<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
TRACOR, INC.
(NAME OF SUBJECT COMPANY)
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GEC ACQUISITION CORP.
GEC INCORPORATED
THE GENERAL ELECTRIC COMPANY, P.L.C.
(NOT AFFILIATED WITH THE U.S. BASED CORPORATION WITH A SIMILAR NAME)
(BIDDERS)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
892349200
(CUSIP NUMBER OF CLASS OF SECURITIES)
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PATRICIA A. HOFFMAN
GEC INCORPORATED
C/O NI HOLDINGS INCORPORATED
5700 WEST TOUHY AVENUE
NILES, IL 60714
(847) 779-1900
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
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COPY TO:
PETER S. WILSON, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NY 10019
(212) 474-1767
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CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$1,145,336,600............................................. $229,068
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* For purposes of calculating amount of filing fee only. The amount assumes
the purchase of 28,633,415 shares of Common Stock, par value $.01 per share,
including the associated rights (the "Rights") to purchase Series A Junior
Participating Preferred Stock pursuant to the Rights Agreement dated as of
February 17, 1997 between the Company and Harris Trust and Savings Bank, as
Rights Agent. Such number of shares represents all the shares of Common
Stock (including the associated Right) outstanding as of April 6, 1998 plus
the number of shares of Common Stock (including the associated Right)
issuable upon the exercise of all outstanding options and warrants to
purchase Common Stock (including the associated Right), in each case as
represented by the Company.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None Filing Party:
Form or Registration No.: N/A N/A
Date Filed: N/A
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<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Tracor, Inc., a Delaware corporation
(the "Company"), and the address of its principal executive offices is at 6500
Tracor Lane, Austin, TX 78725.
(b) This Schedule 14D-1 relates to the offer by GEC Acquisition Corp. (the
"Purchaser") to purchase all outstanding shares of Common Stock, par value
$.01 per share (the "Shares"), of the Company, including the associated rights
(the "Rights") to purchase Series A Junior Participating Preferred Stock
pursuant to the Rights Agreement dated as of February 17, 1997 between the
Company and Harris Trust and Savings Bank, as Rights Agent, at a price of
$40.00 per Share (including the associated Right), net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to
Purchase dated April 27, 1998 (the "Offer to Purchase") and in the related
Letter of Transmittal (which, together with any amendments and supplements
thereto, collectively constitute the "Offer"), copies which are attached
hereto as Exhibits (a)(1) and (a)(2), respectively. Unless the context
otherwise requires, all references herein to Shares shall include the Rights.
Information concerning the number of outstanding Shares is set forth in
"Introduction" of the Offer to Purchase and is incorporated herein by
reference.
(c) Information concerning the principal markets in which the Shares are
traded, and the high and low last sales prices of the Shares for each
quarterly period during the past two years is set forth in Section 6 ("Price
Range of the Shares; Dividends on the Shares") of the Offer to Purchase and is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 14D-1 is being filed by the Purchaser, a Delaware corporation
and a wholly owned subsidiary of GEC Incorporated, a Delaware corporation
("Parent"), which is a wholly owned subsidiary of The General Electric
Company, p.l.c., a public limited company organized under the laws of England
and Wales ("GEC, p.l.c."). Information concerning the principal business and
the address of the principal offices of the Purchaser, Parent and GEC, p.l.c.
is set forth in Section 9 ("Certain Information Concerning the Purchaser,
Parent and GEC, p.l.c.") of the Offer to Purchase and is incorporated herein
by reference. This filing shall not be construed as an admission that GEC,
p.l.c. is, for purposes of Regulation 14D under the Securities Exchange Act of
1934, as amended, a bidder on whose behalf this tender offer is being made.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and GEC, p.l.c. is set forth in
Schedule I to the Offer to Purchase and is incorporated herein by reference.
During the last five years, none of the Purchaser, Parent or GEC, p.l.c, or,
to the best knowledge of the Purchaser, Parent or GEC, p.l.c., any of their
respective executive officers or directors, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), nor has any
of them been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of,
or prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 11 ("Contacts and Transactions with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
The Merger Agreement; Other Agreements; Plans for the Company") of the Offer
to Purchase is incorporated herein by reference.
(b) The information set forth in Section 11 ("Contacts and Transactions with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer;
The Merger Agreement; Other Agreements; Plans for the Company") of the Offer
to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
2
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ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement; Other Agreements; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) and (b) The information set forth in "Introduction", Section 9 ("Certain
Information Concerning the Purchaser, Parent and GEC, p.l.c."), Section 11
("Contacts and Transactions with the Company; Background of the Offer") and
Section 12 ("Purpose of the Offer; The Merger Agreement; Other Agreements;
Plans for the Company") of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in "Introduction", Section 9 ("Certain Information
Concerning the Purchaser, Parent and GEC, p.l.c."), Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; The Merger Agreement; Other Agreements; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Because the only consideration in the Offer and Merger (as defined in the
Offer to Purchase) is cash, and in view of the amount of consideration payable
in relation to the financial capability of GEC, p.l.c. and its affiliates, the
Purchaser, Parent and GEC, p.l.c. believe the financial condition of GEC,
p.l.c. and its affiliates is not material to a decision by a holder of Shares
whether to sell, tender or hold Shares pursuant to the Offer.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement; Other Agreements; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of April 21, 1998,
among the Purchaser, Parent and the Company, and the Stockholder Agreement
dated as of April 21, 1998, among the Purchaser, Parent and certain
stockholders of the Company, copies of which are attached hereto as Exhibits
(a)(1), (a)(2), (c)(1) and (c)(2), respectively, is incorporated herein by
reference.
3
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
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(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated April 27, 1998.
(a)(8) Text of Press Release dated April 27, 1998, issued by GEC, p.l.c.
(b) The Euro 6,000,000,000 Syndicated Credit Facility dated March 25,
1998, among GEC, p.l.c., HSBC Investment Bank PLC, as Agent, Marine
Midland Bank, as US Swingline Agent, and certain other financial
institutions.
(c)(1) Agreement and Plan of Merger dated as of April 21, 1998, among the
Purchaser, Parent and the Company.
(c)(2) Stockholder Agreement dated as of April 21, 1998, among the
Purchaser, Parent and certain stockholders of the Company.
(c)(3) Confidentiality Agreement dated March 6, 1998, between GEC Marconi,
N.A., Inc. and the Company.
(c)(4) Letter dated April 21, 1998, from GEC, p.l.c. to the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
4
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: April 27, 1998
GEC ACQUISITION CORP.,
/s/ John Currier
By __________________________________
Name: John Currier
Title: Secretary and Vice
President
GEC INCORPORATED,
/s/ Michael Lester
By __________________________________
Name: Michael Lester
Title: Director
THE GENERAL ELECTRIC COMPANY,
P.L.C.,
/s/ Norman Porter
By __________________________________
Name: Norman Porter
Title: Secretary
5
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EXHIBIT INDEX
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EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
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(a)(1) Offer to Purchase.............................................
(a)(2) Letter of Transmittal.........................................
(a)(3) Notice of Guaranteed Delivery.................................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees......................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees..................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9........................................
(a)(7) Form of Summary Advertisement dated April 27, 1998............
(a)(8) Text of Press Release dated April 27, 1998, issued by GEC,
p.l.c.........................................................
(b) The Euro 6,000,000,000 Syndicated Credit Facility dated March
25, 1998, among GEC, p.l.c., HSBC Investment Bank PLC, as
Agent, Marine Midland Bank, as US Swingline Agent, and certain
other financial institutions..................................
(c)(1) Agreement and Plan of Merger dated as of April 21, 1998, among
the Purchaser, Parent and the Company.........................
(c)(2) Stockholder Agreement dated as of April 21, 1998, among the
Purchaser, Parent and certain stockholders of the Company.....
(c)(3) Confidentiality Agreement dated March 6, 1998, between GEC
Marconi, N.A., Inc. and the Company...........................
(c)(4) Letter dated April 21, 1998, from GEC, p.l.c. to the Company..
(d) None..........................................................
(e) Not applicable................................................
(f) None..........................................................
</TABLE>
<PAGE>
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
PURCHASE RIGHTS)
OF
TRACOR, INC.
AT
$40.00 NET PER SHARE
BY
GEC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GEC INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
THE GENERAL ELECTRIC COMPANY, P.L.C.
(NOT AFFILIATED WITH THE U.S. BASED CORPORATION WITH A SIMILAR NAME)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MAY 22, 1998,
UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF TRACOR, INC. (THE "COMPANY") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT
THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT
THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS
DEFINED HEREIN).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER
OF SHARES WHICH WOULD CONSTITUTE AT LEAST 51% OF ALL OUTSTANDING SHARES ON
A FULLY DILUTED BASIS, (B) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, APPLICABLE TO THE
PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED AND (C) THE PERIOD OF TIME FOR ANY APPLICABLE REVIEW
PROCESS BY THE COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES
("CFIUS") RELATING TO THE DETERMINATION OF ANY THREAT TO NATIONAL
SECURITY HAVING EXPIRED, AND CFIUS NOT HAVING 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.
----------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required
by Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile), or, in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2, an Agent's Message
(as defined herein), and any other required documents to the Depositary and
either deliver the certificates for such Shares to the Depositary along with
the Letter of Transmittal (or a facsimile thereof) or deliver such Shares
pursuant to the procedure for book-entry transfer set forth in Section 2 or
(ii) request such stockholder's broker, dealer, bank, trust company or other
nominee to effect the transaction for such stockholder. A stockholder having
Shares registered in the name of a broker, dealer, bank, trust company or
other nominee must contact such broker, dealer, bank, trust company or other
nominee if such stockholder desires to tender such Shares.
If a stockholder desires to tender Shares and such stockholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the expiration
of the Offer, such stockholder's tender may be effected by following the
procedure for guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
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The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
April 27, 1998
<PAGE>
TABLE OF CONTENTS
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PAGE
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<S> <C>
Introduction............................................................. 1
1.Terms of the Offer.................................................... 3
2.Procedure for Tendering Shares........................................ 4
3.Withdrawal Rights..................................................... 7
4.Acceptance for Payment and Payment.................................... 7
5.Certain Federal Income Tax Consequences............................... 9
6.Price Range of the Shares; Dividends on the Shares.................... 10
7.Effect of the Offer on the Market for the Shares; Stock Quotation;
Exchange Act Registration; Margin Regulations....................... 10
8.Certain Information Concerning the Company............................ 11
9.Certain Information Concerning the Purchaser, Parent and GEC, p.l.c... 14
10.Source and Amount of Funds............................................ 15
11.Contacts and Transactions with the Company; Background of the Offer... 16
12.Purpose of the Offer; The Merger Agreement; Other Agreements; Plans
for the Company..................................................... 17
13.Dividends and Distributions........................................... 28
14.Certain Conditions of the Offer....................................... 28
15.Certain Legal Matters................................................. 30
16.Fees and Expenses..................................................... 32
17.Miscellaneous......................................................... 33
Schedule I -- Directors and Executive Officers........................... I-1
</TABLE>
<PAGE>
To the Holders of Shares of
Tracor, Inc.:
INTRODUCTION
GEC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of GEC Incorporated, a Delaware corporation ("Parent"), which
is A wholly owned subsidiary of The General Electric Company, p.l.c., a public
limited company organized under the laws of England and Wales ("GEC, p.l.c."),
hereby offers to purchase all outstanding shares of Common Stock, par value
$.01 per share (the "Shares"), of Tracor, Inc., a Delaware corporation (the
"Company"), including the associated rights (the "Rights") to purchase Series
A Junior Participating Preferred Stock pursuant to the Rights Agreement dated
as of February 17, 1997 (the "Rights Agreement") between the Company and
Harris Trust and Savings Bank, as Rights Agent, at $40.00 per Share (including
the associated Right) (the "Offer Price"), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer"). Unless the context otherwise requires, all references
herein to Shares shall include the Rights.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
Parent will pay all fees and expenses of Morgan Stanley & Co. Incorporated
("Morgan Stanley"), which is acting as Dealer Manager (the "Dealer Manager"),
The Bank of New York, which is acting as the Depositary (the "Depositary"),
and Georgeson & Company Inc., which is acting as Information Agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED
THE OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE FACTORS
CONSIDERED BY THE BOARD IN ARRIVING AT ITS DECISION TO APPROVE THE OFFER AND
THE MERGER AND TO RECOMMEND THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES ARE DESCRIBED IN THE COMPANY'S SOLICITATION/
RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"), WHICH IS
BEING MAILED TO STOCKHOLDERS OF THE COMPANY HEREWITH.
THE COMPANY HAS ADVISED PARENT AND THE PURCHASER THAT EACH MEMBER OF THE
BOARD AND EACH OF THE COMPANY'S EXECUTIVE OFFICERS INTENDS TO TENDER ALL
SHARES OWNED BY SUCH PERSONS PURSUANT TO THE OFFER, EXCEPT TO THE EXTENT OF
ANY RESTRICTIONS CREATED BY SECTION 16(B) OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE "EXCHANGE ACT"). IN ADDITION, SIMULTANEOUSLY WITH THE
EXECUTION AND DELIVERY OF THE MERGER AGREEMENT (AS HEREINAFTER DEFINED),
PARENT AND THE PURCHASER, ON THE ONE HAND, AND EACH MEMBER OF THE BOARD AND
CERTAIN MEMBERS OF MANAGEMENT ON THE OTHER HAND (THE "CERTAIN STOCKHOLDERS"),
ENTERED INTO THE STOCKHOLDER AGREEMENT DATED AS OF APRIL 21, 1998 (THE
"STOCKHOLDER AGREEMENT"). THE STOCKHOLDER AGREEMENT RELATES TO 306,728 OF THE
SHARES OWNED BY THE CERTAIN STOCKHOLDERS, AS WELL AS 1,104,100 SHARES SUBJECT
TO STOCK OPTIONS (AS HEREINAFTER DEFINED) AND WARRANTS (AS HEREINAFTER
DEFINED) OWNED BY THE CERTAIN STOCKHOLDERS; ALTHOUGH, AT THE DATE HEREOF, ONLY
691,700 SHARES COULD BE ACQUIRED UPON EXERCISE OF THE WARRANTS AND CURRENTLY
EXERCISABLE STOCK OPTIONS. PURSUANT TO THE STOCKHOLDER AGREEMENT, EACH CERTAIN
STOCKHOLDER HAS AGREED, AMONG OTHER THINGS, TO TENDER INTO THE OFFER, AND NOT
TO WITHDRAW THEREFROM, THE 306,728 SHARES OWNED BY THE CERTAIN STOCKHOLDERS,
AS WELL AS ANY OTHER SHARES ACQUIRED PRIOR TO THE EXPIRATION OF THE OFFER
INCLUDING PURSUANT TO THE EXERCISE OF STOCK OPTIONS AND WARRANTS, AND HAS
GRANTED TO THE PURCHASER AN OPTION TO PURCHASE ALL SHARES SUBJECT TO THE
STOCKHOLDER AGREEMENT UNDER CERTAIN CIRCUMSTANCES. SEE SECTION 12.
THE COMPANY'S FINANCIAL ADVISOR, BT WOLFENSOHN, HAS DELIVERED ITS OPINION TO
THE BOARD DATED APRIL 21, 1998 THAT, AS OF SUCH DATE, AND SUBJECT TO THE
CONDITIONS AND LIMITATIONS SET FORTH THEREIN, THE CONSIDERATION TO BE RECEIVED
BY HOLDERS OF SHARES IN THE OFFER AND THE MERGER IS FAIR, FROM A FINANCIAL
POINT OF VIEW. SUCH OPINION IS SET FORTH IN FULL AS AN EXHIBIT TO THE SCHEDULE
14D-9.
1
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH WOULD REPRESENT AT LEAST 51% OF ALL OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (THE "MINIMUM CONDITION"), (B) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING
EXPIRED OR BEEN TERMINATED (THE "HSR ACT CONDITION") AND (C) THE PERIOD OF
TIME FOR ANY APPLICABLE REVIEW PROCESS BY THE COMMITTEE ON FOREIGN INVESTMENT
IN THE UNITED STATES ("CFIUS") RELATING TO THE DETERMINATION OF ANY THREAT TO
NATIONAL SECURITY HAVING EXPIRED, AND CFIUS NOT HAVING 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 "EXON-FLORIO ACT
CONDITION"). FOR ADDITIONAL INFORMATION AS TO THE FOREGOING CLAUSES (B) AND
(C) SEE SECTION 15. THE PURCHASER RESERVES THE RIGHT (SUBJECT TO THE TERMS OF
THE MERGER AGREEMENT AND THE APPLICABLE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC")) TO WAIVE OR REDUCE THE MINIMUM
CONDITION AND TO ELECT TO PURCHASE, PURSUANT TO THE OFFER, FEWER THAN THE
MINIMUM NUMBER OF SHARES NECESSARY TO SATISFY THE MINIMUM CONDITION. THE
PURCHASER CURRENTLY DOES NOT INTEND TO WAIVE THE MINIMUM CONDITION. FOR
PURPOSES HEREOF, SHARES ON A FULLY DILUTED BASIS 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 RIGHTS ASSOCIATED THEREWITH. SEE SECTIONS 1 AND 14.
The Company has informed the Purchaser that, as of April 6, 1998, there were
25,206,204 Shares outstanding, 2,452,016 Shares authorized for issuance
pursuant to the exercise of outstanding options to purchase Shares ("Stock
Options") and 975,195 Shares authorized for issuance pursuant to the exercise
of outstanding Series A Warrants to purchase Shares ("Warrants") issued
pursuant to the Warrant Agreement dated as of December 20, 1991 (the "Warrant
Agreement") between the Company and Ameritrust Company National Association,
as Warrant Agent. As a result, as of such date, the Minimum Condition would be
satisfied if the Purchaser acquired 14,603,042 Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of April 21, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"), with the Company (the "Surviving Corporation") surviving the Merger
as a wholly owned subsidiary of Parent. At the effective time of the Merger
(the "Effective Time"), each outstanding Share (other than Shares held by
stockholders who perfect their appraisal rights under Delaware law, Shares
owned by the Company as treasury stock and Shares owned by Parent or any
direct or indirect wholly owned subsidiary of Parent or of the Company) will
be converted into the right to receive $40.00 in cash (the "Per Share Merger
Consideration"), without interest. The Merger is subject to a number of
conditions, including the adoption of the Merger Agreement by stockholders of
the Company, if required by applicable law. In the event the Purchaser
acquires 90% or more of the outstanding Shares pursuant to the Offer or
otherwise, the Purchaser would be able to effect the Merger pursuant to the
short-form merger provisions of the Delaware General Corporation Law (the
"DGCL"), without prior notice to, or any action by, the Board or any other
stockholder of the Company. In such event, the Purchaser could, and intends
to, effect the Merger pursuant to the short-form merger provisions of the DGCL
without prior notice to, or any action by, the Board or any other stockholder
of the Company. See Section 12.
In connection with the Merger Agreement, the Board amended the Rights
Agreement to render it inapplicable with respect to the Offer, the Merger and
the other transactions contemplated or permitted by the Merger Agreement and
the Stockholder Agreement. Pursuant to the Merger Agreement, the Company has
also agreed that the Board will take all further action requested in writing
by Parent in order to render the Rights inapplicable to the Offer, the Merger
and the other transactions contemplated or permitted by the Merger Agreement
and the Stockholder Agreement.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, May 22, 1998, unless and until the Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, will expire.
In the Merger Agreement, the Purchaser has agreed that it will not, without
the consent of the Company, waive the Minimum Condition. The Purchaser
expressly reserves the right to modify the terms of the Offer, except that,
that without the consent of the Company, the Purchaser shall not (a) reduce
the number of Shares to be subject to the Offer, (b) reduce the Offer Price,
(c) modify or add to the conditions to the Offer in any manner materially
adverse to the holders of the Shares, (d) except as provided in the next
paragraph, extend the Offer, (e) change the form of consideration payable in
the Offer or (f) otherwise amend the Offer in any manner materially adverse to
the holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (a) extend the Offer, if at the scheduled Expiration Date of the
Offer (the initial scheduled Expiration Date being 20 business days following
the commencement of the Offer), any of the conditions to the Purchaser's
obligation to accept for payment, and pay for, Shares are not satisfied, until
such time as such conditions are satisfied or waived, (b) extend the Offer for
a period of not more than 10 business days beyond the latest Expiration Date
that would otherwise be permitted under clause (a) of this sentence, if on the
date of such extension less than 90% of the outstanding Shares on a fully
diluted basis have been validly tendered and not properly withdrawn pursuant
to the Offer, (c) extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer and (d) 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 (a), (b) or (c) of this sentence.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the SEC, the Purchaser reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or
not any of the events or facts set forth in Section 14 hereof shall have
occurred, to (a) extend the period of time during which the Offer is open and
thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (b)
except as set forth above, amend the Offer in any other respect by giving oral
or written notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR
NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If by 12:00 Midnight, New York City time, on Friday, May 22, 1998 (or any
date or time then set as the Expiration Date), any of or all the conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the terms and conditions contained in
the Merger Agreement and to the applicable rules and regulations of the SEC,
to (a) terminate the Offer and not accept for payment or pay for any Shares
and return all tendered Shares to tendering stockholders, (b) except as set
forth above with respect to the Minimum Condition, waive all the unsatisfied
conditions and accept for payment and pay for all Shares validly tendered
prior to the Expiration Date and not theretofore withdrawn, (c) extend the
Offer and, subject to the right of stockholders to withdraw shares until the
Expiration Date, retain the Shares that have been tendered during the period
or periods for which the Offer is extended or (d) amend the Offer. The
Purchaser presently intends (but shall not be obligated) to extend the Offer
until the Exon-Florio Act Condition is satisfied.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of
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an extension, Rule 14e-1(d) under the Exchange Act, requires that the
announcement be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date in accordance
with the public announcement requirements of Rule 14d-4(c) under the Exchange
Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under
the Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to
inform stockholders of such change), and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser will
not have any obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to
the Purchaser's rights under the Offer (but subject to compliance with Rule
14e-1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may nevertheless, on behalf of the Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 3.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition), the Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required
by Rules 14d-4(c), 14d-6(d) and l4e-1 under the Exchange Act. The minimum
period during which an offer must remain open following material changes in
the terms of the Offer or information concerning the Offer, other than a
change in price or a change in the percentage of securities sought, will
depend upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. With respect to a change in
price or a change in the percentage of securities sought, a minimum period of
10 business days is generally required to allow for adequate dissemination to
stockholders.
The Company has provided the Purchaser with the Company's stockholder list
and security position listing for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and will be furnished to brokers, dealers, banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list, or, if applicable, who are listed as participants
in a clearing agency's security position listing, for subsequent transmittal
to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), together with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received
by the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
confirmation of such delivery, including an Agent's Message (as defined
below), must be received by the Depositary), in each case prior to the
Expiration Date or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facilities") for purposes
of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the Book-Entry
Transfer Facilities' systems may make book-entry delivery of Shares by causing
a Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with such Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account
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at a Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message, and any other required documents, must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at a Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." DELIVERY
OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-
ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) of Shares (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or
the Stock Exchange Medallion Program or by any other "eligible guarantor
institution", as such term is defined in Rule 17Ad-15 under the Exchange Act
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be returned to a person other
than the registered holder of the certificates surrendered, the tendered
certificates for such Shares must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name or names of the
registered holders or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed in the manner described above.
