ITEM 5 Other events.
On April 21, 1998, the Registrant entered into an Agreement and Plan of Merger,
dated as of that date, which contemplates the acquisition by a wholly-owned
subsidiary of the General Electric Company, plc a public limited company
organized under the laws of England and Wales("GEC"), of all the issued and
outstanding common stock, par value $.01 per share, of Registrant in exchange
for the cash payment of $40 per share, by way of a cash tender offer. It is
expected that the offer will commence within five days from April 21, 1998.
The tender offer is subject GEC obtaining at least 51% of such shares, and the
required clearances of government regulatory agencies. For a more complete
description of the terms of the acquisition see Exhibit 10.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Tracor, Inc.
April 27, 1998
By: /s/ James B. Skaggs
--------------------------------
President and Chief Executive
Officer
<PAGE>
EXHIBIT INDEX
Exhibit 10.0 -- Agreement and Plan of Merger
AGREEMENT AND PLAN OF MERGER
By and Among
GEC Incorporated
("Parent"),
GEC Acquisition Corp.
("Purchaser")
and
Tracor, Inc.
(the "Company")
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS ......................................................1
SECTION 1.1 Definitions ...................................................1
SECTION 1.2 Rules of Construction .........................................1
ARTICLE II - THE OFFER .......................................................2
SECTION 2.1 The Offer .....................................................2
SECTION 2.2 Company Actions ...............................................3
SECTION 2.3 Stockholder Lists .............................................3
SECTION 2.4 Composition of the Board of Directors; Section 14(f) ..........4
ARTICLE III - THE MERGER .....................................................4
SECTION 3.1 The Merger ....................................................4
SECTION 3.2 Effective Time ................................................5
SECTION 3.3 Effect of the Merger ..........................................5
SECTION 3.4 Certificate of Incorporation; Bylaws ..........................5
SECTION 3.5 Directors and Officers ........................................5
SECTION 3.6 Stock Options and Warrants ....................................5
SECTION 3.7 Stockholders' Meeting .........................................6
ARTICLE IV - CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES ..............7
SECTION 4.1 Merger Consideration; Conversion and Cancelation
of Securities .................................................7
SECTION 4.2 Exchange of Certificates ......................................7
SECTION 4.3 Dissenting Shares .............................................9
SECTION 4.4 Closing .......................................................9
SECTION 4.5 Stock Transfer Books ..........................................9
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE COMPANY ....................9
SECTION 5.1 Organization and Qualification; Subsidiaries ..................9
SECTION 5.2 Certificate of Incorporation and Bylaws ......................10
SECTION 5.3 Capitalization ...............................................10
SECTION 5.4 Authorization of Agreement ...................................11
SECTION 5.5 Approvals ....................................................12
SECTION 5.6 No Violation .................................................12
SECTION 5.7 Reports and Financial Statements .............................13
SECTION 5.8 No Undisclosed Liabilities ...................................13
SECTION 5.9 No Material Adverse Effect; Conduct ..........................14
SECTION 5.10 Schedule 14D-9; Offer Documents; Proxy Statement .............14
SECTION 5.11 Properties and Assets ........................................15
SECTION 5.12 Material Contracts ...........................................15
SECTION 5.13 Litigation; Compliance with Laws .............................15
SECTION 5.14 Employee Benefit Plans .......................................16
SECTION 5.15 Labor Matters ................................................18
SECTION 5.16 Taxes ........................................................18
SECTION 5.17 Environmental Matters ........................................19
SECTION 5.18 Intellectual Property ........................................19
SECTION 5.19 Brokers ......................................................20
SECTION 5.20 Opinion of Financial Advisor .................................20
SECTION 5.21 Year 2000 ....................................................20
SECTION 5.22 Insurance ....................................................20
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES .........20
SECTION 6.1 Organization and Qualification; Subsidiaries .................20
SECTION 6.2 Authorization of Agreement ...................................21
SECTION 6.3 Approvals ....................................................21
SECTION 6.4 No Violation..................................................21
SECTION 6.5 Proxy Statement; Schedule 14D-9 ..............................21
SECTION 6.6 Sufficient Funds .............................................22
SECTION 6.7 Brokers ......................................................22
ARTICLE VII - COVENANTS .....................................................22
SECTION 7.1 Conduct of Business of the Company ...........................22
SECTION 7.2 Prohibited Actions by the Company ............................22
SECTION 7.3 No Solicitation ..............................................25
SECTION 7.4 Access to Information ........................................27
SECTION 7.5 Confidentiality Agreement ....................................27
SECTION 7.6 Reasonable Efforts ...........................................27
SECTION 7.7 Permits ......................................................28
SECTION 7.8 HSR Act and Exon-Florio Filings ..............................28
SECTION 7.9 Public Announcements .........................................28
SECTION 7.10 Employee Agreements ..........................................29
SECTION 7.11 Company's Rights Agreement; State Takeover Statutes ..........29
SECTION 7.12 Employee Benefit Plans .......................................29
SECTION 7.13 Indemnification of Directors and Officers ....................30
SECTION 7.14 Event Notices and Other Actions ..............................31
SECTION 7.15 Third Party Standstill Agreements; Tortious Interference .....31
ARTICLE VIII - CLOSING CONDITIONS ...........................................32
SECTION 8.1 Conditions to Obligations of Each Party Under This Agreement .32
SECTION 8.2 Additional Conditions to Obligations of the Parent Companies .32
SECTION 8.3 Additional Condition to Obligations of the Company ...........33
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER ..............................33
SECTION 9.1 Termination ..................................................33
SECTION 9.2 Effect of Termination ........................................34
SECTION 9.3 Amendment ....................................................34
SECTION 9.4 Extension; Waiver ............................................35
SECTION 9.5 Fees, Expenses and Other Payments ............................35
ARTICLE X - GENERAL PROVISIONS ..............................................36
SECTION 10.1 Nonsurvival of Representations, Warranties and Agreements ...36
SECTION 10.2 Notices .....................................................36
SECTION 10.3 Headings ....................................................37
SECTION 10.4 Severability ................................................37
SECTION 10.5 Entire Agreement ............................................37
SECTION 10.6 Assignment ..................................................38
SECTION 10.7 Parties in Interest .........................................38
SECTION 10.8 Failure or Indulgence Not Waiver; Remedies Cumulative .......38
SECTION 10.9 Governing Law ...............................................38
SECTION 10.10 Enforcement .................................................38
SECTION 10.11 Counterparts ................................................39
ANNEXES
Annex A - Schedule of Defined Terms
Annex B - Conditions of the Offer
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 21, 1998 (this
"Agreement"), is by and among GEC Incorporated, a Delaware corporation
("Parent"), GEC Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Tracor, Inc., a Delaware corporation
("the Company"). Parent and Purchaser are sometimes referred to herein as the
"Parent Companies."
RECITALS:
The respective Boards of Directors of the Company, Parent, and Purchaser
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions set forth in this Agreement.
In furtherance of such acquisition, Parent proposes to cause Purchaser to
make a tender offer (as it may be amended from time to time as permitted under
this Agreement, the "Offer") to purchase all the issued and outstanding shares
of common stock, par value $0.01 per share, of the Company ("Company Common
Stock"), including the associated Company Rights, at a price per share of
Company Common Stock (including the associated Company Right) of $40.00, net to
the seller in cash, upon the terms and subject to the conditions set forth in
this Agreement.
Upon the terms and subject to the conditions of this Agreement and in
accordance with the GCL, Purchaser will merge with and into the Company and the
Company will be the Surviving Corporation.
Simultaneously with the execution and delivery of this Agreement, Parent
and Purchaser, on the one hand, and each member of the Board of Directors of
the Company and certain members of management on the other hand ("Certain
Stockholders"), are entering into an agreement (the "Stockholders Agreement")
pursuant to which Certain Stockholders have agreed to take specified actions in
furtherance of the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Certain capitalized and other terms used in
this Agreement are defined in Annex A hereto and are used herein with the
meanings ascribed to them therein.
SECTION 1.2 Rules of Construction. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. Unless the context otherwise requires, as used in
this Agreement: (a) a term has the meaning ascribed to it; (b) "or" is not
exclusive; (c) whenever the words "include," "includes" or "including" are
used, they shall be deemed to be followed by the words "without limitation;"
and (d) words in the singular include the plural and words in the plural
include the singular.
<PAGE> 2
ARTICLE II
THE OFFER
SECTION 2.1 The Offer.
(a) Subject to the conditions of this Agreement, as promptly as
practicable but in no event later than five Business Days after the date of
this Agreement, Purchaser shall, and Parent shall cause Purchaser to, commence
the Offer within the meaning of the applicable Regulations of the SEC. The
obligation of Purchaser to, and of Parent to cause Purchaser to, commence the
Offer or accept for payment, or pay for, any shares of Company Common Stock
tendered pursuant to the Offer shall be subject to the conditions set forth in
Annex B (any of which may be waived by Purchaser in its sole discretion,
provided that, without the consent of the Company, Purchaser may not waive the
Minimum Tender Condition or the condition set forth in paragraph (b)(viii) of
Annex B) and to the other provisions of this Agreement. The initial expiration
date of the Offer shall be the 20th Business Day following the commencement of
the Offer (determined using Rule 14d-1(c)(6) under the Exchange Act).
Purchaser expressly reserves the right to modify the terms of the Offer, except
that, without the consent of the Company, Purchaser shall not (i) reduce the
number of shares of Company Common Stock subject to the Offer, (ii) reduce the
price per share of Company Common Stock to be paid pursuant to the Offer,
(iii) modify or add to the conditions set forth in Annex B in any manner
materially adverse to the holders of shares of Company Common Stock,
(iv) except as provided in the next sentence, extend the Offer, (v) change the
form of consideration payable in the Offer or (vi) otherwise amend the Offer in
any manner materially adverse to the holders of shares of Company Common Stock.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer, if at the scheduled expiration date of the Offer
any of the conditions to Purchaser's obligation to purchase shares of Company
Common Stock are not satisfied, until such time as such conditions are
satisfied or waived, (ii) extend the Offer for a period of not more than 10
Business Days beyond the expiration date that would otherwise be permitted
under clause (i) of this sentence, if on the date of such extension less than
90% of the Fully Diluted Shares have been validly tendered and not properly
withdrawn pursuant to the Offer, (iii) extend the Offer for any period required
by any Regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer and (iv) extend the Offer for any reason for a period
of not more than 10 Business Days beyond the latest expiration date that would
otherwise be permitted under clause (i), (ii) or (iii) of this sentence. On
the terms and subject to the conditions of the Offer and this Agreement,
Purchaser shall, and Parent shall cause Purchaser to, pay for all shares of
Company Common Stock validly tendered and not withdrawn pursuant to
the Offer that Purchaser becomes obligated to purchase pursuant to the Offer as
soon as practicable after the expiration of the Offer.
(b) Notwithstanding anything to the contrary contained in this Agreement,
Parent and Purchaser shall not be required to commence the Offer in any
jurisdiction other than the United States of America.
(c) On the date of the commencement of the Offer, Purchaser shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer ("Schedule 14D-1") which will contain an offer to purchase and form of
the related letter of transmittal (the Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, collectively, the "Offer Documents").
Parent, Purchaser, and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and
Parent and Purchaser further agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and be disseminated to
holders of shares of Company Common Stock, in each case, as and to the extent
required by applicable federal securities Laws. Parent and Purchaser agree to
give the Company and its counsel a reasonable opportunity to review and comment
on the Offer Documents prior to the filing of the Offer Documents with the SEC.
Purchaser agrees to provide the Company and its counsel in writing with any
comments Purchaser and its counsel may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt thereof.
SECTION 2.2 Company Actions. The Company hereby consents to the Offer and
represents that its Board of Directors (at a meeting duly called and held) has
unanimously (a) determined that the Offer and the Merger are fair to the
stockholders of the Company and are in the best interests of the stockholders
of the Company, (b) approved this Agreement, the Offer, the Merger and the
Stockholders Agreement, including for purposes of Section 203 of the GCL, and
(c) resolved to recommend acceptance of the Offer and approval and adoption of
this Agreement and the Merger by the stockholders of the Company which approval
constitutes approval of each of the transactions contemplated by this Agreement
for purposes of the applicable provisions of the GCL. The Financial Advisor
has delivered to the Board of Directors of the Company its opinion that the
consideration to be received by the holders of shares of Company Common Stock
in the Offer and the Merger is fair to the holders of shares of Company Common
Stock from a financial point of view. The Company hereby agrees to file a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") containing such
recommendation with the SEC (and the information required by Section 14(f) of
the Exchange Act if Parent shall have furnished such information to the Company
in a timely manner) and to mail such Schedule 14D-9 to the stockholders of the
Company; provided, that such recommendation may be withdrawn, modified or
amended by the Company's Board of Directors only to the extent permitted by
Section 7.3(b). Such Schedule 14D-9 shall be filed on the same date as
Purchaser's Schedule 14D-1 is filed and mailed together with the Offer
Documents. Each of the Company, Parent, and Purchaser agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
the holders of shares of Company Common Stock, in each case, as and to the
extent required by applicable federal securities Laws. The Company agrees to
give Purchaser and its counsel a reasonable opportunity to review and comment
on the Schedule 14D-9 prior to the Company's filing of the Schedule 14D-9 with
the SEC. The Company agrees to provide Purchaser and its counsel in writing
with any comments the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt thereof.
SECTION 2.3 Stockholder Lists. In connection with the Offer, the Company
will promptly furnish Purchaser with mailing labels, security position listings
and any available listing or computer file containing the names and addresses
of the record holders of shares of Company Common Stock as of a recent date and
of those Persons becoming record holders subsequent to such date (to the extent
available), together with all other information in the Company's possession or
control regarding the beneficial owners of shares of Company Common Stock and
shall furnish Purchaser with such information and assistance (including, to the
extent available, updated lists of stockholders, security position listings and
computer files) as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of shares of
Company Common Stock.
SECTION 2.4 Composition of the Board of Directors; Section 14(f).
Promptly upon the acceptance for payment of, and payment by Purchaser for,
any shares of Company Common Stock pursuant to the Offer, Purchaser shall be
entitled to designate such number of directors on the Board of Directors of the
Company as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors of the Company equal to
at least that number of directors, rounded up to the next whole number, which
is the product of (a) the total number of directors on the Company's Board of
Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by (b) the percentage that (i) such number of shares of Company
Common Stock so accepted for payment and paid for by Purchaser plus the number
of shares of Company Common Stock otherwise owned by Purchaser or any other
Subsidiary of Parent bears to (ii) the number of such shares outstanding, and
the Company shall, at such time, cause Purchaser's designees to be so elected;
provided, however, that in the event that Purchaser's designees are appointed
or elected to the Board of Directors of the Company, until the Effective Time
the Board of the Directors of the Company shall have at least three directors
who are directors on the date of this Agreement (the "Independent Directors");
and provided further that, in such event, if the number of Independent
Directors shall be reduced below three for any reason whatsoever, any remaining
Independent Directors (or Independent Director, if there shall be only one
remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Independent Directors for purposes of this Agreement or,
if no Independent Directors then remain, the other directors promptly shall
designate three persons to fill such vacancies who shall not be officers,
stockholders or Affiliates of Parent or Purchaser, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable Law, the Company shall take all action requested by Parent necessary
to effect any such election, including mailing to its stockholders the
information statement required under Rule 14f-1 containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and the Company shall make such mailing with the mailing of the
Schedule 14D-9 (provided that Purchaser shall have provided to the Company on a
timely basis all information required to be included in the information
statement required under Rule 14f-1 with respect to Purchaser's designees).
Purchaser's designees shall be divided between the classes of directors as
necessary to comply with the requirements of the Company's bylaws. In
connection with the foregoing, the Company shall promptly, at the option of
Purchaser, either increase the size of the Board of Directors of the Company or
obtain the resignation of such number of its current directors as is necessary
to enable Purchaser's designees to be elected or appointed to the Board of
Directors of the Company as provided above. The date on which Purchaser's
designees constitute a majority of the Company's Board of Directors is herein
referred to as the "Control Date."
<PAGE> 4
ARTICLE III
THE MERGER
SECTION 3.1 The Merger. Subject to the terms and conditions and in
reliance upon the representations, warranties, covenants and agreements
contained herein, Purchaser shall merge with and into the Company at the
Effective Time (the "Merger"). The terms and conditions of the Merger and the
mode of carrying the same into effect shall be as set forth in this Agreement.
As a result of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall continue as the Surviving Corporation. At the
election of Parent, any direct or indirect wholly owned Subsidiary of Parent
may be substituted for Purchaser as a constituent corporation in the Merger;
provided that any such substitution could not reasonably be expected to
materially and adversely affect the ability of the parties to perform their
obligations hereunder, or materially delay the consummation of the Offer or the
Merger. In such event, the parties shall execute an appropriate amendment to
this Agreement in order to reflect the foregoing.
SECTION 3.2 Effective Time. As soon as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in
Article VIII, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the GCL.
SECTION 3.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the GCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of Purchaser and the Company shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Purchaser
and the Company shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 3.4 Certificate of Incorporation; Bylaws. (a) The certificate
of incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be amended at the Effective Time so that Article IV,
Section 1 of such certificate of incorporation reads in its entirety as
follows: "The total number of shares of all classes of stock which the
corporation shall have authority to issue is 1,000 shares of Common Stock, par
value $1.00 per share ("Common Stock")." and, as so amended, such certificate
of incorporation shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable Law.
(b) The bylaws of Purchaser as in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law;
provided, however, that the bylaws of Purchaser shall be amended prior to the
Effective Time to the extent necessary to comply with Purchaser's obligations
under the first sentence of Section 7.13(a).
SECTION 3.5 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until the earlier of their resignation or
removal or until their respective successors are duly elected or appointed and
qualify.
SECTION 3.6 Stock Options and Warrants.
(a) Upon consummation of the Merger, all then outstanding Company Stock
Options and all Company Common Stock subject to a vesting requirement granted
to any Company employee or director ("Restricted Stock") shall be canceled in
exchange for a cash payment to the holder of a Company Stock Option or
Restricted Stock award equal to (i) in the case of Company Stock Options, A
times B, where A equals the difference between the Per Share Merger
Consideration and the per share exercise price of the holder's Company Stock
Option and B equals the number of shares of Company Common Stock subject to the
holder's Company Stock Option and (ii) in the case of Restricted Stock, the
number of shares of the holder's Restricted Stock times the Per Share Merger
Consideration. All applicable Taxes shall be withheld from any proceeds payable
under this Section 3.6(a).
(b) Before the commencement of the Offer, the Company shall take all
actions (including obtaining any and all consents from employees or directors)
necessary to implement Section 3.6(a); provided, the Company may not provide
additional compensation, benefits or other payments to holders of Company Stock
Options or Restricted Stock as an inducement to consent to the provisions of
Section 3.6(a).
(c) Except as provided herein or as otherwise agreed to by the parties,
(i) the Company Option Plans shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the issuance
or grant by the Company or any of its Subsidiaries of any interest in respect
of the capital stock of the Company or any of its Subsidiaries shall be
terminated as of the Effective Time, and (ii) following the Effective Time no
holder of Company Stock Options or Restricted Stock or any participant in the
Company Option Plans or any other such plans, programs or arrangements shall
have any right thereunder to acquire any equity securities of the Company, the
Surviving Corporation or any Subsidiary thereof.
(d) The Company shall take all actions necessary to comply with
Section 5.1(1) of the Warrant Agreement, so that upon exercise of the Warrants
at any time on or after the Effective Time and payment of the exercise price,
the holder thereof shall be entitled to receive, and the Warrants shall
thereafter represent the right to receive, in lieu of Company Common Stock
issuable upon such exercise prior to the Effective Time, cash in an amount per
share of such Company Common Stock equal to the Per Share Merger Consideration.
SECTION 3.7 Stockholders' Meeting. (a) If the adoption of this
Agreement by the Company's stockholders is required by Law, the Company shall,
at Parent's request, as soon as practicable following the expiration of the
Offer, prepare and file with the SEC the Proxy Statement in preliminary form,
and each of the Company and Parent shall use its best efforts to respond as
promptly as practicable to any comments of the SEC or its staff with respect
thereto. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement. If at any time
prior to receipt of the Company Stockholder Approval there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. The
Company shall use its best efforts to cause the Proxy Statement to be mailed to
the Company's stockholders as promptly as practicable after filing with the
SEC.
(b) If the adoption of this Agreement by the Company's stockholders is
required by Law, the Company shall, at Parent's request, as soon as practicable
following the expiration of the Offer, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Company Stockholders' Meeting") for
the purpose of seeking the Company Stockholder Approval. The Company shall,
through the Board of Directors of the Company, give the recommendation referred
to in Section 2.2. Without limiting the generality of the foregoing, the
Company agrees that its obligations pursuant to this Section 3.7(b) shall not
be affected by the commencement, public proposal, public disclosure or
communication to the Company of any Acquisition Proposal. Notwithstanding the
foregoing, if Purchaser or any other Subsidiary of Parent shall acquire at
least 90% of the outstanding shares of Company Common Stock, the parties shall,
at the request of Parent, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after the expiration of
the Offer without a stockholders meeting in accordance with Section 253 of the
GCL.
(c) Parent will provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement and will
vote, or cause to be voted, all shares of Company Common Stock owned by it or
its Subsidiaries in favor of the adoption of this Agreement.
<PAGE> 7
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 4.1 Merger Consideration; Conversion and Cancelation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of the Parent Companies, the Company or the holders of any
of the following securities:
(a) Subject to Section 4.3, each share of Company Common Stock (and the
related Company Right) issued and outstanding immediately prior to the
Effective Time (excluding any shares of Company Common Stock described in
Section 4.1(c)) shall be converted into the right to receive $40.00 in cash,
without interest thereon (the "Per Share Merger Consideration").
(b) All shares of Company Common Stock converted pursuant to Section
4.1(a) shall cease to be outstanding and shall automatically be canceled and
retired, and each holder of a Certificate previously evidencing such shares of
Company Common Stock shall cease to have any rights as a stockholder of the
Company, except the right to receive the Per Share Merger Consideration for
each such share.
(c) All shares of Company Common Stock that are owned by the Company as
treasury stock and each share of Company Common Stock, if any, owned by Parent
or any direct or indirect wholly owned Subsidiary of Parent or of the Company
immediately prior to the Effective Time shall cease to be outstanding and shall
be automatically canceled and retired without conversion thereof, and no
consideration shall be delivered or deliverable in exchange therefor.
(d) Each share of common stock, par value $1.00 per share, of Purchaser
issued and outstanding immediately prior to the Effective Time shall continue
to be issued and outstanding as one fully paid and nonassessable shares of
common stock, par value $1.00 per share, of the Surviving Corporation.
SECTION 4.2 Exchange of Certificates.
(a) Exchange Fund. On the day of the Effective Time, the Parent shall
deposit, or cause to be deposited, with the Exchange Agent in the Exchange
Fund, for the payment of the Merger Consideration through the Exchange Agent
upon surrender of Certificates in accordance with Section 4.2(c), cash in an
amount sufficient to make the cash payments due under Section 4.1(a). The
Exchange Fund shall not be used for any other purpose except as specified in
Section 4.2(d).
(b) Letter of Transmittal. As soon as reasonably practicable after the
Effective Time, Parent will cause the Exchange Agent to send a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) to each record holder of shares of
Company Common Stock immediately prior to the Effective Time, along with other
appropriate materials for use in surrendering Certificates to the Exchange
Agent.
