<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-3
Amendment No. 6
(Final Amendment)
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
PEC ISRAEL ECONOMIC CORPORATION
(Name of the Issuer)
DISCOUNT INVESTMENT CORPORATION LTD., PEC ACQUISITION CORPORATION, PEC
ISRAEL ECONOMIC CORPORATION AND IDB DEVELOPMENT CORPORATION LTD.
(Name of Persons Filing Statement)
COMMON SHARES, $1.00 PAR VALUE 705098-10-1
(Title of Class of Securities) (Cusip Number of Class of Securities)
MR. JAMES I. EDELSON
EXECUTIVE VICE PRESIDENT, SECRETARY AND
GENERAL COUNSEL
PEC ISRAEL ECONOMIC CORPORATION
511 FIFTH AVENUE
NEW YORK, NEW YORK 10017
(212) 551-8881
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of the persons filing statement.)
Copy To:
PETER G. SAMUELS, ESQ.
PROSKAUER ROSE LLP
1585 BROADWAY
NEW YORK, NEW YORK 10036-8299
(212) 969-3335
a. [x] The filing of solicitation materials or an information statement
subject to Regulation 14A [17 CFR 240.14a-1 to 240.14b-1], Regulation
14C [17 CRF 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [240.13e-3 (c)]
under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
<PAGE>
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION AMOUNT OF
VALUATION* FILING FEE**
----------- ------------
<S> <C>
$124,990,454 $24,998.09
</TABLE>
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* Assumes 3,424,396 Common Shares, par value $1.00 per share, of PEC Israel
Economic Corporation (the "Common Shares") will be converted into the right
to receive $36.50 per share in cash.
** The amount of the filing fee, calculated in accordance with 240.0-11 of the
Securities Exchange Act of 1934 equals 1/50th of one percent of the
transaction value.
[x] 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: $24,998.09
Form or Registration No.: Schedule 14A Information
Filing Party: PEC Israel Economic Corporation
Date Filed: September 2, 1999
2
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This Final Amendment No. 6 amends and supplements the Rule 13e-3
Transaction Statement filed on January 5, 1999, Amendment No. 1 thereto filed on
February 23, 1999, Amendment No. 2 thereto filed on March 12, 1999, Amendment
No. 3 thereto filed on April 6, 1999, Amendment No. 4 thereto filed on
September 1, 1999 and Amendment No. 5 thereto filed on October 5, 1999, all
relating to the solicitation of proxies by the Board of Directors of PEC
Israel Economic Corporation, a Maine corporation (the "Company"), from
holders of outstanding shares of common stock, par value $1.00 per share, of
the Company (the "Shares" and the holders thereof the "Shareholders"), for
use at a Special Meeting of Shareholders of the Company (the "Special
Meeting") to vote to approve and adopt an Agreement and Plan of Merger, dated
as of December 15, 1998, as amended (the "Merger Agreement"), pursuant to
which (a) PEC Acquisition Corporation ("Merger Sub"), a Maine corporation and
wholly-owned subsidiary of Discount Investment Corporation Ltd., an Israeli
corporation ("DIC"), will be merged with and into the Company (the "Merger")
at the effective time of the Merger (the "Effective Time") with the Company
as the surviving corporation in the Merger, and (b) each Share that is
outstanding at the Effective Time owned by shareholders other than DIC or by
Shareholders in respect of which appraisal rights have been perfected in
accordance with the Maine Business Corporation Act ("MBCA"), will be
converted into the right to receive $36.50 in cash, without interest (the
"Merger Consideration").
The Special Meeting was held on November 5, 1999. Shareholders holding
an aggregate of approximately 87.77% of the Shares voted to approve the Merger.
Shareholders holding approximately 2.19% of the Shares voted against the Merger,
approximately 0.07% of the Shares abstained and the remaining Shares were not
voted. The Merger was consummated on November 5, 1999. The Articles of Merger
were filed with the Secretary of State of the State of Maine on November 5,
1999.
The Company has designated ChaseMellon Shareholder Services, L.L.C.
to act as the paying agent (the "Paying Agent") under the Merger Agreement.
Immediately prior to the Effective Time, Merger Sub deposited in trust with
the Paying Agent funds to which Shareholders became entitled upon the Merger
and conversion of their Shares into the Merger Consideration. The Paying
Agent will mail to each Shareholder of record on October 4, 1999, a letter of
transmittal and instructions for effecting surrender of such Shareholder's
share certificates for payment in accordance with the Merger Agreement.
In addition to the foregoing, this Final Amendment No. 6 to the
Schedule 13E-3 also amends and supplements Schedule 13E-3 as follows:
Items 6(a) and (c) are hereby amended and supplemented so that such
Items shall be deemed to incorporate by reference Exhibit (a)(2) to this
Transaction Statement.
Item 17 is hereby amended and supplemented by adding the following
exhibits:
(a)(1) Promissory Note issued by PEC Acquisition Corporation in favor
of Bank Leumi USA dated October 18, 1999.
(a)(2) Unlimited Guaranty made by Discount Investment Corporation Ltd.
in favor of Bank Leumi USA with respect to the obligations of PEC
Acquisition Corporation dated October 26, 1999.
<PAGE>
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Transaction Statement is true, complete
and correct.
DISCOUNT INVESTMENT CORPORATION LTD.