See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), with any required signature guarantees, or, in
the case of a book-entry transfer, an
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Agent's Message, and any other required documents are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the
Nasdaq National Market (the "Nasdaq National Market") operated by the
National Association of Securities Dealers, Inc. (the "NASD") is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
such Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES
WILL ANY INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF
ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after April 21, 1998. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
deemed effective). The designees of the Purchaser will thereby be empowered to
exercise all voting and other rights with respect to such Shares and other
securities or rights in respect of any annual, special or adjourned meeting of
the Company's stockholders, actions by written consent in lieu of any such
meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares and other securities or rights,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, Parent, GEC, p.l.c., the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
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Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to
provide the certifications described above, the Internal Revenue Service (the
"IRS") may impose a penalty on such stockholder and payment of cash to such
stockholder pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete and
sign the Substitute Form W-9 included as part of the Letter of Transmittal to
provide the information and certification necessary to avoid backup
withholding (unless an applicable exemption exists and is proved in a manner
satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign a Form W-8, Certificate of Foreign
Status, a copy of which may be obtained from the Depositary, in order to avoid
backup withholding. See Instruction 9 to the Letter of Transmittal.
Warrants. The Purchaser is not tendering for the Warrants pursuant to the
Offer. In order for holders of the Warrants to participate in the Offer, such
holders at their own risk may exercise their Warrants in accordance with the
terms of the Warrant Agreement and validly tender the Shares received upon
such exercise in accordance with the procedures of the Offer.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant
to the procedures set forth below at any time prior to the Expiration Date
and, unless theretofore accepted for payment and paid for by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after Thursday, June
25, 1998.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates for Shares have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant
to the procedure for book-entry transfer as set forth in Section 2, any notice
of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 2 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, GEC, p.l.c., the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all
Shares validly tendered prior to the Expiration Date, and not properly
withdrawn in accordance with Section 3, promptly after the Expiration Date.
All questions as to the satisfaction of such terms and conditions will be
determined by the Purchaser in its sole discretion, which determination will
be final and binding. See Sections 1 and 14. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for
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payment of or payment for Shares in order to comply in whole or in part with
any applicable law, including, without limitation, the HSR Act. Any such
delays will be effected in compliance with Rule 14e-1(c) under the Exchange
Act, which requires that a tender offeror pay the consideration offered or
return the tendered securities promptly after termination or withdrawal of a
tender offer.
GEC, p.l.c. will file a Notification and Report Form with respect to the
Offer under the HSR Act. The waiting period under the HSR Act with respect to
the Offer will expire at 11:59 p.m., New York City time, on the 15th day after
the day such form is filed, unless early termination of the waiting period is
granted. However, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend
the waiting period by requesting additional information or documentary
material from GEC, p.l.c. If such a request is made, such waiting period will
expire at 11:59 p.m., New York City time, on the 10th day after substantial
compliance by GEC, p.l.c. with such request. See Section 15.
The Purchaser and the Company will make a filing under Section 721 of the
Defense Production Act of 1950, as amended (the "Exon-Florio Act"). The time
period for CFIUS to determine whether to undertake an investigation will
expire on the 30th day following the acceptance of such filing by CFIUS. In
the event that CFIUS determines to undertake an investigation, such
investigation must be completed within forty-five days after such
determination. The President has fifteen days following the presentation by
CFIUS of its recommendation to the President in which to suspend or prohibit
the proposed acquisition or seek other appropriate relief. See Section 15.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other holder of Shares pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF ANY SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to
the Purchaser's rights under the Offer (but subject to compliance with Rule
14e-1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may, nevertheless, on behalf of the Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to an affiliate of Parent, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Purchaser of its obligations under the Offer
and will in no way prejudice the
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rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain United States Federal
income tax consequences of the receipt of cash by a holder of Shares pursuant
to the Offer or the Merger. Except as specifically noted, this discussion
applies only to a U.S. Holder.
A "U.S. Holder" means a holder of Shares that is (i) a citizen or resident
of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized in or under the laws of the United States or
any political subdivision thereof or therein, (iii) an estate the income of
which is subject to United States Federal income taxation regardless of its
source, or (iv) a trust if (x) a court within the United States is able to
exercise primary supervision over the administration of the trust and (y) one
or more United States fiduciaries have the authority to control all
substantial decisions of the trust. A "Non-U.S. Holder" is a holder of Shares
that is not a U.S. Holder.
The transfer of Shares pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
Federal income tax purposes, a U.S. Holder will recognize gain or loss equal
to the difference between the amount of cash received by the U.S. Holder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
purchased pursuant to the Offer (or canceled pursuant to the Merger). Gain or
loss will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer (or canceled pursuant to the Merger).
Gain (or loss) will be capital gain (or loss), assuming that such Shares are
held as a capital asset. Capital gains of individuals, estates and trusts
generally are subject to a maximum Federal income tax rate of (i) 39.6% if, at
the time the Company accepts the Shares for payment, the stockholder held the
Shares for not more than one year, (ii) 28% if the stockholder held such
Shares for more than one year but not more than 18 months at such time and
(iii) 20% if the stockholder held such Shares for more than 18 months at such
time. Capital gains of corporations generally are taxed at the Federal income
tax rates applicable to corporate ordinary income. In addition, under present
law, the ability to use capital losses to offset ordinary income is limited.
A stockholder that tenders Shares pursuant to the Offer or surrenders Shares
pursuant to the Merger may be subject to 31% backup withholding unless the
stockholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN, or unless an exemption applies.
A stockholder that does not furnish its TIN may be subject to a penalty
imposed by the IRS. See "--Backup Withholding" under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be
credited against the Federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the
IRS. If backup withholding results in an overpayment of tax, a refund can be
obtained by the stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL
TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. HOLDERS, LIFE INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS, DEALERS IN
SECURITIES OR CURRENCIES, PERSONS WHO HOLD SHARES AS A POSITION IN A
"STRADDLE" OR AS PART OF A "HEDGING" OR "CONVERSION" TRANSACTION AND PERSONS
THAT HAVE A FUNCTIONAL CURRENCY OTHER THAN THE U.S. DOLLAR, AND MAY NOT APPLY
TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
9
<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are quoted on the Nasdaq National Market under the symbol "TTRR".
The following table sets forth, for each of the periods indicated, the high
and low last sales prices per Share, as reported in published financial
sources.
<TABLE>
<CAPTION>
LAST SALES
PRICES OF SHARES
------------------
CALENDAR YEAR HIGH LOW
- ------------- -------- ---------
<S> <C> <C>
1996
First Quarter.............................................. $17 7/16 $14
Second Quarter............................................. 21 1/8 17 1/8
Third Quarter.............................................. 20 5/8 16 5/8
Fourth Quarter............................................. 24 3/8 19 3/4
1997
First Quarter.............................................. 24 21 1/8
Second Quarter............................................. 26 3/4 20
Third Quarter.............................................. 31 23 7/8
Fourth Quarter............................................. 31 3/8 25 13/16
1998
First Quarter.............................................. 33 26 15/16
Second Quarter (through April 24, 1998).................... 39 3/8 31
</TABLE>
On April 20, 1998, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the Nasdaq National Market was $36 3/8 per Share. On
April 24, 1998, the last full trading day before the commencement of the
Offer, the last reported sales price of the Shares on the Nasdaq National
Market was $39 3/8 per Share.
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares.
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Stock Quotation.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NASD for continued inclusion
in the Nasdaq National Market, which among other things require that an issuer
have either (i) at least 750,000 publicly held shares, held by at least 400
stockholders of round lots, with a market value of at least $5,000,000 and net
tangible assets of at least $4,000,000 and at least two registered and active
market makers for the shares or (ii) at least 1,100,000 publicly held shares,
held by at least 400 stockholders of round lots, with a market value of at
least $15,000,000, and either (x) a market capitalization of at least
$50,000,000 or (y) total assets and total revenue of at least $50,000,000 each
for the most recently completed fiscal year or two of the last three most
recently completed fiscal years and at least four registered and active market
markers. The Shares might nevertheless continue to be included in the NASD's
Nasdaq Stock Market (the "Nasdaq Stock Market") with quotations published in
the Nasdaq "additional list" or in one of the "local lists", but if the number
of holders of the Shares were to fall below 300, or if the number of publicly
10
<PAGE>
held Shares were to fall below 100,000 or there were not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq Stock Market
reporting and the Nasdaq Stock Market would cease to provide any quotations.
Shares held directly or indirectly by directors, officers or beneficial owners
of more than 10% of the Shares are not considered as being publicly held for
this purpose. If, as a result of the purchase of Shares pursuant to the Offer
or otherwise, the Shares no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq National Market or in any other tier of the
Nasdaq Stock Market and the Shares are no longer included in the Nasdaq
National Market or in any other tier of the Nasdaq Stock Market, as the case
may be, the market for Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and
that price quotations would be reported by other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of Shares remaining at such time,
the interest in maintaining a market in Shares on the part of securities
firms, the possible termination of registration of the Shares under the
Exchange Act, as described below, and other factors.
Exchange Act Registration.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are not listed on a national securities
exchange, quoted on an automated inter-dealer quotation system or held by 300
or more holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the SEC and would make
certain provisions of the Exchange Act no longer applicable to the Company,
such as the short-swing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met.
If public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration
of the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), which has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans
made by brokers. In any event, the Shares will cease to be "margin securities"
if registration of the Shares under the Exchange Act is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices at 6500
Tracor Lane, Austin, TX 78725-2000. The Company and its subsidiaries provide
sophisticated electronic and information technology products,
11
<PAGE>
systems and services to the United States Department of Defense ("DOD"), other
United States government agencies, foreign governments and commercial
customers. The Company's business units operate in the United States and
foreign defense electronics, information technology and systems engineering
and integration markets. The Company's products and services largely support
high priority DOD weapons, platforms and systems, enabling defense customers
to enhance the operational performance and readiness of existing systems and
platforms, as well as extend their useful lives and survivability.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the information
contained in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 and the Company's Report on Form 10-Q for the three
months ended March 31, 1997. More comprehensive financial information is
included in such reports and other documents filed by the Company with the
SEC, and the following summary is qualified in its entirety by reference to
such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and such other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "--Available Information." In
addition, the financial information with respect to the three months ended
March 31, 1998 was excerpted from a press release issued by the Company on
April 21, 1998.
TRACOR, INC
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31,
--------------------- ------------------------------
1998 1997 1997 1996 1995
------------ -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Net sales................ $290,658 $297,464 $1,265,686 $1,082,505 $886,920
Earnings before interest,
income tax and
extraordinary item...... 26,330 26,115 101,906 92,590 68,190
Net income............... 11,745 279 34,245 36,614 27,863
Net income per Share
before extraordinary
item.................... n/d n/d 1.78 1.86 2.11
Net income per Share..... n/d n/d 1.37 1.86 2.11
Net income per Share
before extraordinary
item (assuming
dilution)............... 0.43 0.38 1.65 1.47 1.29
Net income per Share
(assuming dilution)..... 0.43 0.01 1.27 1.47 1.29
- --------
n/d=not disclosed
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
------------ ---------------------
1998 1997 1996
------------ ---------- ----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Current assets........... $327,931 $ 316,982 $ 320,014
Total assets............. 701,867 717,609 744,954
Long-term debt, less
current portion......... 263,104 270,343 292,172
Stockholders' equity..... 271,471 259,215 222,917
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons
in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the SEC.
Such reports, proxy statements and other information should be available for
inspection at the public reference facilities of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located
at Seven World Trade Center, 13th Floor, New York, NY
12
<PAGE>
10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, IL
60661. Copies of such information should be obtainable, by mail, upon payment
of the SEC's customary charges, by writing to the SEC's principal office at
450 Fifth Street, N.W., Washington, D.C. 20549. Such material should also be
available for inspection at the offices of Nasdaq Operations, 1735 K Street,
N.W., Washington, D.C. 20006. The SEC maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. Such reports, proxy and
information statements and other information may be found on the SEC's web
site address, http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the SEC and other publicly available
information. Although the Purchaser, Parent and GEC, p.l.c. do not have any
knowledge that any such information is untrue, none of the Purchaser, Parent
or GEC, p.l.c. takes any responsibility for the accuracy or completeness of
such information or for any failure by the Company to disclose events that may
have occurred and may affect the significance or accuracy of any such
information.
Certain Company Projections. During the course of discussions between
representatives of GEC Marconi, N.A., Inc., a wholly owned subsidiary of
Parent ("GEC Marconi"), and the Company, the Company provided GEC Marconi or
its representatives with certain non-public business and financial information
about the Company. The following is a summary of selected projected financial
information provided by the Company.
<TABLE>
<CAPTION>
PROJECTIONS FOR
YEAR ENDING DECEMBER 31,
--------------------------------------
1998 1999 2000
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales.............................. $ 1,353,718 $ 1,504,394 $ 1,625,852
Earnings before interest, income tax
and extraordinary item................ 109,239 116,250 127,057
Net income............................. 50,076 55,292 62,442
Net income per Share (assuming dilu-
tion)................................. 1.86 2.05 2.32
</TABLE>
THE COMPANY HAS ADVISED THE PURCHASER, PARENT AND GEC, P.L.C. THAT IT DOES
NOT AS A MATTER OF COURSE MAKE PUBLIC ANY PROJECTIONS AS TO FUTURE PERFORMANCE
OR EARNINGS, AND THE PROJECTIONS SET FORTH ABOVE ARE INCLUDED IN THIS OFFER TO
PURCHASE ONLY BECAUSE THE INFORMATION WAS PROVIDED TO GEC MARCONI. THE
PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE
WITH THE PUBLISHED GUIDELINES OF THE SEC OR THE GUIDELINES ESTABLISHED BY THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR
FORECASTS. THE COMPANY'S INTERNAL OPERATING PROJECTIONS ARE, IN GENERAL,
PREPARED SOLELY FOR INTERNAL USE AND CAPITAL BUDGETING AND OTHER MANAGEMENT
DECISIONS AND ARE SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE TO VARIOUS
INTERPRETATIONS AND PERIODIC REVISION BASED ON ACTUAL EXPERIENCE AND BUSINESS
DEVELOPMENTS. THE PROJECTIONS WERE BASED ON A NUMBER OF ASSUMPTIONS THAT ARE
BEYOND THE CONTROL OF THE COMPANY, THE PURCHASER, PARENT OR GEC, P.L.C. OR
THEIR RESPECTIVE FINANCIAL ADVISORS, INCLUDING ECONOMIC FORECASTING (BOTH
GENERAL AND SPECIFIC TO THE COMPANY'S BUSINESS), WHICH IS INHERENTLY UNCERTAIN
AND SUBJECTIVE. NONE OF THE COMPANY, THE PURCHASER, PARENT OR GEC, P.L.C. OR
THEIR RESPECTIVE FINANCIAL ADVISORS ASSUMES ANY RESPONSIBILITY FOR THE
ACCURACY OF ANY OF THE PROJECTIONS. THE INCLUSION OF THE FOREGOING PROJECTIONS
SHOULD NOT BE REGARDED AS AN INDICATION THAT THE COMPANY, THE PURCHASER,
PARENT OR GEC, P.L.C. OR ANY OTHER PERSON WHO RECEIVED SUCH INFORMATION
CONSIDERS IT AN ACCURATE PREDICTION OF FUTURE EVENTS. NONE OF THE COMPANY, THE
PURCHASER , PARENT OR GEC, P.L.C. INTENDS TO UPDATE, REVISE OR CORRECT SUCH
PROJECTIONS IF THEY BECOME INACCURATE (EVEN IN THE SHORT TERM).
13
<PAGE>
9. CERTAIN INFORMATION CONCERNING THE PURCHASER, PARENT AND GEC, P.L.C.
The Purchaser, a Delaware corporation, was recently incorporated for the
purpose of acquiring the Company and has not conducted any unrelated
activities since its incorporation. The principal executive office of the
Purchaser is located at 5700 West Touhy Avenue, Niles, IL 60714-4690 (c/o NI
Holdings Incorporated). All outstanding shares of common stock of Purchaser
are owned by Parent.
The principal executive office of Parent, a Delaware corporation, is located
at 5700 West Touhy Avenue, Niles, IL 60714-4690 (c/o NI Holdings
Incorporated). Parent is a holding company of substantially all of the United
States operations of GEC, p.l.c. All outstanding shares of common stock of
Parent are owned by GEC, p.l.c.
GEC, p.l.c. is a public limited company organized under the laws of England
and Wales with its principal executive office at One Bruton Street, London WIX
8AQ. GEC, p.l.c., its subsidiaries and associated companies are principally
engaged in the manufacture of electronic, electrical and power generation
apparatus and systems.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and GEC, p.l.c. is set forth in
Schedule I hereto.
Except as described in this Offer to Purchase, none of the Purchaser, Parent
or GEC, p.l.c. (together, the "Corporate Entities") or, to the best knowledge
of the Corporate Entities, any of the persons listed in Schedule I or any
associate or majority-owned subsidiary of the Corporate Entities or any of the
persons so listed, beneficially owns any equity security of the Company, and
none of the Corporate Entities or, to the best knowledge of the Corporate
Entities, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
Except as described in this Offer to Purchase, (a) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand,
that are required to be disclosed pursuant to the rules and regulations of the
SEC and (b) none of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I has any contract,
arrangement, understanding or relationship with any person with respect to any
securities of the Company.
14
<PAGE>
Because the only consideration in the Offer and Merger is cash, and in view
of the amount of consideration payable in relation to the financial capability
of GEC, p.l.c. and its affiliates, the Purchaser, Parent and GEC, p.l.c.
believe the financial condition of GEC, p.l.c. and its affiliates is not
material to a decision by a holder of Shares whether to sell, tender or hold
Shares pursuant to the Offer. Set forth below is a summary of certain selected
consolidated financial information with respect to GEC, p.l.c. for the fiscal
years ended March 31, 1995, 1996 and 1997 and the six months ended September
30, 1996 and 1997. The selected consolidated financial information are stated
in U.K. pounds sterling. Such information is provided for supplemental
information purposes only and is neither intended nor required to comply with
the requirements of the Exchange Act. On April 23, 1998, The Wall Street
Journal reported that, as of April 22, 1998, one U.K. pound sterling equaled
1.6717 U.S. dollars. The following information was prepared in accordance with
accounting principles generally accepted in the United Kingdom (and has not
been reconciled to generally accepted accounting principles in the United
States).
THE GENERAL ELECTRIC COMPANY, P.L.C.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
((Pounds) MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED MARCH 31,
--------------------------- --------------------------------------------
1997 1996 1997 1996 1995
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
PROFIT AND LOSS:
Turnover (1)............ (Pounds)5,118 (Pounds)5,055 (Pounds)11,147 (Pounds)10,990 (Pounds)10,330
Profit on ordinary
activities before
taxation (excluding
exceptional items)..... 442 421 1,010 1,004 907
Profit on ordinary
activities before
taxation............... 442 261 707 981 891
Profit on ordinary
activities attributable
to the shareholders.... 280 151 408 623 564
<CAPTION>
AT SEPTEMBER 30, AT MARCH 31,
--------------------------- --------------------------------------------
1997 1996 1997 1996 1995
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Fixed assets............ (Pounds)1,947 (Pounds)2,081 (Pounds)1,919 (Pounds)2,110 (Pounds)1,890
Current assets.......... 4,369 4,608 4,240 4,545 4,423
Creditors: due within
one year............... 2,311 2,539 2,333 2,462 2,041
Equity shareholders'
interest............... 2,887 2,933 2,687 3,112 3,348
</TABLE>
- --------
(1)Including share of turnover of joint ventures and other associated
companies.
This financial information does not constitute GEC, p.l.c.'s statutory
accounts within the meaning of section 240 of the Companies Act 1985 of Great
Britain (the "Act"). The information for the three years ended March 31, 1997
is extracted from the published audited consolidated financial statements of
GEC, p.l.c. for the three years ended March 31, 1997. GEC, p.l.c.'s auditors
made reports under section 235 of the Act on each of the financial statements
for the three years ended March 31, 1997 and the statutory accounts have been
delivered to the Registrar of Companies of England and Wales for each of those
years. Each such report was unqualified and did not contain a statement under
section 237(2) to (4) of the Act.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the amount of funds required to purchase all
outstanding Shares on a fully diluted basis pursuant to the Offer and to pay
fees and expenses related to the Offer will be approximately $1.1 billion. The
Purchaser will obtain such funds in the form of capital contributions. Parent
will obtain such funds from GEC, p.l.c. Such funds will be obtained by GEC,
p.l.c. from existing cash resources or from bank borrowings which may include
borrowings pursuant to the Euro 6,000,000,000 Syndicated Credit Facility dated
March 25, 1998 (the "Credit Facility Agreement") among GEC, p.l.c., HSBC
Investment Bank PLC, as Agent, Marine Midland Bank, as US Swingline Agent, and
certain other financial institutions. The Credit Facility Agreement includes a
364 day revolving credit facility up to the amount of Euro 1,500,000,000 (the
"364 Day Facility") and a five year revolving credit facility up to the amount
of Euro 4,500,000,000 (the "Five Year Facility"). Any
15
<PAGE>
such borrowings will be unsecured and repayable (with a right to reborrow) on
the last day of each borrowing period of up to six months. Such borrowings can
be made in Euro, U.K. pounds sterling, U.S. Dollars or in any other currency
which is readily available and freely transferable in the London foreign
exchange market. The 364 Day Facility will terminate on March 24, 1999 and the
Five Year Facility will terminate on March 25, 2003. Any such borrowings would
bear interest at a rate equal to the aggregate of the London inter-bank
offered rate plus 0.175 percent per annum. References in the Credit Facility
Agreement, prior to the third stage of the Economic and Monetary Union, to a
Euro mean an ECU. On April 23, 1998, The Wall Street Journal reported, that as
of April 22, 1998, one ECU equaled 1.1031 U.S. dollars. The Credit Facility
Agreement includes customary covenants and events of default. There are no
current plans to refinance any such borrowings made under the Credit Facility
Agreement.
Pursuant to a letter dated April 21, 1998 from GEC, p.l.c. to the Company,
GEC, p.l.c. has agreed to provide that the Parent be a borrower under the
Credit Facility Agreement until one day after the Effective Time and that from
and after the date of the Merger Agreement until the earlier to occur of (i)
the date which is one day after the Effective Time and (ii) the date the
Merger Agreement is terminated, GEC, p.l.c. shall cause the availability of
the commitment under the Credit Facility Agreement to be an amount at least
necessary to complete the acquisition of the Shares upon the terms and
conditions set forth in the Merger Agreement.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
In February 1998, William E. Conway, Jr., a member of the Board, telephoned
Mark Ronald, President and Chief Executive Officer of GEC Marconi, to inform
GEC Marconi that the Company was evaluating its strategic options and that the
Company might be available for acquisition.
On March 5, 1998, Mr. Ronald met with James B. Skaggs, President and Chief
Executive Officer of the Company, in Dallas, Texas. At the meeting, Mr. Ronald
and Mr. Skaggs exchanged information regarding GEC Marconi and the Company and
their respective strategic alternatives including, in the case of the Company,
a potential sale of the Company.
On March 6, 1998, GEC Marconi entered into the Confidentiality Agreement (as
hereinafter defined) with the Company.
From March 11, 1998, through March 13, 1998, representatives of GEC Marconi,
including Mr. Ronald, and of Morgan Stanley met in Miami, Florida, with
representatives of the Company, including Mr. Skaggs. During such meetings,
representatives of the Company made presentations about the business of the
Company, including financial information.
On March 17, 1998, representatives from GEC Marconi and Morgan Stanley met
with representatives from the Company and BT Wolfensohn in Washington D.C. for
a business due diligence session.