(c) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall distribute to each former holder of
shares of Company Common Stock, upon surrender to the Exchange Agent for
cancelation of one or more Certificates, the Merger Consideration. If the
Merger Consideration is to be paid to a Person other than the Person in whose
name the surrendered Certificate or Certificates are registered, it shall be a
condition of payment of the Merger Consideration that the surrendered
Certificate or Certificates shall be properly endorsed, with signatures
guaranteed, or otherwise in proper form for transfer and that the Person
requesting such payment shall pay any transfer or other Taxes required by
reason of the payment of the Merger Consideration to a Person other than the
registered holder of the surrendered Certificate or Certificates or such Person
shall establish to the satisfaction of Parent that such Tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 4.2(c), each
Certificate shall be deemed from and after the Effective Time to represent only
the right to receive upon such surrender the Per Share Merger Consideration for
each share of Company Common Stock evidenced by such Certificate. In no event
shall the holder of any such surrendered Certificate be entitled to receive
interest on any cash to be received in the Merger. Neither the Exchange Agent
nor any party hereto shall be liable to a holder of shares of Company Common
Stock for any amount paid to a public official or Governmental Authority
pursuant to any applicable abandoned property, escheat, or similar Law. If any
Certificate has not been surrendered prior to the date which is five years
after the Effective Time (or immediately prior to such earlier date on which
Merger Consideration in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Authority), any such cash in respect
of such Certificate shall, to the extent permitted by applicable Law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any Person previously entitled thereto.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains unclaimed by the former holders of shares of Company Common Stock for
six months after the Effective Time shall be delivered to Parent, upon demand,
and any former holders of shares of Company Common Stock who have not
theretofore complied with this Article IV shall thereafter look only to Parent
for any cash payment to which they are entitled.
(e) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Parent.
(f) Withholding of Tax. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
former holder of shares of Company Common Stock such amounts as Parent (or any
Affiliate thereof) is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign Tax Law. To the extent that amounts are so withheld by Parent and paid
by Parent to the applicable taxing authority, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent.
SECTION 4.3 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock ("Dissenting Shares")
which are issued and outstanding immediately prior to the Effective Time and
that are held by any Person who is entitled to demand and properly demands
appraisal of such Dissenting Shares pursuant to, and who complies in all
respects with, Section 262 of the GCL ("Section 262") shall not be converted as
provided in Section 4.1(a), but rather the holders of Dissenting Shares shall
be entitled only to payment of the fair value of such Dissenting Shares in
accordance with Section 262; provided, however, that if any such holder shall
fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, then the right of such holder to be paid the fair
value of such holder's Dissenting Shares shall cease and such Dissenting Shares
shall be treated as if they had been converted as of the Effective Time into
the Merger Consideration as provided in Section 4.1(a). The Company shall
serve prompt notice to Parent of any demands received by the Company for
appraisal of any shares of Company Common Stock, and Parent shall have the
right to participate in and direct all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to, or settle or offer to
settle, any such demands, or agree to do any of the foregoing.
SECTION 4.4 Closing. The closing (the "Closing") of the Merger shall
take place at the offices of Cravath, Swaine & Moore, at 825 Eighth Avenue, New
York, NY at 10 a.m. on a date as soon as practicable following the date on
which the conditions to the Closing (other than those that, by their terms, are
to be satisfied at the Closing) have been satisfied or waived, or at such other
place, time and date as the parties hereto may agree. At the conclusion of the
Closing on the Closing Date, the parties hereto shall cause the Certificate of
Merger to be filed with the Secretary of State of the State of Delaware.
SECTION 4.5 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.
<PAGE> 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent Companies that:
SECTION 5.1 Organization and Qualification; Subsidiaries. The Company
and each Subsidiary of the Company are legal entities duly organized, validly
existing and in good standing under the Laws of their respective jurisdictions
of incorporation or organization, have all requisite power and authority and
possess all governmental franchises and Permits necessary to enable them to
own, lease and operate their respective properties and assets and to carry on
their business as it is now being conducted and are duly qualified and in good
standing to do business in each jurisdiction in which the nature of the
business conducted by them or the ownership or leasing of their respective
properties and assets makes such qualification necessary, other than such
franchises and Permits and qualifications the lack of which, individually or in
the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect on the Company. Section 5.1 of the Company's
Disclosure Letter sets forth, as of the date of this Agreement, a true and
complete list of all the Company's directly or indirectly owned Subsidiaries,
together with the jurisdiction of incorporation of each Subsidiary and the
percentage of each Subsidiary's outstanding capital stock or other equity
interests owned of record or beneficially by the Company or another Subsidiary
of the Company. Except for such Subsidiaries and as disclosed in Section 5.1
of the Company's Disclosure Letter, neither the Company nor any of its
Subsidiaries owns an equity interest in any partnership or joint venture
arrangement or other business entity.
SECTION 5.2 Certificate of Incorporation and Bylaws. The Company has
heretofore furnished or made available to Parent complete and correct copies of
the certificate of incorporation and the bylaws or the equivalent
organizational documents, in each case as amended or restated to the date
hereof, of the Company and each of its Subsidiaries. Neither the Company nor
any of its Subsidiaries is in violation of any of the provisions of its
certificate of incorporation or bylaws (or equivalent organizational
documents).
SECTION 5.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i) 53,000,000
shares of Company Common Stock of which, as of April 6, 1998, 25,206,204
shares were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights, and
(ii) 1,000,000 shares of preferred stock, par value $0.01 per share, of which
none is issued but of which 500,000 shares have been designated as Series A
Junior Participating Preferred Stock in connection with the rights (the
"Company Rights") issued pursuant to the Company's Rights Agreement. As of
April 6, 1998, there were 2,452,016 shares of Company Common Stock reserved for
future issuance pursuant to outstanding Company Stock Options granted pursuant
to the Company Option Plans and 975,195 shares of Company Common Stock reserved
for future issuance pursuant to outstanding Warrants. Except as set forth in
Section 5.3(a) of the Company's Disclosure Letter, between April 6, 1998 and
the date of this Agreement, no shares of Company Common Stock have been issued
by the Company. Except as set forth in Section 5.3(a) of the Company's
Disclosure Letter, since April 6, 1998, the Company has not granted any options
for, or other rights to purchase, shares of Company Common Stock.
(b) Except as set forth in Section 5.3(a), no shares of Company Common
Stock are reserved for issuance, and, except for the Warrants, the Company
Rights, Company Stock Options, and Restricted Stock, as listed in
Section 5.3(b) of the Company's Disclosure Letter, there are no options,
warrants, rights, convertible or exchangeable securities, "phantom" stock
rights, stock appreciation rights, stock-based performance units, contracts,
agreements, commitments or arrangements obligating the Company (i) to offer,
sell, issue or grant any shares of, or any options, warrants or rights of any
kind to acquire any shares of, or any securities that are convertible into or
exchangeable for any shares of, capital stock of the Company, (ii) to redeem,
purchase or acquire, or offer to purchase or acquire, any outstanding shares
of, or any outstanding options, warrants or rights of any kind to acquire any
shares of, or any outstanding securities that are convertible into or
exchangeable for any shares of, capital stock of the Company or (iii) to grant
any Lien on any shares of capital stock of the Company.
(c) The authorized, issued and outstanding capital stock of, or other
equity interests in, each of the Company's Subsidiaries and the names and
addresses of the holders of record of the capital stock or other equity
interests of each such Subsidiary are set forth in Section 5.3(c) of the
Company's Disclosure Letter. Except as set forth in Section 5.3(c) of the
Company's Disclosure Letter, (i) the issued and outstanding shares of capital
stock of, or other equity interests in, each of the Subsidiaries of the Company
that are owned by the Company or any of its Subsidiaries have been duly
authorized and are validly issued, and, with respect to capital stock, are
fully paid and nonassessable, and were not issued in violation of any
preemptive or similar rights of any past or present equity holder of such
Subsidiary; (ii) all such issued and outstanding shares, or other equity
interests, that are indicated as owned by the Company or one of its
Subsidiaries in Section 5.3(c) of the Company's Disclosure Letter are owned
(A) beneficially as set forth therein and (B) free and clear of all Liens
except as described therein; (iii) no shares of capital stock of, or other
equity interests in, any Subsidiary of the Company are reserved for issuance,
and there are no options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, contracts, agreements, commitments or arrangements
obligating the Company or any of its Subsidiaries (A) to offer, sell, issue,
grant, pledge, dispose of or encumber any shares of capital stock of, or other
equity interests in, or any options, warrants or rights of any kind to acquire
any shares of capital stock of, or other equity interests in, or any securities
that are convertible into or exchangeable for any shares of capital stock of,
or other equity interests in, any of the Subsidiaries of the Company or (B) to
redeem, purchase or acquire, or offer to purchase or acquire, any outstanding
shares of capital stock of, or other equity interests in, or any outstanding
options, warrants or rights of any kind to acquire any shares of capital stock
of, other equity interests in, or any outstanding securities that are
convertible into or exchangeable for, any shares of capital stock of, or other
equity interests in, any of the Subsidiaries of the Company or (C) to grant any
Lien on any outstanding shares of capital stock of, or other equity interests
in, any of the Subsidiaries of the Company.
(d) Except as set forth in Section 5.3(d) of the Company's Disclosure
Letter, the Company's Rights Agreement, and the Company Option Plans listed in
Section 5.3(b) of the Company's Disclosure Letter, there are no voting trusts,
proxies or other agreements, commitments or understandings of any character to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound with respect to the voting of any shares of
capital stock of the Company or any of its Subsidiaries or with respect to the
registration of the offering, sale or delivery of any shares of capital stock
of the Company or any of its Subsidiaries under the Securities Act. The
Company has delivered to Parent a complete and correct copy of the Company's
Rights Agreement, as amended to the date of this Agreement.
(e) There are not any bonds, debentures, notes or other Indebtedness of
the Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of
the Company may vote ("Voting Company Debt").
SECTION 5.4 Authorization of Agreement. (a) The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and each instrument required hereby to be executed and delivered by it prior to
or at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by the Company of this Agreement and each instrument required hereby
to be executed and delivered by it prior to or at the Closing and the
performance of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of the Company
(other than, with respect to the Merger, the adoption of this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock in
accordance with the GCL). This Agreement has been duly executed and delivered
by the Company and (assuming due authorization, execution and delivery hereof
by the other parties hereto) constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as the same may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws
relating to creditors' rights generally, and (ii) legal principles of general
applicability governing the application and availability of equitable
remedies.
(b) The only vote of holders of any class or series of capital stock of
the Company necessary to adopt or approve this Agreement and the Merger is the
adoption of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock (the "Company Stockholder Approval"). The
affirmative vote of the holders of any capital stock of the Company, or any of
them, is not necessary to consummate the Offer or any transaction contemplated
by this Agreement other than the Merger.
SECTION 5.5 Approvals. Except for the applicable requirements, if any,
of (a) the Exchange Act, (b) state securities Laws or blue sky Laws, (c) the
HSR Act, (d) Exon-Florio, (e) the NASD, (f) the filing and recordation of
appropriate merger documents as required by the GCL, (g) the National
Industrial Security Program Operating Manual with respect to foreign ownership,
control or influence and (h) those Laws and Orders noncompliance with which
could not reasonably be expected to have a material adverse effect on the
ability of the Company to perform its obligations under this Agreement or to
have a Material Adverse Effect on the Company, no filing or registration with,
no waiting period imposed by and no Permit or Order of, any Governmental
Authority is required under any Law or Order applicable to the Company or any
of its Subsidiaries to permit the Company to execute, deliver or perform this
Agreement or any instrument required hereby to be executed and delivered by it
prior to or at the Closing.
SECTION 5.6 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits and Orders of, Governmental Authorities
indicated as required in Section 5.5 and adoption of this Agreement by the
stockholders of the Company as required by the GCL and except as set forth in
Section 5.6 of the Company's Disclosure Letter, neither the execution and
delivery by the Company of this Agreement or any instrument required hereby to
be executed and delivered by it prior to or at the Closing nor the performance
by the Company of its obligations hereunder or thereunder will (a) conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a Material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under, or result in the creation of any Lien upon any of the properties
or assets of the Company or any Subsidiary of the Company under, any provision
of (i) any Law or Order applicable to the Company, (ii) the certificate of
incorporation or bylaws of the Company or (iii) any contract or agreement to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective properties or assets is
bound, or (b) with the passage of time, the giving of notice or the taking of
any action by a third Person, have any of the effects set forth in clause (a)
of this Section, except in any such case for any matters described in this
Section that could not reasonably be expected to have a Material Adverse Effect
on the Company. Prior to the execution of this Agreement, the Board of
Directors of the Company has taken all necessary action to cause this
Agreement, the Stockholders Agreement and the transactions contemplated or
permitted hereby and thereby to be exempt from the provisions of Section 203 of
the GCL and to cause any Company Rights not to be distributed or exercisable
under the Company's Rights Agreement. To the Company's Knowledge, no other
state takeover statute or similar Law or Regulation applies or purports to
apply to the Company with respect to this Agreement, the Stockholders
Agreement, the Offer, the Merger or any other transaction contemplated by this
Agreement or the Stockholders Agreement. The Company has been advised by each
of its directors and executive officers that each such Person currently intends
to tender all shares of Company Common Stock owned by such Person pursuant to
the Offer, except to the extent of any restrictions created by Section 16(b) of
the Exchange Act.
SECTION 5.7 Reports and Financial Statements.
(a) The Company has filed all SEC Reports required to be filed by the
Company with the SEC since January 1, 1997 (the "Company SEC Documents"). As of
its respective date, each Company SEC Document complied in all material respects
with the requirements of the Exchange Act or the Securities Act, as the case may
be, applicable to such Company SEC Document, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to the
extent that information contained in any Company SEC Document has been revised
or superseded by a later filed Company SEC Document, none of the Company SEC
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No Subsidiaries of the Company are SEC reporting companies.
(b) Since December 31, 1997, the Company and its Subsidiaries have filed
all Reports required to be filed with any Governmental Authorities other than
the SEC, including state securities administrators, except where the failure to
file any such Reports of the Company would not reasonably be expected to have a
Material Adverse Effect on the Company. Such Reports of the Company, including
all those filed after the date of this Agreement and prior to the Effective
Time, were prepared in all material respects in accordance with the requirements
of applicable Law.
(c) The Company Consolidated Financial Statements and any consolidated
financial statements of the Company (including any related notes thereto)
contained in any SEC Reports of the Company filed with the SEC (i) have been or
will have been prepared in accordance with applicable accounting requirements
and the published Regulations of the SEC and in accordance with GAAP
consistently applied (except (A) to the extent required by changes in GAAP and
(B) with respect to SEC Reports of the Company filed prior to the date of this
Agreement, as may be indicated in the notes thereto) and (ii) fairly present the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the respective dates thereof and the consolidated results of their
operations and cash flows for the periods indicated (and include, in the case of
any unaudited interim financial statements, reasonable accruals for normal
year-end adjustments).
SECTION 5.8 No Undisclosed Liabilities. Except as set forth in
Section 5.8 of the Company's Disclosure Letter, there exist no liabilities or
obligations of the Company and its Subsidiaries that are Material to the
Company, whether accrued, absolute, contingent or otherwise, which would be
required to be reflected, reserved for or disclosed under GAAP in consolidated
financial statements of the Company (including the notes thereto) as of and for
the period ended on the date this representation and warranty is given or
required to be true to satisfy any condition to the Offer or the Merger, other
than (a) liabilities or obligations that are adequately reflected, reserved for
or disclosed in the Company's Consolidated Financial Statements and,
(b) liabilities or obligations incurred in the ordinary course of business of
the Company since the Balance Sheet Date not in violation of this Agreement.
Except as set forth in Section 5.8 of the Company's Disclosure Letter, neither
the Company nor any of its Subsidiaries has any liability for any discontinued
operations (as such term is used in accordance with GAAP) or with respect to any
business, properties or assets formerly owned or operated by the Company or any
of its Subsidiaries or with respect to any acquiree or predecessor of the
Company or any of its Subsidiaries, that would individually or in the aggregate
have a Material Adverse Effect on the Company.
SECTION 5.9 No Material Adverse Effect; Conduct.
Except as disclosed in the Company SEC Documents filed and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or in Section 5.9 of the Company Disclosure Letter, from the date of
the most recent audited financial statements included in the Filed Company SEC
Documents, the Company has conducted its business only in the ordinary course,
and during such period there has not been:
(a) any event, change, effect or development that, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend on, or other
distribution in respect of (whether in cash, stock or property), any capital
stock of the Company or any repurchase for value by the Company of any capital
stock of the Company;
(c) any split, combination or reclassification of any capital stock of the
Company or of any other equity interests in the Company, or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of capital stock of the Company or of any other
equity interests in the Company;
(d) (i) any granting by the Company or any Subsidiary of the Company to
any director or executive officer of the Company or any Subsidiary of the
Company of any increase in compensation, except in the ordinary course of
business consistent with past practice or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Filed Company SEC Documents, (ii) any granting by the
Company or any Subsidiary of the Company to any such director or executive
officer of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in the Filed
Company SEC Documents, or (iii) any entry by the Company or any Subsidiary of
the Company into any employment, severance or termination agreement with any
such director or executive officer; or
(e) any change in accounting methods, principles or practices by the
Company or any Subsidiary of the Company materially affecting the consolidated
assets, liabilities or results of operations of the Company, except insofar as
may have been required by a change in GAAP.
SECTION 5.10 Schedule 14D-9; Offer Documents; Proxy Statement. None
of the information (other than information provided in writing by Parent or
Purchaser for inclusion therein) supplied or to be supplied for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-9 or the
Proxy Statement, including any amendments or supplements thereto, at the time
such document is filed with the SEC, at any time it is amended or supplemented
or at the time it is first published or sent or given to holders of shares of
Company Common Stock, and, in the case of the Proxy Statement, at the time that
it or any amendment or supplement thereto is mailed to the Company's
stockholders, at the time of the Company Stockholders' Meeting or at the
Effective Time, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. Except for information supplied by Parent or Purchaser in
writing for inclusion therein, the Schedule 14D-9 and the Proxy Statement,
including any amendments or supplements thereto, will comply in all material
respects with the Exchange Act.
SECTION 5.11 Properties and Assets. Except as set forth in Section 5.11
of the Company's Disclosure Letter, the Company and its Subsidiaries own or have
rights to use all properties and assets necessary to permit the Company and its
Subsidiaries to continue to conduct their businesses as currently being
conducted except where the failure to own or have the right to use such
properties and assets would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Except as set forth in Section 5.11 of
the Company Disclosure Letter, each of the Company and its Subsidiaries has good
and indefeasible fee title to, or valid leasehold interests in, all its material
real property, free and clear of all Liens except for Permitted Encumbrances.
SECTION 5.12 Material Contracts. Section 5.12 of the Company's
Disclosure Letter contains a true and complete list of the Material Contracts of
the Company and its Subsidiaries. Except as set forth in Section 5.12 of the
Company's Disclosure Letter, neither the Company nor any of its Subsidiaries is
a party to or bound by any Material Contract. All Material Contracts to which
the Company or any of its Subsidiaries is a party are in full force and effect,
the Company or the Subsidiary of the Company that is a party to or bound by such
Material Contract has performed its obligations thereunder to date and, to the
Knowledge of the Company, each other party thereto has performed its obligations
thereunder to date, other than any failure of a Material Contract to be in full
force and effect or any nonperformance thereof that could not reasonably be
expected to have a Material Adverse Effect on the Company. As of the date of
this Agreement, except where the same would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, to the Company's
Knowledge, neither the Company nor any of its Subsidiaries (a) has received any
written notice of the intention of any party to terminate any Material Contract,
whether as a termination for convenience or for default of the Company or any
Subsidiary thereunder, or (b) has any pending default termination action or open
written cure notice or show cause notice (as defined in the Federal Acquisition
Regulations Part 49, para. 49.607(a) and (b), respectively) in respect of any
such Material Contract which is a Government Contract. To the Company's
Knowledge, as of the date hereof, there is no pending written claim or request
for equitable adjustment under any Government Contract by any Governmental
Authority that would have a Material Adverse Effect on the Company. To the
Company's Knowledge, the Company and its Subsidiaries are in compliance in all
material respects with all of their obligations relating to any equipment or
fixtures owned by any Governmental Authority and loaned, bailed or otherwise
furnished to or held by the Company or any of its Subsidiaries except where the
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
SECTION 5.13 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits or proceedings that (a) are set
forth in Section 5.13 of the Company's Disclosure Letter, or (b) individually
or, with respect to multiple actions, suits or proceedings that allege similar
theories of recovery based on similar facts, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company. Except
as set forth in Section 5.13 of the Company's Disclosure Letter, the Company and
its Subsidiaries are in compliance with all applicable Laws and Regulations
(including the Truth-In-Negotiations-Act, the Procurement Integrity Act, the
Foreign Corrupt Practices Act, the Cost Accounting Standards, the Regulations of
applicable Governmental Entities governing foreign military sales, export
controls, illegal boycotts, national security and any other Laws or Orders
incorporated expressly, by reference or by operation of Law into, or otherwise
applicable to, any contract or other agreement made with the United States of
America (a "Government Contract")) and are not in default with respect to any
Order applicable to the Company or any of its Subsidiaries, except such events
of noncompliance or defaults that, individually or in the aggregate, have not
and could not reasonably be expected to have a Material Adverse Effect on the
Company. Since January 1, 1993, to the date hereof, neither the Company nor any
Subsidiary of the Company has received any written notice of any administrative
or civil or criminal investigation or audit (other than Tax audits) by any
Governmental Authority (including any qui tam action brought under the Civil
False Claims Act alleging any irregularity, misstatement or omission arising
under or relating to any Government Contract) relating to the Company or any of
its Subsidiaries that, individually or in the aggregate, would have a Material
Adverse Effect on the Company. Notwithstanding the foregoing, except as set
forth in Section 5.13 of the Company's Disclosure Letter, since January 1, 1993,
to the Knowledge of the Company, neither the Company nor any Subsidiary of the
Company nor any officer or director of the Company or any Subsidiary of the
Company is or has been the subject of any criminal investigation in respect of
any Government Contract.
SECTION 5.14 Employee Benefit Plans.
(a) Each Benefit Plan of the Company and its Subsidiaries is listed in
Section 5.14 of the Company's Disclosure Letter, including, with respect to
Terminated Benefit Plans, the date of termination.
(b) No event has occurred and, to the Knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
or any of its Subsidiaries could be subject to any liability under the terms of
any Benefit Plan, or under ERISA, or, with respect to any Benefit Plan, under
the Code or any other applicable Law, other than any condition or set of
circumstances that could not reasonably be expected to have a Material Adverse
Effect on the Company. Each of the Benefit Plans has been administered in
material compliance with its terms and with the applicable provisions of ERISA,
the Code and any other applicable Law.
(c) As to any Benefit Plan of the Company intended to be qualified under
Section 401 of the Code, such Benefit Plan has been determined by the IRS to
satisfy in form the requirements of such Section, no event has occurred that
could be reasonably expected to result in the disqualification of such Benefit
Plan and there has been no termination or partial termination of such Benefit
Plan within the meaning of Section 411(d)(3) of the Code.
(d) As to any Terminated Benefit Plan intended to have been qualified
under Section 401 of the Code, such Terminated Benefit Plan received a favorable
determination letter from the IRS with respect to its termination.