By: /s/ Yoram Turbowicz
--------------------------------
Title: President and Chief
Executive Officer
Date: November 5, 1999
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Transaction Statement is true, complete
and correct.
PEC ACQUISITION CORPORATION
By: /s/ Yoram Turbowicz
--------------------------------
Title: President and Chairman
of the Board
Date: November 5, 1999
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Transaction Statement is true, complete
and correct.
PEC ISRAEL ECONOMIC CORPORATION
By: /s/ Frank Klein
--------------------------------
Title: President
Date: November 5, 1999
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Transaction Statement is true, complete
and correct.
IDB DEVELOPMENT CORPORATION LTD.
By: /s/ Eliahu Cohen
--------------------------------
Title: Co-Chief Executive
Officer
By: /s/ Arthur Caplan
--------------------------------
Title: Corporate Secretary
Date: November 5, 1999
13
<PAGE>
99(a)(1)
PROMISSORY NOTE
NEW YORK, N.Y. October 18, 1999 $125,000,000
on June 30, 2000, PEC Acquisition Corporation ("maker"), a Maine corporation
promises to pay to the order of BANK LEUMI USA ("Bank") the amount of the
advances to the maker from the Bank pursuant to the next sentence up to One
Hundred Twenty Five Million Dollars ($125,000,000) at the Bank at 564 Fifth
Avenue, New York, New York 10036. The Bank agrees to make advances to the maker
from time to time on one or more Business Days on or prior to February 28, 2000,
upon at least five Business Days written notice to the Bank provided that each
advance shall be in an amount of at least $10,000,000. All drawings under the
Note shall be made no later than February 28, 2000.
Interest shall be computed at a rate per annum which shall be equal to
0.22% per annum above the Libor Rate (Reserve Adjusted)(*) for a one, three or
six month term, as elected by the maker and calculated by the Bank, in the
manner hereinafter provided, but in no event in excess of the maximum rate
permitted by applicable law; provided, that in the event the Bank shall have
determined that by reason of circumstances affecting the Libor Rate (Reserve
Adjusted) adequate and reasonable means do not exist for ascertaining the Libor
Rate (Reserve Adjusted) for any Interest Period, or the time remaining to the
stated maturity date of this Note is less than the shortest Interest Period
which may be elected hereunder, then the applicable rate of interest during such
Interest Period shall be equal to the rate of interest designated by the Bank,
and in effect from time to time, as its "Reference Rate" adjusted when said
Reference Rate changes, but in no event in excess of the maximum rate permitted
by law (the maker acknowledges that the Reference Rate may not necessarily
represent the lowest rate of interest charged by the Bank to customers); further
provided that if, at the end of any Interest Period, the maker has failed to
timely notify the Bank of its election of the choice of interest rate for or
length of the next Interest Period, then the interest rate in effect thereafter
shall be at the Libor Rate (Reserve Adjusted) plus 0.22% per annum for an
Interest Period the length of which shall be the same length as the immediately
preceding Interest Period unless such Interest Period would end after the stated
maturity date of this Note, in which case the Interest Period shall be of a
duration equal to the next longest Interest Period which would end prior to such
scheduled maturity date, provided further that no Libor Rate (Reserve
Adjusted)-based loan shall be made less than one month before the stated
maturity date of this Note or after the occurrence and continuance of an Event
of Default or an event which, upon notice, passage of time or both would
constitute an Event of Default. Interest hereunder shall be payable on the last
day of each
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* "Libor Rate" means, relative to any Interest Period (hereinafter defined)
for loans made pursuant to this Note and which bear interest at the "Libor
Rate (Reserve Adjusted)", the rate of interest per annum determined by the
Bank to be the arithmetic mean (rounded upward to the next 1/16th of 1%)
of the rates of interest per annum at which dollar deposits in the
approximate amount of the amount of the loan to be made or continued
hereunder by the Bank and having a maturity comparable to such Interest
Period would be offered to the Bank in the London Interbank market at its
request at approximately 11:00 a.m. (London time) two Business Days prior
to the commencement of such Interest Period.
"Libor Reserve Percentage" means, relative to any Interest Period for
loans hereunder, the percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable
to the Bank) under regulations issued from time to time by the Federal
Reserve System Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve
System Board).
"Libor Rate (Reserve Adjusted)" means, relative to any loan to be made or
continued hereunder for any Interest Period, the rate of interest per
annum (rounded upwards to the next 1/16th of 1%) determined by the Bank as
follows:
Libor Rate = Libor Rate
(Reserve Adjusted) -------------------------------
1.00 - Libor Reserve Percentage
<PAGE>
2
Interest Period and at maturity (whether by acceleration or otherwise). The term
"Interest Period" as used in this Note shall mean a period of one, three or six
month(s), as elected by the maker by written or facsimile notice to the Bank
given not later than 12:00 noon five Business Days prior to the commencement of
an Interest Period. No Interest Period shall extend beyond the stated maturity
date of this Note. The initial Interest Period for this Note shall begin on the
day of the initial draw down under the Note, and each subsequent Interest Period
shall begin on the last day of the immediately preceding Interest Period. If an
Interest Period would otherwise end on a day that is not a Business Day, such
Interest Period shall end on the next succeeding Business Day; provided,
however, that, if any Interest Period would otherwise end on a day that is not a
Business Day but is a day of the calendar month after which no further Business
Day occurs in such month, such Interest Period shall end on the next preceding
Business Day and further provided that if any Interest Period commences on the
last Business Day in a calendar month or if there is no corresponding day in the
calendar month in which it is to end, then it shall end on the last Business Day
in a calendar month. The Bank shall give notice to the maker of the interest
rate determined for each Interest Period as provided herein within two business
days after the beginning of such Interest Period, and such notice shall be
conclusive and binding upon the maker for all purposes absent manifest error.