From March 17, 1998, through March 24, 1998, negotiations between
representatives of Morgan Stanley and BT Wolfensohn took place to reach
preliminary agreement on the purchase price.
On March 25, 1998, Lord Simpson, Chief Executive Officer of GEC, p.l.c.
submitted to BT Wolfensohn a preliminary, nonbinding indication of interest
for GEC, p.l.c. or one of its United States affiliates to acquire 100 percent
of the outstanding shares of the Company at a purchase price of $40.00 per
share, subject to additional information to be received, the terms and
conditions of a definitive agreement to be negotiated, approval by the Board
of Directors of GEC, p.l.c. and certain regulatory approvals.
During March and April of 1998, the Company provided GEC, p.l.c., GEC
Marconi and their financial and legal representatives with financial and other
information, and representatives of Parent's counsel conducted due diligence
at the Company's offices.
On April 2, 1998, GEC, p.l.c. and GEC Marconi received a letter from
representatives of the Company transmitting a draft of the Merger Agreement.
16
<PAGE>
Between March 31, 1998, and April 3, 1998, representatives of GEC Marconi
and Morgan Stanley, including Mr. Ronald, conducted due diligence with
management of the Company in Austin, Texas, and representatives of GEC Marconi
conducted due diligence with management of the Company in Rancho Bernardo,
California. On April 6, 1998, representatives of GEC Marconi and Morgan
Stanley met with management of the Company in Rockville, Maryland, to conduct
due diligence. Mr. Skaggs attended the meetings in Austin, Texas. Robert K.
Floyd, Chief Financial Officer of the Company, attended all such meetings.
Between April 7, 1998, and April 16, 1998, negotiations by phone were
conducted between the parties on several different aspects of the Merger
Agreement.
On April 15, 1998, Lord Simpson contacted Mr. Skaggs by telephone and
indicated that GEC, p.l.c. was prepared to go forward with the transaction,
subject to the negotiation of definitive agreements. Parent's counsel
transmitted a draft Merger Agreement to the Company's counsel with the
proposed changes to the draft previously distributed by such counsel.
On April, 17, 1998, and April 18, 1998, representatives of GEC Marconi,
Morgan Stanley and Parent's counsel met in New York with representatives of
the Company, BT Wolfensohn and the Company's counsel to negotiate the Merger
Agreement. During such negotiations, Mr. Ronald and representatives of Morgan
Stanley indicated to Mr. Skaggs and representatives of BT Wolfensohn that it
was a condition of GEC, p.l.c.'s willingness to have Parent and the Purchaser
enter into the Merger Agreement that there be an agreement along the lines of
the Stockholder Agreement.
Discussions by telephone among counsel to Parent and the Company regarding
the Merger Agreement and the Stockholder Agreement continued on April 19,
1998, and April 20, 1998.
On April 21, 1998, GEC, p.l.c.'s full board met in London and approved
Parent and the Purchaser entering into the Merger Agreement and the
Stockholder Agreement. Mr. Skaggs advised Lord Simpson that the Board met on
April 21, 1998, in Austin, and approved the transactions contemplated by the
Merger Agreement and the Stockholder Agreement and approved entering into such
agreements. Following these approvals, the Merger Agreement and the
Stockholder Agreement were executed and the transaction was publicly
announced.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; OTHER AGREEMENTS; PLANS FOR
THE COMPANY
Purpose. The purpose of the Offer is to acquire control of and the entire
equity interest in the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction of the conditions described below under "Conditions to the
Merger", the Purchaser will be merged with and into the Company, and each
outstanding Share (other than Shares held by stockholders who perfect their
appraisal rights under Delaware law, Shares owned by the Company as treasury
stock and Shares owned by Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company) will be converted into the right to
receive the Per Share Merger Consideration, without interest.
(1) Vote Required to Approve Merger. The DGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must
be approved by the Board and generally by a majority of the holders of the
Company's outstanding voting securities. The Board has approved the Offer and
the Merger. Consequently, the only additional action of the Company that may
be necessary to effect the Merger is approval by such stockholders if the
"short-form" merger procedure described below is not available. Under the
DGCL, the affirmative vote of holders of a majority of the outstanding Shares
(including any Shares owned by the Purchaser), is generally required to
approve the Merger. If the Purchaser acquires, through the Offer or otherwise,
voting power with respect to at least a majority of the outstanding Shares
(which would be the case if the Minimum Condition were satisfied and the
Purchaser were to accept for payment Shares tendered pursuant to
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the Offer), it would have sufficient voting power to effect the Merger without
the vote of any other stockholder of the Company. However, the DGCL also
provides that if a parent company owns at least 90% of each class of stock of
a subsidiary, the parent company can effect a short-form merger with that
subsidiary without the action of the other stockholders of the subsidiary.
Accordingly, if, as a result of the Offer or otherwise, the Purchaser acquires
or controls the voting power of at least 90% of the outstanding Shares, the
Purchaser could, and intends to, effect the Merger without prior notice to, or
any action by, any other stockholder of the Company.
(2) Conditions to the Merger.
Conditions to Obligations of Each Party Under The Merger Agreement. The
respective obligations of Parent, the Purchaser and the Company to effect the
Merger under the Merger Agreement are subject to the satisfaction at or prior
to the Effective Time of the following conditions, any or all of which may be
waived by Parent, the Purchaser and the Company, in whole or in part, to the
extent permitted by applicable law: (a) the Merger 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 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; and (c) the applicable waiting period under the
HSR Act shall have expired or been terminated.
Conditions to Obligations of Parent and the Purchaser. The obligations of
Parent and the Purchaser to effect the Merger under the Merger Agreement are
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived by Parent and the Purchaser, in
whole or in part, to the extent permitted by applicable law: (a) each of the
representations and warranties of the Company in the Merger Agreement shall be
true and correct (without giving effect to any material or Material Adverse
Effect (as hereinafter defined) qualifiers or other qualifiers based on
materiality contained therein), as of the date of the Merger 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) the Company shall have performed or complied in all
material respects with all agreements and covenants required by the Merger
Agreement to be performed or complied with by it at or prior to the Effective
Time; (c) the Company shall have furnished Parent and the Purchaser with such
certificates and other documents necessary to evidence the fulfillment of the
conditions set forth in the Merger Agreement as Parent or the Purchaser may
reasonably request; (d) each of the 1995 Stock Plan for Employees and
Subsidiaries and the 1991 Stock Plan for Employees of the Company and
Subsidiaries (collectively, the "Stock 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 Stock Options and
Restricted Stock (as hereinafter defined) awards in accordance with the Merger
Agreement, 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; and (e) the Exon-Florio Act Condition shall
have been satisfied. "Material Adverse Effect" means 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 Merger 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 the Purchaser of the acquisition of the
Company.
Condition to Obligations of the Company. The obligations of the Company to
effect the Merger under the Merger Agreement are subject to the satisfaction
at or prior to the Effective Time of the condition, which may
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be waived by the Company, in whole or in part, to the extent permitted by
applicable law, that Parent and the Purchaser shall have performed or complied
in all material respects with all agreements and covenants required by the
Merger Agreement to be performed or complied with by them at or prior to the
Effective Time.
(3) Termination of the Merger Agreement. The Merger 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, the
Purchaser and the Company; (b) by Parent, the 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
the Purchaser if due to an occurrence or circumstance which would result in a
failure to satisfy any of the conditions set forth in Section 14, the
Purchaser shall have (i) terminated the Offer without purchasing any Shares
pursuant to the Offer or (ii) failed to accept for payment Shares 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 the Purchaser shall have (A)
terminated the Offer without purchasing any Shares pursuant to the Offer or
(B) failed to accept for payment Shares pursuant to the Offer prior to July
31, 1998, or (ii) prior to the purchase of Shares pursuant to the Offer,
concurrently with the execution of an Acquisition Agreement (as hereinafter
defined) under the circumstances described below under "Acquisition Proposals"
provided, that such termination under this clause (ii) shall not be effective
unless the Company and the Board shall have complied with all their
obligations described below under "Acquisition Proposals" and until payment of
the Termination Fee (as hereinafter defined) and the out-of-pocket fees and
expenses incurred by Parent, the Purchaser and their affiliates in connection
with the transactions contemplated by the Merger Agreement; (e) by Parent or
the Purchaser prior to the purchase of Shares 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 the Merger 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 the Merger 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 the
Purchaser may immediately terminate the Merger Agreement in the event that
such breach by the Company was wilful or intentional or in the event of a
breach of the provisions described below under "Acquisition Proposals", (iii)
the Board or any committee thereof shall have withdrawn or modified (including
by amendment of the Schedule 14D-9) in a manner adverse to the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger Agreement,
shall have recommended to the Company's stockholders a Third Party Acquisition
(as hereinafter defined), or shall have authorized the redemption of any
Rights, or (iv) there shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer at least 51% of the Shares on a fully
diluted basis and on or prior to such expiration an entity or group (other
than Parent or the Purchaser) shall have made, or, with respect to any
proposal that may have been existing on the date of the Merger Agreement, not
withdrawn, a proposal with respect to a Third Party Acquisition; or (f) by the
Company prior to the purchase of any Shares pursuant to the Offer if (i) there
shall have been a material breach of any representation or warranty in the
Merger Agreement on the part of Parent or the 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 the
Merger Agreement on the part of Parent or the 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 the Purchaser shall have no
right to cure and the Company may immediately terminate the Merger Agreement
in the event that such breach by Parent or the Purchaser was wilful or
intentional.
(4) Acquisition Proposals. Pursuant to the Merger Agreement, the Company has
agreed that it will not, and will not permit any of its subsidiaries, or any
of its or their officers, directors, employees, representatives,
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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 (a) 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 (as hereinafter defined), (b)
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 (c) 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 the Merger Agreement shall prohibit the Board at any time
prior to the earlier to occur of acceptance for payment of Shares pursuant to
the Offer or adoption of the Merger 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
the Merger Agreement) 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 (as
hereinafter defined), if, and only to the extent that, (i) the Board, 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 to the stockholders of the Company under applicable law, and (ii)
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
the terms of the Merger Agreement. 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 the Merger Agreement. It is understood that
any violation of the restrictions described above by any Representative of the
Company or any of its subsidiaries, whether or not such person is purporting
to act on behalf of the Company or otherwise, shall be deemed to be a breach
of the Merger Agreement by the Company.
The Merger Agreement provides further that, except as described below
neither the Board nor any committee thereof shall (a) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent or the
Purchaser, the approval or recommendation by the Board of the Offer or the
Merger, (b) approve or recommend, or propose publicly to approve or recommend,
any Acquisition Proposal, or (c) 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 pursuant to the Offer or adoption of the
Merger Agreement by the stockholders of the Company, the Board may terminate
the Merger Agreement but only (a) to the extent that the Board 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 to the stockholders of the Company under applicable law, (b) if the
Company and the Board have complied with all the provisions described in this
subsection on "Acquisition Proposals", (c) after the third day following
Parent's receipt of written notice advising Parent that the Board 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, the Purchaser and their affiliates in connection with the
transactions contemplated by the Merger Agreement pursuant to the provisions
described under "Fees and Expenses" below.
In addition, under the Merger Agreement the Company has agreed to 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.
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Nothing contained in the Merger Agreement 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, after consultation with outside legal
counsel to the Company, determines in good faith is required by the fiduciary
duty of the Board to the stockholders of the Company under applicable law;
provided that neither the Board nor any committee thereof withdraws or
modifies, or proposes to withdraw or modify, the approval or recommendation of
the Board of the Offer or the Merger or approves or recommends, or publicly
proposes to approve or recommend, an Acquisition Proposal unless the Company
and the Board have complied with the terms of the Merger Agreement.
"Acquisition Proposal" means an inquiry, offer or proposal regarding any of
the following (other than the transactions contemplated by the Merger
Agreement) involving the Company: (a) any merger, consolidation, share
exchange, recapitalization, liquidation, dissolution, business combination or
other similar transaction; (b) 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
(as hereinafter defined) or of any subsidiary or subsidiaries responsible for
a Material Business in a single transaction or series of related transactions;
(c) any acquisition of 15% 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 (d) 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
then outstanding or not less than 75% of the assets of the Company and its
subsidiaries which the Board 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 the Merger 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 the Merger
Agreement proposed by Parent in response to such proposal) than the Offer, the
Merger and the other transactions contemplated by the Merger 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. "Third Party Acquisition" means
(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, the 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 Shares 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% of the outstanding
Shares.
(5) Fees and Expenses. Except with respect to the circumstances described
below, the Merger Agreement provides that each of Parent, the Purchaser and
the Company will bear its own fees and expenses in connection with the Merger
Agreement.
The Merger Agreement provides that (a) if Parent or the Purchaser terminates
the Merger Agreement pursuant to the provisions described above under clause
(e)(i) or (iv) of "Termination of the Merger Agreement" or the provisions
described above under clause (e)(ii) of "Termination of the Merger Agreement"
(other than as a result of a breach of the provisions described above under
"Acquisition Proposals") or the Company
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terminates the Merger Agreement pursuant to the provisions described above
under clause (d)(i) of "Termination of the Merger Agreement" under
circumstances when Parent had the right to terminate the Merger Agreement
pursuant to the provisions described above under clause (e)(iv) of
"Termination of the Merger Agreement", 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, (b) Parent or the
Purchaser terminates the Merger Agreement pursuant to the provisions described
above under clause (e)(ii) of "Termination of the Merger Agreement" as a
result of a breach of the provisions described above under "Acquisition
Proposals" or pursuant to the provisions described above under clause (e)(iii)
of "Termination of the Merger Agreement" or (c) the Company terminates the
Merger Agreement pursuant to the provisions described above under clause
(d)(ii) of "Termination of the Merger Agreement", 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 the provisions
described above under clause (d)(ii) of "Termination of the Merger Agreement",
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 the Purchaser, up to a limit of $5 million,
for all their reasonable out-of-pocket fees and expenses actually incurred by
Parent, the Purchaser or their respective affiliates in connection with the
Merger Agreement, the Offer, the Merger and the other transactions
contemplated by the Merger 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
the Purchaser and their respective affiliates and the expenses of the
preparation, printing, filing and mailing of the offer documents.
(6) Conduct of Business of the Company. Pursuant to the Merger Agreement,
the Company has agreed that, prior to the Effective Time, unless otherwise
expressly contemplated by the Merger 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.
(7) Prohibited Actions by the Company. Under the Merger Agreement, the
Company has agreed that, except as expressly contemplated by the Merger
Agreement or otherwise consented to in writing by Parent, from the date of the
Merger 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 the
Merger 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 (as defined in the Merger Agreement) 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 Stock
Option Plans to accelerate the vesting of any unvested Stock Options and to
permit employees to tender any Shares acquired upon exercise of any 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
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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 or the Stock Options
occurring pursuant to the terms (as in effect on the date of the Merger
Agreement) of any existing Benefit Plan of the Company or any of its
subsidiaries or (iii) the repurchase of Rights pursuant to the terms (as in
effect on the date of the Merger Agreement) of the Rights Agreement to the
extent required by the Merger 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 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 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 (and associated
Rights) upon the exercise of the Stock Options and Warrants outstanding at the
date of the Merger Agreement in accordance with the terms thereof (as in
effect on the date of the Merger 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 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
generally accepted accounting principles, 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; (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
was furnished to Parent prior to the execution of the Merger 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 documents filed with the SEC from January 1, 1997
to the date of the Merger Agreement or incurred in the ordinary course of
business consistent with past practice, (ii) cancel any material indebtedness
(individually or in the aggregate) or waive
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any claims or rights of substantial value or (iii) subject to the terms of the
Merger Agreement, 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.
(8) Directors. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment by the Purchaser for, any Shares
pursuant to the Offer, the Purchaser shall be entitled to designate such
number of directors on the Board as will give the Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
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 Board
(giving effect to the directors elected pursuant to this sentence) multiplied
by (b) the percentage that (i) such number of Shares so accepted for payment
and paid for by the Purchaser plus the number of Shares otherwise owned by the
Purchaser or any other subsidiary of Parent bears to (ii) the number of such
Shares outstanding, and the Company shall, at such time, cause the Purchaser's
designees to be so elected; provided, however, that in the event that the
Purchaser's designees are appointed or elected to the Board, until the
Effective Time the Board shall have at least three directors who are directors
on the date of the Merger 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 the Merger
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 the Purchaser, and such
persons shall be deemed to be Independent Directors for purposes of the Merger
Agreement. Subject to applicable law, the Company has agreed to 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, which information statement is attached as
Schedule I to the Schedule 14D-9. The 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,
at the option of the Purchaser, either increase the size of the Board 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 as
provided above.
(9) Stock Options and Warrants. The Merger Agreement provides that upon
consummation of the Merger, all then outstanding Stock Options and all Shares
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 Stock Option or Restricted Stock award equal to (a) in the case of
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 Stock
Option and B equals the number of Shares subject to the holder's Stock Option
and (b) in the case of Restricted Stock, the number of shares of the holder's
Restricted Stock times the Per Share Merger Consideration. Except as provided
in the Merger Agreement or as otherwise agreed to by the parties, (a) the
Stock 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 (b) following the Effective Time no holder of Stock
Options or Restricted Stock or any participant in 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. The
Company shall take all actions necessary to comply with the provisions 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 Shares issuable upon such exercise prior to the
Effective Time, cash in an amount per share of such Shares equal to the Per
Share Merger Consideration.
(10) Indemnification of Directors and Officers. In the Merger Agreement the
Purchaser has agreed that all rights to indemnification for acts or omissions
occurring prior to the date the Purchaser accepts for payment
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and pays for the Shares tendered pursuant to the Offer existing as of the date
of the Merger Agreement 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 date the Purchaser accepts for payment and pays for the
Shares tendered purusant to the Offer. Parent shall cause to be maintained for
a period of six years from the date the Purchaser accepts for payment and pays
for the Shares tendered pursuant to the Offer 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 the Merger Agreement, so
long as the aggregate amount to be paid by the Company after the date of the
Merger 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 the Merger 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 the Merger 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.
(11) Reasonable Efforts. The Merger Agreement provides that, subject to the
terms of the Merger Agreement, each of the parties has agreed to use all
reasonable efforts to take, or cause to be taken, all actions, 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 the Merger Agreement; provided,
that neither Parent nor any of its subsidiaries shall be required to divest
any asset or enter into any consent decree.
(12) Directors and Officers. The directors of the 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.
(13) Employment Agreements. Pursuant to the Merger Agreement, Parent
acknowledged and agreed that all employment agreements, severance agreements,
deferred compensation agreements and supplemental retirement agreements with
employees of the Company and its subsidiaries set forth in the Company's
Disclosure Letter (as defined in the Merger Agreement) 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 the Merger.
(14) Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
(15) Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that in the event the Purchaser's designees are appointed
or elected to the Board as described above under "Directors", the approval of
a majority of the Independent Directors is required to amend the Merger
Agreement or the Company's certificate of incorporation or bylaws, to
terminate the Merger Agreement, to extend the time for performance of any
obligations of Parent or the Purchaser, to waive any condition to the
obligations of the Company or any of the Company's rights under the Merger
Agreement or to take any action by the Company under the Merger Agreement.
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The Stockholder Agreement.
Pursuant to the Stockholder Agreement, each of the Certain Stockholders has
unconditionally agreed to tender into the Offer, and not to withdraw
therefrom, the Shares set forth in the Stockholders Agreement with respect to
each such Certain Stockholder, as such Shares may be adjusted by stock
dividend, stock split, recapitalization, combination and exchange of Shares,
merger, consolidation, reorganization or other change or transaction of or by
the Company, together with Shares that may be acquired after April 21, 1998 by
such Certain Stockholder, including Shares issuable upon the exercise of
Options or Warrants (collectively, the "Subject Shares"). In addition, each
Certain Shareholder has granted to Purchaser an irrevocable option (the
"Option") to purchase any or all Subject Shares owned by such Certain
Stockholder and any or all Subject Shares for which any stock options and
warrants are then exercisable on the date the Option is exercised by
Purchaser, in each case at a price per Share equal to $40.00.
Each Certain Stockholder severally has agreed that: (a) such Certain
Stockholder will not (i) sell, transfer, pledge, assign or otherwise dispose
of, or enter into any contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of, such Certain
Stockholder's Subject Shares to any person other than the Purchaser or the
Purchaser's designee, (ii) enter into any voting arrangement, whether by
proxy, voting agreement, voting trust, power-of-attorney or otherwise, with
respect to such Certain Stockholder's Subject Shares or (iii) take any other
action that would in any way restrict, limit or interfere with the performance
of its obligations under the Stockholder Agreement or the transactions
contemplated thereby, (b) until the Merger is consummated or the Merger
Agreement is terminated, such Certain Stockholder will not, nor will such
Certain Stockholder permit any investment banker, financial adviser, attorney,
accountant or other representative or agent of such Certain Stockholder to,
directly or indirectly (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed or reasonably
likely to facilitate, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal or (ii) participate in any discussions or negotiations regarding any
Acquisition Proposal, (c) at any meeting of stockholders of the Company called
to vote upon the Merger and the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, such Certain Stockholder will, including by initiating a
written consent solicitation if requested by Parent, vote (or cause to be
voted) such Certain Stockholder's Subject Shares in favor of the Merger, the
adoption by the Company of the Merger Agreement and the approval of the other
transactions contemplated by the Merger Agreement and (d) at any meeting of
stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which such Certain Stockholder's vote, consent or other
approval is sought, such Certain Stockholder will vote (or cause to be voted)
such Certain Stockholder's Subject Shares against (i) any merger agreement or
merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or any other
Acquisition Proposal (collectively, "Alternative Transactions") or (ii) any
amendment of the Company's certificate of incorporation or bylaws or other
proposal or transaction involving the Company or any of its subsidiaries,
which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Offer, the Merger, the Merger Agreement or
any of the other transactions contemplated by the Merger Agreement
(collectively, "Frustrating Transactions"). The Stockholder Agreement provides
that each Certain Stockholder executed the Stockholder Agreement solely in his
or her capacity as the beneficial owner of such Certain Stockholder's Subject
Shares and nothing therein shall limit or affect any actions taken by a
Certain Stockholder in its capacity as an officer or director of the Company
or any subsidiary of the Company to the extent specifically permitted by the
Merger Agreement.
Under the Stockholder Agreement each Certain Stockholder has irrevocably
granted to, and appointed, Mark Ronald and John Currier and any other
individual who shall thereafter be designated by Parent, and each of them,
such Certain Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Certain
Stockholder, to vote such Certain Stockholder's Subject Shares, or grant a
consent or approval in respect of such Subject Shares, at any meeting of
stockholders of the Company or at any adjournment
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thereof or in any other circumstances upon which their vote, consent or other
approval is sought, in favor of the Merger, the adoption by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement and against any Alternative
Transaction or Frustrating Transaction.
Confidentiality Agreement. Pursuant to the Confidentiality Agreement dated
March 6, 1998 between GEC Marconi and the Company (the "Confidentiality
Agreement"), the Company and GEC Marconi agreed to keep confidential certain
information exchanged between such parties. The Confidentiality Agreement also
contains customary non-solicitation and standstill provisions. The Merger
Agreement provides that the provisions of the Confidentiality Agreement shall
remain binding and in full force and effect and that the parties shall comply
with, and shall cause their respective Representatives to comply with, all of
their respective obligations under the Confidentiality Agreement until the
Purchaser purchases a majority of the outstanding Shares pursuant to the
Offer.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the
Shares, including asset values and the investment value of the Shares. The
fair value so determined could be more or less than the Offer Price or the Per
Share Merger Consideration.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the Per
Share Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the
Merger unless the Merger is consummated more than one year after the
termination of the Offer. If applicable, Rule 13e-3 would require, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of the Merger and the consideration
offered to minority shareholders be filed with the SEC and disclosed to
minority shareholders prior to consummation of the Merger.