(e) There are no investigations, audits, actions, suits or claims
pending (other than routine claims for benefits) or, to the Knowledge of the
Company, threatened against, or with respect to, any Benefit Plan or its assets
that could reasonably be expected to have a Material Adverse Effect on the
Company.
(f) To the Knowledge of the Company, there is no matter pending (other
than routine qualification determination filings) with respect to any Benefit
Plan before the IRS, the Department of Labor or the PBGC.
(g) All contributions required to be made by the Company or the
Company's Subsidiaries to any Benefit Plan pursuant to its terms and provisions
have been timely made.
(h) As to any Current Benefit Plan subject to Title IV of ERISA, (i) there
has been no event or condition which presents a material risk of plan
termination, (ii) no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred within six years prior to date of this Agreement, (iii) no reportable
event within the meaning of Section 4043 of ERISA (for which the disclosure
requirements of Regulation section 2615.3 promulgated by the PBGC have not been
waived) has occurred within six years prior to the date of this Agreement,
(iv) no notice of intent to terminate such Benefit Plan has been given under
Section 4041 of ERISA, (v) no proceeding has been instituted under Section 4042
of ERISA to terminate such Benefit Plan, (vi) no liability to the PBGC has been
incurred (other than with respect to required premium payments) and (vii) the
assets of the Benefit Plan equal or exceed the actuarial present value of the
benefit liabilities, within the meaning of Section 4041 of ERISA, under such
Benefit Plan, based upon reasonable actuarial assumptions and the asset
valuation principles established by the PBGC.
(i) Except as set forth in Section 5.14 of the Company's Disclosure
Letter, in connection with the consummation of the transactions contemplated by
this Agreement, no payments have been or will be made under any Current Benefit
Plan or any other program, agreement, policy or arrangement which would be
nondeductible under Section 280G of the Code.
(j) Except as set forth in Section 5.14 of the Company's Disclosure
Letter, the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not (i) require the Company or any of its
Subsidiaries to pay greater compensation or make a larger contribution to, or
pay greater benefits or accelerate payment or vesting of a benefit under, any
Current Benefit Plan or any other program, agreement, policy or arrangement or
(ii) create or give rise to any additional vested rights or service credits
under any Current Benefit Plan or any other program, agreement, policy or
arrangement.
(k) Except as set forth in Section 5.14 of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or is
bound by any severance agreement, program or policy. True and correct copies of
all employment agreements with officers of the Company and its Subsidiaries, and
all vacation, overtime and other compensation policies of the Company and its
Subsidiaries relating to their employees have been made available to Parent.
(l) Except as set forth in Section 5.14 of the Company's Disclosure
Letter, no Benefit Plan provides retiree medical or retiree life insurance
benefits to any Person and neither the Company nor any of its Subsidiaries is
contractually or otherwise obligated (whether or not in writing) to provide any
Person with life insurance or medical benefits upon retirement or termination of
employment, other than as required by the provisions of Sections 601 through 608
of ERISA and Section 4980B of the Code.
(m) Neither the Company nor any of its Subsidiaries contributes or has
an obligation to contribute, and neither has within six years prior to the date
of this Agreement contributed or had an obligation to contribute, to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(n) Except as disclosed in Section 5.14 of the Company's Disclosure
Letter, no compensation payable by the Company or any of its Subsidiaries to any
of their employees under any Current Benefit Plan or other program, agreement,
policy or arrangement is subject to disallowance under Section 162(m) of the
Code.
SECTION 5.15 Labor Matters. Except as set forth in Section 5.15 of
the Company's Disclosure Letter, no collective bargaining agreement to which the
Company or any of its Subsidiaries is a party is currently in effect or is being
negotiated by the Company or any of its Subsidiaries. There is no pending or,
to the Knowledge of the Company, threatened labor dispute, strike or work
stoppage against the Company or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect on the Company. To the Knowledge of
the Company, neither the Company or any of its Subsidiaries nor any
representative or employee of the Company or any of its Subsidiaries has
committed any unfair labor practices in connection with the operation of the
business of the Company and its Subsidiaries, and there is no pending or, to the
Knowledge of the Company, threatened charge or complaint against the Company or
any of its Subsidiaries by the National Labor Relations Board or any comparable
agency of any state of the United States. The Company and its Subsidiaries are
in material compliance with all applicable federal, state, local or foreign
labor Laws.
SECTION 5.16 Taxes.
(a) (i) All Tax Returns that are required to be filed by or with respect
to the Company or any of its Subsidiaries on or before the Effective Time have
been or will be timely filed, and all such Tax Returns are or will be true,
complete and accurate, (ii) all Taxes that are due on or before the Effective
Time have been or will be timely paid in full, (iii) all withholding Tax
requirements imposed on or with respect to the Company or any of its
Subsidiaries have been or will be satisfied in full in all respects, (iv) no
penalty, interest or other charge is or will become due with respect to the late
filing of any such Tax Return or late payment of any such Tax and (v) the most
recent financial statements contained in the Filed Company SEC Documents reflect
an adequate reserve for all Taxes of the Company and its Subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements.
(b) Except as set forth in Section 5.16 of the Company's Disclosure
Letter, all income Tax Returns have been audited by the applicable Governmental
Authority or the applicable statute of limitations has expired for the period
covered by such Tax Returns.
(c) Except as set forth in Section 5.16 of the Company's Disclosure
Letter, there is not in force any extension of time with respect to the due date
for the filing of any Tax Return or any waiver or agreement for any extension of
time for the assessment or payment of any Tax due with respect to the period
covered by any Tax Return.
(d) Except as disclosed in Section 5.16 of the Company's Disclosure
Letter, there is no claim against the Company or any of its Subsidiaries for any
Taxes, and no assessment, deficiency or adjustment has been asserted or proposed
with respect to any Tax Return.
(e) Except as set forth in Section 5.16 of the Company's Disclosure
Letter, since January 1, 1988, none of the Company and its Subsidiaries, has
been a member of an Affiliated group filing a consolidated federal income Tax
Return other than the affiliated group of which the Company is the common parent
corporation.
(f) There are no material Liens for Taxes on the assets of the Company
or any of its Subsidiaries.
(g) Except as set forth in Section 5.16 of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries is bound by any
agreement with respect to Taxes.
(h) Except as set forth in Section 5.16 of the Company's Disclosure Letter
or as disclosed in the most recent audited financial statements included in the
Filed Company SEC Documents, neither the Company nor any of its Subsidiaries
will be required to include in a taxable period beginning after the Effective
Date taxable income attributable to income that economically accrued in a
taxable period ending on or before the Effective Date, including as a result of
the installment method of accounting, the completed contract or percentage of
completion methods of accounting (including the look-back method under Section
460(b)(2) of the Code) or the cash method of accounting.
(i) Except as set forth in Section 5.16 of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries will be required in a
taxable period beginning on or after the Effective Date to include any amount in
income pursuant to Section 481 of the Code (or any comparable provisions of
state, local or foreign Law), by reason of a change in accounting methods or
otherwise, as a result of actions taken prior to the Effective Date.
SECTION 5.17 Environmental Matters. Except for matters disclosed in
Section 5.17 of the Company's Disclosure Letter or as described in Reports,
copies of which have been provided to Parent, and except for matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company, (a) the properties, operations and
activities of the Company and its Subsidiaries are in compliance with all
Environmental Laws; (b) the Company and its Subsidiaries and the properties,
operations and activities of the Company and its Subsidiaries are not subject to
any existing, pending or, to the Knowledge of the Company, threatened action,
suit, investigation, inquiry or proceeding by or before any Court or
Governmental Authority under any Environmental Law; (c) all Permits or
applications therefor required to be obtained or filed by the Company or any of
its Subsidiaries under any Environmental Law in connection with the properties,
operations and activities of the Company and its Subsidiaries have been obtained
or filed and are valid and currently in full force and effect, and, to the
Company's Knowledge, there are no facts or circumstances that would cause such
Permits to be revoked, modified or not renewed under current conditions or in
connection with the transactions contemplated by this Agreement; (d) there has
been no release of any hazardous substance, pollutant or contaminant into the
environment by the Company or its Subsidiaries or in connection with their
properties, operations or activities; (e) there has been no exposure
(attributable to the action of the Company or its Subsidiaries) of any Person or
property to any hazardous substance, pollutant or contaminant in connection with
the properties, operations and activities of the Company and its Subsidiaries;
and (f) neither the Company nor its Subsidiaries have assumed, whether by
contract, operation of Law or otherwise, any liabilities or obligations arising
under Environmental Laws in connection with their respective formerly owned
properties, businesses, divisions, Subsidiaries, companies or other entities.
SECTION 5.18 Intellectual Property. The Company and its Subsidiaries
own, or are validly licensed or otherwise have the right to use, all patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, copyrights, inventions, trade secrets, mask
works and other proprietary intellectual property rights and computer programs
(collectively, "Intellectual Property Rights") which are Material to the conduct
of the business of the Company and its Subsidiaries, taken as a whole. Section
5.18 of the Company's Disclosure Letter sets forth a description of all
Intellectual Property Rights which are Material to the conduct of the business
of the Company and its Subsidiaries taken as a whole. Except as set forth in
Section 5.18 of the Company's Disclosure Letter, no claims are pending or, to
the Knowledge of the Company, threatened that the Company or any of its
Subsidiaries is infringing or otherwise adversely affecting the rights of any
Person with regard to any Intellectual Property Right. To the Knowledge of the
Company, except as set forth in Section 5.18 of the Company's Disclosure Letter,
no Person is infringing the rights of the Company or any of its Subsidiaries
with respect to any Intellectual Property Right.
SECTION 5.19 Brokers. No broker, finder or investment banker (other
than the Financial Advisor) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The estimated fees
and expenses incurred and to be incurred by the Company in connection with the
Offer, the Merger and the other transactions contemplated by this Agreement
(including the fees of the Financial Adviser and the fees of the Company's legal
counsel) are set forth in Section 5.19 of the Company's Disclosure Letter. The
Company has furnished to Parent a true and complete copy of all agreements
between the Company and the Financial Advisor relating to the Merger and the
other transactions contemplated hereby.
SECTION 5.20 Opinion of Financial Advisor. The Company has received
the opinion of the Financial Advisor, dated the date of this Agreement, to the
effect that, as of such date, the consideration to be received in the Offer and
the Merger by the Company's stockholders is fair to the Company's stockholders
from a financial point of view, a signed copy of which opinion has been
delivered to Parent.
SECTION 5.21 Year 2000. With respect to the "Year 2000 Problem," the
information set forth under the caption "Year 2000" on page 24 of the 1997
Annual Report of the Company is accurate. The Company has no Material exposure
to contingencies related to the "Year 2000 Problem" for the products and
services it has sold or is currently selling.
SECTION 5.22 Insurance. The Company and its Subsidiaries maintain
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are in the
Company's judgment, reasonable for the assets and properties of the Company and
its Subsidiaries and as are customary in the Company's industry. As of the date
of this Agreement, except as set forth in Section 5.22 of the Company's
Disclosure Letter, all such policies are in full force and effect, all premiums
due and payable thereon have been paid, and no notice of cancelation or
termination has been received with respect to any such policy.
<PAGE> 20
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES
The Parent Companies hereby represent and warrant to the Company that:
SECTION 6.1 Organization and Qualification; Subsidiaries. Parent and
Purchaser are legal entities duly organized, validly existing and in good
standing under the Laws of their respective jurisdictions of incorporation or
organization, have all requisite power and authority to own, lease and operate
their respective properties and assets and to carry on their business as it is
now being conducted and are duly qualified and in good standing to do business
in each jurisdiction in which the nature of the business conducted by them or
the ownership or leasing of their respective properties and assets makes such
qualification necessary, other than such qualifications the lack of which,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect on Parent.
SECTION 6.2 Authorization of Agreement. Each of Parent and Purchaser has
all requisite corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered by it
prior to or at the Closing, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby. The execution and
delivery by Parent and Purchaser of this Agreement and each instrument required
hereby to be executed and delivered by Parent or Purchaser prior to or at the
Closing and the performance of their respective obligations hereunder and
thereunder have been duly and validly authorized by all requisite corporate
action (including stockholder action) on the part of Parent and Purchaser,
respectively. This Agreement has been duly executed and delivered by Parent and
Purchaser and (assuming due authorization, execution and delivery hereof by the
other party hereto) constitutes a legal, valid and binding obligation of Parent
and Purchaser, enforceable against Parent and Purchaser in accordance with its
terms, except as the same may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws relating
to creditors' rights generally and (b) legal principles of general applicability
governing the application and availability of equitable remedies.
SECTION 6.3 Approvals. Except for the applicable requirements, if any, of
(a) the Exchange Act, (b) state securities Laws or blue sky Laws, (c) the HSR
Act, (d) Exon-Florio, (e) the NASD, (f) the filing and recordation of
appropriate merger documents as required by the GCL (and other state Laws where
Purchaser or the Company are qualified to do business), (g) the National
Industrial Security Program Operating Manual with respect to foreign ownership,
control or influence and (h) those Laws and Orders noncompliance with which
could not reasonably be expected to have a material adverse effect on the
ability of Parent or Purchaser to perform its obligations under this Agreement,
no filing or registration with, no waiting period imposed by and no Permit or
Order of, any Governmental Authority is required under any Law or Order
applicable to Parent or Purchaser to permit Parent or Purchaser to execute,
deliver or perform this Agreement or any instrument required hereby to be
executed and delivered by it prior to or at the Closing.
SECTION 6.4 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Permits and Orders of, Governmental Authorities
indicated as required in Section 6.3, neither the execution and delivery by
Parent or Purchaser of this Agreement or any instrument required hereby to be
executed and delivered by Parent or Purchaser prior to or at the Closing nor the
performance by Parent or Purchaser of their respective obligations hereunder or
thereunder will (a) conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancelation or acceleration of any obligation or to loss
of a Material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Lien upon any of the properties or assets of Parent or any Subsidiary of
Parent under, any provision of (i) any Law or Order applicable to Parent or
Purchaser, (ii) the certificate of incorporation or bylaws of Parent or
Purchaser or (iii) any contract or agreement to which Parent or any of its
Subsidiaries is a party or by which it or any of its properties or assets is
bound, or (b) with the passage of time, the giving of notice or the taking of
any action by a third Person, have any of the effects set forth in clause (a) of
this Section, except in any such case for any matters described in this Section
that could not reasonably be expected to have a material adverse effect upon the
ability of Parent or Purchaser to perform its obligations under this Agreement.
SECTION 6.5 Proxy Statement; Schedule 14D-9. None of the information
supplied or to be supplied by or on behalf of Parent or Purchaser for inclusion
or incorporation by reference in the Offer Documents, the Schedule 14D-9 or the
Proxy Statement, including any amendments or supplements thereto, at the time
such document is filed with the SEC, at any time it is amended or supplemented
or at the time it is first published or given to holders of shares of Company
Common Stock, and, in the case of the Proxy Statement, at the time that it or
any amendment or supplement thereto is mailed to the Company's stockholders, at
the time of the Company Stockholders' Meeting or at the Effective Time, will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading; provided, that the foregoing shall not apply to information supplied
by or on behalf of the Company specifically for inclusion or incorporation by
reference in any such document. The Offer Documents will comply as to form in
all material respects with the provisions of the Exchange Act, except that no
representations is made by Parent or Purchaser with respect to statements made
or incorporated by reference therein based on information supplied by the
Company for inclusion or incorporation by reference therein.
SECTION 6.6 Sufficient Funds. Parent has access to sufficient funds to
consummate the Offer and the Merger on the terms contemplated by this Agreement.
SECTION 6.7 Brokers. Except for Morgan Stanley & Co. Incorporated and CSP
Associates Inc., no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Purchaser.
<PAGE> 22
ARTICLE VII
COVENANTS
SECTION 7.1 Conduct of Business of the Company. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
it will and will cause each of its Subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use all reasonable efforts to preserve intact its business
organization, maintain its rights and franchises, retain the services of its
respective key employees and maintain its relationships with its respective
customers and suppliers and others having business dealings with it to the end
that its goodwill and ongoing business shall be unimpaired at the Effective
Time;
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain supplies
and inventories in quantities consistent with its customary business practice;
and
(d) use all reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that currently
maintained.
SECTION 7.2 Prohibited Actions by the Company.
Without limiting the generality of Section 7.1, except as set forth in
Section 7.2 of the Company's Disclosure Letter, the Company covenants and agrees
that, except as expressly contemplated by this Agreement or otherwise consented
to in writing by Parent, from the date of this Agreement until the Effective
Time, it will not do, and will not permit any of its Subsidiaries to do, any of
the following:
(a) (i) increase the compensation payable to or to become payable to
any director or employee, except for increases in salary or wages of employees
in the ordinary course of business and consistent with past practice; (ii) grant
any severance or termination pay (other than pursuant to the normal severance
policy or practice of the Company or its Subsidiaries as in effect on the date
of this Agreement) to, or enter into or amend in any material respect any
employment or severance agreement with, any employee; (iii) establish, adopt,
enter into or amend in any material respect any collective bargaining agreement
or Benefit Plan of the Company or its Subsidiaries except as required by
applicable Law or (iv) take any action to accelerate any rights or benefits, or
make any material determinations not in the ordinary course of business
consistent with past practice, under any collective bargaining agreement or
Benefit Plan of the Company or its Subsidiaries; provided that the Company may
amend the Company Option Plans to accelerate the vesting of any unvested Company
Stock Options and to permit employees to tender any shares of Company Common
Stock acquired upon exercise of any Company Stock Option into the Offer;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property), outstanding
shares of capital stock, except for dividends by a wholly owned Subsidiary of
the Company to the Company or another wholly owned Subsidiary of the Company;
(c) redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any outstanding shares of capital stock of, or
other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of its
Subsidiaries (other than (i) any such acquisition by the Company or any of its
wholly owned Subsidiaries directly from any wholly owned Subsidiary of the
Company in exchange for capital contributions or loans to such Subsidiary,
(ii) any purchase, forfeiture or retirement of shares of Company Common Stock or
the Company Stock Options occurring pursuant to the terms (as in effect on the
date of this Agreement) of any existing Benefit Plan of the Company or any of
its Subsidiaries or (iii) the repurchase of Company Rights pursuant to the terms
(as in effect on the date of this Agreement) of the Company's Rights Agreement
to the extent required by this Agreement or by a Court of competent
jurisdiction;
(d) effect any reorganization or recapitalization; or split,
combine or reclassify any of the capital stock of, or other equity interests in,
the Company or any of its Subsidiaries or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of such capital stock or such equity interests;
(e) offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant of, any shares of capital stock of, or other equity interests
in, any securities convertible into or exchangeable for any shares of capital
stock of, or other equity interests in, or any options, warrants or rights of
any kind to acquire any shares of capital stock of, or other equity interests
in, or any Voting Company Debt or other voting securities of, the Company or any
of its Subsidiaries, or any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock-based performance units, other than issuances of
shares of Company Common Stock (and associated Company Rights) upon the exercise
of the Company Stock Options and Warrants outstanding at the date of this
Agreement in accordance with the terms thereof (as in effect on the date of this
Agreement);
(f) acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets of any
other Person (other than the purchase of assets from suppliers or vendors in the
ordinary course of business and consistent with past practice);
(g) sell, lease, exchange or otherwise dispose of, or grant any
Lien (other than a Permitted Encumbrance) with respect to, any of the properties
or assets of the Company or any of its Subsidiaries that are, individually or in
the aggregate, material to any of the Company's three core business segments
(information systems, aerospace and systems technologies), except for
dispositions of excess or obsolete assets and sales of inventories in the
ordinary course of business and consistent with past practice;
(h) adopt any amendments to its certificate of incorporation or
bylaws or other organizational documents;
(i) effect any change in any accounting methods, principles or
practices in effect as of December 31, 1997 materially affecting the reported
consolidated assets, liabilities or results of operations of the Company, except
as may be required by a change in GAAP, or any change in Tax accounting;
(j) (i) incur any Indebtedness, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the Company or any
of its Subsidiaries, guarantee any debt securities of another Person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another Person or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or (ii) make any loans,
advances or capital contributions to, or investments in, any other Person, other
than to or in the Company or any direct or indirect wholly owned Subsidiary of
the Company;
(k) enter into any contract which, if such contract is entered into,
would be a Material Contract; or
(l) make or agree to make any new capital expenditure or
expenditures other than the capital expenditures contemplated by the Company's
annual operating plan for 1998, a copy of which has been furnished to Parent
prior to the execution of this Agreement;
(m) make any non-routine Tax election or settle or compromise any
Material Tax liability or refund;
(n) (i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Filed SEC Documents or incurred in the ordinary course
of business consistent with past practice, (ii) cancel any Material Indebtedness
(individually or in the aggregate) or waive any claims or rights of substantial
value or (iii) subject to Section 7.15, waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its Subsidiaries is a party; or
(o) agree in writing or otherwise to do any of the foregoing.
SECTION 7.3 No Solicitation.
(a) From the date of this Agreement until the Effective Time or the
termination of this Agreement pursuant to Section 9.1, the Company agrees that
it will not, and will not permit any of its Subsidiaries, or any of its or their
officers, directors, employees, representatives, agents, or Affiliates,
including any investment banker, attorney, or accountant retained by the Company
or any of its Subsidiaries (collectively, "Representatives"), to, directly or
indirectly (i) initiate, solicit or encourage or otherwise facilitate (including
by way of furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal or offer that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal, (ii) enter into or
maintain or continue discussions or negotiate with any Person regarding an
Acquisition Proposal or in furtherance of such inquiries or to obtain an
Acquisition Proposal, or (iii) agree to, approve, recommend or endorse any
Acquisition Proposal, or authorize or permit any of the Representatives of the
Company or any of its Subsidiaries to take any such action, and the Company
shall promptly notify Parent of any such inquiries and proposals hereafter
received by the Company or any of its Subsidiaries or by any such
Representative, relating to any of such matters; provided however, that nothing
contained in this Agreement shall prohibit the Board of Directors of the Company
at any time prior to the earlier to occur of acceptance for payment of shares of
Company Common Stock pursuant to the Offer or adoption of this Agreement by the
stockholders of the Company from furnishing information (pursuant to a customary
confidentiality agreement no more favorable to the party receiving information
than the Confidentiality Agreement and consistent with the Company's obligations
under this Agreement, including Section 7.3(c)) to, or engaging in discussions
or negotiations with, any Person in response to an unsolicited bona fide written
Acquisition Proposal of such Person that satisfies the requirements of a
Superior Proposal, if, and only to the extent that, (A) the Board of Directors
of the Company, after consultation with outside legal counsel to the Company,
determines in good faith that failure to do so would result in a breach of the
fiduciary duty of the Board of Directors of the Company to the stockholders of
the Company under applicable Law, and (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such Person the Company
provides written notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such Person
and the Company complies with Section 7.3(c). Taking the actions contemplated
by the proviso to the prior sentence under the circumstances described therein
will not be deemed to be a breach of this Agreement. It is understood that any
violation of the restrictions set forth in this Section 7.3 by any
Representative of the Company or any of its Subsidiaries, whether nor not such
Person is purporting to act on behalf of the Company or otherwise, shall be
deemed to be a breach of this Section 7.3 by the Company.