The maker shall pay to the Bank to compensate it for any loss, cost or expense
that the Bank determines is attributable to any prepayment of a loan made by the
Bank to the maker using the Libor Rate (Reserve Adjusted). Such compensation
shall be an amount equal to the excess (if any) of (i) the amount of interest
that otherwise would have accrued on the principal amount so prepaid for the
period from the date of such prepayment to the last day of the then current
Interest Period for such loan at the applicable rate of interest for such loan
provided for herein less (ii) the amount of interest that otherwise would have
accrued on such principal amount from the date of such prepayment until the end
of the then current Interest Period at a rate per annum equal to the interest
component of the amount the Bank would have bid in The London Interbank market
for dollar deposits of leading banks in amounts comparable to such principal
amount and with maturities comparable to such period (as reasonably determined
by the Bank). The term "Business Day" shall mean any day of the year on which
the Bank is open for business (as required or permitted by law or otherwise) and
on which dealings in U.S. dollar deposits are carried on in London, England.
If any law, treaty, rule, regulation or determination of a court or
governmental authority or any change therein or in the interpretation or
application thereof (each, a "Change in Law") shall make it unlawful for the
Bank to make Libor Rate (Reserve Adjusted)-based loans, or to maintain interest
rates based on Libor, then in the former event, any obligation of the Bank
contained herein or in any agreement of the Bank to make available such unlawful
Libor Rate (Reserve Adjusted)-based loans shall immediately be cancelled, and in
the latter event, any such unlawful Libor Rate (Reserve Adjusted)-based loans
then outstanding shall be converted, at the Bank's option, so that interest on
the outstanding principal balance subject hereto is determined in relation to
the Reference Rate as hereinabove provided; provided however, that if any such
Change in Law shall permit any Libor Rate (Reserve Adjusted)-based loans to
remain in effect until the expiration of the Interest Period applicable thereto,
then such permitted Libor Rate (Reserve Adjusted)-based loans shall continue in
effect until the expiration of such Interest Period; and further provided,
however, that if any such Change in Law does not so permit any Libor Rate
(Reserve Adjusted)-based loans to remain in effect, then the maker shall have
the right to prepay this Note immediately in whole or in part without penalty or
premium. Upon the occurrence of any of the foregoing events, maker shall pay to
the Bank immediately upon demand such amounts as may be necessary to compensate
the Bank for any fines, fees, charges, penalties or other costs incurred or
payable by the Bank as a result thereof and which are attributable to any Libor
Rate (Reserve Adjusted) options made available to maker hereunder, and any
reasonable allocation made by the Bank among its operations shall be conclusive
and binding upon maker.
<PAGE>
3
If any Change in Law or compliance by the Bank with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority shall:
(A) subject the Bank to any tax, duty or other charge with respect to
any Libor Rate (Reserve Adjusted) options, or change the basis of
taxation of payments to the Bank of principal, interest, fees or any
other amount payable hereunder (except for changes in the rate of
tax on the overall net income of the Bank); or
(B) impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances or
loans by, or any other acquisition of funds by any office of the
Bank; or
(C) impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost to the Bank of
making, renewing or maintaining any Libor Rate (Reserve Adjusted)-based loan
hereunder and/or to reduce any amount receivable by the Bank in connection
therewith, then in any such case, maker shall pay to the Bank immediately
upon demand such amounts as may be necessary to compensate the Bank for any
additional costs incurred by the Bank and/or reductions in amounts received
by the Bank which are attributable to such Libor Rate (Reserve Adjusted)-based
loan. In determining which costs incurred by the Bank and/or reductions in
amounts received by the Bank are attributable to any Libor Rate (Reserve
Adjusted)-based loan made to maker hereunder, any reasonable allocation made
by the Bank among its operations shall be conclusive and binding upon maker.
The maker shall have the right to prepay this Note in whole or in part at
the end of any Interest Period (but if in part, in the principal amount of
$25,000.00 or any whole multiple thereof), in each case upon not less than 5
Business Days prior written notice to the Bank, without penalty or premium,
provided that on each prepayment the maker shall pay accrued interest on the
principal amount so prepaid to the date of such prepayment, and each partial
prepayment shall be applied to this Note in the inverse order of their stated
maturities. The maker may not reborrow any amount prepaid under this Note.
The Bank is hereby authorized to enter on the schedule attached hereto the
amount of each drawdown and each payment of principal thereon, without any
further authorization on the part of the maker or any guarantor of this Note,
but the Bank's failure to make such entry shall not limit or otherwise affect
the obligations of the maker or any guarantor of this Note. In the event that
any other Liabilities (as hereinafter defined) of maker to the Bank are due at
any time that the Bank receives a payment from maker on account of this Note or
any such other Liabilities of maker, the Bank may apply such payments to amounts
due under this Note or any such other Liabilities in such manner as the Bank, in
its discretion, elects, regardless of any instructions from maker to the
contrary.