Plans for the Company. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right
to take such actions or effect such changes as it deems desirable. Such
changes could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy.
Except as otherwise described in this Offer to Purchase, none of the
Purchaser, Parent or GEC, p.l.c. have any current plans or proposals that
would relate to, or result in, any extraordinary corporate transaction
involving the Company or any of its subsidiaries, such as a merger,
reorganization or liquidation involving the Company, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any
change in the Company's capitalization or dividend policy or any other
material change in the Company's business, corporate structure or personnel.
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13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
If, on or after April 21, 1998, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or
(c) issue or sell additional Shares (other than the issuance of Shares upon
the exercise of Stock Options and Warrants outstanding at April 21, 1998 in
accordance with the terms thereof (as in effect on April 21, 1998)), shares of
any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 14,
the Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including,
without limitation, the number or type of securities offered to be purchased.
If, on or after April 21, 1998, the Company should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares or any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior
to the transfer of Shares purchased pursuant to the Offer to the Purchaser or
its nominee or transferee on the Company's stock transfer records, then,
subject to the provisions of Section 14, (a) the Offer Price may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
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 the Purchaser's obligation to pay for or return
tendered Shares promptly after the termination or withdrawal of the Offer), to
pay for any Shares tendered pursuant to the Offer unless the Minimum
Condition, the HSR Act Condition and the Exon-Florio Act Condition shall have
been satisfied. Furthermore, notwithstanding any other term of the Offer or
the Merger Agreement, the Purchaser shall not be required to accept for
payment or, subject as aforesaid, pay for any Shares 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 Merger
Agreement and before the acceptance of Shares for payment or the payment
therefor, any of the following conditions exists:
(a) any representations and warranties of the Company in the Merger
Agreement shall not be true and correct (for all purposes of this paragraph
(a) without giving effect to any material or Material Adverse Effect
qualifiers or other qualifiers based on materiality that are contained in
the Merger Agreement) 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 reasonably be expected to have, in the aggregate, a Material
Adverse Effect on the Company;
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(b) the Company shall have breached in any material respect any of its
covenants or agreements contained in the Merger Agreement;
(c) 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, (i) challenging
the acquisition by Parent or the Purchaser of any Shares, 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, (ii) 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
Merger Agreement, (iii) 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, including the right to
vote Shares purchased by it on all matters properly presented to the
stockholders of the Company, (iv) 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
(v) which otherwise is reasonably likely to have a Material Adverse Effect
on the Company;
(d) 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, (i) Parent, the Company or any of their respective subsidiaries or
affiliates or (ii) 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 (c) above;
(e) since the date of the Merger 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;
(f) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or in the United Kingdom, (ii) any material adverse change in
the financial markets or major stock exchange indices in the United States
or in the United Kingdom, (iii) 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, (iv) 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, (v) 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, (vi) 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 (vii) in
the case of any of the foregoing existing on the date of the Merger
Agreement, a material acceleration or worsening thereof;
(g) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than the 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 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 or a merger, consolidation or other business combination
with or involving the Company or any of its subsidiaries; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms,
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which, in the sole judgment of the 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 the Purchaser and
Parent and may be asserted by the Purchaser or Parent regardless of the
circumstances giving rise to such condition or may be waived by the Purchaser
and Parent in whole or in part at any time and from time to time in their
reasonable discretion; provided that the condition set forth in clause (h)
above and the Minimum Condition may be waived or modified only by the mutual
consent of the Purchaser and the Company. The failure by Parent, the 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.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the SEC and other publicly
available information concerning the Company, none of the Purchaser, Parent or
GEC, p.l.c. is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a
whole, that might be adversely affected by the Purchaser's acquisition of
Shares (and the indirect acquisition of the stock of the Company's
subsidiaries) as contemplated herein or of any approval or other action by any
governmental entity that would be required for the acquisition or ownership of
Shares by the Purchaser as contemplated herein. Should any such approval or
other action be required, the Purchaser, Parent and GEC, p.l.c. currently
contemplate that such approval or other action will be sought, except as
described below under "--State Takeover Laws." While, except as otherwise
expressly described in this Section 15, the Purchaser does not presently
intend to delay the acceptance for payment of or payment for Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that failure to obtain
any such approval or other action might not result in consequences adverse to
the Company's business or that certain parts of the Company's business might
not have to be disposed of if such approvals were not obtained or such other
actions were not taken or in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the
matters discussed below, the Purchaser could, subject to the terms and
conditions of the Merger Agreement, decline to accept for payment or pay for
any Shares tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in such
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable only under certain circumstances. Subsequently,
a number of Federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside
the state of enactment.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting
stock of the corporation) for a period of three years from the time such
interested stockholders became the holders of 15% or more of such Shares
unless, among other things, the corporation's board of directors has given its
prior approval to either the business combination or the transaction which
resulted in the stockholder
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becoming an "interested stockholder". The Board has approved the Merger
Agreement and the Stockholder Agreement and the Purchaser's acquisition of
Shares pursuant to the Offer and, therefore, Section 203 of the DGCL is
inapplicable to the Merger.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor
any action taken in connection with the Offer or the Merger is intended as a
waiver of that right. In the event that any state takeover statute is found
applicable to the Offer or the Merger, the Purchaser might be unable to accept
for payment or pay for Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer or the Merger. In such case, the
Purchaser might not be obligated to accept for payment or pay for any Shares
tendered. See Section 14.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by GEC,
p.l.c. of a Notification and Report Form with respect to the Offer, unless
GEC, p.l.c. receives a request for additional information or documentary
material from the Antitrust Division or the FTC or unless early termination of
the waiting period is granted. GEC, p.l.c. is in the process of making such
filing. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from GEC,
p.l.c. concerning the Offer, the waiting period will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by GEC, p.l.c. with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may
be extended only by court order or with the consent of GEC, p.l.c. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or
the FTC raises substantive issues in connection with a proposed transaction,
the parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues and may agree to
delay consummation of the transaction while such negotiations continue.
Expiration or termination of the applicable waiting period under the HSR Act
is a condition to the Purchaser's obligation to accept for payment and pay for
Shares tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company or its subsidiaries or GEC, p.l.c. or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. Based upon a preliminary examination of
information provided by the Company relating to the businesses in which GEC,
p.l.c. and the Company are engaged, Parent and the Purchaser believe that the
acquisition of Shares by Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result thereof.
Exon-Florio Act. The Exon-Florio Act applies to all acquisitions proposed or
pending on or after August 23, 1988, by or with foreign persons which could
result in foreign control of persons engaged in interstate commerce in the
United States. The Exon-Florio Act empowers the President of the United States
to prohibit or suspend mergers, acquisitions or takeovers by or with foreign
persons if the President finds, after investigation, credible evidence that
the foreign person might take action that threatens to impair the national
security of the United States and that other provisions of existing law do not
provide adequate and appropriate authority to protect the national security.
The President has designated CFIUS as the agency authorized under the Exon-
Florio Act to receive notices and other information and to conduct a review
process which consists of a determination whether an investigation
31
<PAGE>
should be undertaken and making any such investigation. Any determination by
CFIUS that an investigation is called for must be made within thirty days
after its acceptance of written notification concerning a proposed
transaction. In the event that CFIUS determines to undertake an investigation,
such investigation must be completed within forty-five days after such
determination. Upon completion or termination of any such investigation, CFIUS
must report to the President and present its recommendation. The President
then has fifteen days in which to suspend or prohibit the proposed transaction
or to seek other appropriate relief. In order for the President to exercise
his authority to suspend or prohibit a proposed transaction, the President
must make two findings: (i) that there is credible evidence that leads the
President to believe that the foreign interest exercising control might take
action that threatens to impair national security and (ii) that provisions of
law other than the Exon-Florio Act and the International Emergency Economic
Powers Act do not in the President's judgment provide adequate and appropriate
authority for the President to protect the national security in connection
with the acquisition. Such findings are not subject to judicial review. If the
President makes such findings, he may take action for such time as he
considers appropriate to suspend or prohibit the relevant acquisition. The
President may direct the Attorney General to seek appropriate relief,
including divestment relief, in the District Courts of the United States in
order to implement and enforce the Exon-Florio Act. The Exon-Florio Act does
not obligate the parties to a proposed acquisition to notify CFIUS of a
proposed transaction. However, if notice of a proposed acquisition is not
submitted to CFIUS, then the transaction remains indefinitely subject to
review by the President under the Exon-Florio Act, unless it is determined
that CFIUS does not have jurisdiction over the transaction.
The Purchaser and the Company will make a filing under the Exon-Florio Act.
There can be no assurance that CFIUS will not determine to conduct an
investigation of the proposed acquisition of the Company and, if an
investigation is commenced, there can be no assurance regarding the outcome of
such investigation. If the results of such investigation are adverse to the
Purchaser, the Purchaser is not obligated to accept for payment or pay for any
Shares tendered pursuant to the Offer.
Other Foreign Laws. The Company has informed the Purchaser that the Company
and certain of its subsidiaries conduct business in certain other foreign
countries where regulatory filings or approvals may be required in connection
with the consummation of the Offer. Certain of such filings, if required, may
not be completed and certain of such approvals, if required, may not be
obtained, prior to the expiration of the Offer. However, there is no present
intention to delay the acceptance for payment of or the payment for Shares
pursuant to the Offer pending the completion of such filings and the obtaining
of such approvals. There is no assurance that any such approvals would be
obtained or that adverse consequences to Parent's or the Company's business
might not result from a failure to obtain such approvals or conditions that
might be imposed in connection therewith.
16. FEES AND EXPENSES
Morgan Stanley is acting as Dealer Manager in connection with the Offer and
is acting as financial advisor to Parent in connection with the Offer. Parent
has agreed to pay Morgan Stanley as compensation for such services (i) an
advisory fee in an amount to reimburse Morgan Stanley for its time and efforts
expended in connection with its engagement and (ii) a fee of $4,800,000
payable if the transaction is consummated (against which the fee described in
clause (i) will be credited). Such fees shall include the compensation of
Morgan Stanley acting as Dealer Manager. Parent has also agreed to reimburse
Morgan Stanley for its reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its counsel and any other professional advisor
retained by Morgan Stanley in connection with its engagement and to indemnify
Morgan Stanley and certain related persons against certain liabilities and
expenses, including certain liabilities and expenses under the Federal
securities laws.
Parent has retained Georgeson & Company Inc. to act as the Information Agent
and The Bank of New York to serve as the Depositary in connection with the
Offer. The Information Agent and the Depositary each will receive reasonable
and customary compensation for their services, be reimbursed for certain
reasonable out-of-
32
<PAGE>
pocket expenses and be indemnified against certain liabilities and expenses in
connection therewith, including certain liabilities and expenses under the
Federal securities laws.
None of the Purchaser, Parent or GEC, p.l.c. will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust
companies will be reimbursed by the Purchaser upon request for customary
mailing and handling expenses incurred by them in forwarding material to their
customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. To the extent the Purchaser, Parent or GEC, p.l.c. becomes
aware of any state law that would limit the class of offerees in the Offer,
the Purchaser reserves the right to amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, blue sky or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer
is being made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER, PARENT OR GEC, P.L.C. NOT CONTAINED
IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
The Purchaser, Parent and GEC, p.l.c. have filed with the SEC the Schedule
14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with exhibits, setting
forth its recommendation with respect to the Offer and the reasons for such
recommendation and furnishing such additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the SEC).
GEC Acquisition Corp.
April 27, 1998
33
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
GEC, P.L.C., PARENT AND THE PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL ELECTRIC COMPANY, P.L.C.
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of The General Electric Company, p.l.c. All
the directors and officers listed below are citizens of the United Kingdom,
except for Mr. Seitz, who is a citizen of the United States. Directors are
indicated by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- ------------------------------------------
<S> <C>
The Rt Hon Lord Prior* Executive Director and Chairman of The General
The General Electric Electric Company, p.l.c. (1992-present).
Company, p.l.c.
One Bruton Street
London, WIX 8AQ
(England)
The Rt Hon Lord Simpson* Executive Director and Managing Director of The
The General Electric General Electric Company, p.l.c. (1996-present); Chief
Company, p.l.c. Executive of Lucas Industries plc(/1/) (1994-1996);
One Bruton Street Deputy Chief Executive of British Aerospace Public
London, WIX 8AQ Limited Company(/2/) (1992-1994); Chairman and Chief
(England) Executive of Rover Group Ltd. (/3/) (1992-1994).
Ronald Edward Artus* Non-executive Director of The General Electric
The Securities and Company, p.l.c. (1992-present) and of the Securities
Futures and Futures Authority Limited (1992-present).
Authority Limited
Cottons Centre
Cottons Lane
London, SE1 2QB
(England)
William Martin Castell* Chief Executive of Nycomed Amersham plc (formerly
Nycomed Amersham plc Amersham International plc) (1992-present).
Little Chalfont
Buckinghamshire, HP7 9NA
(England)
James Brian Cronin* Executive Director of The General Electric Company,
GEC Alsthom p.l.c. (1994-present); Managing Director of GEC
38 Avenue Kleber Alsthom SA
75795 Paris, (France) (1992-present).
The Rt Hon The Baroness Executive Director of John Swire & Sons Ltd. (1996-
Dunn* present); Senior Member of The Hong Kong Executive
John Swire & Sons Ltd. Council(/4/) (1992-1996).
59 Buckingham Gate
London, SW1E 6AJ
(England)
Peter Oliver Gershon* Executive Director of The General Electric Company,
GEC-Marconi Limited p.l.c. (1994-present); Managing Director of GEC-
The Grove, Warren Lane Marconi Limited (1994-present); Managing Director of
Stanmore, Middlesex, G.P.T. Ltd.(/5/) (1992-1994).
HA7 4LY (England)
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- ------------------------------------------
<S> <C>
Sir Christopher Harding* Chairman of United Utilities PLC (1997-present);
United Utilities PLC Chairman of Legal & General Group Plc(/6/) (1992-
43 Grosvenor Street present).
London, W1X 9FH
(England)
Michael Lester* Executive Director of The General Electric Company,
The General Electric p.l.c. (1992-present); Vice Chairman of The General
Company, p.l.c. Electric Company, p.l.c. (1994-present).
One Bruton Street
London, WIX 8AQ
(England)
John Charles Mayo* Finance Director of The General Electric Company,
The General Electric p.l.c.
Company, p.l.c. (1997-present); Finance Director of Zeneca Group
One Bruton Street PLC(/7/) (1993-1997).
London, WIX 8AQ
(England)
Dr. Alan Walter Rudge* Chairman of WS Atkins plc (1997-present); Deputy Chief
WS Atkins plc Executive of British Telecommunications public limited
25 Old Broad Street company(/8/) (1996-1997); Managing Director,
London, EC2N 1HN Development and Procurement, of British
(England) Telecommunications plc (1992-1995).
The Hon Raymond G.H. Vice-Chairman of Lehman Brothers (1995-present);
Seitz* American Ambassador to the Court of St. James(/9/)
Lehman Brothers (1992-1994).
One Broadgate
London, EC2M 7HA
(England)
Nigel John Stapleton* Co-Chairman of Reed Elsevier plc (1996-present);
Reed Elsevier plc Chairman of Reed International PLC (1997-present);
25 Victoria Street Deputy Chairman of Reed International PLC (1994-1997);
London, SW1H OEX Chief Financial Officer of Reed Elsevier plc (1993-
(England) 1996); Finance Director of Reed International PLC
(1992-1993).
Norman Charles Porter Secretary of The General Electric Company, p.l.c.
The General Electric (1992-present).
Company, p.l.c.
One Bruton Street
London, WIX 8AQ
(England)
</TABLE>
I-2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF GEC INCORPORATED
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of each of the
directors and executive officers of GEC Incorporated. All the directors and
officers listed below are citizens of the United States, except Mr. Lester,
who is a citizen of the United Kingdom. Directors are indicated by an
asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- ------------------------------------------
<S> <C>
Michael Lester* Executive Director of The General Electric Company,
The General Electric p.l.c. (1992-present); Vice Chairman of The General
Company, p.l.c. Electric Company, p.l.c. (1994-present).
One Bruton Street
London, WIX 8AQ
(England)
William B. Korb* President and CEO of Gilbarco Inc. (1992-present).
Gilbarco Inc.
7300 W. Friendly Avenue
P.O. Box 22087
Greensboro, NC 27420
Cary J. Nolan* President and CEO of Picker International, Inc. (1992-
Picker International, present).
Inc.
595 Miner Road
Highland Hts, OH 44143
Thomas R. Edeus Treasurer of GEC Incorporated (1997-present); Videojet
GEC Incorporated Systems International, Inc.(/10/) (1997-present) and
c/o NI Holdings A. B. Dick Company(/11/) (1992-1997).
Incorporated
5700 West Touhy Avenue
Niles, Illinois 60714
Patricia A. Hoffman Secretary of GEC Incorporated (1997-present); Attorney
GEC Incorporated for Videojet Systems International, Inc.(/10/)
c/o NI Holdings (1997-present) and A. B. Dick Company(/11/) (1992-
Incorporated 1997).
5700 West Touhy Avenue
Niles, Illinois 60714
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF GEC ACQUISITION CORP.
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of each of the
directors and executive officers of GEC Acquisition Corp. All the directors
and officers listed below are citizens of the United States. Directors are
indicated by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- ------------------------------------------
<S> <C>
Mark H. Ronald* President of GEC Acquisition Corp. (1998-present);
GEC-Marconi President and CEO of GEC-Marconi North America Inc.,
164 Totowa Road GEC-Marconi Hazeltine Corporation and GEC-Marconi
Wayne, NJ 07470 Electronic Systems Corporation (1993-present).
John A. Currier* Vice President and Secretary of GEC Acquisition Corp.
GEC-Marconi (1998-present); General Counsel, Vice President of
164 Totowa Road Contracts & Compliance and Corporate Secretary of GEC-
Wayne, NJ 07470 Marconi North America Inc. (1997-present) and GEC-
Marconi Hazeltine Corporation (1992-present).
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- ------------------------------------------
<S> <C>
Peter V. Price* Vice President, Treasurer and Assistant Secretary of
GEC-Marconi GEC Acquisition Corp. (1998-present); Vice President--
164 Totowa Road Finance of GEC-Marconi North America Inc. (1998-
Wayne, NJ 07470 present); Vice President--Finance of GEC-Marconi
Hazeltine Corporation (1998-present); Senior Vice
President Finance and Acting Division President of
Lockheed-Martin Tactical Defense Systems(/12/)
(1994-1997); Vice President--Finance of Lockheed-
Martin Conic(/13/) (1992-1994).
</TABLE>
- --------
1. Lucas Industries plc has its principal office located at Stratford Road,
Solihull, West Midlands, B90 4LA (England).
2. British Aerospace Public Limited Company has its principal office located
at Warwick House, P.O. Box 87, Farnborough Aerospace Centre, Farnborough,
Hampshire, GU14 6YU (England).
3. Rover Group Ltd. has its principal office located at Warwick Technology
Pk, Warwick, CV34 6RG (England).
4. The Hong Kong Executive Council has its principal office located at
Executive Council Secretarial, 148a Central, East Wing, Lower Albert Road
(Hong Kong).
5. G.P.T. Ltd. has its principal office located at New Century Park, P.O. Box
53, Coventry, CV3 1HJ (England).
6. Legal & General Group Plc has its principal office located at Temple
Court, 11 Queen Victoria Street, London, EC4N 4TP (England).
7. Zeneca Group PLC has its principal office located at 15 Stanhope Gate,
London (England).
8. British Telecommunications public limited company has its principal office
located at BT Centre, 81 Newgate Street, London, EC1A 7AJ (England).
9. The American Embassy is located at 20 Grosvenor Square, London, W1A 1AE
(England).
10. Videojet Systems International, Inc. has its principal office located at
1500 Mittel Boulevard, Wood Dale, IL 60191.
11. A. B. Dick Company has its principal office located at 5700 West Touhy
Ave., Niles, IL 60714.
12. Lockheed-Martin Tactical Defense Systems has its principal office located
at P.O. box 85, Litchfield Park, AZ 85340.
13. Lockheed-Martin Conic has its principal office located at 9020 Balboa
Avenue, San Diego, CA 92123.
I-4
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
(For Eligible Institutions Only)
Tender & Exchange Tender & Exchange
Department (212) 815-6217 Department
P.O. Box 11248 Confirm by Telephone: 101 Barclay Street
Church Street Station 1-800-507-9357 Receive and Deliver
New York, New York Window
10286-1248 New York, New York 10286
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF GEORGESON AND COMPANY INC.]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
(212) 761-4750
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING STOCK PURCHASE RIGHTS)
OF
TRACOR, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 27, 1998
BY
GEC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GEC INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
THE GENERAL ELECTRIC COMPANY, P.L.C.
(NOT AFFILIATED WITH THE U.S. BASED CORPORATION WITH A SIMILAR NAME)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 22, 1998, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY:
THE BANK OF NEW YORK
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT
COURIER:
(FOR ELIGIBLE
INSTITUTIONS ONLY)
TENDER & EXCHANGE TENDER & EXCHANGE
DEPARTMENT (212) 815-6217 DEPARTMENT
P.O. BOX 11248 101 BARCLAY STREET
CHURCH STREET STATION RECEIVE AND DELIVER WINDOW
NEW YORK, NEW YORK 10286-1248 NEW YORK, NEW YORK 10286
CONFIRM BY TELEPHONE:
1-800-507-9357
----------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN, IF
BLANK, EXACTLY AS
NAME(S) APPEAR(S)
ON SHARE SHARE(S) TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED NUMBER
CERTIFICATE BY SHARE OF SHARES
NUMBER(S)(/1/) CERTIFICATE(S)(/1/) TENDERED(/2/)
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
<S> <C> <C> <C>
TOTAL SHARES
</TABLE>
- --------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
described above are being tendered. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in the Offer to Purchase (as defined below)) is utilized, if
delivery of Shares is to be made by book-entry transfer to an account
maintained by the Depositary at a Book-Entry Transfer Facility (as defined in
and pursuant to the procedures set forth in Section 2 of the Offer to
Purchase). Stockholders who deliver Shares by book-entry transfer are referred
to herein as "Book-Entry Stockholders" and other stockholders are referred to
herein as "Certificate Stockholders". Stockholders whose certificates for
Shares are not immediately available or who cannot deliver either the
certificates for, or a Book-Entry Confirmation (as defined in the Offer to
Purchase) with respect to, their Shares and all other documents required
hereby to the Depositary prior to the Expiration Date (as defined in the Offer
to Purchase) must tender their Shares in accordance with the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
-----------------------------------------------------------
Account Number
--------------------------------------------------------------------
Transaction Code Number
--------------------------------------------------------------
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s)
----------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
---------------------------------------------
Name of Institution that Guaranteed Delivery
--------------------------------------------------
If delivered by book-entry transfer check box:
[_]The Depository Trust Company
Account Number
--------------------------------------------------------------------
Transaction Code Number
--------------------------------------------------------------
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to GEC Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of GEC
Incorporated, a Delaware corporation, which is a wholly owned subsidiary of
The General Electric Company, p.l.c., a public limited company organized under
the laws of England and Wales, the above-described shares of Common Stock, par
value $.01 per share (the "Shares"), of Tracor, Inc., a Delaware corporation
(the "Company"), including the associated rights (the "Rights") to purchase
Series A Junior Participating Preferred Stock pursuant to the Rights Agreement
dated as of February 17, 1997 between the Company and Harris Trust and Savings
Bank, as Rights Agent, upon the terms and subject to the conditions set forth
in the Purchaser's Offer to Purchase dated April 27, 1998 (the "Offer to
Purchase"), and this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged. Unless the context
otherwise requires, all references herein to Shares shall include the Rights.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with
the terms of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares that are being tendered hereby (and any and all other Shares
or other securities or rights issued or issuable in respect thereof on or
after April 21, 1998), and irrevocably constitutes and appoints The Bank of
New York (the "Depositary"), the true and lawful agent and attorney-in-fact of
the undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full
extent of the undersigned's rights with respect to such Shares (and any such
other Shares or securities or rights), (a) to deliver certificates for such
Shares (and any such other Shares or securities or rights) or transfer
ownership of such Shares (and any such other Shares or securities or rights)
on the account books maintained by a Book-Entry Transfer Facility together, in
any such case, with all accompanying evidences of transfer and authenticity
to, or upon the order of, the Purchaser, (b) to present such Shares (and any
such other Shares or securities or rights) for transfer on the Company's books
and (c) to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any such other Shares or securities
or rights), all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares on or after April 21, 1998) and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances,
and the same will not be subject to any adverse claim. The undersigned will,
upon request, execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any and all such other Shares or
securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Mark Ronald and John Currier,
and each of them, and any other designees of the Purchaser, the attorneys-in-
fact and proxies of the undersigned, each with full power of substitution, to
vote at any annual, special or adjourned meeting of the Company's stockholders
or otherwise in such manner as each such attorney-in-fact and proxy or his or
her substitute shall in his or her sole discretion deem proper with respect
to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, and to otherwise
<PAGE>
act as each such attorney-in-fact and proxy or his or her substitute shall in
his or her sole discretion deem proper with respect to, the Shares tendered
hereby that have been accepted for payment by the Purchaser prior to the time
any such action is taken and with respect to which the undersigned is entitled
to vote (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after April 21, 1998). This
appointment is effective when, and only to the extent that, the Purchaser
accepts for payment such Shares as provided in the Offer to Purchase. This
power of attorney and proxy are irrevocable and are granted in consideration
of the acceptance for payment of such Shares in accordance with the terms of
the Offer. Upon such acceptance for payment, all prior powers of attorney,
proxies and consents given by the undersigned with respect to such Shares (and
any such other Shares or securities or rights) will, without further action,
be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given, will not be deemed effective) by the
undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered".
