SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TRACOR, INC.
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
8923491 20 0
(CUSIP Number)
J. Stephen Hatfield, P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201
(214) 969-2837
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 9, 1996
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d- 1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [X].
CUSIP NO. 8923491 20 0 Schedule 13D
(1) Name of Reporting Person. Mason Best Company, L.P.
S.S. or I.R.S. Identification No. of
Above Person. 75-1974755
(2) Check the Appropriate Box if a Member of a (a)
Group (See instructions) (b)
(3) SEC Use Only
(4) Source of Funds (See instructions) OO(1)
(5) Check if Disclosure of Legal
Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Texas
Number of Shares (7) Sole Voting Power 1,398,067(2)
Beneficially Owned By
Each Reporting Person (8) Shared Voting Power None
With
(9) Sole Dispositive Power 1,398,067(2)
(10) Shared Dispositive None
Power
(11) Aggregate Amount Beneficially Owned by Each 1,398,067(2)
Reporting Person
(12) Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See instructions)
(13) Percent of Class Represented by Amount in Row 5.9%
(11)
(14) Type of Reporting Person (See Instructions) PN
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(1) The shares were acquired pursuant to a liquidating acquisition of Westmark
Systems, Inc.
(2) See Footnote 3 to Item 7. (above) for MB Partners, Ltd. and Footnote 4 to
Item 7. (above) for Elvis L. Mason.
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the "Statement") relates to shares of the
common stock, $.01 par value (the "Common Stock"), of Tracor, Inc. (the
"Issuer"), whose principal executive offices are located at 6500 Tracor Lane,
Austin, Texas 78725-2000.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by Mason Best Company, L.P. ("Mason Best"), MB
Partners, Ltd. ("MB Partners"), E. L. Mason Corporation, and Elvis L. Mason with
respect to shares of Common Stock of the Issuer.
Mason Best is a Texas limited partnership. The principal executive offices
of Mason Best are located at 2121 San Jacinto Street, Suite 1000, Dallas, Texas
75201. Mason Best is primarily engaged in the business of merchant banking. MB
Partners is the general partner of Mason Best. E. L. Mason Corporation is the
general partner of MB Partners, and Mr. Mason is the president of E. L. Mason
Corporation.
During the last five years, Mason Best has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
MB Partners is a Texas limited partnership. The principal executive
offices of MB Partners are located at 2121 San Jacinto Street, Suite 1000,
Dallas, Texas 75201. MB Partners is primarily engaged in the business of
merchant banking as general partner of Mason Best. E. L. Mason Corporation is
the general partner of MB Partners, and Mr. Mason is the president of E. L.
Mason Corporation.
During the last five years, MB Partners has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
E. L. Mason Corporation is a Texas corporation. The principal executive
offices of E. L. Mason Corporation are located at 2121 San Jacinto Street, Suite
1000, Dallas, Texas 75201. E. L. Mason Corporation is primarily engaged in the
business of merchant banking as the corporate general partner of the limited
partnership that is the general partner of Mason Best.
Mr. Mason is the President, sole director and sole stockholder of E. L.
Mason Corporation.
During the last five years, E. L. Mason Corporation has not been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Mr. Mason is a citizen of the United States. Mr. Mason's business address
is 2121 San Jacinto Street, Suite 1000, Dallas, Texas 75201. Mr. Mason's
principal occupation is serving as managing partner of Mason Best, and he has
served on the boards of several privately held companies in which Mason Best was
a significant shareholder. He also has served, since December 1991, as a
director and, since February 1992, as Chairman of the Board and CEO of Safeguard
Business Systems, Inc., a supplier of office management products and services
for small businesses, and its parent, San Jacinto Holdings. Mr. Mason also
serves as a director of United Meridian Corporation and American Eagle Group,
Inc.
During the last five years, Mr. Mason has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The shares of Common Stock owned by Mason Best and MB Partners were issued
pursuant to the acquisition on June 13, 1996 (the "Acquisition") by the Issuer
of substantially all of the assets of Westmark Systems, Inc. ("Westmark"). The
purchase consideration paid by the Issuer to Westmark in the Acquisition
included 8,267,435 shares of Common Stock and approximately $10.2 million of
United States Treasury Securities. Immediately following the Acquisition,
Westmark dissolved and distributed the Common Stock which it acquired in the
Acquisition to its shareholders, including Mason Best and MB Partners. Mr. Mason
has previously acquired 4,000 shares of the Common Stock directly in the Issuer
as a director of the Issuer.
ITEM 4. PURPOSE OF TRANSACTION
Mason Best acquired the Common Stock pursuant to the Acquisition and the
liquidation of Westmark. Mason Best intends to hold such securities for
investment purposes. Pursuant to the Acquisition Agreement dated as of March 9,
1996, between the Issuer and Westmark, as amended, the board of directors of the
Issuer appointed Mr. Mason a director of the Issuer for a three year term upon
the closing of the Acquisition. Mason Best intends to review, on a continuing
basis, its investment in the Issuer and the Issuer's business and prospects.
Mason Best is not currently considering the acquisition of additional shares of
Common Stock. Whether Mason Best purchases additional shares will depend upon
its evaluation of pertinent factors, including without limitation, the
availability of shares of Common Stock for purchase at particular price levels,
the business and prospects of each of the Issuer and Mason Best, economic and
stock market conditions, other business and investment opportunities available
to Mason Best, regulatory requirements, and the desires of the partners of Mason
Best. Depending upon its assessment of these factors from time to time, Mason
Best may change its present intention as stated above by possibly determining to
acquire additional shares of Common Stock or dispose of some or all of the
Common Stock held by Mason Best.
Except as described above, Mason Best has not formulated any plans or
proposals of the type referred to in clauses (a)-(j) of Item 4 of Schedule 13D.
MB Partners acquired the Common Stock pursuant to the Acquisition and the
liquidation of Westmark. MB Partners is required to distribute one-half of the
shares of Common Stock directly owned by MB Partners (i.e., 4,402 shares) to the
beneficial holder of an approximately 50% economic interest in MB Partners.
Except for this distribution, MB Partners intends to hold such securities for
investment purposes. MB Partners intends to review, on a continuing basis, its
investment in the Issuer and the Issuer's business and prospects. MB Partners is
not currently considering the acquisition of additional shares of Common Stock.
Whether MB Partners purchases additional shares will depend upon its evaluation
of pertinent factors, including without limitation, the availability of shares
of Common Stock for purchase at particular price levels, the business and
prospects of each of the Issuer and MB Partners, economic and stock market
conditions, other business and investment opportunities available to MB
Partners, regulatory requirements, and the desires of the partners of MB
Partners. Depending upon its assessment of these factors from time to time, MB
Partners may change its present intention as stated above by possibly
determining to acquire additional shares of Common Stock or dispose of some or
all of the Common Stock held by MB Partners.
Except as described above, MB Partners has not formulated any plans or
proposals of the type referred to in clauses (a)-(j) of Item 4 of Schedule 13D.
E. L. Mason Corporation acquired beneficial ownership of the Common Stock
pursuant to the Acquisition and the liquidation of Westmark and intends to hold
such securities for investment purposes. E. L. Mason Corporation intends to
review, on a continuing basis, its investment in the Issuer and the Issuer's
business and prospects. E. L. Mason Corporation is not currently considering the
acquisition, directly or indirectly through MB Partners or Mason Best, of
additional shares of Common Stock. Whether E. L. Mason Corporation purchases
additional shares will depend upon its evaluation of pertinent factors,
including without limitation, the availability of shares of Common Stock for
purchase at particular price levels, the business and prospects of each of the
Issuer and E. L. Mason Corporation, economic and stock market conditions, other
business and investment opportunities available to E. L. Mason Corporation and
regulatory requirements. Depending upon its assessment of these factors from
time to time, E. L. Mason Corporation may change its present intention as stated
above by possibly determining to acquire additional shares of Common Stock or
dispose of some or all of its beneficial interests in the Common Stock held by
E. L. Mason Corporation.
Except as described above, E. L. Mason Corporation has not formulated any
plans or proposals of the type referred to in clauses (a)-(j) of Item 4 of
Schedule 13D.
Mr. Mason acquired beneficial ownership of the Common Stock pursuant to
the Acquisition and the liquidation of Westmark, except for 4,000 of such shares
which were previously acquired for investment purposes, and intends to hold all
of such securities for investment purposes except for the shares that MB
Partners is required to transfer as described above. Mr. Mason intends to
review, on a continuing basis, its investment in the Issuer and the Issuer's
business and prospects. Mr. Mason is not currently considering the acquisition
of additional shares of Common Stock. Whether Mr. Mason purchases additional
shares will depend upon his evaluation of pertinent factors, including without
limitation, the availability of shares of Common Stock for purchase at
particular price levels, the business and prospects of each of the Issuer and
Mr. Mason, economic and stock market conditions, other business and investment
opportunities available to Mr. Mason, and regulatory requirements. Depending
upon his assessment of these factors from time to time, Mr. Mason may change his
present intention as stated above by possibly determining to acquire additional
shares of Common Stock or dispose of some or all of the Common Stock held by
him.
Except as described above, Mr. Mason has not formulated any plans or
proposals of the type referred to in clauses (a)-(j) of Item 4 of Schedule 13D.
However, as a director of the Issuer, Mr. Mason may from time to time consider
such plans or proposals as may be presented to or considered by the board of
directors of the Issuer.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Prospectus provided by the Issuer dated July 2, 1996, offering
5,710,672 shares of Common Stock indicates that the Issuer had 23,760,580 shares
of Common Stock outstanding. As of the date hereof, Mason Best owns of record
1,398,067 shares of Common Stock. Therefore, in the aggregate, Mason Best has a
beneficial ownership of 5.9% of the Issuer's total shares of Common Stock.
MB Partners beneficially owns 1,406,871 shares of Common Stock (including
8,804 shares of Common Stock MB Partners owns directly and Mason Best's
1,398,067 shares of Common Stock), or an aggregate beneficial ownership of 5.9%
of the Issuer's outstanding shares of Common Stock.
E. L. Mason Corporation beneficially owns 1,406,871 shares of Common Stock
(including MB Partners's 8,804 shares of Common Stock and Mason Best's 1,398,067
shares of Common Stock), or an aggregate beneficial ownership of 5.9% of the
Issuer's outstanding shares of Common Stock.