Interest shall be computed on the basis of a 360-day year and, with
respect to any Interest Period, the number of days lapsed up to and not
including the last day of such Interest Period.
The maker authorizes (but shall not require) the Bank to debit any account
maintained by the maker with the Bank, at any date on which the payment of
principal or of interest on any of the Liabilities is due, in an amount equal to
any unpaid portion of such payment. If the time for payment of principal of or
interest on any of the Liabilities or any other money payable hereunder or with
respect to any of the Liabilities becomes due on a day on which the Bank's
offices are closed (as required or permitted by law or otherwise),
<PAGE>
4
such payment shall be made on the next succeeding Business Day, and such
extension shall be included in computing interest in connection with such
payment. All payments by the maker of this Note on account of principal,
interest or fees hereunder shall be made in lawful money of the United States of
America, in immediately available funds.
The Bank or holder hereof shall not be obligated to exercise any authority
or right granted to it hereunder and shall not be liable for any action taken or
omitted or the manner of taking any action, except for its willful misconduct or
gross negligence, and in no event for consequential damages.
To induce the Bank to make the loans evidenced by this Note, the maker
represents and warrants to the Bank that the maker is a corporation duly
incorporated, validly existing and in good standing under the laws of its state
of incorporation, and is duly qualified as a foreign corporation in each
jurisdiction wherein the character of the property owned or the nature of the
business being transacted by it makes such qualification necessary (except where
the failure to be qualified would not reasonably be expected to have a material
adverse effect on the maker); the maker has the corporate power to execute and
deliver this Note and to incur and perform its obligations hereunder. The
execution, delivery and performance of this Note has been duly authorized by all
necessary corporate action and does not violate any provision of law or of the
maker's Certificate or Articles of Incorporation or By-Laws or result in the
breach of, or constitute a default under, any indenture or other agreement or
instrument to which the maker is a party or by which the maker be bound or
affected. This Note constitutes, the legal, valid and binding obligation of the
maker, enforceable in accordance with its terms. The proceeds of this Note shall
be used to provide the cash necessary to fund the acquisition of all of the
outstanding public shares of PEC Israel Economic Corporation, a Maine
corporation ("PEC Israel"). The maker further represents and warrants to the
Bank that (i) it has not and will not engage in any activities other than to
consummate the purchase of the outstanding public shares of PEC Israel and that
it was created exclusively for the purpose of acquiring the publicly held
minority 18.65% common shares of PEC Israel; (ii) prior to the merger of the
maker into PEC Israel, the maker shall furnish to the Bank, prior to each
drawdown of the credit facility hereunder, a certificate signed by an officer of
the maker confirming that the maker was not engaged in any operating activities,
did not incur any debt except hereunder, that there are no other creditors of
the maker other than the Bank, and that (iii) on the date of such advance no
condition or event shall have occurred and be continuing which would result in,
or which has resulted in, the acceleration of this Note. The maker shall cause
Discount Investment Corporation Ltd., a corporation incorporated in the State of
Israel five Business Days prior to each drawdown, to furnish a certificate
signed by one of its officers stating that it is not in default of any of its
obligations in any material respect under its Unlimited Guaranty executed in
favor of the Bank in support of the obligations of the maker to the Bank.
The maker covenants and agrees that until the maker merges into PEC
Israel,the maker shall not (a) pay any management fee; (b) assume, guarantee,
endorse or otherwise become directly or contingently liable in connection with
any obligation of any other person, firm, corporation or other entity; (c) make
any loan, advance or capital contribution or extend any credit to any person,
firm, corporation or other entity; (d) sell, lease, assign, transfer or
otherwise dispose of any of its assets, other than in the ordinary course of
business; (e) declare or pay any dividend, purchase, redeem or otherwise acquire
for value any of its capital stock now or hereafter outstanding or return any
capital or make any distribution of assets to stockholders or issue any capital
stock; and (f) create, incur, assume or suffer to exist, any indebtedness for
borrowed money or for the deferred purchase price of property, other than to its
shareholders, which debt may only be incurred for purposes of consummating the
acquisition of all of the outstanding public shares of PEC Israel and, in any
event, such indebtedness shall be subordinated to the prior payment in full of
all indebtedness due to the Bank by the maker.
<PAGE>
5
All Property (as hereinafter defined) held by the Bank shall be subject to
a security interest in favor of the Bank or holder hereof as security for any
and all Liabilities. The term "Property" shall mean the balance of every deposit
account of the maker with the Bank or any of the Bank's nominees or agents and
all other obligations of the Bank or any of its nominees or agents to the maker,
whether now existing or hereafter arising, and all other personal property of
the maker (including without limitation all money, accounts, general
intangibles, goods, instruments, documents and chattel paper) which, or evidence
of which, are now or at any time in the future shall come into the possession or
under the control of or be in transit to the Bank or any of its nominees or
agents for any purpose, whether or not accepted for the purposes for which it
was delivered. The term "Liabilities" shall mean the indebtedness evidenced by
this Note and all other indebtedness, liabilities and obligations of any kind of
the maker to (a) the Bank, (b) any group of which the Bank is a member, or (c)
any other person if the Bank has a participation or other interest in such
indebtedness, liabilities or obligations, whether (i) for the Bank's own account
or as agent for others, (ii) acquired directly or indirectly by the Bank from
the maker or others, (iii) absolute or contingent, joint or several, secured or
unsecured, liquidated or unliquidated, due or not due, contractual or tortious,
now existing or hereafter arising, or (iv) incurred by the maker as principal,
surety, endorser, guarantor or otherwise, and including without limitation all
expenses, including reasonable attorneys' fees, incurred by the Bank in
connection with any such indebtedness, liabilities or obligations or any of the
Property (including any sale or other disposition of the Property).