Similarly, unless otherwise indicated under "Special Delivery Instructions",
please mail the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment (and accompanying documents,
as appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered". In the event that both "Special Delivery
Instructions" and "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any certificates for Shares not
tendered or accepted for payment (and any accompanying documents, as
appropriate) in the name of, and deliver such check and/or return such
certificates (and any accompanying documents, as appropriate) to, the person
or persons so indicated. Please credit any Shares tendered herewith by book-
entry transfer that are not accepted for payment by crediting the account at
the Book-Entry Transfer Facility designated above. The undersigned recognizes
that the Purchaser has no obligation pursuant to "Special Payment
Instructions" to transfer any Shares from the name of the registered holder
thereof if the Purchaser does not accept for payment any of the Shares so
tendered.
<PAGE>
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number, class and series of Shares represented by the lost or destroyed
certificates:
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 5, 6, AND 7) (SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Shares not tendered or cates for Shares not tendered or
not accepted for payment and/or not accepted for payment and/or
the check for the purchase price the check for the purchase price
of Shares accepted for payment of Shares accepted for payment
are to be issued in the name of are to be sent to someone other
someone other than the under- than the undersigned, or to the
signed. undersigned at an address other
than that above.
Issue [_] Check
[_] Certificate(s) to: Mail [_] Check
[_] Certificate(s) to:
Name _____________________________ Name______________________________
(PLEASE PRINT) (PLEASE PRINT)
Address __________________________ Address __________________________
__________________________________ __________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
__________________________________ __________________________________
(TAXPAYER IDENTIFICATION OR (TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER) SOCIAL SECURITY NUMBER)
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facilities' systems whose name appears
on a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or
the Stock Exchange Medallion Program or by any other "eligible guarantor
institution", as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (each an "Eligible Institution"). In all
other cases, all signatures on this Letter of Transmittal must be guaranteed
by an Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined below) is utilized, if delivery of Shares is to be
made pursuant to the procedures for book-entry transfer set forth in Section 2
of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in the
Offer to Purchase) and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
(and a Book-Entry Confirmation (as defined in the Offer to Purchase) received
by the Depositary), in each case prior to the Expiration Date, or (b) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below and in Section 2 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase. Pursuant
to such procedures, (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be
received by the Depositary prior to the Expiration Date and (c) the
certificates for all tendered Shares in proper form for transfer (or a Book-
Entry Confirmation with respect to all such Shares), together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents, must be
received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery as provided in Section 2 of
the Offer to Purchase. A "trading day" is any day on which the Nasdaq National
Market operated by the National Association of Securities Dealers, Inc. is
open for business.
"Agent's Message" means a message transmitted by a Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of a Book-
Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or a facsimile hereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
<PAGE>
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered". In any such case, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificate(s) will be
sent to the registered holder, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the acceptance
for payment of, and payment for, the Shares tendered herewith. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered owner(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as provided below, the Purchaser will pay
any stock transfer taxes with respect to the transfer and sale of Shares to it
or its order pursuant to the Offer. If, however, payment of the purchase price
is to be made to, or if certificates for Shares not tendered or accepted for
payment are to be registered in the name of, any person(s) other than the
registered owner(s), or if tendered certificates are registered in the name(s)
of any person(s) other than the person(s) signing this Letter of Transmittal,
the amount of any stock transfer taxes (whether imposed on the registered
owner(s) or such person(s)) payable on account of the transfer to such
person(s) will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not accepted for payment are to be
returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal must be completed.
<PAGE>
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right (subject
to the provisions of the Merger Agreement) in its reasonable discretion to
waive any of the specified conditions of the Offer, in whole or in part in the
case of any Shares tendered.
9. 31% BACKUP WITHHOLDING. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a stockholder tendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number (i.e., social
security number or employer identification number) ("TIN") on Substitute Form
W-9 below in this Letter of Transmittal and certify under penalties of perjury
that such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide such stockholder's correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a $50 penalty on such stockholder and payment
of cash to such stockholder pursuant to the Offer may be subject to backup
withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding may be credited against the Federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund may be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the T1N of the record
holder of the Shares. If the Shares are held in more than one name or are not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
The box in Part 3 of Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders must complete and sign a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9"
for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares so
lost, destroyed or stolen. The stockholder will then be instructed by the
Depositary as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
certificates have been followed.
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER
CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES
MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH
CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY
WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
PAYER'S NAME: THE BANK OF NEW YORK
- -------------------------------------------------------------------------------
| PART 1--PLEASE PROVIDE YOUR Social security
| TIN IN THE BOX AT RIGHT AND number(s) or Employer
| CERTIFY BY SIGNING AND identification number(s)
| DATING BELOW.
| -------------------------
- --------------------------------------------------------------------------------
SUBSTITUTE
FORM W-9 PART 2--Certification--Under penalty of perjury, I
DEPARTMENT OF THE certify that: (1) the number shown on this form is my
TREASURY INTERNAL correct Taxpayer Identification Number (or I am
REVENUE SERVICE waiting for a number to be issued to me) and (2) I am
not subject to backup withholding because (a) I am
exempt from backup withholding or (b) I have not been
notified by the Internal Revenue Service ("IRS") that
I am subject to backup withholding as a result of a
failure to report all interest or dividends or (c)
the IRS has notified me that I am no longer subject
to backup withholding.
--------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN)
PART 3 -- | PART 4 --
Awaiting | Exempt
TIN [_] | TIN [_]
-------------------------------------------------------
Certification instructions--You must
cross out item (2) in Part 2 above if
you have been notified by the IRS
that you are subject to backup
withholding because of underreporting
interest or dividends on your tax
returns. However, if after being
notified by the IRS that you were
subject to backup withholding you
received another notification from
the IRS stating that you are no
longer subject to backup withholding,
do not cross out such item (2). If
you are exempt from backup
withholding, check the box in Part 4
above.
SIGNATURE ______________ DATE _______
- --------------------------------------------------------------------------------
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.
----------------------------------------------- -------------------, 1998
Signature Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 WILL RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
The Information Agent for the Offer is:
[LOGO OF GEORGESON AND COMPANY INC.]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
(212) 761-4750
<PAGE>
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING STOCK PURCHASE RIGHTS)
OF
TRACOR, INC.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer
(as defined below) if certificates representing shares of Common Stock, par
value $.01 per share (the "Shares"), of Tracor, Inc., a Delaware corporation
(the "Company"), including the associated rights (the "Rights") to purchase
Series A Junior Participating Preferred Stock pursuant to the Rights Agreement
dated as of February 17, 1997 between the Company and Harris Trust and Savings
Bank, as Rights Agent, are not immediately available or if the procedures for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in the Offer to Purchase). Unless the context otherwise
requires, all references herein to Shares shall include the Rights. This form
may be delivered by hand to the Depositary or transmitted by telegram,
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution (as defined in the Offer to Purchase). See Section 2
of the Offer to Purchase.
The Depositary:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight
Courier:
(for Eligible Institutions Only)
Tender & Exchange (212) 815-6217 Tender & Exchange
Department P.O. Box Department 101 Barclay
11248 Church Street Street Receive and
Station New York, New Deliver Window New
York 10286-1248 York, New York 10286
Confirm by Telephone:
1-800-507-9357
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to GEC Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of GEC
Incorporated, a Delaware corporation, which is a wholly owned subsidiary of
The General Electric Company, p.l.c., a public limited company organized under
the laws of England and Wales (which is not affiliated with the U.S. based
corporation with a similar name), upon the terms and subject to the conditions
set forth in the Purchaser's Offer to Purchase dated April 27, 1998 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer"), receipt of which is hereby acknowledged, the number of Shares
set forth below, all pursuant to the guaranteed delivery procedures set forth
in Section 2 of the Offer to Purchase.
Number of Shares ____________________ Name(s) of Record Holder(s): ________
Certificate Nos. -------------------------------------
(if available): _____________________
-------------------------------------
PLEASE PRINT
(Check box if Shares will be Address(es): ________________________
tendered by book-entry transfer)
-------------------------------------
[_]The Depository Trust Company ZIP CODE
Daytime Area Codeand Tel. No.: ______
Account Number ______________________
Signature(s): _______________________
Dated: ______________________________
-------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or
the Stock Exchange Medallion Program or an "eligible guarantor institution",
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, hereby guarantees to deliver to the Depositary either the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to such Shares, in any such case together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
with any required signature guarantees, or an Agent's Message (as defined in
the Offer to Purchase), and any other required documents, within three trading
days (as defined in the Letter of Transmittal) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _______________________ -------------------------------------
AUTHORIZED SIGNATURE
Address: ____________________________
Name: _______________________________
- -------------------------------------
ZIP CODE -------------------------------------
PLEASE PRINT
Area Code and Tel. No.: _____________
Title: ______________________________
Dated: ______________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING STOCK PURCHASE RIGHTS)
OF
TRACOR, INC.
AT
$40.00 NET PER SHARE
BY
GEC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GEC INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
THE GENERAL ELECTRIC COMPANY, P.L.C.
(NOT AFFILIATED WITH THE U.S. BASED CORPORATION WITH A SIMILAR NAME)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 22, 1998, UNLESS THE OFFER IS EXTENDED.
April 27, 1998
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been engaged by GEC Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of GEC Incorporated, a Delaware
corporation ("Parent"), which is a wholly owned subsidiary of The General
Electric Company, p.l.c., a public limited company organized under the laws of
England and Wales ("GEC, p.l.c."), to act as Dealer Manager in connection with
the Purchaser's offer to purchase all outstanding shares of Common Stock, par
value $.01 per share (the "Shares"), of Tracor, Inc., a Delaware corporation
(the "Company"), including the associated rights (the "Rights") to purchase
Series A Junior Participating Preferred Stock pursuant to the Rights Agreement
dated as of February 17, 1997 between the Company and Harris Trust and Savings
Bank, as Rights Agent, at $40.00 per Share (including the associated Right)
(the "Offer Price"), net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase dated April 27, 1998 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). Unless the context otherwise
requires, all references herein to Shares shall include the Rights. Please
furnish copies of the enclosed materials to those of your clients for whom you
hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated April 27, 1998;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman of the
Board of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery with respect to Shares;
<PAGE>
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to The Bank of New York, the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH WOULD REPRESENT AT LEAST 51% OF ALL OUTSTANDING SHARES ON A FULLY
DILUTED BASIS, (B) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED AND (C) THE PERIOD OF
TIME FOR ANY APPLICABLE REVIEW PROCESS BY THE COMMITTEE ON FOREIGN INVESTMENT
IN THE UNITED STATES ("CFIUS") RELATING TO THE DETERMINATION OF ANY THREAT TO
NATIONAL SECURITY HAVING EXPIRED, AND CFIUS NOT HAVING 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.
We urge you to contact your clients promptly. Please note that the Offer and
withdrawal rights will expire at 12:00 midnight, New York City time, on
Friday, May 22, 1998, unless extended.
The Board of Directors of the Company has unanimously approved the Offer and
the Merger and determined that the terms of the Offer and the Merger are fair
to, and in the best interests of, the stockholders of the Company and
recommends that stockholders of the Company accept the Offer and tender their
Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of April 21, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company, with the
Company surviving the merger as a wholly owned subsidiary of Parent (the
"Merger"). At the effective time of the Merger, each outstanding Share (other
than Shares held by stockholders who perfect their appraisal rights under
Delaware law, Shares owned by the Company as treasury stock and Shares owned
by Parent or any direct or indirect wholly owned subsidiary of Parent or of
the Company) will be converted into the right to receive $40.00 in cash,
without interest, as set forth in the Merger Agreement and described in the
Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to) such Shares, (b) a Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer effected pursuant to the
procedure set forth in Section 2 of the Offer to Purchase, an Agent's Message
(as defined in the Offer to Purchase), and (c) any other documents required by
the Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the Depositary.
Under no circumstances will interest be paid on the purchase price of the
Shares to be paid by the Purchaser, regardless of any extension of the Offer
or any delay in making such payment.
None of the Purchaser, Parent or GEC, p.l.c. will pay any fees or
commissions to any broker or dealer or other person (other than the Dealer
Manager and the Information Agent as described in the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
You will be reimbursed upon request for customary mailing and handling
expenses incurred by you in forwarding the enclosed offering materials to your
customers.
<PAGE>
Questions and requests for additional copies of the enclosed material may be
directed to the Information Agent or to the Dealer Manager at their respective
addresses and telephone numbers set forth on the back cover of the enclosed
Offer to Purchase.
Very truly yours,
Morgan Stanley & Co. Incorporated
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, GEC, P.L.C., THE
DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER OR AUTHORIZE YOU OR
ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF
OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO
PURCHASE OR THE LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING STOCK PURCHASE RIGHTS)
OF
TRACOR, INC.
AT
$40.00 NET PER SHARE
BY
GEC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GEC INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
THE GENERAL ELECTRIC COMPANY, P.L.C.
(NOT AFFILIATED WITH THE U.S. BASED CORPORATION WITH A SIMILAR NAME)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 22, 1998 UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated April 27, 1998
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to the offer by GEC Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of GEC
Incorporated, a Delaware corporation ("Parent"), which is a wholly owned
subsidiary of The General Electric Company, p.l.c., a public limited company
organized under the laws of England and Wales ("GEC, p.l.c."), to purchase all
outstanding shares of Common Stock, par value $.01 per share (the "Shares"),
of Tracor, Inc., a Delaware corporation (the "Company"), including the
associated rights (the "Rights") to purchase Series A Junior Participating
Preferred Stock pursuant to the Rights Agreement dated as of February 17, 1997
between the Company and Harris Trust and Savings Bank, as Rights Agent, upon
the terms and subject to the conditions set forth in the Offer. Unless the
context otherwise requires, all references to Shares shall include the Rights.
Also enclosed is the Letter to Stockholders of the Company from the Chairman
of the Board of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The offer price is $40.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions of the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the Offer
and the Merger (as defined below) and determined that the terms of the Offer
and the Merger are fair to, and in the best interests of, the stockholders of
the Company and recommends that the stockholders of the Company accept the
Offer and tender their Shares.
<PAGE>
4. The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of April 21, 1998 (the "Merger Agreement"), among Parent, the
Purchaser and the Company pursuant to which, as soon as practicable following
the consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company, with the
Company surviving the merger as a wholly owned subsidiary of Parent (the
"Merger"). At the effective time of the Merger, each outstanding Share (other
than Shares held by stockholders who perfect their appraisal rights under
Delaware law, Shares owned by the Company as treasury stock and Shares owned
by Parent or any direct or indirect wholly owned subsidiary of Parent) will be
converted into the right to receive $40.00 in cash, without interest, as set
forth in the Merger Agreement and described in the Offer to Purchase.
5. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 22, 1998 (THE "EXPIRATION DATE"), UNLESS THE OFFER IS
EXTENDED BY THE PURCHASER, IN WHICH EVENT THE TERM "EXPIRATION DATE" SHALL
MEAN THE LATEST TIME AT WHICH THE OFFER, AS SO EXTENDED BY THE PURCHASER, WILL
EXPIRE.
6. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date that number of
Shares which would represent at least 51% of all outstanding Shares on a fully
diluted basis, (2) any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, applicable to the purchase of Shares
pursuant to the Offer having expired or been terminated and (3) the period of
time for any applicable review process by the Committee on Foreign Investment
in the United States ("CFIUS") relating to the determination of any threat to
national security having expired, and CFIUS not having 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.
7. Any stock transfer taxes applicable to a sale of Shares to the Purchaser
will be borne by the Purchaser, except as otherwise provided in Instruction 6
of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. An
envelope to return your instructions to us is enclosed. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified on the detachable part hereof. Your instructions should be forwarded
to us in ample time to permit us to submit a tender on your behalf prior to
the Expiration Date.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by The Bank of New York (the
"Depositary") of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer effected pursuant to the procedure set forth in Section 2 of the
Offer to Purchase, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the Depositary.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE
SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. To the extent the Purchaser, Parent or GEC, p.l.c. becomes
aware of any state law that would limit the class of offerees in the Offer,
the Purchaser reserves the right to amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by Morgan Stanley & Co. Incorporated,
the Dealer Manager for the Offer, or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PURCHASE RIGHTS)
OF
TRACOR, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
of GEC Acquisition Corp. dated April 27, 1998 (the "Offer to Purchase"), and
the related Letter of Transmittal relating to shares of Common Stock, par
value $.01 per share (the "Shares"), of Tracor, Inc., a Delaware corporation,
including the associated rights (the "Rights") to purchase Series A Junior
Participating Preferred Stock pursuant to the Rights Agreement dated as of
February 17, 1997 between the Company and Harris Trust and Savings Bank, as
Rights Agent. Unless the context otherwise requires, all references herein to
Shares shall include the Rights.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and related Letter of
Transmittal.
Number of Shares to be Tendered:* SIGN HERE
____________________________ Shares -------------------------------------
Daytime Area Codeand Tel. No. _______
-------------------------------------
Taxpayer Identification No. or SIGNATURE
Social Security No. _________________
-------------------------------------
Dated: ________________________, 1998
-------------------------------------
(PLEASE PRINT NAME(S) AND
ADDRESS(ES))
- --------
* Unless otherwise indicated, it will be assumed that all your Shares are to
be tendered.
<PAGE>
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
---
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
---
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 5% on any portion of an under-
payment attributable to that failure unless there is clear and convincing evi-
dence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated April
27, 1998, and the related Letter of Transmittal and is not being made to (nor
will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS)
OF
TRACOR, INC.
AT
$40.00 NET PER SHARE
BY
GEC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GEC INCORPORATED
A WHOLLY OWNED SUBSIDIARY OF
THE GENERAL ELECTRIC COMPANY, P.L.C.
(NOT AFFILIATED WITH THE U.S. BASED CORPORATION WITH A SIMILAR NAME)
GEC Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of GEC Incorporated, a Delaware corporation ("Parent"),
which is a wholly owned subsidiary of The General Electric Company, p.l.c., a
public limited company organized under the laws of England and Wales ("GEC"), is
offering to purchase all outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of Tracor, Inc., a Delaware corporation (the "Company"),
including the associated rights (the "Rights") to purchase Series A Junior
Participating Preferred Stock pursuant to the Rights Agreement dated as of
February 17, 1997, between the Company and Harris Trust and Savings Company, as
Rights Agent, at $40.00 per Share (including the associated Right) (the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated April 27,
1998, and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"). Unless
the context otherwise requires, all references herein to Shares shall include
the Rights.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 22, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date that number of
Shares which would represent at least 51% of all outstanding Shares on a fully
diluted basis, (2) any waiting period under the Hart-Scott- Rodino Antitrust
Improvements Act of 1976, as amended, applicable to the purchase of Shares
pursuant to the Offer having expired or been terminated and (3) the period of
time for any applicable review process by the Committee on Foreign Investment in
the United States ("CFIUS") relating to the determination of any threat to
national security having expired, and CFIUS not having 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 (as defined below).
<PAGE>
2
The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of April 21, 1998 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain conditions,
the Purchaser will be merged with and into the Company, with the Company
surviving the merger as a wholly owned subsidiary of Parent (the "Merger"). At
the effective time of the Merger, each outstanding Share (other than Shares held
by stockholders who perfect their appraisal rights under Delaware law, Shares
owned by the Company as treasury stock and Shares owned by Parent or any direct
or any indirect wholly owned subsidiary of Parent or of the Company) will be
converted into the right to receive $40.00 in cash, without interest, as set
forth in the Merger Agreement and described in the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares properly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (a) certificates for such Shares or timely
confirmation of book-entry transfer of such Shares into the Depositary's account
at a Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant
to the procedures set forth in Section 2 of the Offer to Purchase, (b) a Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) and (c) any
other documents required by the Letter of Transmittal. Under no circumstances
will interest be paid on the purchase price of the Shares to be paid by the
Purchaser, regardless of any extension of the Offer or any delay in making such
payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, May 22, 1998, unless and until the Purchaser, in its sole discretion
(but subject to the terms of the Merger Agreement), shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, will expire. Subject to the terms of the Merger
Agreement and applicable rules and regulations of the Securities and Exchange
Commission, the Purchaser reserves the right, in its sole discretion, at any
time and from time to time and regardless of whether or not any of the events or
facts set forth in Section 14 of the Offer to Purchase shall have occurred, to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary. Under no circumstances will
interest be paid on the purchase price for tendered Shares, whether or not the
Purchaser exercises its right to extend the Offer. There can be no assurance
that the Purchaser will exercise its right to extend the Offer. Any such
extension will be followed by a public announcement thereof no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
Thursday, June 25, 1998. For a withdrawal to be effective, a written,
<PAGE>
3
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase and must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of the Shares to be withdrawn, if different from the name
of the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in the Offer to Purchase), the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedure for book-entry transfer as
set forth in Section 2 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 2 of the Offer to Purchase at any time prior to the Expiration Date. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the Company's stockholder lists, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under
the Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.