Mr. Mason beneficially owns 1,410,871 shares of Common Stock (including
4,000 shares of Common Stock Mr. Mason owns directly, 8,804 shares of Common
Stock directly owned by MB Partners and 1,398,067 shares of Common Stock
directly owned by Mason Best), or an aggregate beneficial ownership of 5.9% of
the Issuer's outstanding shares of Common Stock.
(b) Mason Best has the sole power to vote and dispose of the Common Stock
beneficially owned by it. Mason Best does not share the power to vote or to
direct the vote of, or the power to dispose or direct the disposition of, the
Common Stock owned by it. MB Partners, as general partner of Mason Best, may be
deemed, for purposes of determining beneficial ownership pursuant to Rule 13d-3,
to have the sole power to vote or direct the vote of, and to dispose of or to
direct the disposition of, the Common Stock owned by Mason Best, and in
addition, the 8,804 shares of Common Stock owned directly by MB Partners. MB
Partners does not share the power to vote or to direct the vote of, or the power
to dispose or direct the disposition of, the Common Stock owned by it. E. L
Mason Corporation, as general partner of MB Partners, may be deemed, for
purposes of determining beneficial ownership pursuant to Rule 13d-3, to have
sole power to vote or to direct the vote of, and sole power to dispose or direct
the disposition of, the Common Stock owned by MB Partners and the Common Stock
owned by Mason Best. E. L. Mason Corporation does not share the power to vote or
to direct the vote of, or the power to dispose or direct the disposition of, the
Common Stock owned by it. Mr. Mason, as president of E. L. Mason Corporation,
which is the general partner of MB Partners, may be deemed, for purposes of
determining beneficial ownership pursuant to Rule 13d-3, to have sole power to
vote or to direct the vote of, and sole power to dispose or to direct the
disposition of, the Common Stock owned by MB Partners and the Common Stock owned
by Mason Best, as well as the 4,000 shares of Common Stock owned directly by Mr.
Mason. Mr. Mason does not share the power to vote or to direct the vote of, or
the power to dispose or direct the disposition of, the Common Stock beneficially
owned by him.
(c) Not applicable.
(d) MB Partners may be deemed to have the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Common Stock owned by
Mason Best as well as the Common Stock owned by MB Partners. E. L. Mason
Corporation may be deemed to have the power to direct the receipt of dividends
from, or the proceeds from the sale of, the Common Stock owned by Mason Best as
well as the Common Stock owned by MB Partners. Mr. Mason may be deemed to have
the power to direct the receipt of dividends from, or the proceeds from the sale
of, the Common Stock owned by Mason Best, the Common Stock owned by MB Partners,
and the Common Stock owned by Mr. Mason.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
WESTMARK CUSTODY AGREEMENT. In connection with the Acquisition and the
liquidation of Westmark, Mason Best and certain other shareholders of Westmark
(collectively, the "Signing Shareholders") entered into the Westmark
Shareholders Custody Agreement, dated as of the closing (the "Closing") of the
Acquisition (the "Custody Agreement"). Pursuant to the Custody Agreement, the
Signing Shareholders agreed, for purposes of helping to assure that the
Acquisition qualifies as a tax-free reorganization under Section 368(a)(1)(C) of
the Internal Revenue Code of 1986, as amended, that they would not sell, pledge,
hypothecate, or otherwise transfer more than 50% of the shares of the Common
Stock received by them in connection with the Acquisition for a period of two
years after the Closing, except for Mason Best which has agreed that such
transfer restrictions will apply to 100% of such Common Stock received by it.
The transfer restrictions under the Custody Agreement do not apply to a transfer
of shares of Common Stock pursuant to laws relating to devise, descent or
divorce. The Issuer is not a party to the Custody Agreement and no person other
than the Signing Shareholders has any rights under the Custody Agreement.
REGISTRATION RIGHTS AGREEMENT. In connection with the Acquisition, the
Issuer entered into a Registration Rights Agreement for the benefit of the
shareholders of Westmark. The Registration Rights Agreement provides holders of
shares of Common Stock received pursuant to the liquidation of Westmark
("Registrable Securities") with certain registration rights in respect of such
shares. Such rights provide that the holders of Registrable Securities (the
"Holders") may require the Issuer to file a registration statement under the
Securities Act of 1933, as amended, (the "Securities Act") with the respect to
the sale of the Registrable Securities. The Issuer is required to effect three
such demand registrations at the request of the Holders. The Issuer is required
to pay certain expenses and, under certain circumstances, indemnify the Holders
in connection with such registrations. If marketing considerations so require,
the underwriters in respect of any such registration have a right to limit the
number of Registrable Securities sold by such Holders in an underwritten
offering pursuant to a demand registration request; provided that the shares of
Common Stock sought to be sold in such registration by persons other than the
Holders are first reduced subject only to their rights under existing
registration rights agreements.
Pursuant to the demand registration provisions of the Registration Rights
Agreement, the Issuer filed a registration statement on Form S-4/S-3 on May 9,
1996, to permit Westmark shareholders to include in a resale offering (the
"Resale Offering") up to 4,174,537 shares of Common Stock received by such
shareholders pursuant to the liquidation and dissolution of Westmark. Pursuant
to this registration statement, as amended, certain former shareholders of
Westmark (not including any of the reporting persons under this Statement) sold
3,567,272 shares of Tracor Common Stock in an underwritten offering pursuant to
a prospectus dated July 2, 1996. Consequently, the former shareholders of
Westmark have two remaining demand registrations under the Registration Rights
Agreement.
In the event the Issuer proposes to register any of its securities under
the Securities Act in a public offering for cash for its own account or for the
account of persons other than the Holders, it is required to notify each Holder
and certain other stockholders in writing of each such proposed registration,
and include, at its expense, the portion of the Registrable Securities which
such persons may request be included in such registration. The Holders are
entitled to notice of, and to participate in, an unlimited number of such
registrations ("piggyback registrations"). If the marketing conditions so
require, the underwriters have a right to limit the number of Registrable
Securities sold by such persons in an offering pursuant to any such piggyback
registration request; provided that (i) in respect of a registration for the
account of the Issuer, the Issuer's obligation shall be to include Registrable
Securities that comprise no more than 20% of the current market value of all
securities to be registered and (ii) in respect of a registration for the
account of a person other than the Issuer or a Holder, the Issuer's obligations
shall be to include Registrable Securities that comprise no more than 30% of the
current market value of the securities proposed to be registered.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
The following are filed as exhibits to this Statement on Schedule 13D:
Exhibit A Custody Agreement
Exhibit B Registration Rights Agreement
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this Statement is true,
complete and correct.
Dated: July 10, 1996
MASON BEST COMPANY, L.P.
By: MB Partners, Ltd.,
as General Partner
By: E. L. Mason Corporation,
as General Partner
By: /s/ ELVIS L. MASON
Elvis L. Mason
President
EXHIBIT INDEX
Exhibit A Custody Agreement dated as of June 13, 1996, among the
stockholders of Tracor, Inc. listed on the signature pages
thereto and Mason Best Company, L.P., as custodian.
Exhibit B Registration Rights Agreement dated effective as of June 13,
1996, by and between Tracor, Inc. and certain shareholders who
are signatories thereto.
EXHIBIT A
WESTMARK SHAREHOLDERS CUSTODY AGREEMENT
This Westmark Shareholders Custody Agreement ("AGREEMENT") is entered
into as of the date this Agreement becomes effective pursuant to Section 6.2
hereof among the stockholders of Tracor, Inc., a Delaware corporation
("TRACOR"), listed on the signature pages hereto (collectively, the
"STOCKHOLDERS"), and Mason Best Company, L.P., as custodian (the "CUSTODIAN").
RECITALS
WHEREAS, each of the Stockholders is a shareholder of Westmark Systems,
Inc., a Texas corporation ("WESTMARK"), and Westmark is a party to that certain
Acquisition Agreement, dated as of March 9, 1996 (as amended by the First
Amendment to Acquisition Agreement dated as of March 9, 1996, the "ACQUISITION
AGREEMENT");
WHEREAS, pursuant to the Acquisition Agreement, Westmark has agreed to
sell and transfer substantially all of its assets to Tracor in exchange for
consideration (the "CONSIDERATION") consisting of common stock, par value $.01
per share, of Tracor (the "COMMON STOCK") and treasury securities in a
transaction (the "TRANSACTION") intended to qualify as a tax-free "C"
reorganization under Section 368(a)(1)(C) of the Internal Revenue Code of 1986,
as amended (the "CODE");
WHEREAS, immediately following the closing of the Transaction, Westmark
intends to dissolve in accordance with the Plan of Complete Liquidation of
Westmark Systems, Inc. (the "PLAN OF LIQUIDATION") adopted by the board of
directors of Westmark, subject to the approval by the shareholders of Westmark
at a special meeting of shareholders to be held for this purpose;
WHEREAS, pursuant to the Plan of Liquidation, Westmark will distribute
the Consideration to the stockholders of Westmark entitled thereto, including
the shares of Common Stock;
WHEREAS, the Stockholders desire to have the shares of Common Stock
received by them pursuant to the Plan of Liquidation (the "SHARES") held in
custody pursuant to this Agreement, or pursuant to other arrangements
satisfactory to the Board of Directors of Westmark, in order to ensure
compliance with the continuity-of-interest requirement in Section 368(a)(1)(C)
of the Code; and
WHEREAS, in connection with the Plan of Liquidation and as a means of
providing for the discharge of the obligation of Westmark under that certain
indemnity agreement (the "MS INDEMNITY AGREEMENT") dated as of July 5, 1994, by
and between Westmark and Morgan Stanley & Co. Incorporated ("MORGAN STANLEY"),
which was entered into by Westmark in connection with the engagement of Morgan
Stanley as Westmark's financial advisor for the Transaction, each of the
Stockholders, severally, is willing to assume and be responsible for its
proportionate share of the total liability of Westmark under the MS Indemnity
Agreement;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
STATEMENT OF AGREEMENT
ARTICLE I.
DEFINITIONS
1.1 CERTAIN TERMS. When used herein the following terms shall have the
meanings indicated:
"ACQUISITION AGREEMENT" means that certain Acquisition Agreement,
dated as of March 9, 1996, between Tracor and Westmark, as amended by the First
Amendment to Acquisition Agreement, dated as of March 9, 1996.