(b) Except as expressly permitted by this Section 7.3, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to Parent
or Purchaser, the approval or recommendation by such Board of the Offer or the
Merger as set forth in Section 2.2, (ii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (iii) cause the
Company to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, an "Acquisition Agreement") related
to any Acquisition Proposal. Notwithstanding the foregoing, prior to the
earlier to occur of acceptance for payment of shares of Company Common Stock
pursuant to the Offer or adoption of this Agreement by the stockholders of the
Company, the Board of Directors of the Company may terminate this Agreement but
only (A) to the extent that the Board of Directors of the Company, after
consultation with outside legal counsel to the Company, determines in good faith
that failure to do so would result in a breach of the fiduciary duty of the
Board of Directors to the stockholders of the Company under applicable Law,
(B)if the Company and the Board of Directors of the Company have complied with
all the provisions of this Section 7.3, (C) after the third day following
Parent's receipt of written notice advising Parent that the Board of Directors
of the Company is prepared to accept a Superior Proposal, specifying the
principal terms and conditions of such Superior Proposal and identifying the
Person making such Superior Proposal and (D) if concurrently with such
termination, the Company enters into an Acquisition Agreement with respect to
such Superior Proposal and pays to Parent the Termination Fee and the
out-of-pocket fees and expenses incurred by Parent, Purchaser and their
Affiliates in connection with the transactions contemplated by this Agreement
pursuant to Section 9.5(b).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 7.3, the Company shall promptly advise
Parent, orally and in writing, of any request for information or of any
Acquisition Proposal, the principal terms and conditions of such request or
Acquisition Proposal and the identity of the Person making such request or
Acquisition Proposal. The Company shall keep Parent reasonably informed of the
status and details (including amendments or proposed amendments) of any such
request or Acquisition Proposal.
(d) "Acquisition Proposal" means an inquiry, offer or proposal regarding
any of the following (other than the transactions contemplated by this
Agreement) involving the Company: (i) any merger, consolidation, share
exchange, recapitalization, liquidation, dissolution, business combination or
other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of a substantial portion of the assets of the
Company and its Subsidiaries, taken as a whole, or of any Material Business or
of any Subsidiary or Subsidiaries responsible for a Material Business in a
single transaction or series of related transactions; (iii) any acquisition of
15 percent or more of the outstanding shares of capital stock of the Company or
the filing of a registration statement under the Securities Act in connection
therewith or any other acquisition or disposition the consummation of which
would prevent or materially diminish the benefits to Parent of the Merger; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing. "Superior
Proposal" means any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or other similar transaction, for consideration
consisting of cash and/or marketable securities, all the shares of Company
Common Stock then outstanding or not less than 75 percent of the assets of the
Company and its Subsidiaries which the Board of Directors of the Company
determines in good faith (based on advice of a financial advisor of nationally
recognized reputation) to be superior to the Company's stockholders from a
financial point of view (taking into account any changes to the financial terms
of this Agreement proposed by Parent in response to such proposal) and to be
more favorable generally to the Company's stockholders (taking into account all
financial and strategic considerations, including relevant legal, financial,
regulatory and other aspects of such proposal and the third party making such
proposal and the conditions and prospects for completion of such proposal, and
any changes to this Agreement proposed by Parent in response to such proposal)
than the Offer, the Merger and the other transactions contemplated by this
Agreement, taken as a whole. "Material Business" means any business (or the
assets needed to carry out such business) that contributed or represented 15% or
more of the net sales, the net income or the assets (including equity
securities) of the Company and its Subsidiaries taken as a whole.
(e) Nothing contained in this Section 7.3 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders which the Board of Directors of the Company, after
consultation with outside legal counsel to the Company, determines in good faith
is required by the fiduciary duty of the Board of Directors to the stockholders
of the Company under applicable Law; provided that neither the Board of
Directors of the Company nor any committee thereof withdraws or modifies, or
proposes to withdraw or modify, the approval or recommendation of such Board of
the Offer or the Merger as set forth in Section 2.2 or approves or recommends,
or publicly proposes to approve or recommend, an Acquisition Proposal unless the
Company and the Board of Directors of the Company have complied with all the
provisions of this Section 7.3.
SECTION 7.4 Access to Information. Between the date of this Agreement and
the Effective Time, the Company shall, and shall cause its Subsidiaries to,
(a) afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives full access during
normal business hours and at all other reasonable times to the officers,
employees, agents, properties, offices and other facilities of the Company and
its Subsidiaries and to their books and records and (b) furnish promptly to
Parent and its Representatives a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities Laws and such other information
concerning the business, properties, contracts, records and personnel of the
Company and its Subsidiaries (including financial, operating and other data and
information) as may be reasonably requested, from time to time, by or on behalf
of Parent.
SECTION 7.5 Confidentiality Agreement. The parties agree that the
provisions of the Confidentiality Agreement shall remain binding and in full
force and effect and that the terms of the Confidentiality Agreement are
incorporated herein by reference; provided, however, that any consents from the
Company necessary under the Confidentiality Agreement for Parent and Purchaser
to consummate the transactions contemplated by this Agreement and the
Stockholders Agreement shall be deemed to have been made. The parties shall
comply with, and shall cause their respective Representatives to comply with,
all of their respective obligations under the Confidentiality Agreement until
Purchaser purchases a majority of the outstanding shares of Company Common Stock
pursuant to the Offer.
SECTION 7.6 Reasonable Efforts. Subject to the terms and conditions of
this Agreement and, including the provisions of Sections 7.7 and 7.8, each of
the parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable Laws to consummate and make
effective as soon as reasonably practicable the transactions contemplated by
this Agreement including (a) cooperating in the preparation and filing of all
applications, requests, consents and other filings required by applicable
Governmental Authorities or Courts, including the Offer Documents, the
Schedule 14D-9, the Proxy Statement and any amendments and supplements to any
thereof; (b) taking all action reasonably necessary, proper or advisable to
secure any necessary consents, approvals or waivers from third parties,
including under existing debt obligations of the Company and its Subsidiaries or
to amend the notes, indentures or agreements relating to such existing debt
obligations to the extent required by such notes, indentures or agreements, or
to redeem or repurchase such debt obligations; (c) contesting any pending legal
proceeding, whether judicial or administrative, relating to the Offer or the
Merger including seeking to have any stay or temporary restraining order entered
by any Court or other Governmental Authority vacated or reversed; and
(d) executing any additional instruments necessary to consummate the
transactions contemplated hereby and thereby. In case at any time after the
Effective Time any further action is necessary to carry out the purposes of this
Agreement, the proper officers and directors of each party hereto shall use all
reasonable efforts to take all such necessary action.
SECTION 7.7 Permits. Each of the Company, Parent and Purchaser shall
cooperate and use their respective reasonable efforts to make all filings, to
obtain all actions or nonactions, waivers, Permits and Orders of Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement and to take all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Authority. Each of the parties hereto will furnish to the other
parties such necessary information and reasonable assistance as such other
parties may reasonably request in connection with the foregoing.
SECTION 7.8 HSR Act and Exon-Florio Filings.
(a) In addition to and without limiting the agreements of Parent,
Purchaser and the Company contained in Sections 7.6 and 7.7, Parent, Purchaser
and the Company will (i) take promptly all actions necessary to make the filings
required of Parent, Purchaser, the Company or any of their Affiliates under the
HSR Act and Exon-Florio, (ii) comply at the earliest practicable date with any
request for additional information or documentary material received by Parent,
Purchaser, the Company or any of their respective Affiliates from the Federal
Trade Commission or the Antitrust Division of the Department of Justice pursuant
to the HSR Act, or from CFIUS under Exon-Florio, and (iii) cooperate in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement (A) under the HSR Act commenced by
the Federal Trade Commission or the Antitrust Division of the Department of
Justice, or (B) under Exon-Florio, commenced by CFIUS.
(b) In furtherance and not in limitation of the covenants contained in
Section 7.7 and Section 7.8(a), Parent, Purchaser and the Company shall each use
all reasonable efforts to resolve such objections, if any, as may be asserted
with respect to the Offer, the Merger or any other transactions contemplated by
this Agreement under the HSR Act or Exon-Florio; provided, that neither Parent
nor any of its Subsidiaries shall be required to divest any asset or enter into
any consent decree.
(c) Each of the Company, Parent and Purchaser shall promptly inform the
other party of any material communication received by such party from the
Federal Trade Commission, the Antitrust Division of the Department of Justice,
CFIUS, or any other Governmental Authority regarding any of the transactions
contemplated hereby.
SECTION 7.9 Public Announcements. Parent, Purchaser and the Company will
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer or the Merger or this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation (and affording the other party or parties an opportunity to
comment thereon), except as may be required by applicable Law or Court process
or by obligations pursuant to any listing agreement with the NASD or any
securities exchange.
SECTION 7.10 Employee Agreements.
Parent acknowledges and agrees that all employment agreements,
severance agreements, deferred compensation agreements, and supplemental
retirement agreements with the employees of the Company and its Subsidiaries
that are listed in Section 7.10 of the Company's Disclosure Letter will be
binding and enforceable obligations of the Surviving Corporation to the same
extent as they were binding and enforceable obligations of the Company and its
Subsidiaries as of the date of this Agreement, except as the parties thereto may
otherwise agree.
SECTION 7.11 Company's Rights Agreement; State Takeover Statutes.
The Company shall take all action (including, if necessary, redeeming all the
outstanding Company Rights issued pursuant to the Company's Rights Agreement or
amending or terminating the Company's Rights Agreement) so that the execution,
delivery and performance of this Agreement and the Stockholders Agreement and
the consummation of the Merger and the other transactions contemplated or
permitted by this Agreement and the Stockholders Agreement do not and will not
result in the grant of any Company Rights to any Person under the Company's
Rights Agreement or enable or require any outstanding Company Rights to be
exercised, distributed or triggered. Except as set forth in the first sentence
of this Section 7.11 or as approved in writing by Parent, the Board of Directors
of the Company shall not (a) amend the Company's Rights Agreement or (b) take
any action with respect to, or make any determination under, the Company's
Rights Agreement. If any Distribution Date or Shares Acquisition Date occurs
under the Company's Rights Agreement at any time during the period from the date
of this Agreement to the Effective Time, the Company and Parent shall make such
adjustment to the Offer price as the Company and Parent shall mutually agree so
as to preserve the economic benefits that the Company and Parent each reasonably
expected on the date of this Agreement to receive as a result of the
consummation of the Offer, the Merger and the other transactions contemplated by
this Agreement. The Company will take all steps necessary (a) to exempt the
transactions contemplated by this Agreement and the Stockholders Agreement from
Section 203 of the GCL, (b) to ensure that no other state takeover statute or
similar Law or Regulation is or becomes applicable to this Agreement or the
Stockholders Agreement and (c) if any state takeover statute or similar Law or
Regulation becomes applicable to this Agreement or the Stockholders Agreement,
to ensure that the Offer, the Merger and the other transactions contemplated
hereby and thereby may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Stockholders Agreement and otherwise to
minimize the effect of such Law or Regulation on the Offer, the Merger and the
other transactions contemplated hereby and thereby.
SECTION 7.12 Employee Benefit Plans. Until at least December 31,
1998, Parent shall provide, or cause to be provided, to all employees of the
Company and its Subsidiaries compensation, incentive pay and benefits that are
substantially comparable in the aggregate to the compensation, incentive pay and
benefits (without taking into account any equity-based compensation, incentive
pay or benefits) provided to such employees by the Company and its Subsidiaries
as of the Offer Closing Date. From and after the Effective Time, Parent shall
grant all employees of the Surviving Corporation and its Subsidiaries on the
Effective Time credit for vesting and eligibility purposes (but not for benefit
accrual purposes) for all service (to the same extent as service with Parent or
any Subsidiary of Parent (other than the Surviving Corporation and its
Subsidiaries) is taken into account with respect to similarly situated employees
of Parent and the Subsidiaries of Parent (other than the Surviving Corporation
and its Subsidiaries)) with the Surviving Corporation and any Subsidiary of the
Surviving Corporation and their respective predecessors prior to the Effective
Time under all Benefit Plans of Parent or its Subsidiaries (other than the
Surviving Corporation and its Subsidiaries) in which such employees shall become
eligible to participate as if such service with the Surviving Corporation or any
Subsidiary of the Surviving Corporation and their respective predecessors was
service with Parent or any Subsidiary of Parent (other than the Surviving
Corporation and its Subsidiaries), and, with respect to any medical or dental
benefit plan in which such employees become eligible to participate, Parent
shall waive any pre-existing condition exclusions and actively-at-work
requirements (provided, however, that no such waiver shall apply to a pre-
existing condition of any employee of the Surviving Corporation or any
Subsidiary of the Surviving Corporation who was, as of the Offer Closing Date,
excluded from participation in a Benefit Plan of the Surviving Corporation or
any Subsidiary of the Surviving Corporation by virtue of such pre-existing
condition) and provided that any covered expenses incurred (on or before the
Offer Closing Date) by an employee or an employee's covered dependent shall be
taken into account for purposes of satisfying applicable deductible, coinsurance
and maximum out-of-pocket provisions after the Offer Closing Date to the same
extent as such expenses are taken into account for the benefit of similarly
situated employees of Parent and the Subsidiaries of Parent (other than the
Surviving Corporation and its Subsidiaries).
SECTION 7.13 Indemnification of Directors and Officers.
(a) Purchaser agrees that all rights to indemnification for acts or
omissions occurring prior to the Offer Closing Date existing as of the date
hereof in favor of the current or former directors or officers of the Company
and its Subsidiaries as provided in their respective certificates of
incorporation or bylaws shall survive the Merger and shall continue in full
force and effect in accordance with their terms for a period of six years from
the Offer Closing Date. Parent shall cause to be maintained for a period of six
years from the Offer Closing Date the Company's current directors' and officers'
insurance and indemnification policy (the "D&O Insurance") and the current
fiduciary liability insurance policy (the "Fiduciary Insurance") (provided that
Parent may substitute therefor policies or financial guarantees with reputable
and financially sound carriers or other obligors of at least the same coverage
and amounts containing terms and conditions which are no less advantageous) to
the extent that such insurance policies provide coverage for events occurring
prior to the Effective Time for all persons who are directors and officers of
the Company on the date of this Agreement, so long as the aggregate amount to be
paid by the Company after the date of this Agreement for such D&O Insurance and
Fiduciary Insurance during such six-year period would not be in excess of
$350,000 and $150,000, respectively. If, during such six-year period, such
insurance coverage cannot be obtained at all or can only be obtained for an
aggregate amount (including all amounts paid by the Company after the date of
this Agreement) in excess of $350,000, in the case of D&O Insurance, and
$150,000, in the case of Fiduciary Insurance, Parent shall use all reasonable
efforts to cause to be obtained as much D&O Insurance and Fiduciary Insurance as
can be obtained for the remainder of such six-year period for an aggregate
amount (including all amounts paid by the Company after the date of this
Agreement) not in excess of $350,000 and $150,000, respectively, on terms and
conditions no less advantageous than the existing D&O Insurance and the existing
Fiduciary Insurance, respectively.
(b) If any claim or claims shall, subsequent to the Offer Closing Date
and within six years thereafter, be made in writing against any present or
former director or officer of the Company based on or arising out of the
services of such Person prior to the Offer Closing Date in the capacity of such
Person as a director or officer of the Company (and such director or officer
shall have given Parent written notice of such claim or claims within such six
year period), the provisions of subsection (a) of this Section respecting the
rights to indemnity for current or former directors or officers under the
certificate of incorporation and bylaws of the Company and its Subsidiaries
shall continue in effect until the final disposition of all such claims.
(c) Notwithstanding anything to the contrary in this Section 7.13, neither
Parent nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which shall not be unreasonably withheld.
(d) The provisions of this Section 7.13 are intended to be for the benefit
of, and shall be enforceable by, each Person entitled to indemnification
hereunder and the heirs and representatives of such Person.
(e) Parent shall not permit the Surviving Corporation to merge or
consolidate with any other Person unless the Surviving Corporation shall ensure
that the surviving or resulting entity assumes the obligations imposed by
subsections (a) and (b) of this Section 7.13.
SECTION 7.14 Event Notices and Other Actions. (a) From and after the
date of this Agreement until the Effective Time, each party hereto shall
promptly notify the other parties hereto of (i) the occurrence or nonoccurrence
of any event, the occurrence or nonoccurrence of which has resulted in, or could
reasonably be expected to result in, any condition to the Offer set forth in
Annex B, or any condition to the Merger set forth in Article VIII, not being
satisfied, (ii) the failure of such party to comply with any covenant or
agreement to be complied with by it pursuant to this Agreement which has
resulted in, or could reasonably be expected to result in, any condition to the
Offer set forth in Annex B, or any condition to the Merger set forth in Article
VIII, not being satisfied and (iii) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect. No delivery
of any notice pursuant to this Section 7.14(a) shall cure any breach of any
representation or warranty of such party contained in this Agreement or
otherwise limit or affect the remedies available hereunder to the party or
parties receiving such notice.
(b) The Company and Parent shall not, and shall not permit any of their
respective Subsidiaries to, take any action or nonaction that would, or that
could reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect or (iii) except
as otherwise permitted by Section 7.3, any condition to the Offer set forth in
Annex B, or any condition to the Merger set forth in Article VIII, not being
satisfied.
SECTION 7.15 Third Party Standstill Agreements; Tortious Interference.
During the period from the date of this Agreement through the Effective Time,
the Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill or similar agreement to which the Company or any
of its Subsidiaries is a party (other than any involving Parent). Subject to
the foregoing, during such period, the Company agrees to enforce, to the fullest
extent permitted under applicable Law, the provisions of any such agreements,
including obtaining injunctions to prevent any breaches of such agreements and
to enforce specifically the terms and provisions thereof in any Court of the
United States or any state thereof having jurisdiction. Notwithstanding the
foregoing, nothing in this Section 7.15 is intended to prevent the Company from
exercising its rights under Section 7.3(a) in accordance with the provisions of
Section 7.3.
<PAGE> 32
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.1 Conditions to Obligations of Each Party Under This Agreement.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived by the parties hereto, in whole or
in part, to the extent permitted by applicable Law:
(a) Company Stockholder Approval. This Agreement and the Merger
shall have been approved and adopted by the requisite vote of the stockholders
of the Company, if required by applicable Law.
(b) No Order. No Court or Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
(c) HSR Act. The applicable waiting period under the HSR Act
shall have expired or been terminated.
SECTION 8.2 Additional Conditions to Obligations of the Parent Companies.
The obligations of the Parent Companies to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by the Parent Companies, in whole or in part,
to the extent permitted by applicable Law:
(a) Representations and Warranties. Each of the representations
and warranties of the Company in this Agreement shall be true and correct (for
all purposes of this Section 8.2 (a) without giving effect to any Material or
Material Adverse Effect qualifiers or other qualifiers based on materiality
contained therein), as of the date of this Agreement and as of the Effective
Time as though made as of the Effective Time, (other than to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall be true and correct as of such
date), except to the extent the failure of such representations and warranties
to be true and correct has not had, and could not be reasonably expected to
have, in the aggregate, a Material Adverse Effect on the Company.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Effective Time.
(c) Certificates of Compliance. The Company shall have furnished
Parent and Purchaser with such certificates and other documents necessary to
evidence the fulfillment of the conditions set forth in this Section 8.2 as
Parent or Purchaser may reasonably request.
(d) Company Stock Options. Each of the Company Option Plans shall
have been, or contemporaneously with or by virtue of the Merger will be,
terminated, all required consents shall have been obtained to cancel all Company
Stock Options and Restricted Stock awards in accordance with Section 3.6(a), and
any other program, plan or arrangement providing for the issuance or grant by
the Company or any of its Subsidiaries of any interest in respect of the capital
stock of the Company or any of its Subsidiaries (and any interests outstanding
under any such plan, program or arrangement) shall have been, or
contemporaneously with or by virtue of the Merger will be, validly terminated or
canceled.
(e) Exon-Florio Review. The period of time for any applicable review
process by CFIUS relating to the determination of any threat to national
security shall have expired, and CFIUS shall not have taken any action or made
any recommendation to the President of the United States to block or prevent
consummation of the Offer or the Merger.
SECTION 8.3 Additional Condition to Obligations of the Company. The
obligations of the Company to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the condition, which may be
waived by the Company, in whole or in part, to the extent permitted by
applicable Law, that the Parent Companies shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them at or prior to the Effective
Time.
<PAGE> 33
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated and the Offer
and the Merger may be abandoned at any time (notwithstanding approval of the
Merger by the stockholders of the Company) prior to the Effective Time:
(a) by mutual written consent of Parent, Purchaser and the
Company;
(b) by Parent, Purchaser or the Company if any Court of competent
jurisdiction or other Governmental Authority shall have issued a final Order or
taken any other final action restraining, enjoining or otherwise prohibiting the
consummation of the Offer or the Merger and such Order or other action is or
shall have become nonappealable;
(c) by Parent or Purchaser if due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth in
Annex B hereto, Purchaser shall have (i) failed to commence the Offer within the
time required by Regulation 14D under the Exchange Act, (ii) terminated the
Offer without purchasing any shares of Company Common Stock pursuant to the
Offer or (iii) failed to accept for payment shares of Company Common Stock
pursuant to the Offer prior to July 31, 1998;
(d) by the Company if (i) there shall not have been a material
breach of any representation, warranty, covenant or agreement on the part of the
Company and Purchaser shall have (A) failed to commence the Offer within the
time required by Regulation 14D under the Exchange Act, (B) terminated the Offer
without purchasing any shares of Company Common Stock pursuant to the Offer, or
(C) failed to accept for payment shares of Company Common Stock pursuant to the
Offer prior to July 31, 1998, or (ii) prior to the purchase of shares of Company
Common Stock pursuant to the Offer, concurrently with the execution of an
Acquisition Agreement under the circumstances permitted by Section 7.3 provided,
that such termination under this clause (ii) shall not be effective unless the
Company and the Board of Directors of the Company shall have complied with all
their obligations under Section 7.3 and until payment of the Termination Fee and
the out-of-pocket fees and expenses incurred by Parent, Purchaser and their
Affiliates in connection with the transactions contemplated by this Agreement
pursuant to Section 9.5(b);
(e) by Parent or Purchaser prior to the purchase of shares of
Company Common Stock pursuant to the Offer, if (i) there shall have been a
material breach of any representation or warranty on the part of the Company
under this Agreement which materially adversely affects (or materially delays)
the consummation of the Offer, (ii) there shall have been a material breach of
any covenant or agreement on the part of the Company under this Agreement which
materially adversely affects (or materially delays) the consummation of the
Offer, which shall not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two Business Days prior to the date on
which the Offer expires, provided, however, that the Company shall have no right
to cure and Parent and Purchaser may immediately terminate this Agreement in the
event that such breach by the Company was wilful or intentional or in the event
of a breach of Section 7.3, (iii) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified (including by amendment of
Schedule 14D-9) in a manner adverse to Purchaser its approval or recommendation
of the Offer, the Merger or this Agreement, shall have recommended to the
Company's stockholders a Third Party Acquisition, or shall have authorized the
redemption of any Company Rights, or (iv) there shall not have been validly
tendered and not withdrawn prior to the expiration of the Offer at least 51
percent of the Fully Diluted Shares and on or prior to such expiration an entity
or group (other than Parent or Purchaser) shall have made, or, with respect to
any proposal that may be existing on the date hereof, not withdrawn, a proposal
with respect to a Third Party Acquisition; or
(f) by the Company prior to the purchase of any shares of Company
Common Stock pursuant to the Offer if (i) there shall have been a material
breach of any representation or warranty in this Agreement on the part of Parent
or Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or (ii) there shall have been a material breach of
any covenant or agreement in this Agreement on the part of Parent or Purchaser
which materially adversely affects (or materially delays) the consummation of
the Offer which shall not have been cured prior to the earliest of (A) 10 days
following notice of such breach and (B) two Business Days prior to the date on
which the Offer expires; provided, however, that Parent and Purchaser shall have
no right to cure and the Company may immediately terminate this Agreement in the
event that such breach by Parent or Purchaser was wilful or intentional.