Request for copies of the Offer to Purchase, the Letter of Transmittal
and all other tender offer materials may be directed to the Information Agent or
the Dealer Manager as set forth below, and copies will be furnished promptly at
the Purchaser's expense. No fees or commissions will be payable to brokers,
dealers or other persons (other than the Dealer Manager and the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
----------------
Wall Street Plaza
New York, NY 10005
Bankers and Brokers call collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-4750
<PAGE>
EXHIBIT (a)(8)
For Immediate Release Monday 27th April, 1998
GEC COMMENCES TENDER OFFER FOR TRACOR SHARES
On the 21st April 1998, The General Electric Company, p.l.c. ("GEC") announced
that a GEC subsidiary in the US had entered into a definitive merger agreement
with Tracor, Inc.
That subsidiary has today commenced a tender offer at $40 in cash per share for
all of the shares of Tracor. The initial expiration date for the tender offer
is 22nd May, 1998.
Morgan Stanley & Co. Incorporated is the Dealer Manager and Georgeson & Company
is the Information Agent for the tender offer.
The General Electric Company, p.l.c. is not affiliated with the similarly named
company which is based in the United States of America.
<PAGE>
EXHIBIT (b)
CONFORMED COPY
AGREEMENT
DATED 25TH MARCH, 1998
EURO 6,000,000,000
SYNDICATED CREDIT FACILITY
FOR
THE GENERAL ELECTRIC COMPANY, p.l.c.
ARRANGED BY
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
BANQUE NATIONALE DE PARIS
BARCLAYS CAPITAL
CHASE MANHATTAN plc
MIDLAND BANK plc
J. P. MORGAN SECURITIES LTD.
SBC WARBURG DILLON READ
WESTDEUTSCHE LANDESBANK GIROZENTRALE
as Joint Lead Arrangers
with
HSBC INVESTMENT BANK PLC
as Agent
and
MARINE MIDLAND BANK
as US Swingline Agent
ALLEN & OVERY CLIFFORD CHANCE
London London
for the Borrower for the Banks
<PAGE>
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INDEX
Clause Page
1. Interpretation........................................................1
2. The Facilities.......................................................16
3. Purpose..............................................................18
4. Conditions Precedent.................................................18
5. Advance Facilities...................................................18
6. Bill Facility........................................................22
7. Bills................................................................24
8. Repayment............................................................25
9. Prepayment and Cancellation..........................................26
10. Interest.............................................................29
11. Payments.............................................................30
12. Taxes................................................................33
13. Market Disruption....................................................37
14. Availability of Currencies...........................................38
15. Increased Costs......................................................40
16. Illegality and Mitigation............................................41
17. Guarantee............................................................42
18. Representations and Warranties.......................................44
19. Undertakings.........................................................46
20. Default..............................................................47
21. The Agents and the Joint Lead Arrangers..............................49
22. Fees.................................................................54
23. Expenses.............................................................56
24. Stamp Duties.........................................................56
25. Indemnities..........................................................56
26. Evidence and Calculations............................................57
27. Amendments and Waivers...............................................58
28. Changes to the Parties...............................................59
29. Disclosure of Information............................................62
30. Set-Off..............................................................63
31. Pro Rata Sharing.....................................................63
32. Severability.........................................................64
33. Counterparts.........................................................64
34. Notices..............................................................64
35. Language.............................................................66
36. Jurisdiction.........................................................66
37. Governing Law........................................................67
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<PAGE>
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Schedule Page
1. Part I - Banks and Commitments.......................................68
Part II - Swingline Banks and Swingline Commitments..................69
2. Original Borrowers...................................................70
3. Conditions Precedent Documents.......................................71
Part I - To Be Delivered Before The First Advance....................71
Part II - To Be Delivered By An Additional Borrower..................72
4. Calculation of the MLA Cost..........................................73
5. Form of Request......................................................75
6. Forms of Accession Documents.........................................76
Part I - Novation Certificate........................................76
Part II - Borrower Accession Agreement...............................78
Part III - Form of Borrower Novation Agreement.......................79
7. Form of Bill.........................................................81
Signatories...................................................................82
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<PAGE>
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THIS AGREEMENT is dated 25th March, 1998 BETWEEN:
(1) THE GENERAL ELECTRIC COMPANY, p.l.c. (Company No. 67307) (the "Parent");
(2) THE SUBSIDIARIES OF THE PARENT listed in Schedule 2 (if any) as original
borrowers (the "Original Borrowers");
(3) BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH, BANQUE NATIONALE DE
PARIS, BARCLAYS CAPITAL, CHASE MANHATTAN plc, MIDLAND BANK plc, J. P.
MORGAN SECURITIES LTD., SWISS BANK CORPORATION (acting through its division
SBC WARBURG DILLON READ), WESTDEUTSCHE LANDESBANK GIROZENTRALE each as a
joint lead arranger (each a "Joint Lead Arranger");
(4) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks;
(5) HSBC INVESTMENT BANK PLC as agent (the "Agent"); and
(6) MARINE MIDLAND BANK as US swingline agent (in this capacity the "US
Swingline Agent").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement:
"Acceptance Commission Rate"
means 0.175 per cent, per annum.
"Additional Borrower"
means a Subsidiary of the Parent which becomes a Borrower in accordance
with Clause 28.4 (Additional Borrowers).
"Advance"
means a Tranche A Advance, a Tranche B Advance or a Swingline Advance.
"Advance Facility"
means the facility to draw Tranche A Advances, Tranche B Advances or
Swingline Advances referred to in sub-clauses 2.1(a), (b) and (c)
(Facilities) respectively.
"Affiliate"
for the purposes of this Agreement means a Subsidiary or a holding company
(as defined in Section 736 of the Companies Act 1985) of a person and any
other Subsidiary of that holding company.
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<PAGE>
2
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"Agent's Spot Rate of Exchange"
means the spot rate of exchange as determined by the Agent for the purchase
of the relevant Optional Currency in the London foreign exchange market
with euros at the relevant time on a particular day, but for the purpose of
any conversion after the Commencement Date between the euro and a national
currency unit (and vice versa) the rate shall be that determined in
accordance with EMU legislation.
"Agreed Percentage"
means in relation to a Bank (other than a Swingline Bank) and a Swingline
Advance, the amount of its Tranche B Commitment expressed as a percentage
of the Tranche B Total Commitments.
"Anniversary"
means an anniversary of the Signing Date.
"Applicable Taxes"
means any tax levied or imposed by the United Kingdom or any country in
which any Borrower is incorporated or any jurisdiction from or through
which any payment under this Agreement is made.
"Banks"
means those financial institutions listed in Schedule 1 and their
respective successors and assigns which are for the time being
participating in the Facilities.
"Barclays Capital"
means Barclays Capital Group, the investment banking division of Barclays
Bank PLC.
"Bill"
means a Sterling bill of exchange substantially in the form of Schedule 7.
"Bill Facility"
means the facility to draw Bills for acceptance by the Banks under Tranche
A or Tranche B referred to in sub-clauses 2.1(a) and (b) (Facilities)
respectively.
"Borrower"
means the Parent, the Original Borrowers and each Additional Borrower.
"Borrower Accession Agreement"
means a letter substantially in the form of Part II of Schedule 6 with such
amendments as the Agent may, at the request of the Parent, approve.
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<PAGE>
3
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"Borrowings"
means any indebtedness (whether as principal or surety) for or in respect
of money borrowed (including amounts raised by acceptances under any
acceptance credit, bills, bonds, debentures and similar securities and
finance leases arranged primarily to raise finance) and the net amount of
any liability under any treasury transaction with a bank or financial
institution but excluding in each case any such indebtedness:
(a) arising for or in respect of assets or services acquired or sold in
the ordinary course of business (except to the extent it is a treasury
transaction or would be treated as a loan, overdraft or obligation
under a finance lease in the audited consolidated annual accounts of
the Group); and
(b) owing by one member of the Group to another member of the Group.
"Business Day"
means:
(a) a day (other than a Saturday or Sunday) on which banks are open for
general interbank business (other than operation only of business in
euros) in:
(i) London in relation to the day any Request (except a Request for
Swingline Advances in U.S. Dollars or euros) is made and, unless
(b) below applies, for any other purpose;
(ii) if a payment is required in an Optional Currency (including but
not limited to Sterling), the principal financial centre of the
country of that Optional Currency; and
(iii) if a payment is required in ECU (at any time prior to the
Commencement Date), Paris and Brussels; and
(b) in relation to a payment or rate fixing in or other matter relating to
euros, a day on which the Trans-European Automated Real-time Gross
settlement Express Transfer system (TARGET) is operating.
"Code"
means, on any date, the United States Internal Revenue Code of 1986, as
amended and the regulations promulgated and rulings issued thereunder, all
as the same may be in effect at such date.
"Commencement Date"
means the date of commencement of the third stage of EMU as contemplated by
the Treaty (at the date of this Agreement, expected to be 1st January,
1999).
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<PAGE>
4
- --------------------------------------------------------------------------------
"Commitment"
means, in respect of a Bank, the aggregate of its Tranche A Commitment and
Tranche B Commitment (including its Swingline Commitment or the Swingline
Commitment of its Swingline Affiliate, if applicable), in each case to the
extent not cancelled or reduced under this Agreement.
"Controlled Group"
means all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which,
together with any Obligor are treated as a single employer under Section
414 of the Code.
"Default"
means an Event of Default or an event which, with the giving of any notice
or expiry of any grace period, in each case specified in Clause 20
(Default), would constitute an Event of Default.
"EBDR"
means the rate determined by the Agent to be the arithmetic mean (rounded,
if necessary, to the nearest five decimal places with the midpoint rounded
upwards) of the respective rates notified to the Agent by the Reference
Banks (provided at least two Reference Banks are quoting) at or about 10.30
a.m. on the Utilisation Date for a Bill at which Eligible Bills with a face
amount of (Pounds)1,000,000 and of an equivalent tenor can be discounted in
the London discount market at or about that time.
"ECU"
means the ECU, as referred to in Article 109g of the Treaty and as defined
in Council Regulation (EC) No. 3320/94, that is from time to time used as
the unit of account of the European Communities; changes to the ECU may be
made by the European Communities, in which event the ECU will change
accordingly.
"Eligible Bill"
means a Sterling bill of exchange eligible for rediscounting at the Bank of
England.
"EMU"
means Economic and Monetary Union as contemplated in the Treaty.
"EMU legislation"
means legislative measures of the European Council for the introduction of,
changeover to, or operation of, a single or unified European currency.
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<PAGE>
5
- --------------------------------------------------------------------------------
"ERISA"
means the U.S. Employee Retirement Income Security Act of 1974, as amended
from time to time and any successor statute of similar import, together
with any rule or regulation issued thereunder.
"euro" or "euros"
means the single currency to be introduced on the Commencement Date but,
prior to the Commencement Date, references to the "euro" or to "euros" will
be read as references to ECU in accordance with Clause 11.4(b) (Currency).
"euro unit"
means a unit of the euro as defined in EMU legislation.
"Event of Default"
means an event specified as such in Clause 20 (Default).
"Facility"
means any of the Advance Facilities or the Bill Facility.
"Facility Office"
means the office(s) notified by a Bank to the Agent and the Parent:
(a) on or before the date it becomes a Bank; or
(b) subject to Clause 28.6 (Change of Facility Office), by not less than
five Business Days' notice to the Agent and the Parent,
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
"Federal Funds Rate"
means, for any period, a fluctuating interest rate per annum equal for each
day during such period to the weighted average of the rates on overnight
United States Federal funds transactions with members of the United States
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a New York Business Day, for the
immediately preceding New York Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a New
York Business Day, the average of the quotations for such day on such
transactions received by the US Swingline Agent from three Federal funds
brokers of recognised standing selected by it.
"Fee Letters"
means each letter dated on or about the Signing Date:
(a) between the Agent and the Parent; and
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<PAGE>
6
- --------------------------------------------------------------------------------
(b) between the Joint Lead Arrangers and the Parent,
in each case setting out the amount of various fees referred to in Clause
22 (Fees).
"Finance Document"
means this Agreement, each Fee Letter, a Bill, a Novation Certificate, a
Borrower Accession Agreement, each Novation Agreement entered into as
contemplated by Clause 9.5(b)(iii) (Changes to Borrowers) or any other
document designated in writing as such by the Agent and the Parent.
"Finance Party"
means each Joint Lead Arranger, a Bank, the Agent and the US Swingline
Agent.
"Group"
means the Parent and its Subsidiaries.
"Interest Period"
in relation to a Term-out Advance, has the meaning given to it in Clause
10.1 (Interest Periods for Term-out Advances).
"LIBOR"
means in relation to any Advance or unpaid sum:
(a) the rate per annum of the offered quotation for deposits in the
currency of the relevant Advance or unpaid sum for a period equal to
or as near as possible to the required period which appears on
Telerate Page 3750 or Telerate Page 3740 (as appropriate) at or about
11.00 a.m. on the applicable Rate Fixing Day; or
(b) if the rate cannot be determined under paragraph (a) above, the rate
determined by the Agent to be the arithmetic mean (rounded, if
necessary, to the nearest five decimal places with the midpoint
rounded upwards) of the respective rates notified to the Agent by each
of the Reference Banks quoting (provided that at least two Reference
Banks are quoting) as the rate at which it is offering deposits in the
required currency and for the required period in an amount comparable
to the participation of that Reference Bank (or, if it is not a Bank,
the participation of its Affiliate which is a Bank) in the Advance or
unpaid sum to prime banks in the London interbank market at or about
11.00 a.m. on the Rate Fixing Day for such period.
For the purpose of this definition:
(i) "required period" means the applicable Interest Period for a Term-out
Advance, the Term for Tranche A Advances (except Term-out Advances) or
for Tranche B Advances or the period in respect of which LIBOR falls
to be determined in relation to such unpaid sum; and
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<PAGE>
7
- --------------------------------------------------------------------------------
(ii) "Telerate Page 3750" means the display designated as Page 3750, and
"Telerate Page 3740" means the display designated as Page 3740, in
each case on the Telerate Service (or such other pages as may replace
page 3750 or Page 3740 on that service or such other service as may be
nominated by the British Bankers' Association (including the Reuters
Screen) as the information vendor for the purposes of displaying
British Bankers' Association Interest Settlement Rates for deposits in
the currency concerned).
"Majority Banks"
means, at any time:
(a) if any Utilisations are outstanding, Banks with an aggregate Original
Euro Amount of Advances or Bills at that time of more than 66 2/3 per
cent. of the aggregate Original Euro Amount of all Advances and Bills
then outstanding; or
(b) if no Utilisations are outstanding, Banks whose Commitments then
aggregate more than 66 2/3 per cent. of the Total Commitments (or, if
the Total Commitments have been reduced to zero, aggregated more than
66 2/3 per cent. of the Total Commitments immediately before the
reduction).
"Mandatory Prepayment Event"
means the event specified in Clause 9.4 (Mandatory Prepayment Event).
"Margin"
means 0.175 per cent. per annum.
"Maturity Date"
means the last day of the Term of an Advance or a Bill.
"MLA Cost"
means in relation to an Advance in Sterling, the cost of compliance with
the Mandatory Liquid Assets requirements of the Bank of England during its
Term or Interest Period, determined in accordance with Schedule 4.
"national currency unit"
means the unit of currency (other than a euro unit) of a Treaty Country.
"New York Business Day"
means a day (other than a Saturday or Sunday) on which banks are open for
interbank business generally in New York.
"Novation Certificate"
has the meaning given to it in Clause 28.3(a)(i) (Procedure for novations).
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<PAGE>
8
- --------------------------------------------------------------------------------
"Obligor"
means the Parent and each Borrower.
"Optional Currency"
means, in relation to any Advance or proposed Advance, Sterling, U.S.
Dollars or any other currency other than euros which is readily available
and freely transferable in the London foreign exchange market in sufficient
amounts to fund that Advance.
"Original Euro Amount"
means:
(a) the principal amount of an Advance denominated in euros; or
(b) the principal amount of an Advance denominated in any other currency
or a Bill, translated into euros on the basis of the Agent's Spot Rate
of Exchange on the date of receipt by the Agent of the Request for
that Advance or Bill.
"Party"
means a party to this Agreement.
"PBGC"
means the U.S. Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Security Interest"
means:
(a) a lien or right of set-off arising by operation of law (or by
agreement evidencing a lien or right of set-off) and in each case in
the ordinary course of business;
(b) any Security Interest securing any Borrowings of any Obligor which
becomes a member of the Group after the Signing Date which was in
existence when that Obligor became a member of the Group and was not
created in contemplation of that Obligor becoming a member of the
Group;
(c) a Security Interest over an asset acquired by an Obligor after the
Signing Date and to which such asset was subject at the time of such
acquisition provided it was not created in contemplation of that
acquisition;
(d) any Security Interest the principal purpose and effect of which is to
allow the setting-off or netting of obligations:
(i) with those of a financial institution; or
(ii) under swaps or other derivative agreements,
in the ordinary course of the cash management arrangements of the
Group;
- --------------------------------------------------------------------------------
<PAGE>
9
- --------------------------------------------------------------------------------
(e) any retention of title reserved by any seller of goods or any Security
Interest imposed, reserved or granted over goods supplied by such
seller in the ordinary course of business;
(f) any Security Interest arising out of or in connection with pre-
judgement legal process or a judgement or a judicial award relating to
security for costs;
(g) a Security Interest securing any refinancing of amounts secured under
(b) or (c)above provided the amount secured does not exceed the amount
originally secured;
(h) a Security Interest which the Majority Banks have at any time agreed
in writing shall be a Permitted Security Interest; and
(i) Security Interests (other than Security Interests permitted by
paragraphs (a) to (h) above) which secure, in aggregate, Borrowings in
an amount not exceeding 15 per cent. of the Total Consolidated Assets
of the Group.
"Plan"
means an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which an Obligor or any member of the Controlled Group has any
obligation to contribute.
"Prime Rate"
means the prime commercial lending rate for U.S. Dollars from time to time
announced by the US Swingline Agent. Each change in the interest rate on a
Swingline Advance which results from a change in the Prime Rate becomes
effective on the day on which the change in the Prime Rate becomes
effective.
"Qualifying Bank"
means a bank or institution which is:
(a) a bank as defined in Section 840A of the Income and Corporation Taxes
Act 1988 which is within the charge to corporation tax as regards any
interest received by it under this Agreement; or
(b) resident (as such term is defined in the appropriate double taxation
treaty) in a country with which the United Kingdom has an appropriate
double taxation treaty under which that institution is entitled to
exemption from United Kingdom tax on interest and is entitled to apply
under the Double Taxation Relief (Taxes on Income) (General)
Regulations 1970 to have interest paid to its Facility Office without
withholding or deduction for or on account of United Kingdom tax (and
does not carry on business in the United Kingdom through a permanent
establishment with which the investments under this Agreement in
respect of which the interest is paid are effectively connected); and
for this purpose "double taxation treaty" means any convention or
agreement between the government of the United Kingdom and any other
government for the
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<PAGE>
10
- --------------------------------------------------------------------------------
avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income and capital gains.
"Rate Fixing Day"
means:
(a) the Utilisation Date for an Advance denominated in Sterling; and
(b) the second Business Day before the Utilisation Date for an Advance
denominated in euros or any Optional Currency other than Sterling (or
such other day as is generally treated as the rate fixing day by
market practice in the London interbank market for the currency
concerned).
"Reference Banks"
means, subject to Clause 28.5 (Reference Banks), Barclays Bank PLC,
National Westminster Bank Plc and Midland Bank plc.
"Reportable Event"
means a reported event as defined in Section 4043 of ERISA and the
regulations issued under such section with respect to a Plan, excluding,
however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet
the minimum funding standard of Section 412 of the Code and of Section 302
of ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a)
of ERISA or Section 412(d) of the Code.
"Request"
means a request made by a Borrower to utilise a Facility, substantially in
the form of Schedule 5.
"Requested Amount"
means the amount requested in a Request.
"Rollover"
means, in relation to a particular date, one or more Advances (including,
but not limited to, the Term-out Advances):
(a) whose proposed Utilisation Date is the same as the Maturity Date of
one or more existing Advances;
(b) whose aggregate principal amount is the same as or less than the
aggregate outstanding principal amount of all existing Advances whose
Maturity Date is the same as that Utilisation Date; and
(c) which are to be denominated in the same currency or a legal
denomination of the currency as the existing Advance(s) whose Maturity
Date is the same as that
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<PAGE>
11
- --------------------------------------------------------------------------------
Utilisation Date (or, if there is more than one such existing Advance
and such Advances are denominated in different currencies, in the same
or lesser respective amounts of the same or legally equivalent
currencies as for such existing Advances).
"Security Interest"
means a mortgage, charge, pledge, lien or similar security interest.
"Signing Date"
means the date of this Agreement.
"Subsidiary"
means a subsidiary within the meaning of Section 736 of the Companies Act
1985, as amended by Section 144 of the Companies Act 1989.
"Swingline Advance"
means an advance made or to be made by a Swingline Bank under the Swingline
Facility.
"Swingline Affiliate"
means, in relation to a Bank, any Swingline Bank that is an Affiliate of
that Bank and which is notified to the Agent and the US Swingline Agent by
that Bank in writing to be its Swingline Affiliate.
"Swingline Bank"
means, subject to Clause 28.2 (Transfers by Banks), a Bank listed in Part
II of Schedule 1.
"Swingline Commitment"
means in respect of a Swingline Bank, the amount in euros set opposite its
name in Part II of Schedule 1 to the extent not transferred, cancelled or
reduced under this Agreement.
"Swingline Facility"
means the committed swingline facility available in U.S. Dollars, Sterling
or euros, forming part of Tranche B and referred to in Clause 2.1(c)
(Facilities).
"Swingline Rate"
means, on any day:
(a) in relation to Swingline Advances in U.S. Dollars, the higher of:
(i) the Prime Rate; and
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<PAGE>
12
- --------------------------------------------------------------------------------
(ii) the aggregate of the Federal Funds Rate and one per cent. per
annum,
on that day; and
(b) in relation to Swingline Advances in Sterling, the aggregate of:
(i) one per cent. per annum;
(ii) the Bank of England's fixed repo rate (being the Bank of
England's operational rate) at which it conducts its daily money
market operations as at the time the Request is served and at
9.00 a.m. for each subsequent day; and
(iii) the MLA Cost,
on that day; and
(c) in relation to Swingline Advances in euros, the aggregate of:
(i) one per cent. per annum; and
(ii) the cost of same day euro funds certified to the Agent by each
Swingline Bank for each day the relevant Swingline Advance in
euros is outstanding as at the time the Request is served and at
9.00 a.m. for each subsequent day,
on that day.
"Swingline Total Commitments"
means the aggregate for the time being of the Swingline Commitments, being
euro 1,000,000,000 at the date of this Agreement.
"Term"
means the period selected by a Borrower in a Request for which the relevant
Advance or Bill is to be outstanding.
"Term-out Advances"
means the Tranche A Advances, if any, drawn under Clause 8.1(b) (Repayment
of Tranche A Advances).
"Total Commitments"
means the aggregate of the Tranche A Total Commitments and Tranche B Total
Commitments (including the Swingline Total Commitments) from time to time.
"Total Consolidated Assets"
means the aggregate from time to time of the Group's consolidated fixed
assets (including investments but excluding goodwill and intangible assets)
and consolidated current assets, all determined in accordance with
applicable accounting standards from time to time used in preparation of
the Group's audited consolidated annual accounts.
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"Tranche A"
has the meaning given to it in Clause 2.1(a) (Facilities).
"Tranche A Advance"
means an Advance made by a Bank under Tranche A.
"Tranche A Availability Period"
means the period from the Signing Date up to and including 24th March, 1999
(being the date which is 364 days after the Signing Date).