"AGREEMENT" means this Agreement, as it may be amended, modified,
and supplemented from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the common stock of Tracor, Inc., $.01 par
value, as currently constituted, and any stock or securities into which such
common stock may hereafter be reclassified, converted, or exchanged.
"CONSIDERATION" means the Common Stock and other consideration
delivered by Tracor to Westmark in the Transaction.
"CUSTODIAN" means the Person identified as the Custodian in
Article II hereof.
"ENGAGEMENT LETTER" means the engagement letter dated May 31, 1994
among Morgan Stanley, Westmark and Tracor.
"MBC" means Mason Best Company, L.P.
"MORGAN STANLEY" means Morgan Stanley & Co. Incorporated.
"MS INDEMNITY AGREEMENT" means the letter agreement dated July 5,
1994 between Morgan Stanley and Westmark, a copy of which is attached hereto as
Exhibit A.
"PERSON" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture,
association, company, trust, bank, trust company, land trust, business trust, or
other organization, whether or not a legal entity, and any government or agency
or political subdivision thereof.
"PLAN OF LIQUIDATION" means the Plan of Complete Liquidation of
Westmark Systems, Inc.
"QUALIFIED TRANSFEREE" has the meaning set forth in Section 3.3
hereof.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration
Rights Agreement, to be dated as of the closing date of the Transaction, among
Tracor, the Stockholders and certain other stockholders of Tracor.
"SHARES" means the shares of Common Stock received by the
Stockholders upon the dissolution of Westmark pursuant to the Plan of
Liquidation and any other shares of capital stock received by any Stockholder as
a dividend on, or in exchange for or upon conversion or reclassification of,
such shares prior to or during the term of this Agreement.
"STOCKHOLDERS" means the stockholders of Tracor which are parties
hereto.
"TRANSACTION" means the sale of substantially all of the assets of
Westmark to Tracor pursuant to the Acquisition Agreement.
"TRANSFER AGENT" means the stock transfer agent for the Common
Stock.
ARTICLE II.
APPOINTMENT OF CUSTODIAN; DEPOSIT OF SHARES
2.1 For the purposes set forth in the Recitals, each of the Stockholders
hereby appoints Mason Best Company, L.P. as custodian (the "CUSTODIAN") under
this Agreement, and Mason Best Company, L.P. accepts such appointment on the
terms and conditions set forth herein. Subject to Section 2.3 hereof, each of
the Stockholders shall deposit (or cause the Transfer Agent for the Common Stock
to deposit) with the Custodian one or more certificates for the Shares
distributable to such Stockholder pursuant to the Plan of Liquidation, and each
Stockholder hereby authorizes Westmark to deliver all certificates representing
the Shares such Stockholder is entitled to receive pursuant to the Plan of
Liquidation directly to the Custodian for deposit in accordance with this
Agreement. The number of Shares initially deposited hereunder by each
Stockholder shall be set forth by the Custodian opposite such Stockholder's name
on the signature pages hereto. During the term of this Agreement, any shares of
capital stock received by any Stockholder as a dividend on, or in exchange for
or upon conversion or reclassification of, the Shares deposited with the
Custodian pursuant to this Agreement shall be subject to this Agreement, shall
be deposited with the Custodian promptly upon receipt and shall be deemed to be
included within the meaning of the term "Shares" for purposes of this Agreement.
The Custodian is hereby authorized and directed to hold in custody the
certificates for Shares deposited pursuant hereto by the Stockholders and to
redeliver such certificates to the Stockholders at the time or times set forth
herein.
2.2 Each Stockholder shall retain all rights of ownership with respect
to the Shares it deposits hereunder, including the right to vote and to receive
all dividends, distributions and payments thereon, except the right to retain
custody of or dispose of any interest in such Shares, which right is subject to
this Agreement.
2.3 In lieu of depositing certificates with the Custodian pursuant to
Section 2.1 hereof, any Stockholder that does not want to deposit its Shares
with the Custodian may enter into other arrangements for assuring compliance
with the transfer restrictions hereunder so long as (i) such arrangements
subject such Shares to the transfer restrictions in Article III hereof, and (ii)
such arrangements are satisfactory to the Board of Directors of Westmark as
evidenced by a written agreement between the Custodian and such Stockholder
which is acknowledged by at least two directors of Westmark.
ARTICLE III.
SALE OR OTHER TRANSFER OF SHARES
3.1 During the term of Article III of this Agreement, other than as
provided in Section 3.3 below, each Stockholder agrees not to sell, pledge,
hypothecate or otherwise transfer (any such action a "TRANSFER") any interest in
any Shares deposited (or required to be deposited) with the Custodian hereunder
except that each Stockholder other than MBC shall be permitted to Transfer up to
one-half of the number of shares of Common Stock initially deposited by such
Stockholder hereunder and shall be further permitted to Transfer Common Stock in
excess of such number of shares if and to the extent another Stockholder (other
than MBC) agrees in writing with the Custodian not to Transfer, during the term
hereof, an identical number of shares of Common Stock in addition to the number
of shares such Stockholder is otherwise restricted from Transferring hereunder.
During the term of Article III of this Agreement, MBC agrees not to Transfer any
interest in any of the Shares it deposits hereunder.
3.2 Any Stockholder who is permitted to Transfer Shares hereunder and
who desires to Transfer any such Shares shall deliver notice of the proposed
Transfer to the Custodian at least five business days prior to the proposed sale
or transfer. If the Custodian determines that such notice relates to Shares that
such Stockholder is permitted to Transfer under the terms of this Agreement, the
Custodian shall so notify the Stockholder and shall deliver a certificate or
certificates representing the Shares to be sold or transferred to the requesting
Stockholder on or before the fifth business day after receiving such notice. In
the event such certificates represent more Shares than are to be sold or
transferred (or more Shares than such Stockholder is permitted to Transfer
hereunder), then such Stockholder shall request the Transfer Agent promptly to
deliver a certificate or certificates representing the Shares not to be sold or
transferred (or not eligible hereunder to be so sold or transferred) to the
Custodian to be deposited and held hereunder.
3.3 The restrictions in Section 3.1 hereof shall not apply to a Transfer
of Shares pursuant to laws relating to devise, descent or divorce (the recipient
of any Shares Transferred thereby a "QUALIFIED TRANSFEREE"). Upon receipt by the
Custodian of a written request from a Stockholder or a Qualified Transferee for
certificates deposited hereunder in which the Stockholder or Qualified
Transferee who owns Shares represented by such certificate certifies that it is
Transferring such Shares in connection with one or more of the foregoing events,
the Custodian shall promptly deliver certificates representing such Shares to
such Stockholder or Qualified Transferee. In the event such certificates
represent more Shares than are to be Transferred, then such Stockholder or
Qualified Transferee shall request the Transfer Agent promptly to deliver a
certificate or certificates representing the Shares not to be Transferred to the
Custodian to be deposited and held hereunder.
3.4 Upon each redelivery of Shares by the Custodian to a Stockholder or
a Qualified Transferee pursuant to Section 3.2 or 3.3 hereof, the Custodian
shall notify all Stockholders of such redelivery, which notice shall state the
total number of Shares initially deposited hereunder by all Stockholders, the
identity of the Stockholder or Qualified Transferee who has withdrawn Shares,
the number of Shares withdrawn, the basis for the Stockholder's or Qualified
Transferee's redelivery request, and the total number of Shares of Common Stock
redelivered to all Stockholders prior to and including the redelivery that is
the subject of such notice.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.1 Each Stockholder represents and warrants to, and agrees, with each
other Stockholder and the Custodian that it has full legal right, power and
authority to enter into and perform this Agreement and that the execution and
delivery of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party.
4.2 Each Stockholder represents and warrants to each other Stockholder
and the Custodian that the Shares will be, and at the time of the closing of the
Transaction and at the liquidation of Westmark the Westmark securities held by
such Stockholder will be, free and clear of all pledges, security interests,
liens and encumbrances created or arising by or through such Stockholder (other
than by reason of this Agreement).
4.3 Each Stockholder represents and warrants to, and agrees with, each
other Stockholder and the Custodian that it has no current plan or intention, as
of the closing of the Transaction, to Transfer any Shares except for the shares
of Common Stock which such Stockholder has designated, on the Resale Offering
Election Notice form delivered by such Stockholder to Westmark, for inclusion in
the proposed resale offering described in the Joint Proxy Statement/Prospectus
of Tracor and Westmark dated May 10, 1996.
ARTICLE V.
TERMINATION
5.1 The provisions of Article III of this Agreement shall terminate on
the second anniversary of the date this Agreement becomes effective pursuant to
Section 6.2 hereof, unless all of the Stockholders unanimously agree in writing
to terminate such provisions at an earlier time or to extend such provisions to
a later time. Upon such termination, the Custodian shall return to each
Stockholder all certificates then in the custody of the Custodian for the Shares
deposited by such Stockholder hereunder.
ARTICLE VI.
CONDITIONS TO EFFECTIVENESS
6.1 The obligations of each Stockholder and the Custodian hereunder are
subject to the fulfillment, or waiver in writing executed by all Stockholders
and the Custodian, of each of the following conditions:
(a) Each Stockholder and the Custodian shall have executed a
counterpart of this Agreement and shall have delivered such counterpart
to the Custodian; and
(b) The Transaction shall have closed and Westmark shall have been
dissolved pursuant to the Plan of Liquidation.
6.2 Provided the conditions in Section 6.1 hereof have been satisfied or
waived in accordance with the terms thereof, this Agreement shall be effective
upon the closing of the Transaction and the dissolution of Westmark pursuant to
the Plan of Liquidation. In the event this Agreement does not become effective
on or before August 31, 1996, this Agreement shall be null and void and of no
effect whatsoever and the Custodian shall provide written notice to each
Stockholder that the Transaction has not closed on or before such date and that
the original signature pages to this Agreement which were delivered to the
Custodian have been returned to the respective Stockholders or destroyed.
ARTICLE VII.