SECTION 9.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its Affiliates, directors, officers or stockholders, other
than the provisions of this Section 9.2 and Sections 5.19, 6.7, 7.5 and 9.5 and
Article X. Nothing contained in this Section 9.2 shall relieve any party from
liability for any breach of this Agreement.
SECTION 9.3 Amendment. This Agreement may be amended by action taken by
the Company, Parent and Purchaser at any time before or after any adoption of
this Agreement by the stockholders of the Company (whether or not such adoption
is required); provided that after the date of adoption of this Agreement by the
stockholders of the Company, no amendment shall be made that by Law requires
further approval of such stockholders without the approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties. From and after the Control Date, if such date
occurs, and prior to the Effective Time, any amendment of this Agreement or the
Company's certificate of incorporation or by laws, any termination of this
Agreement by the Company, any extension of time for performance of any of the
obligations of Parent or Purchaser hereunder or any waiver thereof, any waiver
of any condition to the obligations of the Company or any of the Company's
rights hereunder or other action by the Company hereunder will require the
concurrence of, and shall be effective only if approved by, a majority of the
Independent Directors, which action shall be deemed to constitute the action of
the full Board of Directors even if such majority of Independent Directors does
not constitute a majority of all directors then in office; provided, that, if
there shall be no Independent Directors and Parent is not in breach of its
obligations to designate Independent Directors under Section 2.4, such actions
may be effected by majority vote of the entire Board of Directors of the
Company, except that no such action shall amend the terms of this Agreement in a
manner materially adverse to the stockholders of the Company (excluding
Purchaser, Parent, and their respective Affiliates) without the approval of a
majority of such stockholders.
SECTION 9.4 Extension; Waiver. At any time prior to the Effective Time, a
party may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other parties contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions of the other parties hereto
contained herein; provided that (i) from and after the Control Date, no
extensions or waivers shall be made which materially adversely affect the rights
of the Company's stockholders hereunder without the approval of a majority of
the Independent Directors if at the time there shall be any Independent
Directors and (ii) after the date of adoption of the Merger by the stockholders
of the Company, no extensions or waivers shall be made that by Law requires
further approval by such stockholders without the approval of such stockholders.
Any agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
SECTION 9.5 Fees, Expenses and Other Payments.
(a) Except as provided in Section 9.5(b) of this Agreement, all fees and
expenses incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such fees and expenses.
(b) If:
(i) Parent or Purchaser terminates this Agreement pursuant to
Section 9.1(e)(i) or (iv) or pursuant to Section 9.1(e)(ii) other than as a
result of a breach of Section 7.3 or the Company terminates this Agreement
pursuant to Section 9.1(d)(i) under circumstances when Parent had the right to
terminate this Agreement pursuant to Section 9.1(e)(iv), and, in any such case,
within 15 months thereafter the Company enters into an agreement with respect to
the consummation of, or consummates, a Third Party Acquisition;
(ii) Parent or Purchaser terminates this Agreement pursuant to
Section 9.1(e)(ii) as a result of a breach of Section 7.3 or pursuant to
Section 9.1(e)(iii); or
(iii) the Company terminates this Agreement pursuant to Section
9.1(d)(ii);
then, in each case, the Company (A) shall pay to Parent, within two Business
Days following the execution and delivery of such agreement or such occurrence,
as the case may be, or simultaneously with such termination pursuant to
Section 9.1(d)(ii), a fee, in cash, of $40 million (a "Termination Fee");
provided, that the Company in no event shall be obligated to pay more than one
such $40 million fee with respect to all such agreements and occurrences and
such termination and (B) shall reimburse Parent and Purchaser, up to a limit of
$5 million, for all their reasonable out-of-pocket fees and expenses actually
incurred by Parent, Purchaser or their respective Affiliates in connection with
this Agreement, the Offer, the Merger and the other transactions contemplated by
this Agreement, including financing fees and other expenses in connection with
options on Interest Rate Protection Agreements and Other Hedging Agreements and
all reasonable fees and expenses of counsel, accountants, investment bankers,
experts and consultants to each of Parent or Purchaser and their respective
Affiliates and the expenses of the preparation, printing, filing and mailing of
the Offer Documents.
(c) Any payment required to be made pursuant to Section 9.5(b) of this
Agreement shall be made to Parent by wire transfer of immediately available
funds to an account designated by Parent.
<PAGE> 36
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
SECTION 10.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given upon receipt, if delivered personally, mailed by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number specified
below:
(a) If to either of the Parent Companies, to:
GEC Incorporated and
GEC Acquisition Corp.
c/o GEC Marconi N.A., Inc.
Mail Stop 11 CO1
164 Totowa Road
Wayne, NJ 07474-0975
Attention: John Currier
Telecopier No.: (973) 633-6431
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Melvin L. Bedrick
Telecopier No.: (212) 474-3700
(b) If to the Company, to:
Tracor, Inc.
6500 Tracor Lane
Austin, TX 78725-2000
Attention: Russell E. Painton
Telecopier No.: (512) 929-2257
with a copy to:
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, TX 75270
Attention: Darrel A. Rice
Telecopier No.: (214) 745-5390
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed received on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed received three
days after the date the same is postmarked.
SECTION 10.3 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 10.5 Entire Agreement. This Agreement (together with the
Annexes, the Company's Disclosure Letter and the Confidentiality Agreement)
constitutes the entire agreement of the parties, and supersedes all prior
agreements and undertakings, both written and oral, among the parties, with
respect to the subject matter hereof.
SECTION 10.6 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of Law or otherwise by any of the parties without
the prior written consent of the other parties, except that Purchaser may
assign, in its sole discretion (but subject to the provisions of Section 3.1),
any of or all its rights, interests and obligations under this Agreement to
Parent or to an Affiliate of Parent, but no such assignment shall relieve
Purchaser of any of its obligations under this Agreement. Any attempted
assignment in violation of this Section 10.6 shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 10.7 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns.
SECTION 10.8 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
SECTION 10.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable principles of conflicts of
Law.
SECTION 10.10 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Delaware state court or any
Federal court located in the State of Delaware, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any Delaware state court or any Federal court located in the State of
Delaware in the event any dispute arises out of this Agreement or any
transaction contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, (c) agrees that it will not bring any action relating
to this Agreement or any transaction contemplated by this Agreement in any court
other than any Delaware state court or any Federal court sitting in the State of
Delaware and (d) waives any right to trial by jury with respect to any action
related to or arising out of this Agreement or any transaction contemplated by
this Agreement. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
Delaware or of the United States of America located in the State of Delaware,
and hereby further irrevocably and unconditionally waive and agree not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
SECTION 10.11 Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first written above by their respective officers
or directors thereunto duly authorized.
GEC INCORPORATED
By:
Name:
Title:
GEC ACQUISITION CORP.
By:
Name:
Title:
TRACOR, INC.
By:
Name:
Title:
<PAGE>
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Agreement shall have the meanings
set forth below unless the context shall otherwise require:
"Acquisition Agreement" shall have the meaning ascribed to such term in
Section 7.3(b).
"Acquisition Proposal" shall have the meaning ascribed to such term in
Section 7.3(d).
"Affiliate" shall mean, with respect to any Person, any other Person that
controls, is controlled by or is under common control with the former Person.
"Agreement" shall mean the Agreement and Plan of Merger dated as of
April 21, 1998 among Parent, Purchaser and the Company, including any
amendments thereto and each Annex (including this Annex A) and Schedule thereto
(including the Company's Disclosure Letter).
"Balance Sheet Date" shall mean December 31, 1997.
"Benefit Plans" shall mean any employee pension benefit plan (whether or
not insured), as defined in Section 3(2) of ERISA, any employee welfare benefit
plan (whether or not insured) as defined in Section 3(1) of ERISA, any plans
that would be employee pension benefit plans or employee welfare benefit plans
if they were subject to ERISA, such as foreign plans and plans for directors,
any employment contracts, severance or termination pay arrangements, any stock
bonus, stock ownership, stock option, stock purchase, stock appreciation
rights, phantom stock or other stock plan (whether qualified or nonqualified),
and any bonus or incentive compensation plan sponsored, maintained or
contributed to by the Company or any of its Subsidiaries for the benefit of any
of the present or former directors, officers, employees, agents, consultants or
other similar representatives providing services to or for the Company or any
of its Subsidiaries in connection with such services or any such plans which
have been so sponsored, maintained, or contributed to within six years prior to
the date of this Agreement; provided, however, that such term shall not include
(a) routine employment policies and procedures developed and applied in the
ordinary course of business and consistent with past practice, including wage,
vacation, holiday and sick or other leave policies, (b) workers compensation
insurance and (c) directors and officers liability insurance.
"Business Day" means any day other than a day on which banks in New York
are authorized or obligated to be closed.
"Capitalized Lease Obligations" shall mean, with respect to any Person,
all rental obligations of such Person which, under GAAP, are or will be
required to be capitalized on the books of such Person, in each case taken at
the amount thereof accounted for as indebtedness in accordance with GAAP.
"Certificate" shall mean an outstanding stock certificate which
immediately prior to the Effective Time represented shares of Company Common
Stock.
"Certain Stockholders" shall have the meaning ascribed to such term in
the recitals to the Agreement.
"Certificate of Merger" shall have the meaning ascribed to such term in
Section 3.2.
"CFIUS" means Committee on Foreign Investment in the United States, an
interagency committee chaired by a representative of the United States
Secretary of the Treasury.
"Closing" shall have the meaning ascribed to such term in Section 4.4.
"Closing Date" shall mean the date of the Closing as determined pursuant
to Section 4.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder.
"Company" shall mean Tracor, Inc., a Delaware corporation.
"Company Common Stock" shall have the meaning ascribed to such term in
the recitals to the Agreement.
"Company Option Plans" shall mean the 1995 Stock Plan for Employees and
Subsidiaries and the 1991 Stock Plan for Employees of Tracor, Inc. and
Subsidiaries and any other arrangement pursuant to which options to acquire
Company Common Stock have been granted to current or former directors or
employees.
"Company Rights" shall have the meaning ascribed to such term in Section
5.3(a).
"Company SEC Documents" shall have the meaning ascribed to such term in
Section 5.7(a).
"Company Stock Options" shall mean stock options granted pursuant to the
Company Option Plans.
"Company Stockholder Approval" shall have the meaning ascribed to such
term in Section 5.4(b).
"Company Stockholders' Meeting" shall have the meaning ascribed to such
term in Section 3.7(b).
"Company's Consolidated Balance Sheet" shall mean the consolidated
balance sheet of the Company as of December 31, 1997 included in the Company's
Audited Consolidated Financial Statements.
"Company's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Company and its Subsidiaries as of
December 31, 1997 and December 31, 1996 and the related consolidated statements
of income and cash flows for the fiscal years ended December 31, 1997, 1996 and
1995, together with the notes thereto, all as audited by Ernst & Young, under
their report with respect thereto dated January 30, 1998 and included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997 filed with the SEC.
"Company's Consolidated Financial Statements" shall mean the Company's
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter dated the date of the
Agreement delivered by the Company to the Parent Companies concurrently with
the execution of the Agreement, which, among other things, shall identify
exceptions to the Company's representations and warranties contained in Article
V and covenants contained in Article VII by specific section and subsection
references.
"Company's Rights Agreement" shall mean that certain Rights Agreement
dated as of February 17, 1997 between the Company and Harris Trust and Savings
Bank, as Rights Agent.
"Company's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
March 31, 1998, and the related consolidated statements of income and cash
flows for the three-month periods ended March 31, 1998 and March 31, 1997,
attached to Section 5.7 of the Company's Disclosure Letter.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between GEC Marconi N.A., Inc. and the Company dated February 24,
1998.
"Contingent Obligation" shall mean, as to any Person, any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including any
obligation of any Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or insolvency of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(d) otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"control" (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock or
as trustee or executor, by contract or credit arrangement or otherwise.
"Control Date" shall have the meaning ascribed to such term in Section 2.4.
"Court" shall mean any court of the United States, any foreign country or
any domestic or foreign state, and any political subdivision thereof, or any
arbitration tribunal and shall include the European Court of Justice.
"Current Benefit Plans" shall mean Benefit Plans that are sponsored,
maintained, or contributed to by the Company or any of its Subsidiaries as of
the date of this Agreement.
"D&O Insurance" shall have the meaning ascribed to such term in Section
7.13(a).
"Dissenting Shares" shall have the meaning ascribed to such term in
Section 4.3.
"Effective Time" shall mean the date and time of the completion of the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with Section 3.2 or such later time as Parent and the
Company may agree and specify in such certificate.
"Environmental Law or Laws" shall mean any and all Laws, enforceable
requirements or Orders of any Governmental Authority pertaining to health or
the environment currently in effect and applicable to a specified Person and
its Subsidiaries, including the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Hazardous & Solid Waste
Amendments Act of 1984, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended, the Oil Pollution Act of 1990, as amended ("OPA"), any state
or local Laws implementing the foregoing federal Laws, and all other
environmental conservation or protection Laws. For purposes of the Agreement,
the terms "hazardous substance" and "release" have the meanings specified in
CERCLA; provided, however, that, to the extent the Laws of the state or
locality in which the property is located establish a meaning for "hazardous
substance" or "release" that is broader than that specified in CERCLA, such
broader meaning shall apply within the jurisdiction of such state or locality,
and the term "hazardous substance" shall include all dehydration and treating
wastes, waste (or spilled) oil, and waste (or spilled) petroleum products, and
radioactive material, even if such are specifically exempt from classification
as hazardous substances or hazardous wastes pursuant to CERCLA or RCRA or the
analogous statutes of any jurisdiction applicable to the specified Person or
its Subsidiaries or any of their respective properties or assets.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the Regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the Regulations promulgated thereunder.
"Exchange Agent" shall mean a bank or trust company having a net worth in
excess of $100 million designated and appointed to act in the capacities
required thereof under Section 4.2.
"Exchange Fund" shall mean the fund of cash deposited with the Exchange
Agent pursuant to Section 4.2.
"Exon-Florio" shall mean Section 721 of the Defense Production Act, 50
App. U.S.C.A. Sec. 2170 (West 1991 & Supp. 1997).
"Fiduciary Insurance" shall have the meaning ascribed to such term in
Section 7.13(a).
"Filed Company SEC Documents" shall have the meaning ascribed to such
term in Section 5.9.
"Financial Advisor" shall mean BT Wolfensohn, the financial advisor to
the Company with respect to the transactions contemplated by the Agreement.
"Fully Diluted Shares" shall have the meaning ascribed to such term in
Annex B.
"GAAP" shall mean accounting principles generally accepted in the United
States consistently applied by a specified Person.
"GCL" shall mean the General Corporation Law of the State of Delaware.
"Governmental Authority" shall mean any governmental agency or authority
(other than a Court) of the United States, any foreign country, or any domestic
or foreign state, and any political subdivision or agency thereof, and shall
include any multinational authority having governmental or quasi-governmental
powers.
"Government Contract" shall have the meaning ascribed to such term in
Section 5.13.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the Regulations promulgated thereunder.
"Indebtedness" shall mean, as to any Person, (a) all indebtedness
(including principal, interest, fees and charges) of such Person for borrowed
money or for the deferred purchase price of property or services, (b) the
maximum amount available to be drawn under all letters of credit issued for the
account of such Person and all unpaid drawings in respect of such letters of
credit, (c) all Indebtedness of the types described in clause (a), (b), (d),
(e), (f) or (g) of this definition secured by any Lien on any property owned by
such Person, whether or not to be capitalized under leases under which such
Person is the lessee, (d) all Capitalized Lease Obligations of such Person, (e)
all obligations of such Person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, (i.e., take-or-pay and similar
obligations), (f) all Contingent Obligations of such Person and (g) all
obligations under any Interest Rate Protection Agreement or any Other Hedging
Agreement or under any similar type of agreement.
"Independent Directors" shall have the meaning ascribed to such term in
Section 2.4.
"Intellectual Property Rights" shall have the meaning ascribed to such
term in Section 5.18.
"Interest Rate Protection Agreements" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement or other similar agreement.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, with respect to either the Company or Parent, the
actual knowledge (after reasonable inquiry) of, in the case of the Company, any
officer of the Company listed in such party's 1997 annual report to
stockholders and, in the case of Parent, any executive officer of Parent.
"Laws" shall mean all laws, statutes, ordinances and Regulations of the
United States, any foreign country, or any domestic or foreign state, and any
political subdivision or agency thereof, including all decisions of Courts
having the effect of Law in each such jurisdiction.
"Leaseholds" shall mean, with respect to any Person, all the right, title
and interest of such Person as lessee or licensee, in, to and under leases,
licenses, improvements and/or fixtures.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing), any conditional sale or other title retention agreement, any lease
in the nature thereof or the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Loan Agreement" shall mean that certain Credit Agreement, dated as of
March 14, 1997, among the Company and various banks, Credit Lyonnais, New York
branch, The First National Bank of Chicago and Wells Fargo Bank (Texas),
National Association (as co-agents) and Bankers Trust Company (as agent), as
amended.
"Material" shall mean is or will be material to the business, properties,
assets, condition (financial and other) or results of operations of a specified
Person and its Subsidiaries, if any, taken as a whole.
"Material Adverse Effect" shall mean any change or effect that is or will
be material and adverse to the business, properties, assets, condition
(financial and other) or results of operations of a specified Person and its
Subsidiaries, if any, taken as a whole, including a material adverse effect on
the ability of a specified Person to perform its obligations under the
Agreement and, in the case of the Company, (i) a reduction in fair market value
(determined on a discounted cash flow basis) of the Company and its
Subsidiaries, taken as a whole, of $40 million or more or (ii) a material
increase in the aggregate cost to Purchaser of the acquisition of the Company.
"Material Business" shall have the meaning ascribed to such term in
Section 7.3(d).
"Material Contract" shall mean each contract, lease, indenture,
agreement, arrangement or understanding to which the Company or any of its
Subsidiaries is a party or to which any of the properties, assets or operations
of the Company or any of its Subsidiaries is subject that is or will be
material to the business, properties, assets, condition (financial and other)
or results of operations of the Company and its Subsidiaries, taken as a whole.
"Merger" shall have the meaning ascribed to such term in Section 3.1.
"Merger Consideration" shall mean, as to any Certificate, the amount to
be paid to the holder thereof pursuant to the Merger, which amount shall be
equal to the product of the number of shares of Company Common Stock evidenced
by such Certificate, multiplied by the Per Share Merger Consideration.
"Minimum Tender Condition" shall have the meaning ascribed to such term
in Annex B.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"National Industrial Security Program Operating Manual" shall mean the
manual promulgated pursuant to the National Industrial Security Program,
established by Executive Order 12829, dated January 6, 1993.
"Offer" shall have the meaning ascribed to such term in the recitals to
the Agreement.
"Offer Closing Date" shall mean the date on which the acceptance for
payment and payment by Purchaser for shares of Company Common Stock tendered
pursuant to the Offer occurs.
"Offer Documents" shall have the meaning ascribed to such term in
Section 2.1(c).
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local.
"Other Hedging Agreement" shall mean any foreign exchange contract,
currency swap agreement, commodity agreement or other similar agreement or
arrangement designed to protect against the fluctuations in currency values.
"Parent" shall mean GEC Incorporated, a Delaware corporation.
"Parent Companies" shall have the meaning ascribed to such term in the
first paragraph of the Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Per Share Merger Consideration" shall have the meaning ascribed to such
term in Section 4.1(a).
"Permits" shall mean any and all permits, licenses, authorizations,
orders, certificates, registrations or other approvals granted by any
Governmental Authority.
"Permitted Encumbrances" shall mean the following:
(a) inchoate Liens for Taxes, assessments or governmental charges or
levies not yet due or Liens for Taxes, assessments or governmental charges or
levies being contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP;
(b) Liens in respect of property or assets of the Company or any of its
Subsidiaries imposed by law, which were incurred in the ordinary course of
business and do not secure indebtedness for borrowed money, such as carriers',
warehousemen's, materialmen's and mechanics' Liens and other similar Liens
arising in the ordinary course of business and (i) which do not in the
aggregate materially detract from the value of the Company's or such
Subsidiary's properties or assets or materially impair the use thereof in the
operation of the business of the Company or such Subsidiary or (ii) which are
being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the properties or
assets subject to any such Lien;
(c) Liens in existence on the Effective Date (as defined in the Loan
Agreement) which are listed, and the property subject thereto described, in
Schedule VII to the Loan Agreement, but only to the respective date, if any,
set forth in such Schedule VII, or the removal and termination of any such
Liens, plus renewals and extensions of such Liens, to the extent set forth in
such Schedule VII provided that (i) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens is not increased from that amount
outstanding at the time of any such renewal or extension, and (ii) any such
renewals or extensions do not encumber any additional assets or properties of
the Company or any of its Subsidiaries;
(d) Liens created pursuant to the pledge agreement in favor of the banks
pursuant to the Loan Agreement.
(e) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of the Company and its
Subsidiaries, taken as a whole;
(f) Liens upon assets subject to Capitalized Lease Obligations existing
on the date hereof or permitted under Section 7.2; provided that (i) such Liens
only serve to secure the payment of Indebtedness arising under such Capitalized
Lease Obligation and (ii) the Lien encumbering the asset giving rise to the
Capitalized Lease Obligation does not encumber any other asset of the Company
or any Subsidiary of the Company;
(g) Liens placed upon (i) equipment or machinery used in the ordinary
course of business of the Company or any of its Subsidiaries or (ii) Real
Property (as defined in the Loan Agreement) of the Company or any of its
Subsidiaries, in each case at the time of acquisition thereof by the Company or
any such Subsidiary or within sixty days thereafter to secure Indebtedness
incurred to pay all or a portion of the purchase price thereof; provided that
(A) the aggregate principal amount of all Indebtedness secured by Liens
permitted by this clause (g) incurred in any fiscal year of the Company,
together with the amount of all Capitalized Lease Obligations incurred in such
fiscal year, does not exceed that aggregate amount permitted by
Section 9.04(vii) of the Loan Agreement and (B) in all events, the Lien
encumbering the equipment, machinery or Real Property so acquired does not
encumber any other asset of the Company or such Subsidiary;
(h) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances, and minor title deficiencies, in each case not
securing Indebtedness and not materially interfering with the conduct of the
business of the Company or any of its Subsidiaries;
(i) Liens arising from precautionary UCC financing statement filings
regarding operating leases;
(j) Liens arising out of judgments or awards in respect of which the
Company or any of its Subsidiaries shall in good faith be prosecuting an appeal
or proceedings for review in respect of which there shall have been secured a
subsisting stay of execution pending such appeal or proceedings; provided that
the aggregate amount of all such judgments or awards does not exceed
$15,000,000 at any time outstanding;
(k) statutory and common law landlords' Liens under leases to which the
Company or any of its Subsidiaries is a party; and
(l) Liens resulting from pledges or deposits to secure payments of
workmen's compensation, unemployment insurance or other social security
programs or securing the performance of surety and bid and performance bonds,
tenders, leases and other obligations of similar nature, in each case incurred
in the ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money).