The Bank or holder hereof shall not be obligated to exercise any authority
or right granted to it hereunder and shall not be liable for any action taken or
omitted or the manner of taking any action (including without limitation with
respect to the care of the Property by the Bank or holder hereof), except for
its willful misconduct or gross negligence, and in no event for consequential
damages.
Upon the happening, (i) with respect to the maker of this Note or any
assets of such maker of any of the following events: (a) the failure to furnish
the Bank with any requested financial information concerning the maker; (b) the
making by the maker of any material misrepresentation to the Bank in obtaining
credit for the maker (in the event that the maker is hereafter merged into
another entity, the surviving entity, if other than the original maker
hereunder, shall not be subject to this sub-section(b) of this paragraph); (c)
the making by the maker, after the date hereof, of a mortgage or pledge in
excess of $1,000,000 in the aggregate; (d) the commencement of a foreclosure
proceeding; (e) default in the payment of principal or interest on this Note or
in the payment of any other obligation of said maker held by the Bank or in the
performance or observance of any material covenant or agreement contained in the
instrument evidencing such obligation; (f) default in the payment of principal
of or interest on any indebtedness for borrowed money owed to any other person
or entity (including any such indebtedness in the nature of a lease) or default
in the performance or observance of the terms of any instrument pursuant to
which such indebtedness was created or is secured the effect of which is to
cause any holder of such indebtedness to cause the same to become due prior to
its stated maturity; (g) a change in the financial condition or affairs of the
maker which in the reasonable opinion of the Bank or subsequent holder hereof
materially reduces its ability to pay all of its obligations; (h) the suspension
of business (other than as a result of the merger of the maker into PEC Israel);
(i) the making of an assignment for the benefit of creditors, or the appointment
of a trustee, receiver or liquidator for the maker or for any of its property,
or the commencement of any proceedings by the maker under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt,
receivership, liquidation or dissolution law or statute, or the commencement of
any such proceedings without the consent of the maker, and such proceedings
shall continue undischarged for a period of 60 days; (j) the sending of notice
of an intended bulk sale; (k) the entry of judgments or attachments, levies or
executions in an aggregate amount in excess of $1,000,000 against any of its
properties shall not be released, discharged, dismissed, stayed or fully bonded
for a period of 30 days
<PAGE>
6
or more after its entry, issue or levy, as the case may be; (l) (x) the issuance
of a warrant of distraint or (y) assertion of a lien for unpaid taxes, which are
not within 30 days bonded or contested in good faith by appropriate proceedings
(to the extent such proceedings are required) and with respect to which the
maker has set up an adequate reserve under GAAP for the payment of such taxes,
(m) the failure, upon reasonable notice, to permit inspection of books or
records of the maker by the Bank or any of its agents; (n) dissolution (if a
corporation or partnership) or (ii) with respect to the guarantor of this Note
or any assets of such guarantor of any of the following events: (a) any event of
default by the guarantor under the guaranty of this Note and the passage of all
applicable notice and cure time periods therein; (b) the failure to furnish the
Bank with any requested financial information concerning the guarantor; (c) the
commencement of a foreclosure proceeding which within 60 days after its start is
not discharged, dismissed, stayed or bonded; (d) default in the payment of
principal or interest on any indebtedness for borrowed money owed to any person
or entity (including any such indebtedness in the nature of a lease), in an
aggregate amount in excess of $10,000,000, or default in the performance or
observance of the terms of any instrument pursuant to which such indebtedness
was created or secured, the effect of which default is to cause any holder of
such indebtedness to cause the same to become due prior to its stated
maturity;(e) the entry of judgments or attachments, levies or executions in an
aggregate amount in excess of $5,000,000, against any of its properties shall
not be released, discharged, dismissed, stayed or bonded for a period of 30 days
or more after its entry, issue or levy, as the case may be; (f) the assertion of
a lien for unpaid taxes which are not within 30 days bonded or contested in good
faith by appropriate proceedings (to the extent such proceedings are required)
and with respect to which the guarantor has set up an adequate reserve under
GAAP for the payment of such taxes; (g) a change in the financial condition or
affairs of the guarantor which in the reasonable opinion of the Bank or
subsequent holder hereof materially reduces the guarantor's ability to pay all
of its obligations; or (h) the failure to permit, upon reasonable notice,
inspection of books and records of the guarantor by the Bank or any of its
agents, this Note, if not then due or payable on demand, shall become due and
payable immediately without demand or notice, except that with respect to the
events set forth in clauses (i) (a), (i) (b), (i) (d), (i) (e), (i) (f), (i)
(g), (i) (l) (x), (ii) (b), (ii) (c), (ii) (d), (ii) (g) and (ii) (h), the Bank
or the holder thereof shall have given notice to the maker or the guarantor, as
the case may be, and such event shall not have been cured or remedied within
four Business days after receipt of such notice by facsimile transmission to
facsimile number 011-972-3-560-7570, Attn: Controller or by written notice, and
all other debts or obligations of the maker hereof to the Bank or holder hereof,
whether due or not due and whether direct or contingent and howsoever evidenced,
shall, at the option of the Bank or holder hereof, also become due and payable
immediately without demand or notice. After this Note becomes due, at stated
maturity or on acceleration, any unpaid balance hereof shall bear interest from
the date it becomes due until paid at a rate per annum 3% above the rate borne
by this Note when it becomes due or, if such rate shall not be lawful with
respect to the undersigned, then at the highest lawful rate. The liability of
any party to commercial paper held by the Bank or holder hereof, other than the
maker hereof, shall remain unaffected hereby and such parties shall remain
liable thereon in accordance with the original tenor thereof. The maker agrees
that if an attorney is retained to enforce or collect this Note or any other
obligations by reason of non-payment of this Note when due or made due
hereunder, a reasonable attorneys' fee shall be paid, which fees shall be
computed as the reasonable value of the attorneys' services.