LIABILITY AND INDEMNIFICATION OF CUSTODIAN
7.1 The Custodian assumes no responsibility or liability to any of the
Stockholders or to any other Persons other than to deal with the Shares
deposited with the Custodian pursuant to the terms of this Agreement in
accordance with the provisions thereof. Each Stockholder, severally, hereby
agrees to indemnify, defend and hold harmless the Custodian and its officers,
agents, successors, assigns and personal representatives with respect to any act
or omission of or by any of them in good faith in connection with any and all
matters contemplated by this Agreement; provided, however, that the liability of
each Stockholder pursuant to this Section 7.1 is limited to its proportionate
share of the total liability of all of the Stockholders pursuant to this Section
7.1, such proportionate share to be based upon the number of shares of Common
Stock received by such Stockholder pursuant to the Plan of Liquidation in
relation to the total number of shares of Common Stock received by all
Stockholders pursuant to the Plan of Liquidation; and provided, further, that in
no event shall the total liability of any Stockholder under this Section 7.1
exceed the value of the Common Stock received by such Stockholder pursuant to
the Plan of Liquidation, which value shall be conclusively deemed for purposes
of this Agreement to be equal to the number of shares of Common Stock received
by such Stockholder pursuant to the Plan of Liquidation multiplied by the
"Average Tracor Trading Price" as defined in, and as determined in accordance
with, the Acquisition Agreement. The Custodian may rely upon and act upon any
instrument received by it pursuant to the provisions of this Agreement that it
reasonably believes to be genuine and in conformity with the requirements of
this Agreement. The obligations to indemnify the Custodian shall survive the
termination of this Agreement.
7.2 The Custodian may resign from its duties hereunder by giving prior
written notice to each Stockholder not less than 60 days prior to the effective
date of such resignation. In such event, the Stockholders shall appoint a
substitute Custodian who shall be selected by holders of a majority of the
Shares then on deposit hereunder.
ARTICLE VIII.
PROVISION WITH RESPECT TO THE
MORGAN STANLEY INDEMNIFICATION AGREEMENT
8.1 In consideration for the services provided by Morgan Stanley under
the Engagement Letter including, without limitation, the fairness opinions dated
as of March 6, 1996, which were delivered to the board of directors of Westmark
in connection with the board's approval of the Transaction and the Acquisition
Agreement, each Stockholder, severally, hereby agrees to assume and be
responsible for such Stockholder's proportionate share of the total liability
and other obligations of Westmark under the MS Indemnity Agreement, such
proportionate share to be based upon the number of shares of Common Stock
received by such Stockholder pursuant to the Plan of Liquidation in relation to
the total number of shares of Common Stock received by Westmark in the
Transaction; provided, however, that (i) in no event shall the liability of any
Stockholder under this Section 8.1 exceed the value of the Common Stock received
by such Stockholder pursuant to the Plan of Liquidation, which value shall be
conclusively deemed for purposes of this Agreement to be equal to the number of
shares of Common Stock received by such Stockholder pursuant to the Plan of
Liquidation multiplied by the "Average Tracor Trading Price" as defined in, and
as determined in accordance with, the Acquisition Agreement, and (ii) the
proportionate liability of MBC under this Section 8.1 shall be based upon the
number of shares of Common Stock received by MBC and the partners of MBC to the
extent of the Shares received by such partners in respect of the approximately
6.2 million shares of Westmark common stock distributed to such partners as a
partnership distribution by MBC immediately prior to the closing of the
Transaction (the "MBC DISTRIBUTION"), but the total liability of MBC under the
preceding clause (i) of this proviso shall be based upon the value of the number
of shares of Common Stock actually received by MBC pursuant to the Plan of
Liquidation (which will not include shares of Common Stock received by MBC's
partners in respect of the shares of Westmark common stock received by such
partners in the MBC Distribution).
8.2 Each Stockholder, severally, agrees that no "Indemnified Person," as
defined in the MS Indemnification Agreement, shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to such Stockholder for or
in connection with the "Engagement," as defined in the MS Indemnity Agreement,
except for any such liability for losses, claims, damages or liabilities
incurred by Westmark or such Stockholder that are finally judicially determined
to have resulted from the bad faith or gross negligence of such Indemnified
Person.
8.3 The agreements made by the Stockholders in this Article VIII are for
the benefit of Morgan Stanley, shall not be modified or amended without in each
instance the prior written consent of Morgan Stanley, and shall remain in full
force and effect regardless of the termination of any other provision of this
Agreement. Morgan Stanley and each Indemnified Person shall be entitled to
enforce the provisions of this Article VIII as if it were a party to this
Agreement.
8.4 The provisions of this Article VIII shall in no way diminish or
affect the liability of any other shareholder or former shareholder of Westmark
for the liabilities of Westmark under Texas law following the dissolution of
Westmark pursuant to the Plan of Liquidation.
ARTICLE IX.
MISCELLANEOUS
9.1 AMENDMENT. Except as otherwise provided in Section 8.3 hereof, any
provision of this Agreement may be altered, supplemented, amended or waived by
written notice to the Custodian given jointly by the Stockholders, but the
duties and responsibilities of the Custodian may not be increased or modified
without its prior written consent.
9.2 SPECIFIC PERFORMANCE. The Stockholders recognize that the
obligations imposed on them in this Agreement are special, unique and of
extraordinary character, and that in the event of breach by any Stockholder,
damages will be an insufficient remedy. Consequently, it is agreed that each
Stockholder may have specific performance and injunctive relief (in addition to
damages) as a remedy for the enforcement hereof, without proving damages. Each
Stockholder shall have the unconditional right to institute suit for the
enforcement of this Agreement. The Custodian shall have no duty or obligation to
seek enforcement of this Agreement against any Stockholder who breaches this
Agreement, but the Custodian shall notify all Stockholders of any breach of this
Agreement by any Stockholder of which the Custodian has actual knowledge.
9.3 ASSIGNMENT. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors and assigns of
the parties hereto. No party to this Agreement may sell, transfer or assign its
rights, interests or obligations under this Agreement, provided that the rights
and obligations of the Custodian may be assigned to any substitute Custodian.
9.4 NOTICES. Any and all notices, designations, consents, offers,
acceptances or other communications provided for herein shall be given in
writing by overnight courier, telegram or telecopy which shall be addressed, or
sent, to the respective addresses as follows (or such other address as the
Custodian or any Stockholder may specify to the Custodian and all Stockholders
by notice as provided herein):
If to the Custodian:
Mason Best Company, L.P.
2121 San Jacinto Street, Suite 1000
Dallas, Texas 75205
Attention: M. Philip Guthrie
Telecopy: (214) 953-0720
Telephone: (214) 754-2690
With a copy to:
J. Stephen Hatfield, P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201-4675
Telecopy: (214) 969-4343
Telephone: (214) 969-2800
If to any Stockholder:
To such address or telecopy number of such Stockholder as is set
forth on the signature pages hereto or as such Stockholder provides
by notice to the Custodian.
All notices shall be deemed effective and received (i) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified above or on
the signature pages hereof and receipt thereof is confirmed, (ii) if given by
overnight courier, on the business day immediately following the day on which
such notice is delivered to a reputable overnight courier service, or (iii) if
given by telegram, when such notice is delivered at the address specified above.
9.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and each counterpart shall be deemed to be an original and which
counterparts together shall constitute one and the same agreement of the parties
hereto.
9.6 SECTION HEADINGS. Headings contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provisions hereof.
9.7 CHOICE OF LAW. This Agreement shall be governed by the internal laws
of the State of Texas without regard to the principles of conflicts of laws
thereof.
9.8 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect thereto.
9.9 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
9.10 NO THIRD-PARTY BENEFIT EXCEPT FOR ARTICLE VIII. Except as expressly
provided otherwise in Section 8.3 hereof, nothing in this Agreement shall be
deemed to create any right or obligation in any person or entity not a party
hereto, and this Agreement shall not be construed in any respect to be a
contract or agreement in whole or in part for the benefit of or binding upon any
Person not a party hereto.
9.11 EXPENSES. Each party hereto will pay all of its expenses in
connection with the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of its counsel and other advisors (and
each Stockholder acknowledges that it is relying on its own separate legal
counsel and not on legal counsel to Westmark or the Custodian), except that each
Stockholder agrees to reimburse the Custodian for all out of pocket expenses
incurred in connection with the performance of its duties and obligations under
this Agreement. The Custodian agrees to perform the services of the Custodian
hereunder without charge in consideration of the liability and indemnification
provisions in Article VII hereof and the payments to be made to MBC by Westmark
under the Administrative Services Agreement between MBC and Westmark; provided,
however, that all out-of-pocket expenses incurred by the Custodian in the
performance of such services shall be reimbursed by the Stockholder causing such
expense to be incurred or, for general expenses, by all Stockholders on a pro
rata basis based on the number of Shares deposited hereunder (except that, as to
MBC, the number of shares deposited hereunder for purposes of this expense
reimbursement provision shall be deemed to include the number of Shares received
by partners of MBC in respect of the shares of Westmark common stock distributed
to such partners by MBC as described in Section 8.1 hereof).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date indicated in the first paragraph hereof.
Date:______________ MASON BEST COMPANY, L.P.
No. of Shares Owned:_______
2121 SAN JACINTO STREET, SUITE 1000 By:___________________________
DALLAS, TX 75201 Name:______________________
Title:_____________________
CHRYSLER CORPORATION MASTER
Date:______________ RETIREMENT PLAN
No. of Shares Owned:_______
PENSION FUND INVESTMENTS By:___________________________
CHRYSLER CORPORATION Name:______________________
12000 CHRYSLER DRIVE, CIMS 416-17-14 Title:_____________________
HIGHLAND PARK, MI 48288-1919
TRUSTEES OF GENERAL ELECTRIC
Date:______________ PENSION TRUST
No. of Shares Owned:_______
3003 SUMMER STREET By:___________________________
STAMFORD, CT 06905 Name:______________________
Title:_____________________
Date:______________ UNION SEAS, INC.