"Person" shall mean an individual, partnership, limited liability
company, corporation, joint stock company, trust, estate, joint venture,
association or unincorporated organization, or any other form of business or
professional entity, but shall not include a Governmental Authority.
"Proxy Statement" shall mean a proxy statement conforming to the
requirements of the Exchange Act and relating to the adoption of this Agreement
by the Company's stockholders, if such adoption is required by Law.
"Purchaser" shall mean GEC Acquisition Corp., a Delaware corporation and
a wholly owned Subsidiary of Parent.
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law.
"Reports" shall mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority (other than the SEC).
"Representatives" shall have the meaning ascribed to such term in Section
7.3(a).
"Restricted Stock" shall have the meaning ascribed to such term in
Section 3.6(a).
"Schedule 14D-1" shall have the meaning ascribed to such term in
Section 2.1(c).
"Schedule 14D-9" shall have the meaning ascribed to such term in
Section 2.2.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean (a) all Annual Reports on Form 10-K, (b) all
Quarterly Reports on Form 10-Q, (c) all proxy statements relating to meetings
of stockholders (whether annual or special), (d) all Current Reports on Form 8-K
and (e) all other reports, schedules, registration statements or other
documents required to be filed during a specified period by a Person with the
SEC pursuant to the Securities Act or the Exchange Act.
"Section 262" shall have the meaning ascribed to such term in Section
4.3.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the Regulations promulgated thereunder.
"Stockholders Agreement" shall have the meaning ascribed to such term in
the recitals to the Agreement.
A "Subsidiary" of a specified Person shall mean any corporation,
partnership, limited liability company, joint venture or other legal entity of
which the specified Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50 percent or more of the stock or
other equity or partnership interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
"Superior Proposal" shall have the meaning ascribed to such term in
Section 7.3(d).
"Surviving Corporation" shall mean the Company as the corporation
surviving the Merger.
"Tax Returns" shall mean all returns and Reports of or with respect to
any Tax which are required to be filed by or with respect to the Company or any
of its Subsidiaries.
"Taxes" shall mean all taxes, charges, imposts, tariffs, fees, levies or
other similar assessments or liabilities, including income taxes, ad valorem
taxes, excise taxes, withholding taxes, stamp taxes or other taxes of or with
respect to gross receipts, premiums, Real Property, personal property, windfall
profits, sales, use, transfers, licensing, employment, payroll and franchises
imposed by or under any Law; and such terms shall include any interest, fines,
penalties, assessments or additions to tax resulting from, attributable to or
incurred in connection with any such tax or any contest or dispute thereof.
"Terminated Benefit Plans" shall mean Benefit Plans that were sponsored,
maintained, or contributed to by the Company or any of its Subsidiaries within
six years prior to the date of the Agreement but which have been terminated
prior to the date of the Agreement.
"Termination Fee" shall have the meaning ascribed to such term in
Section 9.5(b).
"Third Party Acquisition" shall mean (a) the acquisition of the Company
by merger, consolidation, share exchange, recapitalization, liquidation,
dissolution, business combination or other similar transaction by any Person
(which includes for these purposes a "person" as defined in Section 13(d)(3) of
the Exchange Act) other than Parent, Purchaser or any Affiliate thereof (a
"Third Party"); (b) the acquisition by a Third Party of more than 50% of the
assets of the Company and its Subsidiaries, taken as a whole; (c) the
acquisition by a Third Party of 50% or more of the outstanding Company Common
Stock or 50% or more of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Company; (d) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (e) the purchase by the Company or any of its
Subsidiaries of more than 30 percent of the outstanding shares of Company
Common Stock.
"Voting Company Debt" shall have the meaning ascribed to such term in
Section 5.3(e).
"Warrant Agreement" shall mean the Warrant Agreement, dated as of
December 20, 1991, between the Company and Ameritrust Company National
Association, as Warrant Agent.
"Warrants" shall mean the Company's Series A Warrants to purchase shares
of Company Common Stock at an exercise price of $2.54 per share, which were
issued pursuant to the Warrant Agreement.
<PAGE>
ANNEX B
CONDITIONS OF THE OFFER
(a) Notwithstanding any other term of the Offer or the Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
shares of Company Common Stock promptly after the termination or withdrawal of
the Offer), to pay for any shares of Company Common Stock tendered pursuant to
the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer that number of shares of Company Common
Stock which would represent at least 51% of the Fully Diluted Shares (the
"Minimum Tender Condition"), (ii) any waiting period under the HSR Act
applicable to the purchase of shares of Company Common Stock pursuant to the
Offer shall have expired or been terminated and (iii) the period of time for
any applicable review process by CFIUS relating to the determination of any
threat to national security shall have expired, and CFIUS shall not have taken
any action or made any recommendation to the President of the United States to
block or prevent consummation of the Offer or the Merger. The term "Fully
Diluted Shares" means all outstanding securities entitled generally to vote in
the election of directors of the Company on a fully diluted basis, after giving
effect to the exercise or conversion of all options, warrants, rights and
securities exercisable or convertible into such voting securities, other than
potential dilution attributable to any Company Rights associated therewith.
(b) Furthermore, notwithstanding any other term of the Offer or
the Agreement, Purchaser shall not be required to commence the Offer, accept
for payment or, subject as aforesaid, pay for any shares of Company Common
Stock not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, with the consent of the Company or if, at any time on or after
the date of the Agreement and before the acceptance of such shares for payment
or the payment therefor, any of the following conditions exists:
(i) any representations and warranties of the Company in the
Agreement shall not be true and correct (for all purposes of this paragraph
(i) without giving effect to any Material or Material Adverse Effect qualifiers
or other qualifiers based on materiality that are contained therein) as of such
time (other than to the extent such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties
shall not be true and correct as of such date), except to the extent the failure
of such representations and warranties to be true and correct has not had, and
could not be reasonably expected to have, in the aggregate, a Material Adverse
Effect on the Company;
(ii) the Company shall have breached in any material respect
any of its covenants or agreements contained in the Agreement; or
(iii) there shall be threatened or pending any suit, action or
proceeding by any Governmental Authority, or any suit, action or proceeding by
any other Person that has a reasonable likelihood of success, (A) challenging
the acquisition by Parent or Purchaser of any Company Common Stock, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger, or
seeking to obtain from the Company, Parent or any of their respective
Subsidiaries or Affiliates any damages that are material in relation to the
Company and its Subsidiaries taken as a whole, (B) seeking to prohibit or limit
the ownership or operation by the Company, Parent or any of their respective
Subsidiaries or Affiliates of any material portion of the business or assets of
the Company, Parent or any of their respective Subsidiaries or Affiliates, or to
compel the Company, Parent or any of their respective Subsidiaries or Affiliates
to dispose of or hold separate any material portion of the business or assets of
the Company, Parent or any of their respective Subsidiaries or Affiliates, as a
result of the Offer, the Merger or any of the other transactions contemplated by
the Agreement, (C) seeking to impose limitations on the ability of Parent or any
of its Subsidiaries or Affiliates to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock, including the right to vote
Company Common Stock purchased by it on all matters properly presented to the
stockholders of the Company, (D) seeking to prohibit Parent or any of its
Subsidiaries or Affiliates from effectively controlling in any material respect
the business or operations of the Company and its Subsidiaries, or (E) which
otherwise is reasonably likely to have a Material Adverse Effect on the
Company;
(iv) there shall be any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction threatened, proposed,
sought, enacted, entered, enforced, promulgated, amended or issued with respect
to, or deemed applicable to, or any consent or approval withheld with respect
to, (A) Parent, the Company or any of their respective Subsidiaries or
Affiliates or (B) the Offer or the Merger by any Governmental
Authority that has or is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in paragraph (iii) above;
(v) except as disclosed in the Company Disclosure Letter,
since the date of the Agreement there shall have occurred any event, change,
effect or development that, individually or in the aggregate, has had or is
reasonably likely to have, a Material Adverse Effect on the Company;
(vi) there shall have occurred and be continuing (A) any
general suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the United
States or in the United Kingdom, (B) any material adverse change in the
financial markets or major stock exchange indices in the United States or in the
United Kingdom, (C) any material adverse change in United States currency
exchange rates or in the United Kingdom currency exchange rate with respect to
the United States dollar or a suspension of, or limitation on, the markets
therefor, (D) a declaration of a banking moratorium by any Governmental
Authority or any suspension of payments by any Governmental Authority in respect
of banks in the United States or in the United Kingdom, (E) any limitation
(whether or not mandatory) by any Governmental Authority in the United
States or in the United Kingdom on, or other event that might materially
affect, the extension of credit by banks or other lending institutions, (F) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or the United
Kingdom or (G) in the case of any of the foregoing existing on the date of the
Agreement, a material acceleration or worsening thereof;
(vii) any Person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than Purchaser, any of
its Affiliates, or any group of which any of them is a member shall have
acquired beneficial ownership of more than 10 percent of the outstanding shares
of Company Common Stock or shall have entered into a definitive agreement or an
agreement in principle with the Company with respect to a tender offer or
exchange offer for any shares of Company Common Stock or a merger,
consolidation or other business combination with or involving the Company or
any of its Subsidiaries; or
(viii) the Agreement shall have been terminated in accordance
with its terms.
which, in the sole judgment of Purchaser or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition (including
any action or inaction by Parent or any of its Affiliates), makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to such condition or may be waived by Purchaser and
Parent in whole or in part at any time and from time to time in their sole
discretion; provided that the condition set forth in clause (b)(viii) above and
the Minimum Tender Condition may be waived or modified only by the mutual
consent of Purchaser and the Company. The failure by Parent, Purchaser or any
other Affiliate of Parent at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
<PAGE>
April 21, 1998
GEC Incorporated
C/O N.I. Holdings Incorporated
5700 West Toohy Avenue
Chicago, Illinois 60714-4690
Ladies and Gentlemen:
We refer to that certain Agreement and Plan of Merger (the "Agreement") to be
entered into today by and among Tracor, Inc., a Delaware corporation (the
"Company"); GEC Incorporated, a Delaware corporation ("Parent"); and GEC
Acquisition Company, a Delaware corporation and wholly-owned subsidiary of
Parent ("Purchaser"), pursuant to which Purchaser will merge with and into the
Company as provided in the Agreement.
The documents attached to this letter constitute the Company's Disclosure Letter
referred to in the Agreement. Exceptions to the representations and warranties
of the Company in Article V of the Agreement are in this Disclosure Letter.
Further, the covenants of the Company made in Article VII of the Agreement are,
to the extent indicated in the Agreement, made and given subject to this
Disclosure Letter. The section numbers in this Disclosure Letter correspond to
the sections of the Agreement to which the disclosures pertain; provided that
where the same item is required to be disclosed by more than one section of the
Agreement, disclosure of the item in one section of this Disclosure Letter will
constitute disclosure of the item wherever else required. This Disclosure
Letter may include items that do not meet materiality thresholds set forth in
the Agreement. Any such inclusion shall not be deemed an admission that the
item is material. Terms defined in the Agreement are used with the same meaning
in this Disclosure Letter.
Very truly yours,
/s/ Russell E. Painton
- -----------------------
Russell E. Painton
Vice President and
General Counsel
REP:cdm
Enclosures
<PAGE>
DISCLOSURE SCHEDULE
Section 5.1 - List of all subsidiaries, jurisdiction, percent of shares owned
[Attachment 1]
Section 5.3(a) - Shares and options issued since April 6, 1998: No new options
issued since April 6, 1998.
Section 5.3(b) - Capitalization: As of April 6, 1998, 2,305,757 options
outstanding under the Company's 1991 and 1995 Stock Option Plans. The Company
issued stock options to its directors on January 1, 1998 and to management on
February 17, 1998. Currently 975,195 warrants outstanding. Company has issued
rights to its shareholders pursuant to a certain Rights Plan dated February 17,
1997.
Section 5.3(b) - Optionees may exercise options by way of tendering shares to
the Company.
Section 5.3(b) - The Company's loan agreement is securitized by the pledge of
the stock of the subsidiaries. The Company has reserved 2,452,016 shares of
common stock for issuance upon the exercise of options and 975,195 shares for
issuance upon the exercise of the warrants. [Equity Sheet, Attachment 2]
Section 5.3(c) - Holders of Record Names/Addresses; Liens; Reserved Shares;
Options: Authorized and issued capital stock of Company and authorized and
issued stock of shares of subsidiaries: Holders of record [Attachment 1].
Shares are pledged to banks under Company's loan agreement. Options, warrants:
See Section 5.3(b)
Section 5.3(d) - None.
Section 5.6 - Violations: The Company's loan agreement requires that the
company not sell control without permission of the banks party thereto. The
transaction requires clearance under the Exon-Florio Amendment and Hart-Scott-
Rodino Act. All employment agreements and supplemental retirement agreements,
and options have change in control provisions which accelerate vesting thereof.
Section 5.7 - Reports and Financial Statements: See Attachment 7.
Section 5.8 - Undisclosed liabilities: None.
Section 5.8 - The Company and the Defense Control Audit Agency have been in
discussions regarding the possible refund to the government of amounts equal to
over-funding of the Tracor Marine Pension Plan which reverted to Tracor Marine
upon the cessation of operations of such subsidiary. The Company has, to date,
successfully resisted this request and is of the opinion that the matter has
been settled.
Section 5.9(d) - Increase in compensation, employment agreements: In April
1998, the Company and two senior executives amended the supplemental employment
agreements in order to clarify the initial understanding between the parties
regarding the nature of the benefits provided for therein.
Section 5.11 - Ownership of assets, title: To maintain its facility security
clearances, the Company must obtain Exon-Florio clearances.
Section 5.12 - Material Contracts: None.
Section 5.13 - Actions, Suits, Compliance with Laws: (a) EPA proceeding at
Lansdale, Pennsylvania - if RI/FS as proposed by the EPA requires groundwater
treatment, the resulting costs could be a material liability.
(b) Miscellaneous wrongful discharge suits in progress throughout the Company
which if found against the Company, could, in the aggregate, be material.
(c) The company is in discussion with the landlord regarding termination of a
ground lease on Gude Drive in Rockville, Maryland, which is, essentially, a
financing lease. The Company is negotiation a termination of this lease which
has approximately $2.7 million in lease payments remaining (net present value)
(d) Qui Tam action at Lansdale, Pennsylvania - One of the Company's subsidiaries
has been in discussions with the local U.S. attorney regarding alleged
substitution of parts in connection with it manufacture of Ground Jammer Devices
for the Department of Defense. We are advised that the U.S. Attorney has been
considering whether to intervene in this matter on behalf of a Relater who is an
ex-employee of the Company.
Section 5.14(a) - Benefit Plans: See, Attachment 3.
Section 5.14(i) - If amounts become payable, under the agreements disclosed
under Section 5.14(j) and (k), with respect to the 14 executives disclosed under
(k), and such payments are contingent upon a change in ownership of the Company,
a portion of such payments may be nondeductible under Section 280G of the Code.
Section 5.14(j) - The following plans would require larger contributions or pay
greater benefits in the event of a Change in Control of Tracor, Inc.:
Tracor Stock Plan
Tracor Supplemental Employees Retirement Plan (active)
GDE Systems, Inc. Deferred Compensation Plan
Tracor Deferred Compensation Plan
Tracor Funded Welfare Benefit Plan (see 5.14(i) above)
The following plans automatically vest all participants in the event of a Change
in Control of Tracor, Inc.:
Tracor Stock Plan
Tracor Deferred Compensation Plan
Tracor Supplemental Employees Retirement Plan (active)
Employment agreements with 14 executives (see Section 5.14(k))
Section 5.14(k) - Severance Agreements: Eleven executives have severance
agreement that provide for the payment of up to two times their annual salary,
plus bonus, upon termination. Three executives have such agreement that
require payments of one time their annual salaries.
Section 5.14(l) - See Sections 5.14(i) through (k) above. None may be
unilaterally amended; certain former employees have post employment eligibility
in the Company's insurance plans. See Attachment 3, 3A, and 3B.
Section 5.14(n) - Payments under supplemental retirement plans are in excess of
allowable amounts under the Tax Code. Employment agreements may contain
"parachute" payments. See Section 5.14(k)
Section 5.15 - Labor Matters:
(a) Agreement with International Association of Machinists and Aerospace
(b) Workers, Local 502, dated November 5, 1995, expires October 31, 1998.
(b) Agreement with Engineers and Architects Association, San Diego Chapter dated
December 8, 1992, expires December 10, 2000.
(c) International Association of Machinists and Aerospace Workers AFL/CIO dated
October 6, 1997, expires October 6, 2000.
Section 5.16(b) - The following federal income tax returns have not been
audited:
1. Tracor, Inc. and Subsidiaries for 9612 (9712 is not yet filed)
2. Cordant Holdings Corporation and Subsidiaries has not been audited for any
year open under the applicable statute of limitations and no statute of
limitations extensions or waivers have been filed.
3. AEL Industries and Subsidiaries has not been audited for any year open
under the applicable statute of limitations and no statute of limitations
extensions or waivers have been filed.
4. To the best of our knowledge Westmark Systems, Inc. and Subsidiaries has
not been audited for any year open under the applicable statute of
limitations and no statute of limitations extensions or waivers have been
filed.
The following state income /franchise tax returns have not been audited (tax
returns for 9712 have not yet been filed:
1. The state of Alabama has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
2. The state of Alaska has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of
limitations and no statute of limitations extensions or waivers have been
filed.
3. The state of Arizona has not audited Tracor, Inc. and Subsidiaries for
any year open under the applicable statute of limitations and no statute
of limitations extensions or waivers have been filed.
4. The state of Arkansas has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
5. The state of California is in the process of auditing Tracor, Inc. and
Subsidiaries for 9312-9512 (9612 has not been audited).
6. The state of Colorado has not audited Tracor, Inc. and Subsidiaries for
any year open under the applicable statute of limitations and no statute
of limitations extensions or waivers have been filed.
7. The state of Connecticut has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
8. The state of Delaware has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
9. The District of Columbia has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
10. The state of Florida has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
11. The state of Georgia has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
12. The state of Hawaii has not audited Tracor, Inc. and Subsidiaries for
any year open under the applicable statute of limitations and no statute
of limitations extensions or waivers have been filed.
13. The state of Idaho has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
14. The state of Illinois has not audited Tracor, Inc. and Subsidiaries for
any year open under the applicable statute of limitations and no statute
of limitations extensions or waivers have been filed.
15. The state of Indiana has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
16. The state of Iowa has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
17. The state of Kansas has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
18. The state of Kentucky has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
19. The state of Louisiana has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
20. The state of Maine has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
21. The state of Maryland has not audited Vitro Corporation or Tracor
Applied Sciences, Inc. for 9612. Maryland has audited none of the other
Subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
22. The state of Massachusetts has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
23. The state of Michigan has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
24. The state of Minnesota has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
25. The state of Mississippi has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
26. The state of Missouri has not audited GDE Systems, Inc. for 9512-9612.
Missouri has audited none of the other Subsidiaries for any year open
under the applicable statute of limitations and no statute of limitations
extensions or waivers have been filed.
27. The state of Montana has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
28. The state of Nebraska has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
29. The state of New Hampshire has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
30. The state of New Jersey has not audited Tracor Applied Sciences, Inc.
and Vitro Corporation for 9512-9612. New Jersey has audited none of the
other Subsidiaries for any year open under the applicable statute of
limitations and no statute of limitations extensions or waivers have been
filed.
31. The state of New Mexico has not audited Vitro Corporation for 9612.
New Mexico has audited none of the other Subsidiaries for any year open
under the applicable statute of limitations and no statute of limitations
extensions or waivers have been filed.
32. The state of New York has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
33. The state of North Carolina has not audited Tracor Aerospace, Inc.,
Tracor Applied Sciences, Inc. and Vitro Corporation for 9512-9612. North
Carolina has audited none of the other Subsidiaries for any year open
under the applicable statute of limitations and no statute of limitations
extensions or waivers have been filed.
34. The state of North Dakota has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
35. The state of Ohio has not audited GDE Systems, Inc. for 9512-9612.
Ohio has audited none of the other Subsidiaries for any year open under
the applicable statute of limitations and no statute of limitations
extensions or waivers have been filed.
36. The state of Oklahoma has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
37. The state of Oregon has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
38. The state of Pennsylvania has not audited Tracor Aerospace Electronic
Systems, Inc. for 9512-9612. Pennsylvania has audited none of the other
Subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
39. The state of Rhode Island has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
40. The state of South Carolina has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
41. The state of Tennessee has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
42. The state of Texas has not audited Tracor Aerospace, Inc. or GDE
Systems, Inc. for 9612. Texas has audited none of the other Subsidiaries
for any year open under the applicable statute of limitations and no
statute of limitations extensions or waivers have been filed.
43. The state of Utah has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
44. The state of Vermont has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
45. The state of Virginia has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed
46. The state of West Virginia has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
47. The state of Wisconsin has not audited Tracor, Inc. or any of its
subsidiaries for any year open under the applicable statute of limitations
and no statute of limitations extensions or waivers have been filed.
Section 5.16(c) - The filing of ADR's 401(k) Profit Sharing and Trust Final
Return on Form 5500 was extended to May 15, 1998. [See also, Attachment 4]
A. The attached listing reports the extended due date for the filing of any
material income/franchise tax return. All extensions have either been applied
for, are automatically granted, or will be requested prior to the initial filing
date if the return will not be filed by such due date.
B. The only outstanding waiver or agreement for any extension of time for the
assessment or payment of any material income tax is for GDE Holdings, Inc. and
Subsidiaries (GDE) for the federal; income tax periods ended December 31, 1992
and December 31, 1993. On February 13, 1997 a US Form 872-A, Special Consent to
Extend the Time to Assess Tax, was executed for the respective periods. By
filing US Form 872-T, Notice of Termination of Special Consent to Extend the
Time to Assess Tax, on April 6, 1998, the IRS was notified of GDE's intent for
the statute of limitations for the as assessment or payment of federal income
tax with respect to such periods to be terminated by the 90th day following the
IRS's receipt of such notice.
Section 5.16(d) -
A. An auditor representing Kern County California has proposed adjustments to
the personal property tax returns of Tracor Flight Systems, Inc. for the tax
years 1994 through 1997 that may result in a tax deficiency, including interest,
of $35,000.
B. The Internal Revenue Service has recently sent Tracor Flight Systems, Inc a
notice of intent to levy $59,507 related to the US Form 940 of Tracor Flight
Systems, Inc. for the period ended 12/31/97. Upon contacting the IRS on 4/20/98
we have been told that they are putting a hold on the account and will stay
collection activities for 30 days pending our review and resolution of the
matter.
C. The Maryland Department of Labor has proposed an unemployment tax adjustment
for Vitro Corporation of $6,382 for 1995.
Section 5.16(e) -
A. Prior to the acquisition by Tracor, Inc., Tracor Information Systems Company
(formerly Cordant Holdings Corporation) and Tracor Enterprise Solutions, Inc.
(formerly Cordant, Inc.) were members of an affiliated group filing a
consolidated federal income tax return of which Cordant Holdings was the common
parent.
B. Prior to the acquisition by Tracor, Inc., GDE Holdings, Inc. and Subsidiaries
were members of an affiliated group filing a consolidated federal income tax
return of which GDE Holdings, Inc. was the common parent.