The Bank reserves the right to sell participations to one or more persons
or entities in or to all or a portion of its rights under this Note.
This Note shall be governed by the laws of the State of New York and shall
be binding upon the maker and the maker's heirs, administrators, successors and
assigns. The maker hereby irrevocably consents to the jurisdiction of any New
York State or Federal court located in New York City over any action or
<PAGE>
7
proceeding arising out of any dispute between the maker and the Bank, and the
maker further irrevocably consents to the service of process in any such action
or proceeding by facsimile transmission to facsimile number 011-972-3-560-7570,
Att: Legal Counsel and the mailing of a copy of such process to the maker at the
address set forth below. In the event of litigation between the Bank and the
maker over any matter connected with this Note or resulting from transactions
hereunder, the right to a trial by jury is hereby waived by the Bank and the
maker. The maker also waives the right to interpose any set-off or counterclaim
of any nature. The Bank or any holder may accept late payments, or partial
payments, even though marked "payment in full" or containing words of similar
import or other conditions, without waiving any of its rights. No amendment,
modification or waiver of any provision of this Note nor consent to any
departure by maker therefrom shall be effective, irrespective of any course of
dealing, unless the same shall be in writing and signed by the Bank, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
The rights and remedies of the Bank provided for hereunder (including but
not limited to the right to accelerate Liabilities of maker and to realize on
any security for any such Liabilities) are cumulative with the rights and
remedies of the Bank available under any other instrument or agreement or under
applicable law.
PEC ACQUISITION CORPORATION
By: /s/ Yoram Turbowicz
--------------------------------------
Dr. Yoram Turbowicz, President
--------------------------------------
c/o PEC Israel Economic Corporation
--------------------------------------
(Address)
511 Fifth Avenue, New York, NY 10017.
--------------------------------------
<PAGE>
99(a)(2)
SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF
bank leumi USA [LOGO] UNLIMITED GUARANTY
Member FDIC
In consideration of financial accommodations given or to be given or
continued to PEC Acquisition Corporation herein called "Borrower." by BANK LEUMI
USA herein call "Bank," the undersigned irrevocably and unconditionally
guarantee to the Bank, payment when due, whether by acceleration or otherwise,
of any and all liabilities of the Borrower to the Bank, together with all
interest thereon and all attorneys' fees, costs and expenses of collection
incurred by the Bank in enforcing any of such liabilities.
The term "liabilities of the Borrower" shall include all liabilities,
direct, indirect or contingent, joint, several or independent, of the Borrower
now or hereafter existing, due or to become due to, or held or to be held by,
the Bank for its own account or as agent for another or others, whether created
directly or acquired by assignment or otherwise.(1)
The undersigned waive notice of acceptance of this guaranty and notice of
any liability to which it may apply, and waive presentment, demand of payment,
protest, notice of dishonor or nonpayment of any such liabilities, suit or
taking other action by the Bank against, and any other notice to, any party
liable thereon (including the undersigned).
The Bank may at any time and from time to time (whether or not after
revocation or termination of this guaranty) without the consent of, or notice
to, the undersigned, without incurring responsibility to the undersigned,
without impairing or releasing the obligations of the undersigned hereunder,
upon or without any terms or conditions and in whole or in part:
(1) change the manner, place or terms of payment, and/or exchange or
extend the time of payment of, renew or alter, any liability of the Borrower,
any security therefor, or any liability incurred directly or indirectly in
respect thereof, and the guaranty herein made shall apply to the liabilities of
the Borrower as so changed, extended, renewed or altered;
(2) sell, exchange, release, surrender, realize upon or otherwise deal
with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the liabilities hereby
guaranteed or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(3) exercise or refrain from exercising any rights against the Borrower or
others (including the undersigned) or otherwise act or refrain from acting;
(4) settle or compromise any liability hereby guaranteed, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or not) of
the Borrower to creditors of the Borrower other than the Bank and the
undersigned; and
(5) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Bank regardless of what
liability or liabilities of the Borrower remain unpaid.
No failure by the Bank to file, record or otherwise perfect any lien or
security interest, nor any improper filing or recording, nor any failure by the
Bank to insure or protect any security nor any other dealing (or failure to
deal) with any security by the Bank, shall impair or release the obligations of
the undersigned hereunder.