No. of Shares Owned:_______
C/O COUTTS & CO. (BAHAMAS) LTD. By:___________________________
WEST BAY STREET Name:______________________
NASSAU, NEW PROVIDENCE Title:_____________________
BAHAMAS
TANKS CONSOLIDATED
Date:______________ INVESTMENTS LIMITED
No. of Shares Owned:_______
C/O SQUIRE, SANDERS & DEMPSEY By:___________________________
COUNSELLORS AT LAW Name:______________________
520 MADISON AVENUE Title:_____________________
NEW YORK, NY 10022
AMERICAN GENERAL LIFE & ACCIDENT
Date:______________ INSURANCE COMPANY
(on behalf of itself and as
successor in interest to Life &
Casualty Insurance Co. of
Tennessee)
No. of Shares Owned:
INV DEPT A3701 By:___________________________
2929 ALLEN PARKWAY Name:______________________
HOUSTON, TX 77019-2119 Title:_____________________
Date:______________ BANKAMERICA CAPITAL CORPORATION
No. of Shares Owned:_______
By:___________________________
950 TOWER LANE, SUITE 700 Name:______________________
FOSTER CITY, CA 94404 Title:_____________________
Date:______________ MERRILL LYNCH IBK POSITIONS, INC.
No. of Shares Owned:_______
MERRILL LYNCH INVESTMENT BANKING By:___________________________
WORLD FINANCIAL CENTER Name:______________________
NORTH TOWER, 27TH FLOOR Title:_____________________
NEW YORK, NY 10261
Date:______________ CLUB CORPORATION OF AMERICA
No. of Shares Owned:_______
3030 LBJ FREEWAY By:___________________________
DALLAS, TX 75381 Name:______________________
Title:_____________________
Date:______________ TEMPLE-INLAND MASTER RETIREMENT
No. of Shares Owned:_______ TRUST
C/O STATE STREET BANK & TRUST COMPANY By:___________________________
ONE ENTERPRISE DRIVE Name:______________________
NORTH QUINCEY, MA 02171 Title:_____________________
Date:______________ JESSICA EQUITIES LIMITED
No. of Shares Owned:_______
c/o General Electric Pension Trust By:___________________________
3003 SUMMER STREET Name:______________________
STANFORD, CT 06905 Title:_____________________
Date:______________ MASON BEST COMPANY, L.P., as
Custodian
2121 SAN JACINTO STREET By:___________________________
SUITE 1000 Name:______________________
DALLAS, TX 75201 Title:_____________________
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated effective as
of June 13, 1996, is made by and between TRACOR, INC., a Delaware corporation
(the "Company"), and the shareholders listed on Schedule 1 hereto and signatory
hereto (the "Shareholders").
R E C I T A L S:
1. The Company has entered into an Acquisition Agreement, between the
Company and Westmark Systems, Inc., a Texas corporation ("Westmark"), dated
March 9, 1996, as amended (the "Acquisition Agreement"), pursuant to which the
Company has acquired substantially all of the assets of Westmark in exchange for
Common Stock (hereinafter defined) of the Company and certain other
considerations.
2. Pursuant to the Plan of Liquidation of Westmark Systems, Inc. (the
"Plan of Liquidation"), Westmark dissolved and, after Westmark's debt,
liabilities and obligations were paid, satisfied or discharged or adequate
provision had been made for payment, satisfaction or discharge thereof,
distributed its remaining assets to its shareholders entitled thereto.
3. In order to induce Westmark to enter into the Acquisition Agreement,
the Company agreed to register the shares of Common Stock to be received by
Westmark under the Acquisition Agreement and distributed to its shareholders
pursuant to the Plan of Liquidation, on the terms and conditions stated in this
Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Shareholders hereby agree as follows:
X.
DEFINITIONS
10.1 INTERPRETATION. Unless otherwise specified or the context otherwise
requires, (a) each term defined below shall have the meaning set forth opposite
such term in this Article I wherever it occurs in initially capitalized form in
this document, (b) words denoting the singular number shall include the plural
number and vice versa, and words denoting one gender shall include the other
gender, (c) all section and article references in this Agreement are to the
respective section and article of this Agreement, as the same may be amended,
waived or modified from time to time, and (d) the terms "hereof," "hereto,"
"herein" and "hereunder," when used in this Agreement, refer to this Agreement.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the provisions hereof.
10.2 AFFILIATE. "Affiliate" shall, when used with respect to a specified
Person, mean any other Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person specified. For purposes of the foregoing, the term "control" (including
the terms "controlling," "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
10.3 COMMON STOCK. "Common Stock" shall mean the class of capital stock of
the Company designated as the Common Stock, par value $.01 per share.
10.4 CURRENT MARKET VALUE. "Current Market Value" shall mean, on any date,
with respect to any security,
(i) if on such date such security is listed or admitted to trading
on any national securities exchange or quoted on the National Association
of Securities Dealers, Inc. National Market System (the "NASDAQ") or
otherwise traded in the over-the-counter market in the United States, then
"Current Market Value" shall mean the average of the Quoted Prices for
such security for the five consecutive Trading Days selected by the
Company commencing not more than 20 Trading Days before, and ending not
later than, such date; or
(ii) if on such date such security is not listed or admitted to
trading on any national securities exchange or quoted on the NASDAQ or
otherwise traded in the over-the-counter market in the United States, then
"Current Market Value" shall mean the amount that a willing buyer would
pay a willing seller in an arm's length transaction on such date (neither
being under any compulsion to buy or sell) for such security as determined
as of such date, as set forth in a value report by a Financial Expert
using one or more valuation methods that such Financial Expert, in its
best professional judgment, determines to be most appropriate.
If Current Market Value is to be determined for purposes of allocating
reductions in securities to be offered, the Financial Expert shall be the
managing underwriter of the offering.
10.5 EFFECTIVE DATE. "Effective Date" shall mean the "Closing Date" of the
transactions contemplated by the Acquisition Agreement (as defined therein).
10.6 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
10.7 EXISTING REGISTRATION RIGHTS AGREEMENTS. "Existing Registration
Rights Agreements" shall mean (i) that certain Registration Rights Agreement,
dated as of December 20, 1991, by and among the Company, The Toronto-Dominion
Bank Trust Company, a New York trust company, as agent under the New Credit
Agreement (as defined therein), the Official Committee (as defined therein), and
Westmark, and (ii) the Warrant Agreement, dated as of December 20, 1991, between
the Company and Ameritrust Company National Association, as warrant agent,
relating to the Series A Warrants of the Company, in each case as may be
amended, modified, restated, or supplemented and be in effect from time to time.
10.8 EXISTING WESTMARK REGISTRATION RIGHTS AGREEMENTS. "Existing Westmark
Registration Rights Agreements" shall mean (i) the Registration Rights
Agreement, dated as of December 20, 1991, by and among the Company, The
Toronto-Dominion Bank Trust Company, a New York trust company, as agent under
the New Credit Agreement (as defined therein), the Official Committee (as
defined therein), and Westmark, (ii) the Warrant Agreement, and (iii) the
Registration Rights Agreement, dated effective as of February 15, 1995, between
the Company and Westmark.
10.9 FINANCIAL EXPERT. "Financial Expert" shall mean any broker or dealer
registered as such under the Exchange Act that conducts an investment banking
business of nationally recognized standing.
10.10 GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean the
United States of America, any state or other political subdivision thereof or
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government within any such
jurisdiction.
10.11 HOLDER. "Holder" shall mean a holder of Registrable Securities.
10.12 PERSON. "Person" shall mean an individual, corporation (including a
business trust), joint stock company, partnership, joint venture, trust, estate,
limited liability company, unincorporated association, unincorporated
organization, Governmental Authority or any other entity.
10.13 QUOTED PRICE. "Quoted Price" shall mean, on any Trading Day, with
respect to any security, the last reported sales price regular way or, in case
no such reported sale takes place on such Trading Day, the average of the
reported closing bid and asked prices regular way, on the NASDAQ or, if such
security is not listed or admitted to trading or quoted on the NASDAQ, the
average of the closing bid and asked prices in the over-the-counter market in
the United States as furnished by any New York Stock Exchange member firm that
shall be selected from time to time by the Company for that purpose. If the
Common Stock becomes listed or admitted to trading on a national securities
exchange, then the Quoted Price shall be based on the prices quoted on such
national securities exchange.
10.14 REGISTERED RESALE OFFERING. "Registered Resale Offering" shall mean
the registration for resale pursuant to a reoffer prospectus to be included in
the Company's Registration Statement on Form S-4/S-3 to be filed in connection
with the transactions contemplated by the Acquisition Agreement of Common Stock
distributed to the shareholders of Westmark pursuant to the Plan of Liquidation.
10.15 REGISTRABLE SECURITIES. "Registrable Securities" shall mean (i) the
shares of Common Stock issued to Westmark pursuant to the Acquisition Agreement
and distributed to the shareholders of Westmark pursuant to the Plan of
Liquidation, and (ii) shares of capital stock issued or issuable (by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or otherwise) in respect of the
foregoing. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when they have been transferred or sold;
PROVIDED, HOWEVER, that such securities shall nevertheless remain Registrable
Securities if such transfer occurs by operation of law or by dividend,
liquidation, or other similar distribution, descent, bequest or inheritance, and
without the payment of consideration.
10.16 SEC. "SEC" shall mean the Securities and Exchange Commission.
10.17 SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
10.18 SHARES. "Shares" shall mean the shares (subject to adjustment as
provided in the Acquisition Agreement) of Common Stock issued by the Company to
Westmark under the Acquisition Agreement and distributed to the shareholders of
Westmark pursuant to the Plan of Liquidation.
10.19 SHELF REGISTRATION. "Shelf Registration" shall mean a registration
of an offering to be made on a continuous or delayed basis in the future
pursuant to Rule 415 (or any rule or regulation modifying or succeeding Rule
415) under the Securities Act.
10.20 TRADING DAY. "Trading Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday, other than any day on which securities are not
traded on the applicable securities exchange or in the applicable securities
market.
10.21 WARRANT AGREEMENT. "Warrant Agreement" shall mean the Warrant
Agreement, dated as of December 20, 1991, between the Company and the Company,
as warrant agent, providing for the issuance of the Series B Warrants and Series
C Warrants, as the same may be amended, modified, restated or supplemented and
be in effect from time to time.
XI.