C. Prior to the acquisition by Tracor, Inc., Tracor Systems Technologies, Inc.
(formerly Vitro Corporation), Quality Systems, Inc., Tracor Services Corporation
(formerly Vitro Services Corporation) and Tracor Technical Services, Inc.
(formerly Vitro Technical Services, Inc.) were members of an affiliated group
filing a consolidated federal income tax return of which American Premier
Underwriters, Inc. (formerly The Penn Central Corporation) was the common
parent.
D. Prior to the acquisition by Tracor, Inc., Tracor Holdings, Inc. and Westmark
Services, Inc. were members of an affiliated group filing a consolidated federal
income tax return of which Westmark Systems, Inc. was the common parent.
E. Prior to the acquisition by Tracor, Inc., Tracor Aerospace Electronic
Systems, Inc. (formerly AEL Industries, Inc.) was a member of an affiliated
group filing a consolidated federal income tax return of which AEL Industries,
Inc. was the common parent.
Section 5.16(g) - None.
Section 5.16(h) - As disclosed in the Company's Audited Consolidated Financial
Statements, the Company has numerous differences between the timing of the
recognition of items of income and expense(deduction) for tax reporting versus
GAAP reporting. The tax effect of such differences are recorded and reported in
the deferred income tax liability and deferred tax asset accounts of the
Company. As of 12/31/97 the future deductible amounts for income tax purposes
exceeded the future taxable amounts by a net of at least $34,500,000. It is
currently estimated that, as of the effective date, the future deductible
amounts will still exceed the future taxable amounts.
Section 5.16(i) - None.
Section 5.17 - Environmental: see Section 5.13.
Section 5.18 - Intellectual Property Rights: An ex-employee has filed a
complaint against the Company's AES subsidiary alleging that AES has infringed
upon his patented antenna design and seeks damages in excess of $1,000,000. The
Company's position is that the patent is the property of AES. The Company's
motion for summary judgement was filed in February 1997.
Section 5.22 - See Attachment 6.
Section 7.2 - Prohibited Actions: The Company is in the process of selling its
hangar and shop facilities located in East Alton, Illinois. These facilities
are no longer needed by the Company. The Company is in the process of
increasing its ownership percentage in Femtometrics from 5% to 15% for
approximately $1.5 million.
Section 7.2(c) - Acquisition of Stock: The Company is obligated to accept
shares of stock as payment upon the exercise of stock options.
Section 7.2(f) - The company is currently negotiation to increase its percentage
interest ownership in Femtometrics, Inc.
Section 7.2(g) - See Section 7.2, above.
Section 7.2(j) - See Section 7.2(f).
Section 7.10 - Employment Agreements: See Section 7.12 above.
Section 7.12 - (a) The Company has severance agreements with eleven executives
providing for up to two years' salary, plus medical coverage, upon termination.
Another three have severance agreements providing for one year's salary and
medical insurance continuation.
(b) Deferred Compensation Plan available to 165 executives, funded, unsecured
obligation of the Company to repay deferred compensation, plus interest.
(d) Supplemental Retirement Agreements for seven executives providing for
retirement payments that ignore the IRS limitations.
(e) Employment agreements with Barry G. Campbell; Robert J. Fitch; Robert K.
Floyd; K. Bruce Hamilton; George R. Melton; Russell E. Painton; John M.
Rock, III; Roger W. Sadler; James B. Skaggs; Dr. Terry A. Straeter; and
Kathleen Thompson; and Woody Endsley; Marian H. Kelley; and Steven E.
Thompson.
(f) Tracor Supplemental Employees Retirement Plan; Tracor Supplemental
Employees Retirement Plan; GDE Systems, Inc. Supplemental Retirement Plan;
Tracor Benefit Restoration Plan; Tracor Deferred Compensation Plan; GDE
Systems, Inc. Deferred Compensation Plan; and Outside Directors Fee Plan
<PAGE>
ATTACHMENT 1
[all share amounts listed are common, authorized and outstanding unless
otherwise noted]
Tracor, Inc. - see Equity sheet
GDE Systems, Inc. (DE; 100% stock [1,000, $0.01]: Tracor, Inc.)
Aerial Data Reduction Associates, Inc. (PA; 100% stock [5,000 voting,
O/S = 632; 5,000 non-voting, O/S = zero]: GDE Systems, Inc.)
GDE-Helava, Inc. (DE; 100% stock [1,500, $0.00]: GDE Systems, Inc.)
LH Systems, L.L.C. (50% owned by GDE-Helava, Inc.)
GDE Systems Imaging, Inc. (DE; 100% stock [1,000, $0.01]: GDE Systems,
Inc.)
GDESI, Inc. (DE; 100% stock [1,500, O/S = 10, $0.00]: GDE Systems,
Inc.)
Image Information Technologies (Israel; 50% owned with option to
purchase 1%; defined as "Controlled Foreign Corporation": 30,000
authorized; 900 issued, par 1 shekl)
Rokar International, Ltd. (Israel; stock common 1.6 NIS: Tracor, Inc. 100%;
stock common 0.001 NIS: Tracor, Inc. 149,999,950; George Melton 1, & James
B. Skaggs 49)
Tracor Aerospace, Inc. (DE; 100% stock [1,000, $0.01]: Tracor, Inc.)
Tracor Aerospace Electronic Systems, Inc. (PA; 100% stock [1,000, $1.00]:
Tracor, Inc.)
Tracor Australia PTY Limited (Australia; par value $1.00 for all classes;
100,000 shares authorized for Classes A through G; 5,000 for Class H;
50,000 for Class I; 100,000 for each Cumulative Redeemable and Ordinary;
O/S = 2 Ordinary: Tracor, Inc.)
Tracor Flight Systems, Inc. (DE; 100% stock [1,000, $0.01]: Tracor, Inc.)
Tracor FSC, Inc. (Barbados; 100% stock [1,000, $0.01]: Tracor, Inc.)
Tracor Holdings, Inc. (DE; 100% stock [Common, 23,000,000, O/S =
17,500,000, $0.01; Warrants, 2,077,540; Preferred, 2,000,000, O/S = 0,
$1.00]: Tracor, Inc.)
Tracor Information Systems Company (DE; 100% stock [100,000, O/S = 1,000,
$0.01]: Tracor, Inc.)
Tracor Enterprise Solutions, Inc. (MD; 100% stock [2,000, $0.01]:
Tracor Information Systems Company)
Tracor Marine, Inc. (FL; 100% stock [20,000, 16,104, $0.50]: Tracor, Inc.)
Tracor Services Corporation (DE; 100% stock [1,000, $1.00]: Tracor, Inc.)
Tracor Technical Services, Inc. (DE; 100% stock [1,000, $1.00]: Tracor
Services Corporation, Inc.)
Tracor Systems Technologies, Inc. (DE; 100% stock [1,000, $1.00]: Tracor,
Inc.)
Quality Systems, Inc. (VA; 100% stock [Class A Voting, 200, O/S = 100,
$0.01; Class B Non-Voting, 300,000, O/S = 157,731, $0.01]: Tracor
Systems Technologies, Inc.)
Westmark Services Company, Inc. (DE; 100% stock [1,000, $0.01]: Tracor,
Inc.)
<PAGE>
Tracor, Inc.
6500 Tracor Lane
Austin, TX 78725-2000
GDE Systems Inc.
P.O. Box 509009
San Diego, CA 92150-9009
Aerial Data Reduction Associates, Inc.
9285 Commerce Highway
Pennsauken, NJ 08110
GDE-Helava, Inc.
P.O. Box 509009
San Diego, CA 92150-9009
LH Systems, L.L.C.
10965 Via Frontera
San Diego, California 92127
GDE Systems Imaging, Inc.
P.O. Box 509009
San Diego, CA 92150-9009
GDESI, Inc.
P.O. Box 509009
San Diego, CA 92150-9009
Image Information Technologies
14, Hamefalsim Street
Kiryat Arie, Petach-Tikva, Israel
Rokar International, Ltd.
P.O. Box 45059
91450 Jerusalem, Israel
Tracor Aerospace, Inc.
6500 Tracor Lane
Austin, TX 78725-2070
Tracor Aerospace Electronic Systems, Inc.
305 Richardson Road
Lansdale, PA 19446-1485
Tracor Australia PTY Limited
c/o Ernst & Young
Level 6, 54 Marcus Clarke Street
Canberra City Act 2601 Australia
Tracor Flight Systems, Inc.
1434 Flight Line, Bldg. 58B
Mojave, CA 93501-1665
Tracor FSC, Inc.
6500 Tracor Lane
Austin, TX 78725
Tracor Holdings, Inc.
6500 Tracor Lane
Austin, TX 78725
Tracor Information Systems Company
P.O. Box 509009
San Diego, CA 92150-9009
Tracor Enterprise Solutions, Inc.
11400 Commerce Park Drive
Reston, VA 20191
Tracor Marine, Inc.
1601 Research Boulevard
Rockville, MD 20850-3173
Tracor Services Corporation
Industrial Parkway
557 Mary Esther Cut-off
Fort Walton Beach, FL 32548-4090
Tracor Technical Services, Inc.
557 Mary Esther Cut-off
Fort Walton Beach, FL 32548-4090
Tracor Systems Technologies, Inc.
1601 Research Boulevard
Rockville, MD 20850-3173
Quality Systems, Inc.
8201 Greensboro Drive, Suite 1200
McLean, VA 22102
Westmark Services Company, Inc.
6500 Tracor Lane
Austin, TX 78725
<PAGE>
ATTACHMENT 2
Tracor, Inc. Equity
TOTAL SHARES AUTHORIZED: 54,000,000
Common Shares:
Shares Authorized: 53,000,000
Outstanding: 23,275,736
Outstanding/Restricted: 1,928,050
----------
Total Outstanding Common & Outstanding Restricted: 25,203,786
----------
Treasury Shares: 23,377
Reserved for Series A Warrants: 975,195
Reserved for Stock Option Plan: 3,000,000
Less Exercised: 547,984
----------
Available for Issue: 2,452,016
----------
Unreserved/Available for Issue: 25,345,626
Common Warrants:
Series A:
Authorized: 2,820,000
Less Exercised: 1,844,805
----------
Outstanding: 975,195
----------
Preferred Shares:
Authorized: 1,000,000
Less Unreserved/Available for Issue: 1,000,000
----------
Outstanding: 0
----------
Par Value: 0.01
Notes: (1) Treasury Shares -- issued (to Tracor) but not outstanding
(2) shares held by shareholders -- issued and outstanding
</PAGE>
ATTACHMENT 3
Item 5.14(a) Benefit Plan Schedules
Merged
Date Into
Current Benefit Plans Qualified Plans Merged Plan*
- ------------------------------------------------------------- -------- ------
Defined Benefit Plans
1 Tracor, Inc. Employees Retirement Plan
2 GDE Systems, Inc. Retirement Plan 12/31/94 1
3 Vitro Corporation Retirement Floor Plan 8/26/93 1
4 Vitro Services Retirement Plan 8/26/93 1
Defined Contribution Plans
1 Tracor, Inc. 401(k) Savings Plan
2 QSI Money Purchase Pension Plan
3 LH Systems, LLC 401(k) Plan
4 LH Systems, LLC Money Purchase Pension Plan
5 GDE Systems, Inc. Partners In Retirement Savings Plan 1/1/97 1
6 Vitro Corporation Retirement Account & 401(k)
Savings Plan 6/1/94 1
7 Vitro Technical Services, Inc. Savings &
Investment Plan 6/1/94 1
8 PCC Technical Industries, Inc. Savings &
Investment Plan 3/31/92 4
9 PCC Technical Industries, Inc. Retirement Plan 8/26/93 1
10 QSI Profit Sharing/401(k) Plan 1/1/97 1
11 ADR 401(k) Profit Sharing & Trust 7/1/97 1
12 Cordant, Inc. Retirement Savings Plan 1/1/97 1
13 AEL Retirement Savings Plan 10/1/97 1
14 Ultron Labs 401(k) 12/31/92 1
Health and Welfare Benefit Plans
1 Tracor, Inc. Funded Welfare Benefit Plan
2 Tracor, Inc. Unfunded Welfare Benefit Plan
3 Cordant, Inc. Flexible Fund
4 AEL Severance Plan
5 GDE Systems Inc. Welfare Plans
6 GDE Systems Inc. Self Funded Long Term Disability Plan
7 ADR Section 125 Plan
8 Flexible Benefits Plan LH Systems, LLC
9 Vitro Corporation Severance Pay Plan
10 Tracor, Inc. Medical Plan 1/1/95 1
11 Tracor, Inc. Section 125 Cafeteria Plan 1/1/95 1
12 Vitro Corporation Section 125 Plan 1/1/95 1
13 Tracor, Inc. Group Life & AD&D Insurance Plan 1/1/95 2
14 Tracor, Inc. Section 125 Cafeteria Plan 1/1/95 2
15 Tracor Inc. Educational Assistance Plan 1/1/95 2
16 Tracor Flight Systems, Inc. Educational Assistance Plan 1/1/95 2
17 Tracor Aerospace, Inc. Educational Assistance Plan 1/1/95 2
18 Quality Systems, Inc. Employee Assistance Plan 1/1/95 2
19 Quality Systems, Inc. Educational Assistance Plan 1/1/95 2
20 GDE Systems Inc. Educational Assistance Plan 1/1/95 2
21 Tracor Technology Resources, Inc. Educational
Assistance Plan 1/1/95 2
22 Tracor Applied Sciences, Inc. Educational Assistance
Plan 1/1/95 2
23 Vitro Corporation Section 125 Plan 1/1/95 2
24 Vitro Corporation Business Travel Accident Insurance
Plan 1/1/95 2
25 Vitro Educational Assistance Plan 1/1/95 2
26 Cordant, Inc. Health & Dental Plan 12/31/96 1
27 Cordant AD&D/Life/Supplemental Life Plan 12/31/96 2
28 Cordant LTD Plan 12/31/96 2
29 AEL Group Insurance Protection Plan 12/31/96 1&2
30 AEL Educational Assistance Plan 12/31/96 2
31 AEL Long Term Disability Income Plan 12/31/96 2
32 Vitro Corp. Group Benefits Plan 12/1/95 1
33 Vitro Corp. Long Term Disability Plan 1/1/95 2
34 Vitro Corp. Voluntary Supplemental Life Insurance Plan 1/1/95 2
35 Vitro Services Group Medical & Dental Plan 12/31/94 1
36 Vitro Services Life Insurance Plan 12/31/94 1
37 Vitro Services Long Term Disability Plan 12/31/94 1
38 QSI Welfare Benefit Plan (Supp. Life, Disability &
Medical/Dental) 12/31/94 1
* Note - Identifies number of Plan within grouping into which Plan was merged.
<PAGE>
Merged
Date Into
Current Benefit Plans Non Qualified Plans Merged Plan*
- ------------------------------------------------------------- -------- ------
1 Tracor Supplemental Employees Retirement Plan
(Active)
2 Tracor Supplemental Employees Retirement Plan
(Inactive)
3 Tracor Benefit Restoration Plan
4 Tracor Deferred Compensation Plan
5 Tracor Stock Purchase Plan
6 Tracor Stock Plan
7 Outside Directors' Fee Plan
8 LH Systems, LLC Non-Qualified Deferred Compensation
Plan
9 GDE Systems Supplemental Employees Retirement Plan
10 GDE Systems Employees Deferred Compensation Plan
11 Cordant Inc. Directors & Management Amended Deferred
Compensation Plan Dec-96 4
12 Tracor, Inc. Retiree Medical and Life Insurance Plans
13 GDE Systems, Inc. Retiree Medical Plan
14 Vitro Corporation Retiree Medical and Life Insurance
Plans
15 GDE Retiree Life Insurance
16 AEL Industries, Inc. Retiree Life Insurance Plan
17 Vitro Services Corporation Retiree Medical and
Life Insurance Plan
18 Vacation/Paid Time Off Plan
19 Tuition Reimbursement Plan
20 Severance/Layoff Policies Plan
21 Executive Car Allowance Program
22 Employee Assistance Plan
23 Computer Purchase Assistance
24 Tracor Incentive Compensation Plan
* Note - Identifies number of Plan within grouping into which Plan was merged.
<PAGE>
TERMINATED BENEFIT PLANS Year
TERMINATED UPON ACQUISITION - NON QUALIFIED Terminated
- ------------------------------------------------------------------ ----------
Vitro Corporation Benefit Equalization Plan 1993
Penn Central Federal Systems Company Supplemental Benefit Plan 1993
The Penn Central Corporation Stock Option Plan 1993
The Penn Central Corporation Employee Stock Purchase Plan 1993
Vitro Annual Incentive Bonus Pool (Group 2 and Group 3+) 1993
Vitro Long Term Incentive Compensation Plans 1994
AEL Incentive Bonus Plan 1996
AEL Stock Option Plans 1996
GDE Stock Appreciation Rights 1994
GDE Holdings, Inc. Stock Option Plan 1994
GDE Incentive Compensation Plan 1994
Centel Federal Systems, Inc. Management Incentive Plan (Cordant) 1996
Discretionary Bonus Payments(Cordant) 1996
1996 CAD2 Incentive Compensation Plan (Cordant) 1996
1996 FSIG New Win Incentive Compensation Plan (Cordant) 1996
1996 DASH Sales Commission Plan (Cordant) 1996
1996 ICARDS Sales Commission Plan (Cordant) 1996
1996 Postal Division Incentive Compensation Plan (Cordant) 1996
Cordant Holdings Corporation Stock Bonus Plan 1996
Cordant Holdings Corporation Stock Option Plan 1996
TERMINATED BENEFIT PLANS (last 6 years) Year
TERMINATED UPON ACQUISITION - QUALIFIED Terminated
- ------------------------------------------------------------------ ----------
Retirement Plan for Employees of Tracor, Inc. and
Affiliates as adopted by Electrosource, Inc. 1992
<PAGE>
ATTACHMENT 3A
Section 5.14(l): See Section 5.14 above regarding the 14 Employment Agreements.
None of these agreements may be amended unilaterally. In addition, the Company
has certain post-employment benefit plans, listed below, as well as certain
individuals who have continued eligibility in the Company's Insurance Plans (see
Attachment 3B):
GDE Systems, Inc. Retiree Medical and Life Insurance Plan
Tracor, Inc. Retiree Medical and Life Insurance Plans
Vitro Corporation Retiree Medical and Life Insurance Plans
Vitro Services Corporation Retiree Medical and Life Insurance Plans
AEL Industries, Inc. Retiree's Life Insurance Plan
<TABLE>
<CAPTION>
FORMER EMPLOYEES WITH COMPANY PAID BENEFITS
NAME SS# DOB AGE PLAN TYPE LENGTH
OF COVERAGE
- ---------------- ----------- -------- --- ---------------------------------------- -------
- -----------------------------
<S> <C> <C> <C> <C> <C>
David Horton ###-##-#### 3/5/34 63 Two Party Aetna Medical & Delta Dental Until
age 65 For EE and Spouse
Richard Grohman ###-##-#### 6/20/40 57 Single Aetna Supplemental & Delta Dental
Indefinitely
Bob DeHaven ###-##-#### 12/2/45 52 Family Aetna Medical & Delta Dental EE
Portion Until 1/31/99
Tommy Martin ###-##-#### 7/19/38 59 Family Aetna Medical & Delta Dental Company
Paid Thru 8/99
Offer
Cobra Beginning 9/99
Joseph Iervolino ###-##-#### 9/11/40 57 Family Aetna Medical & Delta Dental Company
Paid Thru 11/98
Offer
Cobra Beginning 12/98
Leon Riebman ###-##-#### 4/22/20 77 Two Party BC/BS Medical & Delta Dental Company
Paid for 3 years. Ends 3/99
Has $75,000 Life Insurance Until
3/99
Dean O'Neill ###-##-#### 2/3/48 50 Family Aetna Medical & Delta Dental Company
Paid Thru 1/99
Offer
Cobra Beginning 2/99
John Forrest, Jr. ###-##-#### 3/17/34 64 Two Party Aetna Medical & Delta Dental Company
Paid Thru 1/99
Offer
Cobra Beginning 2/99
David Lawrence ###-##-#### 11/11/42 55 Two Party Aetna Medical & Delta Dental Will
Pay EE Portion Thru
3/2000.
Offer Cobra
Beginning 4/2000
Porter Kier ###-##-#### 2/3/35 63 Two Party Aetna Medical & Delta Dental Company
Paid Thru 8/98
Offer
Cobra Beginning 9/98
Arthur Rossi ###-##-#### 11/27/48 49 Family Aetna Medical & Delta Dental Company
Paid Thru 12/98
Offer
Cobra Beginning 1/99
Ken Cassazza ###-##-#### 11/6/50 47 Family Aetna Medical & Delta Dental Company
Paid Thru 9/30/98
Chris Darling ###-##-#### 4/25/58 39 Family Aetna Medical & Delta Dental Company
Paid Thru 9/30/99
Pete Kusek ###-##-#### 12/8/42 55 Family Aetna Medical & Delta Dental Company
Paid Thru 9/30/98
Ken Michlovitz ###-##-#### 7/31/42 55 Two Party Aetna Medical & Delta Dental Company
Paid Thru 9/26/98
Jim Pompa ###-##-#### 11/8/37 60 Family Aetna Medical & Delta Dental Company
Paid Thru 9/26/98
Chuck Rothernekm ###-##-#### 6/24/52 45 Family Aetna Medical & Delta Dental Company
Paid Thru 9/26/98
Karen Uemoto ###-##-#### 12/31/42 55 Family Delta Dental Company
Paid Thru 9/26/98
Stephannie Wood ###-##-#### 4/18/58 39 Family NYLCare Medical Company
Paid Thru 5/10/98
</TABLE>
<TABLE>
<CAPTION>
FORMER EMPLOYEES WITH RETIREE BENEFITS
NAME SS# DOB AGE PLAN TYPE
COMMENTS
- ---------------- ----------- -------- --- ---------------------------------------- -------
- -----------------------------
<S> <C> <C> <C> <C> <C>
Gloria Cannon ###-##-#### 1/5/33 65 Single Aetna Medical & Delta Dental
Sarah Caton ###-##-#### 12/30/37 61 Single Aetna Medical & Delta Dental Widower
Teresa Fredericks ###-##-#### 9/15/33 64 Single Aetna Medical & Delta Dental Widower
Dorothy Watson ###-##-#### 4/13/33 65 Single Aetna Medical & Delta Dental
James Diskin ###-##-#### 9/12/36 61 Two Party Aetna EE (WVD) & Delta Dental
Disabled - Has $80,00 Life
Insurance Until Age 65
Frank McBee ###-##-#### 1/22/20 78 Two Party Aetna Supplemental & Delta Former
President
Dental
<PAGE>
ATTACHMENT 4
Disclosure Schedule for Section 5.16(c)
A. The attached listing reports the extended due date for the filing of any
material income tax return. All extensions have either been applied for, are
automatically granted, or will be requested prior to the initial filing date if
the return will not be filed by such due date.
B. The only outstanding waiver or agreement for extension of time for the
assessment or payment of any material income tax is for GDE Holdings, Inc. and
Subsidiaries (GDE) for the federal income tax periods ended December 31, 1992
and December 31, 1993. On February 13, 1997 a US Form 872-A, Special Consent
to Extend the Time to Assess Tax, was executed for the respective periods. By
filing US Form 872-T, Notice of Termination of Special Consent to Extend the
Time to Assess Tax, on April 6, 1998, the IRS was notified of GDE's intent for
the statute of limitations for the assessment or payment of federal income tax
with respect to such periods to be terminated by the 90th day following the
IRS's receipt of such notice.