No invalidity, irregularity or unenforceability of all or any part of the
liabilities hereby guaranteed or of any security therefor shall affect, impair
or be a defense to this guaranty, and this guaranty is a primary obligation of
the undersigned.
This guaranty is a continuing one and all liabilities to which it applies
or may apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon. As to each of the undersigned, this guaranty shall
continue until written notice of revocation signed by such undersigned, or until
written notice of the death of such undersigned (which shall be deemed a notice
of revocation hereunder) shall in each case have been actually received by the
Bank, notwithstanding a revocation by, or the death of, or complete or partial
release for any cause of, any one or more of the remainder of the undersigned,
or of the Borrower or of any one liable in any manner for the liabilities hereby
<PAGE>
guaranteed or for the liabilities (including those hereunder) incurred directly
or indirectly in respect thereof or hereof, and notwithstanding the dissolution,
termination or increase, decrease or change in personnel of any one or more of
the undersigned which may be corporations or partnerships. Written notice as
above provided shall be the only means of revocation or termination of this
guaranty, notwithstanding the fact that for periods of time there may be no
outstanding liabilities of the Borrower. No revocation or termination hereof
shall affect in any manner the effectiveness and applicability of this guaranty,
or any rights of the Bank or the obligations of the undersigned hereunder, with
respect to (a) liabilities of the Borrower which shall have been created,
contracted, assumed or incurred prior to receipt by the Bank of written notice
of such revocation or termination, (b) all extensions, renewals or modifications
of any of the liabilities referred to in (a) above made after receipt by the
Bank of such written notice, or (c) liabilities of the Borrower which shall have
been created, contracted, assumed or incurred after receipt by the Bank of such
written notice pursuant to any contract entered into by the Bank prior to its
receipt of such notice or which are otherwise related to or connected with
liabilities of the Borrower theretofore arising or transactions theretofore
entered into.
(2)
All property of the undersigned shall be held by the Bank subject to a
lien and as security for any and all liabilities of the undersigned. The term
"property of the undersigned" shall include all property of every description,
now or hereafter in the
<PAGE>
possession or custody of or in transit to the Bank for any purpose, including
safekeeping, collection or pledge, for account of the undersigned, or as to
which the undersigned may have any right or power. The balance of every account
of the undersigned with, and each claim of the undersigned against, the Bank
existing from time to time, shall be subject to a lien and subject to be set off
against any and all liabilities of the undersigned, and the Bank may at any time
or from time to time at its option and without notice appropriate and apply
toward the payment of any of the liabilities of the undersigned the balance of
each such account of the undersigned with, and each such claim of the
undersigned against, the Bank. The term "property of the undersigned" shall also
include any and all book-entry U.S. Treasury bills and other book-entry
securities purchased on behalf of the undersigned and maintained in an account
at the Bank, which may have a related account at a bank which is a member of the
Federal Reserve System. The undersigned authorizes the Bank to serve as its
bailee and agent with respect to the aforementioned book-entry Treasury bills
and other book-entry securities and to take such action and to execute and
deliver such documents on behalf of the undersigned as the Bank deems necessary
or desirable in order to perfect the Bank's security interest therein. The
undersigned hereby gives notice to the Bank, in the Bank's capacity as bailee
and agent, of the Banks security interest in the aforementioned book-entry
Treasury bills and other book-entry securities. The Bank may at any time and
from time to time, without notice, transfer into its own name or that of its
nominee any of the property of the undersigned.
Upon the happening of any of the following events: insolvency of the
Borrower or the undersigned, or suspension of business of the Borrower or the
undersigned, or the issuance of any warrant of attachment(3) against any of the
property of the Borrower or(4) the undersigned(5), or the making by the Borrower
or the undersigned of an assignment for the benefit of creditors, or a trustee
or receiver being appointed for the Borrower or the undersigned or for any
property of either of them, or any proceeding being commenced by or against the
Borrower or the undersigned under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt, receivership, liquidation or dissolution
law or statute(6), then and in any such event, and at any time thereafter, the
Bank may, without notice to the Borrower(7) the undersigned, make the
liabilities of the Borrower to the Bank, whether or not then due, immediately
due to and payable hereunder as to the undersigned, and the Bank shall be
entitled to enforce the obligations of the undersigned hereunder.
Upon nonpayment when due of any of the liabilities of the Borrower or the
undersigned to the Bank, the Bank may immediately or at any time or times
thereafter without demand or notice to the Borrower or the undersigned and
without advertisement, all of which are hereby expressly waived, sell, resell,
assign and deliver all or part of said "property of the undersigned" at any
Brokers' Board or Exchange, or at public or private sale, for cash, upon credit
or for future delivery, and in connection therewith may grant options. Upon each
such sale the Bank may purchase the whole or any part of such property, free
from any right of redemption, which is hereby waived and released.
In the case of each such sale, or of any proceedings to collect any
liabilities of the undersigned, the undersigned shall pay all costs and expenses
of every kind for collection, sale or delivery, including reasonable attorneys'
fees, and after deducting such costs and expenses from the proceeds of sale or
collection, the Bank may apply any residue to pay any liabilities of the
undersigned, who shall continue liable for any deficiency, with interest.