"Tranche A Commitment"
means, in respect of a Bank, the amount in euros set opposite the name of
that Bank in Column 1 of Part I of Schedule 1 to the extent not cancelled
or reduced under this Agreement.
"Tranche A Term Date"
means the last day of the Tranche A Availability Period or, if that day is
not a Business Day, the preceding Business Day.
"Tranche A Term-out Option"
means the option available to the Borrowers to draw Term-out Advances under
Tranche A pursuant to Clause 8.1(b) (Repayment of Tranche A Advances).
"Tranche A Total Commitments"
means the aggregate for the time being of the Tranche A Commitments, being
euro 1,500,000,000 at the date of this Agreement.
"Tranche B"
has the meaning given to it in Clause 2.1 (b) (Facilities).
"Tranche B Advance"
means an Advance made by a Bank under Tranche B.
"Tranche B Availability Period"
means the period from and including the Signing Date to and including the
Tranche B Final Maturity Date.
"Tranche B Commitment"
means, in respect of a Bank, the amount in euros set opposite the name of
that Bank in Column 2 of Part I of Schedule 1 to the extent not cancelled
or reduced under this Agreement.
"Tranche B Final Maturity Date"
means the fifth Anniversary or such later date as may be agreed in
accordance with Clause 5.7 (Extension of Tranche B Availability Period).
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"Tranche B Total Commitments"
means the aggregate for the time being of the Tranche B Commitments, being
euro 4,500,000,000 at the date of this Agreement (up to euro 1,000,000,000
of which is available under the Swingline Facility).
"Treaty"
means the Treaty Establishing the European Community being the Treaty of
Rome of 25th March, 1957, as amended by the Single European Act 1986 and
the Maastricht Treaty (which was signed at Maastricht on 7th February, 1992
and came into force on 1st November, 1993), as amended from time to time.
"Treaty Country"
means each state described as a participating Member State in any EMU
legislation, whether in the first wave or subsequently.
"U.K." or "United Kingdom"
means the United Kingdom of Great Britain and Northern Ireland.
"United States"
means the United States of America.
"U.S. Borrower"
means a Borrower incorporated in any state of the United States.
"U.S. Qualifying Bank"
has the meaning given to it in Clause 12.3(a) (U.S. Taxes).
"Utilisation"
means:
(a) in the case of a Utilisation comprising Advances, all the Advances
made or to be made; or
(b) in the case of a Utilisation comprising Bills, all the Bills accepted
or to be accepted,
following the giving by a Borrower of a Request for those Advances or
Bills.
"Utilisation Date"
means:
(a) in the case of an Advance or Utilisation comprising Advances, the date
for the making of the relevant Advance or Advances; and
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(b) in the case of a Bill or Utilisation comprising Bills, the date for
the acceptance of the relevant Bill or Bills.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in the
next calendar month, except that, if there is no numerically
corresponding day in the month in which that period ends, that period
shall end on the last Business Day in that calendar month;
a "principal amount" in relation to a Bill is a reference to the face
amount of that Bill;
a "regulation" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law but, if
not, being of a type which banks operating in the relevant
jurisdiction generally and the Bank affected in particular are
accustomed to complying with) of any governmental body, agency,
department or regulatory, self-regulatory or other authority or
organisation;
a reference to the currency of a country is to the lawful currency or
currencies of that country for the time being, "(Pounds)" and
"Sterling" is a reference to the lawful currency or currencies of the
United Kingdom for the time being and "U.S. $" and "U.S. Dollars" is
a reference to the lawful currency of the United States for the time
being; and
a "treasury transaction" is a reference to any interest rate or
cross-currency swap;
(ii) a provision of a law is a reference to that provision as amended or
re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a schedule
to this Agreement;
(iv) a person includes its permitted successors, transferees and assigns;
(v) a Finance Document or another document is a reference to that Finance
Document or that other document as amended, novated or supplemented;
and
(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in this
Agreement.
(c) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
(d) Any provision of this Agreement that states that it will come into effect
as from the Commencement Date shall, to the extent that any such provision
relates to any currency of a state which is not a Treaty Country on the
Commencement Date, come into effect in relation to the currency of such
state on and from the date on which such state becomes a Treaty Country.
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2. THE FACILITIES
2.1 Facilities
The Banks grant to the Borrowers the following facilities:
(a) a committed multicurrency revolving 364 day credit facility, with an
option to draw Term-out Advances, to be designated as Tranche A, under
which the Banks will, when requested by a Borrower, make cash advances
in euros or Optional Currencies to (or accept Bills in Sterling drawn
by) that Borrower on a revolving basis during the Tranche A
Availability Period;
(b) a committed multicurrency revolving credit facility, to be designated
as Tranche B, under which the Banks will, when requested by a
Borrower, make cash advances in euros or Optional Currencies to (or
accept Bills in Sterling drawn by) that Borrower on a revolving basis
during the Tranche B Availability Period; and
(c) a committed swingline advance facility (which is a sub-division of
Tranche B) under which the Swingline Banks will, when requested by a
Borrower, make to that Borrower Swingline Advances in U.S. Dollars,
Sterling or euros during the Tranche B Availability Period except that
Swingline Advances in euros will only be made subject to availability
of same day funding in euros in the London interbank market,
in all cases subject to the terms of this Agreement.
2.2 Overall facility limit
(a) Notwithstanding any other provision of this Agreement, the aggregate
Original Euro Amount of all outstanding Utilisations:
(i) under Tranche A, shall not at any time exceed the Tranche A Total
Commitments at that time;
(ii) under Tranche B (including the Swingline Facility), shall not at any
time exceed the Tranche B Total Commitments at that time;
(iii) under the Swingline Facility, shall not at any time exceed the
Swingline Total Commitments at that time; and
(iv) under all the Facilities, shall not at any time exceed the Total
Commitments.
(b) Notwithstanding any other provision of this Agreement, the aggregate
Original Euro Amount of:
(i) Tranche A Advances made, and the principal amount of Bills under
Tranche A accepted, by a Bank shall not at any time exceed its Tranche
A Commitment at that time;
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(ii) Tranche B Advances (including Swingline Advances) made, and the
principal amount of Bills under Tranche B accepted, by a Bank plus
that Bank's and, if applicable, that Bank's Swingline Affiliate's
outstanding Swingline Advances shall not at any time exceed its
Tranche B Commitment at that time; and
(iii) Swingline Advances made by a Swingline Bank shall not at any time
exceed its Swingline Commitment at that time.
2.3 Number of Requests and Advances
No more than one Request may be delivered on any one day, but that Request
may specify any number of Utilisations and Terms from either Tranche A or
Tranche B (or a Swingline Advance) or all of them. A maximum of 20
Utilisations may be outstanding at any one time (unless the Agent and the
Parent otherwise agree).
2.4 Nature of a Finance Party's rights and obligations
(a) The obligations of a Finance Party under the Finance Documents are several.
Failure of a Finance Party to carry out those obligations does not relieve
any other Party of its obligations under the Finance Documents. No Finance
Party is responsible for the obligations of any other Finance Party under
the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights and accordingly a Finance Party may, except as otherwise stated in
the Finance Documents, separately enforce those rights.
2.5 Obligors' Representative
Each Obligor irrevocably authorises the Parent to give and receive as
representative on its behalf all notices (including Requests) and sign all
documents in connection with the Finance Documents on its behalf (including
Novation Agreements under Clause 9.5(b) (Changes to Borrowers)) and take
such other action as may be necessary or desirable under or in connection
with the Finance Documents and confirms that it will be bound by any action
taken by the Parent under or in connection with the Finance Documents.
2.6 Actions of Parent
The respective liabilities of each of the Obligors under the Finance
Documents shall not be in any way affected by:
(a) any irregularity (or purported irregularity) in any act done by or any
failure (or purported failure) by the Parent; or
(b) the Parent acting (or purporting to act) in any respect outside any
authority conferred upon it by any Obligor; or
(c) the failure (or purported failure) by, or inability (or purported
inability) of, the Parent to inform any Obligor of receipt by it of
any notification under a Finance Document.
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3. PURPOSE
(a) Each Utilisation will be applied:
(i) in the case of Tranche A Advances or Bills, in or towards providing
bridging and liquidity finance for the Group's financial requirements
including, but not limited to, meeting dividend and tax payments and
for backing commercial paper programmes (or refinancing Swingline
Advances); and
(ii) in the case of Tranche B Advances (including Swingline Advances) or
Bills, in or towards the general corporate purposes of the Group
including, but not limited to, acquisitions, capital expenditure,
working capital financing, share buy-backs and other capital
distributions and supporting commercial paper programmes (provided
that a Swingline Advance may not be applied in or towards refinancing
another Swingline Advance).
(b) Without affecting the obligations of any Borrower in any way, no Finance
Party is bound to monitor or verify the application of the proceeds of any
Advance.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of each Finance Party to any Borrower under this Agreement
are subject to the condition precedent that the Agent has notified the
Parent and the Banks that it has received all of the documents set out in
Part I of Schedule 3 in form and substance satisfactory to the Agent. The
Agent will promptly notify the Parent upon such receipt.
4.2 Further conditions precedent
The obligations of each Bank to participate in a Utilisation (or make any
payment under Clause 5.10(b)(ii)) are subject to the further conditions
precedent that on the date of the Request and on its Utilisation Date:
(a) except in the case of a Rollover, the representations and warranties
in Clause 18 (Representations and Warranties) to be repeated in
accordance with Clause 18.2 (Times for making representations and
warranties) on those dates are correct and will be correct immediately
after the Utilisation; and
(b) except in the case of a Rollover, no Default has occurred which is
continuing or would result from the Utilisation and no notice has been
given by the Parent under Clause 9.4 (Mandatory Prepayment Event).
5. ADVANCE FACILITIES
5.1 Receipt of Requests
(a) A Borrower may borrow Advances under Tranche A or Tranche B if the Agent
receives, not later than 3.00 p.m. on the third Business Day before the
proposed Utilisation Date, or, in the
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case of an Advance in Sterling, not later than 3.00 p.m. one Business Day
before the proposed Utilisation Date, a duly completed Request copied to
the US Swingline Agent.
(b) A Borrower may borrow Swingline Advances if:
(i) in the case of Swingline Advances in U.S. Dollars, the US Swingline
Agent receives, not later than 11.00 a.m. (New York City time) on the
proposed Utilisation Date;
(ii) in the case of Swingline Advances in Sterling or euros, the Agent
receives, not later than 9.00 a.m. (London time) on the proposed
Utilisation Date,
a duly completed Request (copied to the Agent or US Swingline Agent as the
case may be).
5.2 Completion of Requests for non Swingline Advances
A Request (other than a Request for a Swingline Advance) will not be
regarded as having been duly completed unless:
(a) the Utilisation Date is a Business Day during the Tranche A
Availability Period (in respect of a Tranche A Advance) or Tranche B
Availability Period (in respect of a Tranche B Advance);
(b) only one currency is specified for each separate Advance, such
currency is the euro or an Optional Currency, and the Requested Amount
for each separate Advance is:
(i) in the case of Advances denominated in euros, a minimum of euro
100,000,000 or, if more, in integral multiples of euro
10,000,000; or
(ii) in the case of any currency other than the euro, a minimum
Original Euro Amount of euro 100,000,000 or, if more, in
integral multiples of euro 10,000,000; or
(iii) the undrawn balance of the Tranche A Total Commitments or the
Tranche B Total Commitments (as the case may be); or
(iv) such other amount as the Agent and the Parent may agree,
and the Agent and the Parent may agree to round the amount of Advances
which are not denominated in euros on such basis as they may
reasonably consider to be appropriate;
(c) only one Term or, in the case of Term-out Advances, Interest Period,
for each separate Advance is specified which:
(i) does not overrun the Tranche A Term Date (in respect of a
Tranche A Advance (other than a Term-out Advance)) or the
Tranche B Final Maturity Date (in respect of a Tranche B
Advance); and
(ii) is a period of one month, two, three or six months (which, in
the case of Term-out Advances only, does not overrun the third
Anniversary) or, in any case,
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such other period as all the banks may previously have agreed for
the purposes of such Advance; and
(d) the currencies specified are either euros or subject to Clause
11.4(c) (Currency), Optional Currencies.
5.3 Completion of Requests for Swingline Advances
A Request for Swingline Advances will not be regarded having been duly
completed unless:
(a) the Utilisation Date is:
(i) in the case of Swingline Advances in U.S. Dollars, a New York
Business Day; or
(ii) in the case of Swingline Advances in Sterling or euros, a
Business Day,
in each case falling before the Tranche B Final Maturity Date;
(b) it is specified that the Swingline Advances are to be made in U.S.
Dollars, Sterling or euros under the Swingline Facility;
(c) the Requested Amount is a minimum Original Euro Amount of euro
10,000,000 or such other amount as the Agent or, as the case may be,
US Swingline Agent and the relevant Borrower may agree which, if
borrowed, would not cause the Original Euro Amount of all Utilisations
under Tranche B to exceed the Tranche B Total Commitments;
(d) only one Term is specified, which:
(i) does not overrun the Tranche B Final Maturity Date; and
(ii) is a period not exceeding 7 days.
5.4 Amount of each Bank's Advance
The amount of a Bank's Advance will be the proportion of the Requested
Amount which:
(a) in the case of a Tranche A Advance, its Tranche A Commitment bears to
Tranche A Total Commitments;
(b) in the case of a Tranche B Advance, its Tranche B Commitment bears to
the Tranche B Total Commitments; and
(c) in the case of a Swingline Advance, its Swingline Commitment bears to
the Swingline Total Commitments,
in each case on the date of receipt of the relevant Request.
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5.5 Notification of the Banks
The Agent (or, in the case of Swingline Advances in U.S. Dollars, the US
Swingline Agent) will promptly notify each Bank (or, as the case may be,
Swingline Bank) of the details of the requested Advances and the amount of
its Advance.
5.6 Payment of Proceeds
Subject to the terms of this Agreement, each Bank (or, as the case may be,
Swingline Bank) will make its Advance available to the Agent (or, in the
case of Swingline Advances in U.S. Dollars, the US Swingline Agent) for the
Borrower for value on the relevant Utilisation Date.
5.7 Extension of Tranche B Availability Period
The Tranche B Final Maturity Date in respect of each Bank's Tranche B
Commitment may, at the Parent's request, be extended from time to time for
any period up to a date falling no later than seven years from the Signing
Date. However, each Bank may, in its sole discretion, decline to extend
the Tranche B Maturity Date in respect of its own Tranche B Commitment, in
which case:
(a) the Tranche B Commitment of that Bank will automatically cancel on the
then applicable Tranche B Final Maturity Date; and
(b) that Bank will be repaid in full upon the then applicable Tranche B
Final Maturity Date and will cease to be a Bank at such time,
irrespective of whether any other Bank has agreed to extend the Tranche B
Availability Period in respect of its own Tranche B Commitment.
5.8 Currency and limit on ECU drawings
No Request may specify an Advance or Advances denominated in ECU to be
drawn down on the same day in an aggregate principal amount exceeding ECU
1,000,000,000, and in any event not more than ECU 2,000,000,000 of Advances
denominated in ECU may be outstanding at any one time (but this Clause 5.8
does not apply after the Commencement Date).
5.9 Currency of Term-out Advances
Subject to Clause 11.4 (Currency), once the currency of a Term-out Advance
has been selected in the applicable Request, it will remain in that
currency throughout its Term.
5.10 Term-out Advances in Optional Currencies
(a) If a Term-out Advance is denominated in an Optional Currency (other than an
Optional Currency that is redenominated under Clause 11.4 (Currency)),
there shall be calculated in respect of each applicable Interest Period the
difference between the amount of the Term-out Advance (in that Optional
Currency) for the current Interest Period and for the next Interest Period.
The amount of the Term-out Advance for the next Interest Period will be
determined by notionally converting into that Optional Currency the
Original Euro Amount of the Term-
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out Advance on the basis of the Agent's Spot Rate of Exchange three
Business Days before the start of that Interest Period.
(b) At the end of the current Interest Period (but subject always to paragraph
(c) below):
(i) if the amount of the Term-out Advance for the next Interest Period is
less than for the preceding Interest Period, the relevant Borrower
shall repay the difference; or
(ii) if the amount of the Term-out Advance for the next Interest Period is
greater, each Bank shall, provided the conditions specified in Clause
4.2 (Further Conditions Precedent) are satisfied, forthwith make
available to the Agent for the relevant Borrower its participation in
the difference.
(c) If the Agent's Spot Rate of Exchange for the next Interest Period shows an
appreciation or depreciation of the Optional Currency against the euro of
less than five per cent. when compared with the Original Exchange Rate, no
amounts are payable in respect of the difference. In this Clause 5.10 and
in Clause 5.11 (Prepayments and repayments) "Original Exchange Rate" means
the Agent's Spot Rate of Exchange used for determining the amount of the
Optional Currency for the Interest Period which is the later of the
following:
(i) the first Interest Period applicable to the Term-out Advance; and
(ii) the most recent Interest Period immediately prior to which a
difference was required to be paid under this Clause 5.10.
5.11 Prepayments
If a Term-out Advance is to be prepaid by reference to an Original Euro
Amount, the Optional Currency amount to be prepaid shall be determined by
reference to the Agent's Spot Rate of Exchange last used for determining
the Optional Currency amount of that Term-out Advance under this Clause 5
or, if applicable, the Original Exchange Rate (as defined in Clause 5.10
(Term-out Advances in Optional Currencies)).
5.12 Notification
The Agent shall notify the Banks and the Parent of Optional Currency
amounts (and the applicable Agent's Spot Rate of Exchange) promptly after
they are ascertained.
6. BILL FACILITY
6.1 Receipt of Requests
Each Borrower may utilise the Bill Facility under Tranche A or Tranche B if
the Agent receives, not later than 10.00 a.m. on the Business Day before
the proposed Utilisation Date, a duly completed Request.
6.2 Form of Requests
A Request will not be regarded as being duly completed unless:
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(a) the Utilisation Date is a Business Day;
(b) the Requested Amount is a minimum of (Pounds)50,000,000 (or the
undrawn balance of the Tranche A Total Commitments or Tranche B Total
Commitments as the case may be) or such other amount as the Agent and
the Borrower may agree; and
(c) only one Term is specified which:
(i) does not overrun the Tranche A Term Date (in respect of Tranche A
Bills) or the Tranche B Final Maturity Date (in respect of
Tranche B Bills); and
(ii) is a period of between 14 days and 187 days.
6.3 Amount of Bills to be accepted by each Bank
The aggregate principal amount of the Bills to be accepted by a Bank will
be the proportion of the Requested Amount which:
(a) in the case of Tranche A Bills, its Tranche A Commitment bears to the
Tranche A Total Commitments; and
(b) in the case of Tranche B Bills, its Tranche B Commitment bears to the
Tranche B Total Commitments,
in each case on receipt of the relevant Request.
6.4 Notification of the Banks
The Agent shall, not later than 1.00 p.m. on the Business Day before the
proposed Utilisation Date, notify each Bank of the details of the requested
Bills and the aggregate principal amount of the Bills to be accepted by it.
6.5 Acceptance of Bills
(a) The Agent shall, not later than 11.00 a.m. on the proposed Utilisation
Date, deliver to each Bank Bills completed in accordance with Clause 7.1
(Holding and completion of Bills).
(b) Each Bank shall accept the Bills delivered to it in accordance with
paragraph (a) above by the proposed Utilisation Date.
(c) The Agent shall, not later than 11.30 a.m. on the proposed Utilisation
Date, notify the Parent and each Bank of the applicable EBDR.
(d) Subject to the terms of this Agreement, each Bank shall pay to the Agent
for the relevant Obligor an amount equal to:
(i) the amount which the Bank would have received as the proceeds of
discounting if it had discounted the Bills accepted by it at the
applicable EBDR; less
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(ii) commission calculated at the Acceptance Commission Rate on the
aggregate principal amount of those Bills.
6.6 Advances as an alternative
(a) If it is unlawful, impracticable or contrary to the Bank of England's
limits on the discounting of Bills applicable to any Bank for a Bank to
accept any Bills, or if a Bank's acceptances are ineligible for discounting
at the Bank of England, then it may notify the Agent accordingly by no
later than 4.00 p.m. on the Business Day before the proposed Utilisation
Date.
(b) If a Bank notifies the Agent in accordance with paragraph (a) above, then,
subject to the terms of this Agreement, the Bank shall instead make an
Advance in accordance with Clause 5 (Advance Facilities) in Sterling on the
relevant Utilisation Date in a principal amount equal to the aggregate
principal amount of the Bills which it would otherwise have been obliged to
accept pursuant to this Clause 6 (Bill Facility) and for a Term equal to
the Term of those Bills.
7. BILLS
7.1 Holding and completion of Bills
(a) Each Borrower shall ensure that the Agent has a sufficient stock of Bills
before delivering any Request for a Utilisation comprising Bills.
(b) Each Bill shall:
(i) be drawn by the Borrower in its own favour and endorsed by it in
blank;
(ii) be undated;
(iii) have the Maturity Date, the drawee and the face amount left blank;
and
(iv) be claused in a manner which complies with the Bank of England's
requirements for Eligible Bills at that time.
(c) Subject to the terms of this Agreement, the Agent shall and is irrevocably
authorised by the Borrowers to:
(i) sign each Bill on behalf of the Borrower concerned and date it with
its Utilisation Date;
(ii) insert in each Bill the name of the Bank on which it is drawn, its
face amount and its Maturity Date; and
(iii) deliver each completed Bill to the Bank on which it is drawn for
acceptance in accordance with this Agreement.
(d) The Agent shall at the request of a Borrower notify that Borrower what
stock of Bills (and in what denominations) are held by the Agent.
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7.2 Rounding of principal amount of Bills
If necessary, the Agent may round the principal amount of the relevant
Bills to be accepted by each Bank to ensure that each Bill has a principal
amount of an integral multiple of (Pounds)10,000, being not less than
(Pounds)250,000 nor more than (Pounds)5,000,000.
7.3 Discounting of Bills
Each Bank may arrange for a Bill accepted by it to be discounted on its
behalf in the London discount market or elsewhere or discount the Bill
itself.
7.4 Information relating to Bills
Each Borrower shall, promptly on request by a Finance Party, supply to the
Agent for that Finance Party any information relating to any Bill
(including the underlying trade transaction for that Bill) as that Finance
Party may reasonably require or which may be required by the Bank of
England or any other fiscal or monetary authority in the U.K.
7.5 Eligible Bills
Each Borrower shall ensure that any Bill drawn by it and accepted by a Bank
is, assuming that the relevant Bank is a bank whose acceptances are then
being treated as eligible acceptances by the Bank of England, eligible for
rediscounting at the Bank of England.
8. REPAYMENT
8.1 Repayment of Tranche A Advances
(a) Each Borrower shall repay each Tranche A Advance made to it in full on its
Maturity Date to the Agent for the relevant Bank but since Tranche A is
available on a revolving basis amounts repaid may be reborrowed subject to
the terms of this Agreement. Subject to paragraph (b) below, no Tranche A
Advance may be outstanding after the Tranche A Term Date.
(b) At any time and from time to time prior to the Tranche A Term Date, any
Borrower may, by delivery of a duly completed Request to the Agent under
Clause 5 (Advance Facilities) (who shall send a copy of the same to the
Banks), elect to draw one or more Advances (each a "Term-out Advance")
under Tranche A with a Maturity Date after the Tranche A Term Date. No
Term-out Advance, once repaid or prepaid, may be reborrowed (other than
under Clause 5.10 (b) (Term-out Advances in Optional Currencies)).
(c) No Tranche A Advance, other than a Term-out Advance, may be outstanding
after the Tranche A Term Date. No Term-out Advance may be outstanding
after the date falling on the third Anniversary.