REGISTRATION RIGHTS
11.1 REGISTRATION ON DEMAND BY HOLDERS. (1) From and after the Effective
Date, upon written notice to the Company from Holders (holding at least
2,500,000 shares of Registrable Securities) requesting that the Company effect
pursuant to this Section 2.1 the registration of such Holders' Registrable
Securities under the Securities Act, the Company (i) shall notify any other
Holders (at least 30 days prior to the proposed filing of any registration
statement), such notice to state the identity of the Holders requesting
registration and the number of Registrable Securities proposed to be sold
thereby, and (ii) take all appropriate action, on a reasonably timely basis, to
file with the SEC a registration statement on the appropriate form covering,
subject to Section 2.1(c), all Registrable Securities specified in such demand
and by such other Holders (by notice given to the Company within 20 days after
the date the Company notifies them of such demand). The Company shall be
obligated to file no more than three registration statements pursuant to this
Section 2.1(a); provided, however, that the Registered Resale Offering shall be
considered as one of such registrations. At the election of Holders of a
majority of the Registrable Securities to be included in any registration
statement pursuant to this Section 2.1(a), such registration may be an
underwritten, best efforts or other form of offering; provided, however, that
any such registration may not be a registration of an offering to be made on a
delayed or continuous basis pursuant to Rule 415 (or any rule or regulation
modifying or succeeding Rule 415) under the Securities Act.
(2) Notwithstanding any other provision of this Section 2.1, (i) no
written notice for a demand registration under this Section 2.1 delivered by any
Holder shall be effective if delivered:
(A) within the period of 180 days after the Effective Date (other
than with respect to the Registered Resale Offering); or
(B) within the period of 270 days after the filing of any
registration statement pursuant to Section 2.1 hereof if such registration
statement is deemed not to have been filed or effected by reason of the
Holders electing to pay all expenses of such registration as contemplated
by Section 2.2(a)(i); or
(C) with respect to the third demand hereunder, prior to eighteen
(18) months after the effective date of the second demand registration
under this Section 2.1; or
(D) within the period of 120 days prior to the planned filing date
of any registration statement authorized by the Board of Directors of the
Company and intended to be filed by the Company; PROVIDED, that the
Company may not delay any demand hereunder pursuant to this Section
2.1(b)(C) for more than two (2) consecutive planned filings; or
(E) within the period of 180 days after the effective date of any
registration statement covering securities to be offered for the account
of the Company; and
(ii) the Company may, at its option, defer giving notice to other Holders of a
request for any demand registration made pursuant to Section 2.1(a) and the
filing of such registration for up to 120 days from the receipt of such request
if the Board of Directors of the Company has concluded that, in light of the
circumstances, it is in the best interests of the Company for such registration
to be delayed; PROVIDED, HOWEVER, that in no event may the Company delay the
filing of a registration statement following a demand by Holders pursuant to
this Agreement by reason of clauses (i)(B), (i)(C), (i)(D), (i)(E) and (ii) of
this Section 2.1(b), or any combination of such clauses, for more than 420
consecutive days after the date the Holders deliver a demand registration notice
to the Company pursuant to Section 2.1(a) hereof.
(3) If any registration pursuant to Section 2.1(a) is an underwritten
offering and the managing underwriter for such offering notifies the Company
that, in good faith, (x) such underwriter is able to proceed with the proposed
offering without materially impairing the per security proceeds thereof only if
the number of securities offered is reduced, or (y) the number of securities to
be registered is too large a number to be reasonably sold, then reductions shall
be made in the number of securities to be registered as follows:
(i) first, from those securities to be sold on behalf of Persons
other than (A) the Company, (B) Persons who have piggyback registration
rights under the Existing Registration Rights Agreements, and (C) the
Holders, according to such priorities as the Company may have agreed with
such Persons, until such securities have, if necessary, been reduced to
zero,
(ii) second, from those securities to be sold on behalf of the
Company, if and to the extent necessary, until such securities have been
reduced to zero,
(iii) third, from those securities to be sold on behalf of Persons
who have piggyback registration rights under the Existing Registration
Rights Agreements, if and to the extent necessary, until such securities
have been reduced to the smallest percentage of the aggregate Current
Market Value of all securities to be registered permitted by the Existing
Registration Rights Agreements; and
(iv) last, with respect to securities requested to be included in
such registration by the Holders pursuant to Section 2.1(a), pro rata
among the Holders based on the securities that each such Holder has so
requested to be included in such registration, if and to the extent
necessary.
11.2 GENERAL PROVISIONS RESPECTING DEMAND REGISTRATIONS. (1) Any
registration initiated by the Holders as a demand registration pursuant to
Section 2.1(a), shall not, for purposes of Section 2.1(a), be deemed to have
been filed or effected pursuant thereto:
(i) unless and until such registration shall have been filed with
the SEC and become effective; provided that a registration which does not
become effective after the Company has filed a registration statement with
respect thereto solely by reason of the refusal of the Holders to proceed
shall be deemed to have been effected by the Company at the request of
such Holders; provided further that, in respect of the Registered Resale
Offering, the registration shall be deemed to have been effected in the
event Holders do not include a minimum of 1,500,000 shares of Common Stock
in such Registered Resale Offering; provided further that, in respect of
any registration other than the Registered Resale Offering, if the Holders
elect to pay all expenses of such registration, such registration shall
not be deemed to have been filed or effected for purposes of Section
2.1(a) hereof,
(ii) if after it has become effective such registration is
interfered with by any stop order, injunction or other order or
requirement of the SEC or other Governmental Authority for any reason
other than in connection with a misrepresentation or an omission by the
Holders, or
(iii) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied other than solely by reason of some act or
omission by such Holders.
(2) If the demand registration is in the form of an underwritten offering,
the Company will select and obtain the investment banker or bankers and manager
or managers that will administer the offering; PROVIDED, HOWEVER, that such
investment bankers and managers must be reasonably acceptable to the Holders of
a majority of the Registrable Securities to be registered.
(3) With respect to any request for a demand registration pursuant to
Section 2.1(a), the Company may, at its option, by notice given to all Holders
entitled to participate in such registration, elect to include shares of Common
Stock, to be sold for its own account, subject to the reduction specified in
Section 2.1(c).
11.3 PIGGYBACK RIGHTS OF HOLDERS. (1) If at any time or times after the
Effective Date, the Company intends to file a registration statement on Form
S-1, S-2 or S-3 (or other appropriate form) for the registration of equity
securities of the Company with the SEC (other than a registration pursuant to
Section 2.1, a registration on Form S-4 (or any successor form), a registration
pursuant to an employee benefit plan or a registration of securities on a form
which does not permit the inclusion of securities sold in a secondary offering),
then the Company shall notify each Holder at least 30 days prior to each such
filing of the Company's intention to file such a registration statement. Such
notice ("Piggyback Notice") shall state the amount and type of securities
proposed to be registered thereby.
(2) Upon receipt of any Piggyback Notice, each Holder shall have the right
to notify the Company of its desire to have all or a portion of its Registrable
Securities included in the registration statement, by giving to the Company
within 20 days after receipt of such Piggyback Notice a written notice from such
Holder ("Registration Request") stating: (i) the identity of the Holder; and
(ii) the number of shares of Registrable Securities which such Holder desires to
be included in the registration statement.
(3) Subject to the reductions specified below, the Company shall cause to
be included in the registration statement, pro rata among the Holders based on
the securities that each such Holder has requested to be included in such
registration, those Registrable Securities of Holders (the "Requesting Holders")
who have requested their Registrable Securities to be included pursuant to
Registration Requests, provided that the aggregate of all Registrable Securities
to be included in any registration statement pursuant to all Registration
Requests given to the Company in accordance with this Agreement shall be limited
as follows:
(i) for any registration statement initiated by the Company for its own
account, the Company shall be obligated to include in the
registration statement Registrable Securities of Requesting Holders
only up to such number of shares equal in Current Market Value to
20% of the Current Market Value of all securities proposed to be
registered; and
(ii) for any registration statement other than a registration statement
initiated by the Company for its own account (or by a Holder
pursuant to Section 2.1 hereof), the Company shall be obligated to
include in such registration statement Registerable Securities of
Requesting Holders only up to the number of shares equal in Current
Market Value to 30% of the Current Market Value of all securities
proposed to be registered.
(4) The Holders shall be entitled, subject to the reductions specified
below, to participate in an unlimited number of registrations pursuant to
Registration Requests given in response to Piggyback Notices.
(5) If any registration pursuant to Section 2.3(a) (other than a
registration initiated by the Company or pursuant to Section 2.1(a)) is not a
Shelf Registration and the managing underwriter for such offering notifies the
Company that, in good faith, (x) such underwriter is able to proceed with the
proposed offering without materially impairing the per security proceeds thereof
only if the number of securities offered is reduced, or (y) the number of
securities to be registered is too large a number to be reasonably sold, then
reductions shall be made in the number of securities to be registered as
follows:
(i) first, from those securities to be sold on behalf of Persons
other than (A) the Persons initiating such registration statement, (B) the
Company, (C) Persons who have piggyback registration rights under the
Existing Registration Rights Agreements, and (D) the Holders, according to
such priorities as the Company may have agreed with such other Persons,
until such securities have, if necessary, been reduced to zero,
(ii) second, in equal portions from those securities to be sold on
behalf of the Company, on the one hand, and from those securities
requested to be included in such registration by the Holders (pro rata
among the Holders based on the securities that each such Holder has
requested to be included in such registration), on the other hand, if and
to the extent necessary, until such securities have been reduced to zero,
and
(iii) last, with respect to securities requested to be included in such
registration by the Persons initiating such registration and Persons who
have piggyback registration rights under the Existing Registration Rights
Agreements if and to the extent necessary, according to such priorities as
the Company may have agreed with such Persons.
(6) If any registration pursuant to Section 2.3(a) initiated by the
Company for its own account is not a Shelf Registration and the managing
underwriter for such offering notifies the Company that, in good faith, (x) such
underwriter is able to proceed with the proposed offering without materially
impairing the per security proceeds thereof only if the number of securities
offered is reduced, or (y) the number of securities to be registered is too
large a number to be reasonably sold, then reductions shall be made in the
number of securities to be registered as follows:
(i) first, from those securities to be sold on behalf of Persons
other than (A) the Company, (B) Persons who have piggyback registration
rights under the Existing Registration Rights Agreements, and (C) the
Holders, according to such priorities as the Company may have agreed with
such other Persons, until such securities have, if necessary, been reduced
to zero,
(ii) second, from those securities requested to be included in such
registration by the Holders, pro rata among such Holders based on the
securities that each such Holder has requested to be included in such
registration, if and to the extent necessary, until such securities have
been reduced to zero, and
(iii) last, with respect to securities intended to be included in such
registration by the Company and the Persons who have piggyback
registration rights under the Existing Registration Rights Agreements, if
and to the extent necessary, according to such priorities as the Company
may have agreed with such Persons.