If claim is ever made upon the Bank for repayment or recovery of any
amount or amounts received by the Bank in payment or on account of any of the
liabilities of the Borrower and the Bank repays all or part of said amount by
reason of (a) any judgment, decree or order of any court or administrative body
having jurisdiction over the Bank or any of its property, or (b) any settlement
or compromise of any such claim effected by the Bank with any such claimant
(including the Borrower), then and in such event the undersigned agree that any
such judgment, decree, order, settlement or compromise shall be binding upon the
undersigned, notwithstanding any revocation hereof or the cancellation of any
note or other instrument evidencing any liability of the Borrower, and the
undersigned shall be and remain liable to the Bank hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by the Bank.
No delay on the part of the Bank in exercising any of its options, powers
or rights, or partial or single exercise thereof, shall constitute a waiver
thereof. No waiver of any of its rights hereunder, and no modifications or
amendment of this guaranty, shall be deemed to be made by the Bank unless the
same shall be in writing, duly signed on behalf of the Bank, and each such
waiver, if any, shall apply only with respect to the specific instance involved,
and shall in no way impair the rights of the Bank or the obligations of the
undersigned to the Bank in any other respect at any other time.
The term "Bank" as used throughout this instrument shall be deemed to
include the BANK LEUMI USA, and all its agencies, branches and departments
wherever located.
Whenever in this instrument the words "attorneys' fees" are used, such
fees shall be the reasonable value of the services of the attorneys. The term
"Borrower" as used throughout this instrument shall be deemed to include any (a)
successor partnership or partnerships if the Borrower is a partnership, and (b)
corporation or corporations which succeed to all or substantially all of the
assets or business of the Borrower by merger, consolidation or sale of assets if
the Borrower is a corporation.
This guaranty and the rights and obligations of the Bank and of the
undersigned hereunder shall be governed and construed in accordance with the
laws of the State of New York; and this guaranty is binding upon the
undersigned, his, their or its executors, administrators, successors, or
assigns, and shall inure to the benefit of the Bank, its successors or assigns.
The undersigned hereby irrevocably submits to the jurisdiction of any New York
State or Federal Court located in New York City over any action or proceeding
arising out of any dispute between the undersigned and the Bank, and the
undersigned further irrevocably consents to the service of any process in any
such action or proceeding by the mailing of a copy of such process to the
undersigned at the address set forth below.
<PAGE>
The undersigned, if more than one, shall be jointly and severally liable
hereunder, and the term "undersigned" wherever used herein shall mean the
undersigned or any one or more of them. Any one signing this guaranty shall be
bound hereby, whether or not any one else signs this guaranty at any time.
Dated: New York, New York
the 26th day of October, 1999
(Individuals sign below)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address)
(Corporation or Partnerships sign below)
Discount Investment Corporation Ltd.
- --------------------------------------------------------------------------------
(Name of Corporation or Partnership)
By: /s/ Yoram Turbowicz
-----------------------------------------------------------------------------
Yoram Turbowicz (Title)
President and CEO
By: /s/ Joseph Boock
-----------------------------------------------------------------------------
Joseph Boock (Title)
Vice President - Finance
14 Beth Hashoeva Lane
- --------------------------------------------------------------------------------
(Address) Tel Aviv, Israel 65814
Signature(s) Guaranteed
-----------------------------------------------------------------------------
(Name of Bank)
By: /s/ Shlomo Cohen
-----------------------------------------------------------------------------
(Authorized Signature)
Shlomo Cohen, Advocate
License No. 7137
14 Beth Hashoeva Lane
Tel Aviv, Israel
<PAGE>
RIDER TO UNLIMITED GUARANTY OF
DISCOUNT INVESTMENT CORPORATION DATED OCTOBER 26, 1999
The following text shall be inserted in the Unlimited Guaranty of Discount
Investment Corporation Ltd., dated October 26, 1999, at the similarly numbered
place in such guaranty:
(1) pursuant to promissory note of Borrower in the original principal amount
of $125,000,000 executed by the Borrower in favor of the Bank
on October 18, 1999.
(2) You agree that all payments to be made to the Bank will be made free and
clear of, and without deduction for or on account of, any present or
future "Foreign Taxes" (as defined below). You further agree that, if any
Foreign Taxes are required to be withheld from any amounts payable to the
Bank, the Bank may, in its sole and absolute discretion increase the
amounts payable by you to the Bank to the extent necessary to yield to the
Bank (after payment of all Foreign Taxes) the full amounts which the Bank
would have received had the payments not been subject to Foreign Taxes.
"Foreign Taxes" means any income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions, withholdings or restrictions or
conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed by any country or government (or by a
political subdivision or taxing authority thereof) other than the United
States of America or any political subdivision or taxing authority thereof
with respect to the payments.
(3) in the aggregate amount in excess of $1,000,000
(4) in the aggregate amount in excess of $5,000,000 against any of the
property of
(5) , which warrant of attachment shall not be released, discharged,
dismissed, stayed or fully bonded for a period of 30 days or more after
its issue,
(6) (exclusive of the merger of the Borrower into PEC Israel Economic
Corporation, a Maine Corporation) and, with respect to the commencement of
any such proceedings without the consent of the Borrower or the
undersigned, such proceedings shall continue undischarged for a period of
60 days,
(7) but with notice to
DISCOUNT INVESTMENT
CORPORATION, LTD
By: /s/ Yoram Turbowicz