</TABLE>
<TABLE>
<CAPTION>
1997 RETURNS
EXTENDED
DUE
STATE DATES SUBSIDIARY FORM RETURN
- ------------- -------- --------------------- ---------- --------------------------------
<S> <C> <C> <C> <C>
Alabama 9/15/98 ADR 20C Corporation Income Tax Return
9/15/98 Applied Sciences 20C Corporation Income Tax Return
9/15/98 TST (VC) 20C Corporation Income Tax Return
Arkansas 9/15/98 Aerospace AR1100CT Corporation Income Tax Return
Arizona 10/15/98 Unitary Tracor, Inc. 120 Corporation Income Tax Return
California 10/15/98 Unitary Tracor, Inc. 100 Corporation Franchise or Income
Tax Return
Colorado 10/15/98 Unitary Tracor, Inc. 112 C Corporation Income Tax Return
Connecticut 9/30/98 Applied Sciences CT-1120 Corporation Business Tax Return
9/30/98 TST (VC) CT-1120 Corporation Business Tax Return
Dist.Columbia 9/15/98 Applied Sciences D-20 Corporation Franchise Tax Return
9/15/98 QSI D-20 Corporation Franchise Tax Return
9/15/98 TESI (Cordant) D-20 Corporation Franchise Tax Return
9/15/98 TISC (Cordant Holdings) D-20 Corporation Franchise Tax Return
9/15/98 TST (VC) D-20 Corporation Franchise Tax Return
Delaware 9/30/98 Aerospace 1100 Income Tax Return
9/30/98 TESI (Cordant) 1100 Income Tax Return
FEDERAL 9/15/98 Tracor & Affiliates 1120/1120FSC FEDERAL 1120 - INCOME TAX RETURN
(CONSOLIDATED)
9/15/98 Tracor FSC, Inc. 1120/1120FSC FEDERAL 1120 - INCOME TAX RETURN
(CONSOLIDATED)
Florida 9/30/98 Aerospace F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
9/30/98 Applied Sciences F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
9/30/98 Flight Systems F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
9/30/98 GDE Systems F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
9/30/98 Marine F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
9/30/98 Tracor, Inc. F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
9/30/98 TSC (VSC) F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
9/30/98 TST (VC) F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
9/30/98 TTS (VTS) F-1120 Corporation Income/Franchise and
Emergency Excise Tax Return
Georgia 9/15/98 Aerospace 600 Income Tax Return/Net Worth Tax
Return
9/15/98 AES (AEL II) 600 Income Tax Return/Net Worth Tax
Return
9/15/98 Applied Sciences 600 Income Tax Return/Net Worth Tax
Return
9/15/98 Flight Systems 600 Income Tax Return/Net Worth Tax
Return
9/15/98 GDE Systems 600 Income Tax Return/Net Worth Tax
Return
9/15/98 TESI (Cordant) 600 Income Tax Return/Net Worth Tax
Return
9/15/98 TST (VC) 600 Income Tax Return/Net Worth Tax
Return
Hawaii 10/15/98 Unitary Tracor, Inc. N-30 Corporation Income Tax Return
Idaho 10/15/98 TST (VC) 41 Corporation Income Tax Return
Illinois 10/15/98 Unitary Tracor, Inc. IL-1120 Corporation Income and
Replacement Tax Return
Indiana 10/15/98 TST (VC) IT-20 Corporation Income Tax Return
Kansas 10/15/98 GDE Systems K-120 Corporation Income Tax Return
Kentucky 10/15/98 Applied Sciences 720 Income Tax and Corporation
License Tax Return
Louisiana 11/15/98 Applied Sciences ICFT-620 Corporation Income Tax
Return/Corporation
Franchise Tax Return
Massachusetts 9/15/98 QSI 355B Foreign Business or Mfg.
Corporation Excise Return
9/15/98 TST (VC) 355B Foreign Business or Mfg.
Corporation Excise Return
Maryland 9/15/98 Aerospace 500 Corporation Income Tax Return
9/15/98 Applied Sciences 500 Corporation Income Tax Return
9/15/98 Cordant Fed Services 500 Corporation Income Tax Return
9/15/98 Flight Systems 500 Corporation Income Tax Return
9/15/98 GDE Systems 500 Corporation Income Tax Return
9/15/98 QSI 500 Corporation Income Tax Return
9/15/98 TESI (Cordant) 500 Corporation Income Tax Return
9/15/98 TISC (Cordant 500 Corporation Income Tax Return
9/15/98 TST (VC) 500 Corporation Income Tax Return
Maine 10/15/98 Unitary Tracor, Inc. 1120-ME Corporation Income Tax Return
Michigan 10/15/98 TTS (VTS) C-8000 Single Business Tax Return
Missouri 10/15/98 Aerospace MO-1120 Corporation Income Tax Return
10/15/98 GDE Systems MO-1120 Corporation Income Tax Return
10/15/98 TESI (Cordant) MO-1120 Corporation Income Tax Return
Missouri,
St. Louis 10/15/98 GDE Systems E-234 City of St. Louis Earnings Tax
Return
Mississippi 9/15/98 Applied Sciences 83-105 Corporate Income and Franchise
Tax Return
9/15/98 TST (VC) 83-105 Corporate Income and Franchise
Tax Return
North Carolina 10/15/98 Aerospace CD-405 Corporation Franchise and Income
Tax Return
10/15/98 Applied Sciences CD-405 Corporation Franchise and Income
Tax Return
10/15/98 TST (VC) CD-405 Corporation Franchise and Income
Tax Return
Nebraska 10/15/98 Unitary Tracor, Inc. 1120N Corporation Income Tax Return
New Hampshire 10/15/98 GDE Systems NH-1120 Corporation Business Profits Tax
Return
New Jersey 10/15/98 ADR CBT-100 Corporation Business Tax Return
10/15/98 Aerospace CBT-100 Corporation Business Tax Return
10/15/98 Applied Sciences CBT-100 Corporation Business Tax Return
10/15/98 Flight Systems CBT-100 Corporation Business Tax Return
10/15/98 GDE Systems CBT-100 Corporation Business Tax Return
10/15/98 TST (VC) CBT-100 Corporation Business Tax Return
New Mexico 9/15/98 Aerospace CIT-1 Corporate Income and Franchise
Tax Return
9/15/98 Flight Systems CIT-1 Corporate Income and Franchise
Tax Return
9/15/98 TSC (VSC) CIT-1 Corporate Income and Franchise
Tax Return
9/15/98 TST (VC) CIT-1 Corporate Income and Franchise
Tax Return
New York 9/15/98 AES (AEL II) CT-3,CT-245 Franchise Tax Return/CT-3
9/15/98 GDE Systems CT-3,CT-245 Franchise Tax Return/CT-3
9/15/98 TST (VC) CT-3,CT-245 Franchise Tax Return/CT-3
9/15/98 TST (VC) CT-3M,CT-4M Metropolitan Surcharge Tax Report
(CT-3M4M)
Ohio 10/15/98 Aerospace FT-1120 Corporate Franchise Tax Report
10/15/98 AES (AEL II) FT-1120 Corporate Franchise Tax Report
10/15/98 Flight Systems FT-1120 Corporate Franchise Tax Report
10/15/98 GDE Systems FT-1120 Corporate Franchise Tax Report
10/15/98 TST (VC) FT-1120 Corporate Franchise Tax Report
Ohio, Columbus 10/15/98 GDE Systems BR-25 Income - City Income Tax
(Columbus) Return
Pennsylvania 9/30/98 ADR RCT-101 Corporate Tax Report
9/30/98 AES (AEL II) RCT-101 Corporate Tax Report
9/30/98 Applied Sciences RCT-101 Corporate Tax Report
9/30/98 TESI (Cordant) RCT-101 Corporate Tax Report
9/30/98 TISC (Cordant) RCT-101 Corporate Tax Report
9/30/98 TST (VC) RCT-101 Corporate Tax Report
Rhode Island 9/15/98 Applied Sciences RI-1120 Business Corporation Tax Return
9/15/98 TSC (VSC) RI-1120 Business Corporation Tax Return
9/15/98 TST (VC) RI-1120 Business Corporation Tax Return
South Carolina 9/15/98 Aerospace SC1120 C Corporation Income Tax
Return/License Fee
9/15/98 Applied Sciences SC1120 C Corporation Income Tax
Return/License Fee
9/15/98 TST (VC) SC1120 C Corporation Income Tax
Return/License Fee
Tennessee 12/31/98 Applied Sciences RV-0001001 Franchise, Excise Tax Return
12/31/98 TST (VC) RV-0001001 Franchise, Excise Tax Return
Texas 11/15/98 Aerospace 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 AES (AEL II) 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 Applied Sciences 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 Flight Systems 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 GDE Systems 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 TESI (Cordant) 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 Tracor Holdings 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 Tracor, Inc. 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 TSC (VSC) 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
11/15/98 Westmark Services 05-132; Corporation Franchise Tax
05-102 Report/Franchise Tax Public
Info. Report
Utah 10/15/98 Aerospace TC-20, Corporation Franchise or Income
TC-559 Tax Return
Virginia 10/15/98 Unitary Tracor, Inc. 500 Corporation Income Tax Return
West Virginia 9/15/98 ADR WV/CNT-112 Corporate Income Tax Return
9/15/98 Applied Sciences WV/CNT-112 Corporate Income Tax Return
9/15/98 TESI (Cordant) WV/CNT-112 Corporate Income Tax Return
9/15/98 TISC (Cordant) WV/CNT-112 Corporate Income Tax Return
9/15/98 TST (VC) WV/CNT-112 Corporate Income Tax Return
<FN> RETURNS DUE this YEAR = 117
</TABLE>
<PAGE>
ATTACHMENT 5
Disclosure Schedule for Section 5.16(e)
A. Prior to the acquisition by Tracor, Inc., Tracor Information Systems Company
(formerly Cordant Holding Corporation) and Tracor Enterprise Solutions, Inc.
(formerly Cordant, Inc.) were members of an affiliated group filing a
consolidated federal income tax return of which Cordant Holdings was the common
parent.
B. Prior the acquisition by Tracor, Inc., GDE Holdings, Inc. and Subsidiaries
were members of an affiliated group filing a consolidated federal income tax
return of which GDE Holdings, Inc. was the common parent.
C. Prior the acquisition by Tracor, Inc., Tracor Systems Technologies, Inc.
(formerly Vitro Corporation), Quality Systems, Inc., Tracor Services
Corporation (formerly Vitro Services Corporation) and Tracor Technical
Services, Inc. (formerly Vitro Technical Services, Inc.) were members of an
affiliated group filing a consolidated federal income tax return of which
American Premier Underwriters, Inc. (formerly The Penn Central Corporation) was
the common parent.
D. Prior the acquisition by Tracor, Inc., Tracor Holdings, Inc. and Westmark
Services, Inc. were members of an affiliated group filing a consolidated
federal income tax return of which Westmark Systems, Inc. was the common
parent.
<PAGE>
ATTACHMENT 6
Schedule 5.22
Casualty Insurance Policies Maintained by
Foreign Subsidiaries and Joint Ventures
Rokar International, Ltd. (Israeli company)
Comprehensive insurance policies providing coverage for Property and Business
Interruption, Employers Liability, General Public Liability, Auto Insurance
(both own damage and property damage), Auto Compulsory (bodily injury
liability) and Goods in Transit Insurance.
Image Information Technology, Ltd. (Israeli joint venture)
Comprehensive insurance policies providing coverage for Property, Employers
Liability, General Public Liability, Auto Insurance (both own damage and
property damage) and Auto Compulsory (bodily injury liability) Insurance.
LH Systems, L.L.C. (US joint venture with Leica)
Comprehensive insurance policies providing coverage for US and Foreign
operations for Property and Business Interruption, Goods in Transit (including
Ocean Cargo), Professional Liability (Electronics Errors and Omissions),
Employee Benefits Liability, Workers Compensation and Employers Liability,
General Public and Product Liability and Comprehensive Auto Insurance (both
physical damage and third party liability).
<TABLE>
<CAPTION>
File: Master 1998
MASTER SCHEDULE OF PROPERTY AND CASUALTY INSURANCE FOR TRACOR, INC. ET AL AS OF 4-3-98.
EST.
ANNUAL
ID# INSURANCE COVERAGE INSURANCE COMPANY POLICY # FROM TO COST LIMITS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 WORKERS COMPENSATION ZURICH INSURANCE COMPANY See left 1-1-98 1-1-99 $811,154 Statutory/
& EMPLOYERS LIABILITY Workers Comp
WCU8376279-02 -
ALL STATES EXCEPT 1,000,000/
WCU83676306-02 - MA Emp
WC8376547-01 - CA Liability
2 WORKERS COMPENSATION ASSIGNED RISK POOL - WA. See left Continuous $150,000 Statutory/
& EMPLOYERS LIABILITY Tracor Systems Technologies Workers Comp
Tracor Systems Technologies 452,515-01 8
500,000/
Emp
Liability
3 WORKERS COMPENSATION OHIO State Fund Policy N/A 1-1-98 1-1-99 $15,412 Statutory/
& EMPLOYERS LIABILITY Workers Comp
GDE Systems, Inc.
1,000,000/
Emp
Liability
4 COMPREHENSIVE GENERAL ZURICH INSURANCE COMPANY GLO8376272-02-A 1-1-98 1-1-99 $234,163 1,000,000/
LIABILITY Occurrence
2,000,000/
Product and
Completed
Operations
aggregate
limit
5,000,000/
aggregate
limit
5 COMPREHENSIVE AUTO ZURICH INSURANCE COMPANY See Left 1-1-98 1-1-99 $131,731 1,000,000/
LIABILITY BAP8376274-02 - ALL STATES Combined
MA8376542-01 - MA Single
TAP8376275-02 - TEXAS Limit
BAP8376276 - 02 - VA
BAP8376277 - 02 - HI
BAP 2346882-QSI
6 EXCESS LIABILITY TIG INSURANCE COMPANY XLB9291272 1-1-98 1-1-00 $375,000 50,000,000
Excess of
Underlying
7 POLLUTION LEGAL LIABILITY NATIONAL UNION FIRE PLS8183816 5-1-96 5-1-98 $56,000 3,000,000/
loss
6,000,000/
max
8 COMPREHENSIVE FOREIGN GENERAL ZURICH INSURANCE COMPANY GLO8376273-02- 1-1-98 1-1-99 $61,600 2,000,000/
& AUTO LIABILITY GL/P occurrence
Covers Difference Between BAP8376278-02- 4,000,000/
Amounts Carried by Foreign Auto Product and
Entities & Limits Shown on Completed
this entity. Operations
aggregate
limit
9 FOREIGN WORKERS COMPENSATION ZURICH INSURANCE COMPANY WC8376280-02 1-1-98 1-1-99 $42,500 Statutory
& EMPLOYERS LIABILITY Workers
Covers Difference Between Compensation
Amounts Carried by Foreign (Country of
Entities & Limits Shown on origin)
this entity. 1,000,000
Employers
Liability
10 CRIME INSURANCE UNITED PACIFIC NFA 0101829-98 4-1-98 4-1-99 $40,000 5,000,000/
INSURANCE COMPANY Employee
Dishonesty
Forgery-
Alteration
Theft
Robbery
Safe
Burglary
11 SPECIAL CRIME INSURANCE LLOYDS OF LONDON SCC-01129700 2-3-97 2-3-00 $7,088 5,000,000/
All Directors
Officers &
Employees of
Tracor
250,000/Occ.
Accidental
Death &
Dismemberm't
12 DIRECTORS AND OFFICERS RELIANCE NATIONAL NDA0101422-97 4-1-97 4-1-00 $685,000 20,000,000
LIABILITY INSURANCE INSURANCE COMPANY Primary
13 EXCESS DIRECTORS & OFFICERS EXECUTIVE RISK INDEMNITY 752-3175-95 4-1-98 4-1-99 $88,000 5,000,000
LIABILITY INSURANCE INSURANCE COMPANY Excess
Primary
14 FIDUCIARY LIABILITY RELIANCE NATIONAL NIA 0101827-97 4-1-97 4-1-00 $132,000 10,000,000/
INSURANCE COMPANY of ILL Occurence
15 EXCESS FIDUCIARY LIABILITY AETNA CASUALTY & SURETY CO 71FF10111613BCM 4-1-97 4-1-00 $38,500 5,000,000
Excess
Primary
16 TRAVEL ACCIDENTAL DEATH ZURICH INSURANCE COMPANY GTU016303 1-1-98 1-1-99 $61,352 Corporate
AND DISMEMBERMENT INSURANCE Officers/
24hrs
Coverage
1,000,000
Principal
Sum
Company
Officers/
24hrs
Coverage
500,000
Principal
Sum
Salaried &
Hourly
Business
Travel Death
Benefit
3x Salary
(Minimum
$75,000)
Foreign
Assignment
$250,000 EE
$125,000
Spouse &
Child
$50,000
Pilots/Crew
$100,000
8,000,000/
Acc.
Aggregate
17 PROFESSIONAL LIABILITY (E&O) ST. PAUL FIRE & MARINE TE00800481 1-1-98 1-1-99 $81,821 5,000,000/
INSURANCE COM Occurrence
10,000,000/
Aggregate
18 ALL RISK PROPERTY INSURANCE PROTECTION MUTUAL INSURANCE 692501-97 3-15-98 3-15-99 $563,242 717,208,000/
CO. occurrence
aggregate
loss limit;
Exceptions:
Limits are
as scheduled
for all
locations
over $1M
in value,
all
Calif
earthquake,&
Extra
Expense
SUBLIMITS
OF:
5,000,000/
Occ
Newly
Acquired
Locations.
10,000,000/
Agg.
Earthquake
& Flood
5,000,000/
Occ.
Business
Interruption
2,000,000/
Occ.
USA Transit
limited
to 1,000,000
per
Conveyance
(Vehicle).
1,000,000/
Occ.
Accts. Rec. &
Demo
Equipment
2,000,000/
Occ.
Valuable
Papers
19 MOBILE EQUIPMENT FLOATER SECURITY INSURANCE COMPANY CCIMG18178 12-7-97 12-7-98 $1,275 30,598/agg
(COMMERCIAL INLAND MARINE)
San Ramon 1985 GMC Truck
with tank & pump
20 PLATINUM BUSHINGS SHIPMENT POTOMIC INS. CO. OF IL. CIM0446256 5-27-97 5-27-98 $6,570 100,000/
INS Shipment
21 FOREIGN SHIPMENT INSURANCE PROTECTION MUTUAL INSURANCE OM-692502-97 10-1-97 10-1-98 $18,898 500,000/
(OCEAN MARINE/AIR SHIPMENTS) CO. Aircraft
300,000/
Vessel
25,000/
Vessel
on deck
500/Mail
22 AVIATION PRODUCTS, PREMISES, U.S. AIG INSURANCE COMPANY SIHL1-8454 11-1-98 11-1-99 $345,000 100,000,000/
& HANGARKEEPERS LIABILITY LLOYDS OF LONDON AV0019097 Occurence
For Tracor, Inc. CIGNA INSURANCE ATP 017637 Bodily Injury
Property
Damage
Aircraft Prod
Grounding
Liab
Excess
Aircraft
Liability
25,000,000/
Occurence
Personal
Inj.
75,000,000/
Aircraft
Ground
Hangar
-Keepers
10,000,000/
Aircraft
In-Flight
Hangar-
keepers
23 AIRCRAFT HULL AND U.S. AVIATION INS. GROUP SIHL1-8455 11-1-98 11-1-99 $157,381 10,000,000/
LIABILITY INSURANCE LLOYDS' OF LONDON AV0019097 Combined
CIGNA ATP 017103 Single
AIG Insurance Company HL3387545-01 Limit for
Property
Damage
for Aircraft
Liability,
Non Owned
Aircraft
Liability and
Contractual
Liability
10,000,000/
Occurence
Aggregate
Personal
Injury
3,000,000/
Agg
Non-Owned
Hull
Hull
Physical
Damage-
Insured
Value
500,000/
Search
& Rescue,
Runway
Foaming Exp
950,000/Loss
100,000/Item
Extra Equip
1,000,000/
Loss
Spare Parts
24 PROTECTION & INDEMNITY INSURANCE COMPANY OF NORTH HU 080275 1-1-98 1-1-99 $7,865 1,000,000/
INSURANCE AND HULL & AMERICA Occurence
MACHINERY INSURANCE Liability
(Coverage for Applied 25,000/Loss
Science Lake Pend O'Rielle, Collision &
ID Operations) Tower Liab.
VARIOUS BONDS AETNA SURETY COMPANY As necessary Various Bond Bond
AMWEST SURETY CO specific specific
LAWYERS SURETY CO
</TABLE>
ATTACHMENT 7
Tracor, Inc.
Summarized Consolidated Financial Statements (unaudited)
STATEMENTS OF INCOME
Three months ended
March 31,
-----------------------------
1998 1997
---- ----
Net sales $290,658,000 $297,464,000
Cost of sales 235,699,000 239,643,000
------------ ------------
Gross profit 54,959,000 57,821,000
Selling, administrative, and general expenses 28,629,000 31,706,000
------------ ------------
Earnings before interest, income taxes, and
extraordinary item 26,330,000 26,115,000
Interest expense, net 5,880,000 6,952,000
------------ ------------
Income before income taxes and extraordinary
item 20,450,000 19,163,000
Income taxes 8,705,000 8,899,000
------------ ------------
Income before extraordinary item 11,745,000 10,264,000
Extraordinary loss from early extinguishment
of debt, net of income tax benefit -- 9,985,000
------------ ------------
Net income $ 11,745,000 $ 279,000
============= ============
Earnings per common share - assuming dilution:
Income before extraordinary item $.43 $.38
Extraordinary loss -- (.37)
---- ----
Net income $.43 $.01
==== ====
Weighted average common shares adjusted for
potential dilution 27,124,000 26,718,000
================================================================================
BALANCE SHEETS
March 31, December 31,
1998 1997
Assets
Current assets $327,931,000 $316,982,000
Property, plant, and equipment, net 118,913,000 120,690,000
Goodwill, net 225,762,000 227,815,000
Other intangibles, net 7,080,000 8,180,000
Deferred charges and other assets 22,181,000 43,942,000
------------ ------------
Total assets $701,867,000 $717,609,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities $138,719,000 $153,630,000
Long-term debt, less current portion 263,104,000 270,343,000
Other long-term liabilities 28,573,000 34,421,000
Shareholders' equity 271,471,000 259,215,000
------------ ------------
Total liabilities and shareholders' equity $701,867,000 $717,609,000
============ ============
STATEMENTS OF CASH FLOWS
Three months ended
March 31,
-------------------------------
1998 1997
---- ----
Net cash provided by (used in) operating
activities $(2,292,000) $ 10,727,000
Purchases of property, plant, and equipment (3,132,000) (5,271,000)
Acquisitions, net of cash acquired and
investments in joint ventures (1,585,000) (465,000)
Net proceeds of long-term debt issuance 53,000,000 291,005,000
Payments of long-term debt (39,007,000) (318,102,000)
Acquisition related settlement (4,480,000) --
Premium on early extinguishment of debt -- (7,512,000)
Payment of debt issuance costs -- (6,645,000)
Exercise of stock options and warrants 331,000 265,000
Cash and cash equivalents at beginning of period 168,000 36,758,000
----------- -------------
Cash and cash equivalents at end of period $ 3,003,000 $ 760,000
=========== =============