(7) The Company may in its discretion withdraw any registration statement
filed pursuant to this Section 2.3 subsequent to its filing and prior to its
effective date without liability to the Holders other than to pay expenses
pursuant to Section 2.6; but no such withdrawal shall preclude an immediate or
subsequent request for registration pursuant to Section 2.1.
(8) No registration of Registrable Securities effected pursuant to a
request or requests by Holders pursuant to this Section 2.3 shall be deemed to
have been effected pursuant to Section 2.1.
11.4 INDEMNITY.
(1) The Company will, and hereby does, indemnify, to the extent permitted
by law, each Holder, its officers and directors, if any, and each Person, if
any, who controls such Holder within the meaning of Section 15 of the Securities
Act, against all losses, claims, damages, liabilities (or proceedings in respect
thereof) and expenses (under the Securities Act or common law or otherwise),
joint or several, caused by any untrue statement or alleged untrue statement of
a material fact contained in any registration statement (as declared effective)
or prospectus filed under Rule 424(b) under the Securities Act (and as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as:
(i) such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses are caused by any untrue statement or alleged
untrue statement made in reliance on or in conformity with any information
furnished in writing to the Company by such Holder expressly for use
therein, or
(ii) in the case of any registration that is not an underwritten
offering, such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses result from such Holder selling Registrable
Securities to a Person asserting the existence of an untrue statement or
alleged omission in a preliminary prospectus and to whom there was not
given or sent, at or prior to the written confirmation of the sale of such
Registrable Securities, a copy of the final prospectus or the final
prospectus as then amended or supplemented but only if such statement or
omission was corrected in such final prospectus or amended or supplemented
final prospectus prior to such written confirmation and such Holder was
given notice, prior to such written confirmation, of the availability of,
or that the Company was preparing, such final prospectus or amended or
supplemented final prospectus.
If the offering pursuant to any registration statement provided for under this
Agreement is made through underwriters, no action or failure to act on the part
of such underwriters (whether or not such underwriter is an Affiliate of any
Holder) shall affect the Company's obligations to indemnify any Holder or any
other Person pursuant to the preceding sentence.
If the offering pursuant to any registration statement provided for under
this Agreement is made through underwriters, the Company agrees to enter into an
underwriting agreement in customary form with such underwriters (which shall
contain customary indemnification and contribution provisions for the benefit of
such underwriters, their officers and directors, if any, and each Person, if
any, who controls such underwriters within the meaning of Section 15 of the
Securities Act; PROVIDED, HOWEVER, that the Company shall not be required to
indemnify any such underwriter, or any officer or director of such underwriter
or any Person who controls such underwriter within the meaning of Section 15 of
the Securities Act, to the extent that the loss, claim, damage, liability (or
proceedings in respect thereof) or expense for which indemnification is claimed
results from such underwriter's failure to send or give at or prior to the
written confirmation of the sale of Registrable Securities, a copy of the final
prospectus or the final prospectus as then amended or supplemented to a Person
asserting the existence of an untrue statement or alleged untrue statement or
omission or alleged omission in a preliminary prospectus if such statement or
omission was corrected in such final prospectus or amended or supplemented final
prospectus prior to such written confirmation and the underwriter was given
notice, prior to such written confirmation, of the availability of such final
prospectus or amended or supplemented final prospectus).
In connection with any registration statement in which a Holder of
Registrable Securities is participating, each such Holder will indemnify, to the
extent permitted by law, the Company, its officers and directors and each
Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages, liabilities (or proceedings
in respect thereof) and expenses (under the Securities Act or common law or
otherwise) resulting from any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact required to
be stated in the registration statement (as declared effective) or prospectus
filed under Rule 424(b) under the Securities Act or preliminary prospectus or
any amendment thereof or supplement thereto, or necessary to make the statements
therein not misleading, but only to the extent that:
(i) such untrue statement is made in reliance on or in conformity
with any information furnished in writing by such Holder expressly for use
therein, or
(ii) in the case of any registration that is not an underwritten
offering, such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses resulting from such Holder selling
Registrable Securities to a Person asserting the existence of an untrue
statement or alleged untrue statement or omission or alleged omission in a
preliminary prospectus and to whom there was not given or sent, at or
prior to the written confirmation of the sale of such Registrable
Securities, a copy of the final prospectus or of the final prospectus as
then amended or supplemented but only if such statement or omission was
corrected in such final prospectus or amended or supplemented final
prospectus prior to such written confirmation and such Holder was given
notice, prior to such written confirmation, of the availability of, or
that the Company was preparing, such final prospectus or amended or
supplemented final prospectus; PROVIDED, HOWEVER, that such Holder's
obligations under clause (ii) of this Section 2.4(a) shall be limited to
an amount equal to the proceeds to such Holder of the Registrable
Securities sold pursuant to such registration statement.
Any Person entitled to indemnification under the provisions of this
Section 2.4(a) shall (i) give prompt notice to the indemnifying party of any
claim with respect to which it seeks indemnification, and (ii) unless in the
opinion of counsel reasonably satisfactory to the indemnifying party a conflict
of interest between such indemnified and indemnifying parties may exist in
respect of such claim, permit such indemnifying party to assume the defense of
such claim, with counsel reasonably satisfactory to the indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party); and if such defense is so assumed, such indemnifying party
shall not enter into any settlement without the consent of the indemnified party
if such settlement attributes liability to the indemnified party and such
indemnifying party shall not be subject to any liability for any settlement made
without its consent (which shall not be unreasonably withheld); and any
underwriting agreement entered into with respect to any registration statement
provided for under this Agreement shall so provide. In the event an indemnifying
party shall not be entitled, or elects not, to assume the defense of a claim,
such indemnifying party shall not be obligated to pay the fees and expenses of
more than one counsel or firm of counsel for all parties indemnified by such
indemnifying party in respect of such claim. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of a
participating Holder, its officers, directors or any Person, if any, who
controls such Holder as aforesaid, and shall survive the transfer of such
securities by such Holder.
(2) If for any reason the foregoing indemnity is unavailable, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other but also the relative fault of
the indemnifying party and the indemnified party as well as any other relevant
equitable considerations. Notwithstanding the foregoing, (x) no Holder shall be
required to contribute any amount in excess of the amount such Holder would have
been required to pay to an indemnified party if the indemnity under Section
2.4(a) was available, and (y) no underwriter, if any, shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The obligation of any underwriters to contribute
pursuant to this Section 2.4 shall be several in proportion to their respective
underwriting commitments and not joint.
(3) An indemnifying party shall make payments of all amounts required to
be made pursuant to the foregoing provisions of this Section 2.4 to or for the
account of the indemnified party from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due and payable.
11.5 REGISTRATION PROCEDURES.
(1) Whenever the Holders have requested that any Registrable Securities be
registered pursuant to this Article II, subject to Section 2.1(c), the Company
will use its best efforts to effect the registration in furtherance of the sale
of such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any such
request the Company will as expeditiously as possible:
(i) in connection with a request pursuant to Section 2.1, and
subject to Section 2.1(b), prepare and file with the SEC within 60 days,
and use its best efforts so to prepare and file within 45 days, after
receipt of a request to file, a registration statement on any form for
which the Company then qualifies or which counsel for the Company shall
deem appropriate and which form shall be available for the sale of the
Registrable Securities in accordance with the intended method of
distribution thereof, and use its best efforts to cause such registration
statement to become effective promptly thereafter; PROVIDED, HOWEVER, that
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will (A) furnish to one counsel selected
by the Holders of a majority of the Registrable Securities being sold,
copies of all such documents proposed to be filed, which documents will be
subject to the review and reasonable approval of such counsel, and (B)
notify each seller of Registrable Securities of any stop order issued or
threatened by the SEC and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered;
(ii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period (not to exceed 90 days) which will terminate when
all Registrable Securities covered by such registration statement have
been sold, and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement;
(iii) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus
included in such registration statement (including each preliminary
prospectus), each amendment and supplement thereto and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller; PROVIDED, HOWEVER, that the
Company will not be required to (A) qualify generally to do business or
subject itself to taxation in any jurisdiction where it would not
otherwise be required to qualify or be subject but for this subparagraph
(iv), or (B) consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause the Registrable Securities covered
by such registration statement to be registered with or approved by such
other Governmental Authorities as may be reasonably necessary by virtue of
the business and operations of the Company to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities;
(vi) (A) notify each seller of such Registrable Securities, at any
time when a prospectus relating to the Registrable Securities being sold
is required to be delivered under the Securities Act, of the happening of
any event as a result of which the prospectus included in such
registration statement contains an untrue statement of material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (B) prepare a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(vii) (A) use its best efforts to cause all Registrable Securities
to be listed on each securities exchange or quotation system on which
similar securities issued by the Company are then listed or quoted, and
(b) unless the same already exists, provide a transfer agent, registrar
and CUSIP number for all Registrable Securities not later than the
effective date of the Registration Statement;
(viii) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions
as the Holders of a majority of the Registrable Securities being sold or
any managing underwriter of such offering reasonably requests in order to
expedite or facilitate the disposition of such Registrable Securities;
(ix) make available for inspection at the offices of the Company
during regular business hours by any seller of Registrable Securities, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, such financial and other records, pertinent
corporate documents and properties of the Company as shall be reasonably
requested by them and be necessary to enable them to exercise their due
diligence responsibility;
(x) obtain "cold comfort" letters and updates thereof from the
Company's independent public accountants and an opinion from the Company's
counsel in customary form and covering such matters of the type
customarily covered by "cold comfort" letters and opinions of counsel,
respectively, as the Holders of a majority of the Registrable Securities
being sold reasonably request;
(xi) refrain (and will cause the subsidiaries and the Affiliates it
controls to refrain) from selling any Common Stock or any securities
convertible into Common Stock for such period (not to exceed 90 days) as
may be reasonably requested by any managing underwriter of such offering;
(xii) use its best efforts to otherwise comply with all applicable
rules and regulations of the SEC; and
(xiii) in the event the registration relates to an underwritten
offer of Registrable Securities, reasonably support the marketing efforts
undertaken in connection therewith, including participation in any "road
shows" reasonably requested by the underwriters.
(2) In connection with any registration effected pursuant to this
Article II, the Holders who have requested that their securities be registered
pursuant to such registration statement shall:
(i) provide to the Company such information with respect to
themselves as may be reasonably determined by the Company to be required
for inclusion in such registration statement pursuant to the Securities
Act and the rules and regulations thereunder;
(ii) enter into and execute such agreements and deliver such other
instruments (including an underwriting agreement, if such offering is to
be underwritten, with customary indemnification and contribution
provisions for the benefit of the underwriters with respect to all
information provided by each such Holder to the Company in writing for
inclusion in such registration statement) that are customary and
appropriate for selling stockholders to execute in connection with
secondary public offerings provided that any underwriters' or brokers'
discounts and commissions or other fees and expenses payable (on a per
share basis) by such Holders shall not be in excess of such underwriters'
or brokers' discounts and commissions or other fees and expenses payable
(on a per share basis) by the Company; and
(iii) with respect to an underwritten offering, agree not to sell
publicly (including pursuant to Rule 144) any other equity securities of
the Company (other than those included in the offering) for such period
before and such further period (not to exceed 90 days) after the effective
date of such registration statement as may be reasonably requested by the
managing underwriter.
If any such registration statement refers to any Holder by name or otherwise as
the holder of any securities of the Company then such Holder shall have the
right to require (i) the insertion therein of language, in form and substance
satisfactory to such Holder and presented to the Company in writing, to the
effect that the holding by such Holder of such securities is not to be construed
as a recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such Holder
will assist in meeting any future financial requirements of the Company, or (ii)
in the event that such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar Federal or state statute then in
force, the deletion of the reference to such Holder.
(3) Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 2.5(a)(vi), such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by such Section 2.5(a)(vi), and, if so directed by the Company,
such Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the period
mentioned in Section 2.5(a)(ii) shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 2.5(a)(vi) to and including the date when such Holder shall have
received the copies of the supplemented or amended prospectus contemplated by
such Section 2.5(a)(vi).
(4) In the case of a registration under Section 2.1(a), if the Holders of
a majority of the Registrable Securities to be included therein determine to
enter into an underwriting agreement in connection therewith, or, in the case of
a registration under Section 2.3, if the Company or holders of securities
initially requesting or demanding such registration have determined to enter
into an underwriting agreement in connection therewith, all shares constituting
Registrable Securities to be included in such registration shall be subject to
such underwriting agreement and no Person may participate in such registration
unless such Person agrees to sell such Person's securities on the basis provided
in the underwriting arrangements approved by such Persons so determining to
enter therein and completes and executes all questionnaires, indemnities,
underwriting agreements and other reasonable documents which must be executed
under the terms of such underwriting arrangements.
11.6 EXPENSES. In connection with any registration of Registrable
Securities pursuant to Section 2.1(a), whether or not any registration pursuant
to this Agreement shall become effective, the Company and the Holders shall pay
their own internal costs and the Company shall pay one-half, and the selling
Holders (pro rata from each such Holder based on the Current Market Value of the
securities that each such Holder registers for sale) shall pay one-half, of all
printing and related expenses. The Company shall pay all registration, filing
and NASD fees, fees and expenses of compliance with securities or blue sky laws,
fees and disbursements of counsel for the Company and the Company's independent
public accountants (including the expenses of any audit or "cold comfort" letter
provided by the Company's independent public accountants) and other Persons
retained by the Company, and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (excluding underwriting
commissions and discounts). Notwithstanding the foregoing, it is expressly
agreed and understood that each selling Holder shall pay the costs and expenses
incident to the sale and delivery of the Registrable Securities to be sold by
it, including any stock transfer taxes payable upon the sale of such Registrable
Securities to the underwriters, the underwriting discounts or commissions
payable to the underwriters, and any similar costs incurred by the Holders in
connection with the registration of Registrable Securities. The Company will pay
all costs and expenses incident to marketing and underwriting efforts related to
any underwritten offering, including any costs and expenses related to any "road
show." In the event Holders participate in any other registration other than
pursuant to Section 2.1(a), each Holder shall pay the costs and expenses
incident to the performance by it of its obligations hereunder in connection
with the offer, sale and delivery of the Registrable Securities to be sold by
it, including any stock transfer taxes payable upon the sale of such Registrable
Securities to the underwriters, the fees and expenses of any counsel retained by
it and the underwriting discounts or commissions payable to the underwriters,
and the Company will pay all expenses incident to its performance of or
compliance with this Agreement, including, without limitation, all registration,
filing and NASD fees, fees and expenses of compliance with securities or blue
sky laws, word processing, duplicating and printing expenses, messenger and
delivery expenses, fees and disbursements of counsel for the Company and the
Company's independent public accountants (including the expenses of any audit or
"cold comfort" letter) and other Persons retained by the Company, and any fees
and disbursements of underwriters customarily paid by issuers and sellers of
securities (excluding underwriting commissions and discounts).
XII.
MISCELLANEOUS
12.1 NOMINEES FOR BENEFICIAL OWNERS. In the event that Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its option and by written notice satisfactory
to the Company, be treated as the holder of such Registrable Securities for
purposes of any request or other action by any holder or holders of Registrable
Securities pursuant to this Agreement (or any determination of any number or
percentage of Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement).
12.2 REGISTRATION RIGHTS TO OTHERS. Nothing herein shall prohibit or limit
the Company from entering into an agreement providing holders of securities
which may hereafter be issued by the Company with such registration rights
exercisable at such time or times and in such manner as the Board of Directors
shall deem in the best interests of the Company so long as the performance by
the Company of its obligations under such other agreement will not cause the
Company to breach its obligations to the Holders hereunder.
12.3 STATUS OF EXISTING AGREEMENTS.
(1) Nothing contained in this Agreement is intended by the parties to, and
this Agreement shall not be deemed or construed to, amend the Existing
Registration Rights Agreements, it being understood and agreed that all such
agreements remain in full force and effect in accordance with their respective
terms.
(2) The parties acknowledge that the rights and obligations of Westmark
under the Existing Westmark Registration Rights Agreements have terminated as a
result of the consummation of the transactions contemplated by the Acquisition
Agreement.
12.4 AMENDMENTS; WAIVERS. This Agreement may be amended only with the
written consent of the Company and Holders of a majority of the Registrable
Securities.
12.5 SUCCESSOR TO THE COMPANY. So long as Registrable Securities remain
subject to this agreement, the Company will not enter into any merger,
consolidation, sale of substantially all of its assets or other transaction in
which it is not the surviving entity unless the acquirer shall expressly assume
by a supplemental agreement, executed and delivered to the Holders, in form
satisfactory to the Holders of a majority of the Registrable Securities, the due
and punctual performance of every covenant of this Agreement on the part of the
Company to be performed and observed with respect to the Registrable Securities
after such transaction.
12.6 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
12.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together with constitute one and the same
Agreement.
12.8 NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when actually delivered to the
recipient by special courier or personal delivery, or mailed by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to Holders of Registrable
Securities at their respective addresses on the books of the Company with a copy
to Akin, Gump, Strauss, Hauer & Feld, L.L.P., 1700 Pacific Avenue, Suite 4100,
Dallas, Texas 75201, Attention: J. Stephen Hatfield, P.C. telephone
(214)969-2837, Fax (214)969-4343 and to the Company at its address indicated
below:
Tracor, Inc.
6500 Tracor Lane
Austin, Texas 78725-2000
Attention: James B. Skaggs
Telephone: (512) 929-2064
Telecopy: (512) 929-2257
with a copy to:
Russell E. Painton, Esq.
6500 Tracor Lane
Austin, Texas 78725-2000
Telephone: (512) 929-2230
Telecopy: (512) 929-2257
with a copy to:
Darrel A. Rice, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Telephone: (214) 745-5255
Telecopy: (214) 745-5390
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
12.9 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto as to the subject matter hereof and supersedes all previous
agreements among the parties hereto with respect thereto, whether written, oral
or otherwise.
12.10 REPORTS. If the Company is not required to file with the SEC annual
reports, quarterly reports, current reports and other documents pursuant to
Sections 13(a), 13(c) or 15(d) of the Exchange Act, then the Company shall:
(1) if permitted, file with the SEC the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the SEC pursuant to such Section 13(a), 13(c) or 15(d) or any successor
provisions thereto if the Company were so required, such document to be filed
with the SEC on or prior to the respective dates (the "Required Filing Dates")
by which the Company would have been required to file such documents if the
Company were so required; and
(2) (x) within 15 days of each Required Filing Date transmit by mail
to all Holders copies of the annual reports, quarterly reports and other
documents which the Company would have been required to file with the SEC
pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act or any successor
provisions thereto if the Company were required to be subject to such Sections,
and (y) if filing such documents by the Company with the SEC is not permitted
under the Exchange Act or any successor provision thereto, promptly upon written
request supply copies of such documents to any prospective holder.
(3) Upon the request of any Holder, the Company (i) shall (if this
Section 3.10 applies) use reasonable efforts to make publicly available other
information, and (ii) shall in any event take such further action as any Holder
may reasonably request, all to the extent required from time to time to enable
such holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (b)
any successor rule or regulation hereafter adopted by the SEC.
(4) Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with the requirements of this Section 3.10.
12.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
12.12 SPECIFIC PERFORMANCE. The parties to this Agreement acknowledge and
agree, and the Holders, by participating in any registration hereunder, shall be
deemed to have acknowledged and agreed, that there may be no adequate remedy at
law if the Company or any Holder fails to perform any of its obligations under
this Agreement, and accordingly the Company and each Holder, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to compel specific performance of the obligations of any other Person under this
Agreement in accordance with the terms and conditions of this Agreement, in any
court of the United States or any State thereof having jurisdiction.
12.13 INSPECTION. For so long as this Agreement shall be in effect, this
Agreement and a complete list of the names and addresses of all the Holders of
record shall be made available for inspection and copying on any Business Day by
any Holder at the offices of the Company at the address set forth herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
authorized, executed and delivered as of the day and year first above written.
TRACOR, INC.
By:______________________
Robert K. Floyd
Vice President
[HOLDERS]
Name:____________________
Address:_________________
_________________
_________________
Tel. No._________________
Fax No.__________________