8.2 Repayment of Tranche B Advances
Each Borrower shall repay each Tranche B Advance made to it in full on its
Maturity Date to the Agent for the relevant Banks but since Tranche B is
available on a revolving basis amounts repaid may be reborrowed subject to
the terms of this Agreement. No Tranche B Advance may be outstanding after
the Tranche B Final Maturity Date.
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8.3 Payment of Bills
Each Borrower shall pay an amount equal to the principal amount of each
Bill on its Maturity Date to the Agent for the relevant Bank. No Tranche A
Bill may be outstanding after the Tranche A Term Date and no Tranche B Bill
may be outstanding after the Tranche B Final Maturity Date.
8.4 Repayment of Swingline Advances
(a) Each Borrower shall repay each Swingline Advance made to it on its Maturity
Date to the Agent or, in the case of Swingline Advances in U.S. Dollars,
the US Swingline Agent for the Swingline Banks. No Swingline Advance may
be outstanding after the Tranche B Final Maturity Date.
(b) Each Swingline Advance shall be repaid on its Maturity Date in accordance
with paragraph (a) above. In the event that a Swingline Advance is not so
repaid each Bank (other than a Swingline Bank) will within four Business
Days of a demand to that effect from the Agent or, as the case may be, the
US Swingline Agent pay to the Agent or, as the case may be, the US
Swingline Agent on behalf of the Swingline Banks and their Swingline
Affiliates an amount equal to its Agreed Percentage of the principal of
such Swingline Advance and accrued interest (including default interest)
thereon to the date of actual payment by such Bank. The relevant Borrower
shall forthwith reimburse the Banks (through the Agent or, as the case may
be, the US Swingline Agent) in full for each payment made by the Banks
under this paragraph (b). Each amount the relevant Borrower is required to
reimburse to the Banks under this paragraph (b) shall be deemed to be an
overdue amount under Clause 10.4 (Default Interest) which fell due for
payment by the relevant Borrower on the day on which the payment by the
Banks giving rise to the reimbursement obligation was made and shall accrue
default interest under Clause 10.4 (Default Interest) accordingly.
9. PREPAYMENT AND CANCELLATION
9.1 Automatic Cancellation of the Total Commitments
(a) The undrawn Tranche A Commitment of each Bank shall be automatically
cancelled at the close of business in London on the last day of the Tranche
A Availability Period.
(b) The Tranche B Commitment of each Bank (including the Swingline Commitments
of the Swingline Banks) shall be automatically cancelled at the close of
business in London on the last day of the Tranche B Availability Period.
9.2 Voluntary Cancellation
(a) The Parent may, by giving not less than five days' prior written notice to
the Agent specifying the relevant Tranche(s), cancel the unutilised portion
of the Tranche A Total Commitments or the Tranche B Total Commitments or
both, in whole or in part (but, if in part, in a minimum amount of euro
50,000,000 and in integral multiples of euro 10,000,000 in aggregate for
both Tranches). Any cancellation in part of the Tranche B Total Commitments
shall be applied against the Tranche B Commitment of each Bank pro rata.
Any cancellation in part of the
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Tranche B Total Commitments shall be applied against the Tranche B
Commitment of each Bank pro rata.
(b) Whenever part of the Tranche B Total Commitments are cancelled, the
Swingline Commitments shall not be cancelled unless (i) the amount of the
Swingline Total Commitments would exceed the Tranche B Total Commitments
after such cancellation or (ii) the Swingline Commitment of any Swingline
Bank would exceed its Tranche B Commitment after such cancellation. In any
such case, the Swingline Total Commitments shall, at the same time as the
cancellation of the Tranche B Total Commitments takes effect, be cancelled
by such amount as is necessary to ensure that after the relevant
cancellation of the Tranche B Total Commitments the Swingline Total
Commitments do not exceed the Tranche B Total Commitments and the Swingline
Commitment of each Swingline Bank does not exceed its Tranche B Commitment.
9.3 Voluntary prepayment
(a) Any Borrower may, by giving not less than five days' prior notice to the
Agent, prepay without premium or penalty the whole or any part of any
Advance made to it under Tranches A or B (but, if in part, in an aggregate
minimum Original Euro Amount, taking all prepayments made by all the
Borrowers under both Tranches on the same day together, of euro 50,000,000
and in integral multiples of euro 10,000,000).
(b) Any voluntary prepayment under paragraph (a) above will:
(i) be applied against Tranche A or B in such proportions as may be
specified by the Borrower in the notice of prepayment or, if not
specified, against Tranche A; and
(ii) be applied against all the Advances of all the Banks in the relevant
Tranche(s) pro rata.
9.4 Mandatory Prepayment Event
If at any time any single person, or group of persons acting in concert (as
defined in the City Code on Takeovers and Mergers), acquires control (as
defined in Section 416 of the Income and Corporation Taxes Act 1988) of the
Parent then the Parent will notify the Agent within thirty days and the
Agent will, if instructed to do so by the Majority Banks, by notice to the
Parent given no earlier than ninety days after the date that notice is
given to the Agent:
(a) call for prepayment of all the Advances on such date as it may specify
in such notice whereupon all the Advances shall become due and payable
on such date together with accrued interest and any other sums then
owed by the Obligors under the Finance Documents;
(b) call for each Borrower to perform its obligations under Clause 8.3
(Payment of Bills) in respect of all outstanding Bills on such date as
it may specify in such notice as if such date were the Maturity Date
of each of those Bills; and
(c) declare that the Total Commitments shall be cancelled, whereupon the
Total Commitments shall be cancelled and the Commitment of each Bank
shall be cancelled and reduced to zero.
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9.5 Changes to Borrowers
(a) Any Borrower (other than the Parent) in respect of which no Utilisation,
interest or related amount is outstanding may, at the request of the
Parent, cease to be a Borrower by giving not less than two Business Days'
notice to the Agent, which, upon taking effect, shall discharge that
Borrower's obligations under this Agreement. No such discharge will take
effect, however, if at the time or immediately thereafter any Default has
occurred which is continuing.
(b) Any Borrower (the "Existing Borrower") will be released from its
obligations under this Agreement as a Borrower (and thereupon cease to be a
"Borrower") upon another Borrower (the "Substitute Borrower") assuming the
obligations in respect thereof of the Existing Borrower provided that:
(i) any such substitution shall take effect on and from the later of the
day upon which the Agent notifies the Parent in writing that it is
satisfied with the compliance with the matters set out in paragraph
(b)(iii) below and the date for substitution specified in the relevant
notice under paragraph (b)(ii) below;
(ii) notice of the proposed substitution has been delivered by the Parent
to the Agent not less than two Business Days prior to the proposed
substitution; and
(iii) the Substitute Borrower enters into a Novation Agreement with the
Existing Borrower, the Parent and the Agent on behalf of the Finance
Parties in the form of Part III of Schedule 6 together with such
amendments as the Agent may, at the request of the Parent, approve.
Each Bank authorises the Agent to sign on its behalf any Novation Agreement
entered into in accordance with this paragraph (b).
9.6 Right of prepayment and cancellation
If any Borrower is required to pay or is notified by any Bank in writing
that it will be required to pay any amount to a Bank under Clause 12
(Taxes) or Clause 15 (Increased Costs), or if circumstances exist such that
a Borrower will be required to pay any amount to a Bank under Clause 12
(Taxes), the Parent may, whilst the circumstances giving rise or which will
give rise to the requirement continue, serve a notice of prepayment and
cancellation on that Bank through the Agent. On the date falling three
Business Days after the date of service of the notice:
(a) each Borrower shall prepay all outstanding Advances made to it by that
Bank;
(b) each Borrower shall perform its obligations under Clause 8.3 (Payment
of Bills) in respect of all outstanding Bills accepted by that Bank as
if such third Business Day were the Maturity Date of each of those
Bills; and
(c) the Bank's Tranche A Commitment, and its Tranche B Commitment
(including its Swingline Commitment (if any)) shall be permanently
cancelled on the date of service of the notice.
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9.7 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of any
such notice.
(b) All prepayments under this Agreement shall be made together with accrued
interest on the amount prepaid and any other amounts due under this
Agreement in respect of that prepayment (including, but not limited to, any
amounts payable under Clause 25.2(b) (Other indemnities) if not made on a
Maturity Date for the relevant Tranche A Advance, Tranche B Advance or
Swingline Advance).
(c) No prepayment or cancellation is permitted except in accordance with the
express terms of this Agreement.
(d) Subject to the terms of this Agreement, any amount prepaid under Clause 9.3
(Voluntary prepayment) in respect of Tranche A (other than in respect of a
Term-out Advance) or Tranche B may be reborrowed. No amount of the Tranche
A Total Commitments or Tranche B Total Commitments (including the Swingline
Total Commitments) cancelled under this Agreement may subsequently be
reinstated.
10. INTEREST
10.1 Interest Periods for Term-Out Advances
The life of each Term-out Advance is divided into successive periods (each
an "Interest Period") for the calculation of interest. The first Interest
Period will be the period selected in the Request for that Term-out Advance
and each subsequent Interest Period will be the period selected by the
relevant Borrower by notice to the Agent received not later than 3.00 p.m.
on the third Business Day before the end of the then current Interest
Period or, in the case of a Term-out Advance in Sterling, not later than
3.00 p.m. on the day before the last day of the then current Interest
Period (being one month, two, three or six months or in any case such other
period as the Agent and all the Banks may agree from time to time which
does not overrun the third Anniversary). If no such selection notice is
received within the time limit mentioned above, the new Interest Period
will be three months or such shorter period as is required to ensure that
it does not overrun the third Anniversary.
10.2 Interest rate for all Advances
(a) The rate of interest on each Tranche A Advance (except a Term-out Advance)
and Tranche B Advance for its Term and for each Term-out Advance for its
Interest Period is the rate per annum determined by the Agent to be the
aggregate of:
(i) the Margin;
(ii) LIBOR; and
(iii) the MLA Cost, if applicable.
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(b) The rate of interest on each Swingline Advance during its Term is the rate
per annum determined by the Agent or, in respect of Swingline Advances in
U.S. Dollars, the US Swingline Agent, to be the Swingline Rate for each day
during its Term.
10.3 Due dates
Except as otherwise provided in this Agreement, accrued interest on each
Advance is payable by the relevant Borrower on its Maturity Date (or the
last day of an Interest Period for a Term-out Advance) and also, in the
case of any Advance with a Term or Interest Period longer than six months,
at six-monthly intervals during its Term or Interest Period for so long as
the Term or Interest Period continues.
10.4 Default interest
(a) If a Borrower fails to pay any amount payable by it under this Agreement,
it shall forthwith on demand by the Agent pay interest on the overdue
amount from the due date up to the date of actual payment, both before and
after judgment, at a rate (the "default rate") determined by the Agent or,
as the case may be, the US Swingline Agent to be one per cent. per annum
above the rate which would have been payable if the overdue amount had,
during the period of non-payment, constituted a Tranche A Advance in the
currency of the overdue amount for such successive Terms of such duration
as the Agent may determine (each a "Designated Term") provided that, in the
case of principal falling due before its Maturity Date, the default rate up
to that Maturity Date will be one per cent. per annum above the rate
applicable to that principal immediately before it fell due.
(b) The default rate will be determined on each Business Day or the first day
of, or two Business Days before the first day of, the relevant Designated
Term, as appropriate.
(c) If the Agent or, as the case may be, the US Swingline Agent determines that
deposits in the currency of the overdue amount are not at the relevant time
being made available by the Reference Banks to leading banks in the London
interbank market, the default rate will be determined by reference to the
cost of funds to each Bank from whatever sources it may reasonably select
after consultation with the Reference Banks.
(d) Default interest will be compounded at the end of each Designated Term.
10.5 Notification of rates of interest
The Agent or, as the case may be, the US Swingline Agent will promptly
notify each relevant Party of the determination of a rate of interest under
this Agreement.
11. PAYMENTS
11.1 Place of Payment
All payments by an Obligor or a Bank under this Agreement shall be made to
the Agent or (if the payment relates to Swingline Advances in U.S. Dollars)
the US Swingline Agent to its account at such office or bank in the
principal financial centre of the country of the currency concerned (or, in
the case of euros, in the principal financial centre of such of the Treaty
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Countries or London as it may reasonably specify) as it may notify to the
Obligor or Bank for this purpose.
11.2 Funds
Payments under this Agreement to the Agent or (if the payment relates to
Swingline Advances in U.S. Dollars) the US Swingline Agent shall be made
for value on the due date at such times and in such funds as it may
specify to the Party concerned as being customary at the time for the
settlement of transactions in the relevant currency in the place for
payment.
11.3 Distribution
(a) Each payment received by the Agent or, as the case may be, the US
Swingline Agent, under this Agreement for another Party shall, subject to
paragraphs (b) and (c) below, be made available by the Agent or, as the
case may be, the US Swingline Agent to that Party by payment (on the date
and in the currency and funds of receipt) to its account with such bank in
the principal financial centre of the country of the relevant currency
(or, in the case of euros, in the principal financial centre of such of
the Treaty Countries or London as the Agent or, as the case may be, the US
Swingline Agent, may reasonably specify) as it may notify to the Agent or,
as the case may be, the US Swingline Agent, for this purpose by not less
than five Business Days' prior notice.
(b) The Agent or, as the case may be, the US Swingline Agent may apply any
amount received by it for an Obligor in or towards payment (on the date
and in the currency and funds of receipt) of any amount due from an
Obligor under this Agreement or in or towards the purchase of any amount
of any currency to be so applied.
(c) Where a sum is to be paid under this Agreement to the Agent or, as the
case may be, the US Swingline Agent for the account of another Party, the
Agent or, as the case may be, the US Swingline Agent is not obliged to pay
that sum to that Party until it has established that it has actually
received that sum. The Agent or, as the case may be, the US Swingline
Agent may, however, assume that the sum has been paid to it in accordance
with this Agreement and, in reliance on that assumption, make available to
that Party a corresponding amount. If the sum has not been made available
but the Agent or, as the case may be, the US Swingline Agent has paid a
corresponding amount to another Party, that Party shall forthwith on
demand refund the corresponding amount to the Agent or, as the case may
be, the US Swingline Agent, together with interest on that amount from the
date of payment to the date of receipt, calculated at a rate reasonably
determined by the Agent or, as the case may be, the US Swingline Agent, to
reflect its cost of funds.
11.4 Currency
(a) In this Agreement:
(i) a repayment or prepayment of an Advance is payable in the currency
in which the Advance is denominated;
(ii) interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated;
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(iii) amounts payable in respect of costs, expenses, taxes and the like
are payable in the currency in which they are incurred; and
(iv) any other amount payable under this Agreement is, except as
otherwise provided in this Agreement, payable in euros.
(b) Until the Commencement Date, all references to euros will be construed as
references to ECU and will be payable in or calculated by reference to ECU
at the rate of one ECU for one euro.
(c) On and after the Commencement Date:
(i) any Advance in the currency of a Treaty Country will be made in the
euro unit;
(ii) each obligation under this Agreement which has been denominated in a
national currency unit shall only be redenominated into the euro
unit at the time provided for and in accordance with EMU
legislation; and
(iii) any amount payable by the Agent to the Banks under this Agreement in
the currency of a Treaty Country will be paid in the euro unit.
(d) If and to the extent that any EMU legislation provides that an amount
denominated either in the euro unit or in the national currency unit of a
given Treaty Country and payable within that Treaty Country by crediting
an account of the creditor can be paid by the debtor either in the euro
unit or in that national currency unit, each Party shall be entitled to
pay or repay that amount either in the euro unit or in the national
currency unit.
11.5 Set-off and counterclaim
All payments made by an Obligor under this Agreement shall be made without
set-off or counterclaim.
11.6 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business Day
(if there is not). If, however, the extension of the due date would mean
that a Bill would have a Term of more than 187 days, then the due date for
that payment shall instead be the preceding Business Day.
(b) During any extension of the due date for payment of any principal under
this Clause 11.6 interest is payable on the principal at the rate payable
on the original due date.
11.7 Partial payments
If the Agent receives a payment insufficient to discharge all the amounts
then due and payable by an Obligor under this Agreement, the Agent shall
apply that payment towards the obligations of the Obligors under this
Agreement in the following order:
(a) first, in or towards payment pro rata of any unpaid costs, fees and
expenses of the Agent under this Agreement;
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(b) secondly, in or towards payment of any accrued fees due but unpaid
under Clause 22.3 (Up-front fee);
(c) thirdly, in or towards payment pro rata of any accrued fees due but
unpaid under Clauses 22.1 (Commitment fee) and 22.4 (Utilisation fee);
(d) fourthly, in or towards payment pro rata of any interest due but
unpaid under this Agreement;
(e) fifthly, in or towards payment pro rata of any principal due but
unpaid under this Agreement; and
(f) sixthly, in or towards payment pro rata of any other sum due but
unpaid under this Agreement.
The Agent shall, if so directed by all the Banks, vary the order set out in
paragraphs (c), (d) and (e) above.
12. TAXES
12.1 Gross-up
(a) All payments by an Obligor under the Finance Documents shall be made free
and clear of and without deduction for or on account of any Applicable
Taxes, except to the extent that the Obligor is required by law to make
payment subject to any Applicable Taxes. Subject to paragraph (b) below
and Clauses 12.2 (Qualifying Bank) and 12.3 (U.S. Taxes), if any Applicable
Taxes or amounts in respect of Applicable Taxes must be deducted or
withheld from any amounts payable or paid by an Obligor, or paid or payable
by the Agent or, as the case may be, the US Swingline Agent, to a Finance
Party under the Finance Documents, the Obligor shall pay such additional
amounts as may be necessary to ensure that the relevant Finance Party
receives and retains (after any deduction or withholding in respect of such
additional amounts) a net amount equal to the full amount which it would
have received and so retained had payment not been made subject to
Applicable Taxes.
(b) An Obligor is not obliged to pay any additional amount pursuant to
paragraph (a) above in respect of any deduction which would not have been
required if the relevant Finance Party had obtained any exemption from the
deduction or withholding of Applicable Taxes which it is able to obtain.
(c) Each Obligor will, within thirty days of the later of:
(i) any payment being made in respect of which tax is required by law to
be deducted or withheld; or
(ii) the date on which the Obligor is required to account for the amount
deducted or withheld to the appropriate tax authority,
deliver to the Agent for the relevant Bank evidence (including any relevant
tax receipts) that the amount deducted or withheld has been duly accounted
for to the appropriate tax authority.
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12.2 Qualifying Bank
(a) If:
(i) on the Signing Date, any Bank which is a Party on the Signing Date
is not a Qualifying Bank; or
(ii) after the Signing Date, a Bank ceases to be a Qualifying Bank other
than as a result of the introduction of, suspension, withdrawal or
cancellation of, or change in, or change in the official
interpretation, administration or official application of, any law,
regulation having the force of law, tax treaty or any published
practice or published concession of the U.K. Inland Revenue or any
other relevant taxing or fiscal authority in any jurisdiction with
which the relevant Bank has a connection, occurring after the
Signing Date; or
(iii) on the date of any novation, transfer or assignment under Clause 28
(Changes to the Parties), a New Bank (as such term is defined in
that Clause) is not a Qualifying Bank,
then no Obligor shall be liable to pay to that Bank under Clause 12.1
(Gross-up) any amount in respect of taxes levied or imposed by the U.K. or
any taxing authority of or in the U.K. in excess of the amount it would
have been obliged to pay if that Bank had been a Qualifying Bank on such
date or had not ceased to be a Qualifying Bank.
(b) Each Bank represents to each Obligor that on the date on which it becomes
a Party to this Agreement (and on the date that the Bank designates a new
Facility Office) it is a Qualifying Bank and a U.S. Qualifying Bank. Each
Bank will notify the Parent through the Agent as soon as practicable if it
ceases to be a Qualifying Bank or a U.S. Qualifying Bank.
12.3 U.S. Taxes
(a) No U.S. Borrower shall be required to pay any additional amount pursuant
to Clause 12.1 (Gross-up) in respect of United States federal income,
branch profits or franchise taxes with respect to a sum payable by it
pursuant to this Agreement to a Bank if such Bank:
(i) on the date it becomes a Party to this Agreement or has designated a
new Facility Office either:
(1) in the case of a Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code), is not
entitled to submit a Form 1001 or Form W-8 (relating to such
Bank and claiming a complete exemption from withholding on
interest payable pursuant to this Agreement) or a Form 4224
(relating to interest payable pursuant to this Agreement) (or
any successor forms) with respect to interest payable pursuant
to this Agreement; or
(2) in the case of a Bank which is a United States person, if Clause
12.1 (Gross-up) would apply (other than as a result of the
introduction of, suspension, withdrawal or cancellation of, or
change in the official interpretation, administration or
official application of, any law, regulation having the force
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of law, tax treaty or any published practice or published
concession of the United States Internal Revenue Service or any
other relevant taxing or fiscal authority in any jurisdiction
with which the relevant Bank has a connection, occurring after
the date the Bank becomes a Party to this Agreement or has
designated a new Facility Office); or
(ii) has failed to submit any form, certificate or other information with
respect to such sum payable that it was required to file pursuant to
paragraph (b) below and is entitled to file under applicable law,
and a Bank (or its Facility Office designated in respect of payments made
by a U.S. Borrower) will be a "U.S. Qualifying Bank" for the purposes of
lending to a U.S. Borrower unless it falls within paragraphs (i) or (ii)
above.
(b) If a Bank is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) it shall (if and to the extent that it is entitled
to do so under applicable law) submit as soon as reasonably practicable in
duplicate to each U.S. Borrower duly completed and signed copies of either
Form 1001 (or, in the case of payment made after 31st December, 1998, Form
W-8) of the United States Internal Revenue Service (relating to such Bank
and claiming complete exemption from withholding on all amounts (to which
such withholding would otherwise apply) to be received by such Bank,
including fees, pursuant to this Agreement in connection with any borrowing
by such U.S. Borrower) as a result of a tax treaty concluded with the
United States or Form 4224 of the United States Internal Revenue Service
(relating to all amounts (to which such withholding would otherwise apply)
to be received by such Bank, including fees, pursuant to this Agreement in
connection with any borrowing by such U.S. Borrower). Thereafter and from
time to time at the request of a U.S. Borrower, such Bank shall (if and to
the extent that it is entitled to do so under applicable law) submit to
each U.S. Borrower such additional duly completed and signed copies of one
or the other such Forms (or such successor Forms as shall be adopted from
time to time by the relevant United States taxation authorities) or any
additional information as may be required under then current United States
law or regulations to claim the inapplicability of or exemption from United
States withholding taxes on payments in respect of all amounts (to which
such withholding would otherwise apply) to be received by such Bank,
including fees, pursuant to this Agreement in connection with any borrowing
by such U.S. Borrower.
(c) If a Bank is a United States person (as such term is defined in Section
7701(a)(30) of the Code) it shall, on the date hereof, and thereafter upon
the request of each U.S. Borrower, submit in duplicate to each U.S.
Borrower a certificate to the effect that it is such a United States person
and shall (if and to the extent that it is entitled to do so under
applicable law) upon the request of a U.S. Borrower submit any additional
information that may be necessary to avoid United States withholding taxes
on all payments, including fees, (to which such withholding would otherwise
apply) to be received pursuant to this Agreement in connection with any
borrowing by such U.S. Borrower.
(d) To the extent that any U.S. Borrower becomes aware of the need for any
other such Form or information it will notify the relevant Banks as soon as
reasonably practicable thereafter and such Bank shall (if and to the extent
that it is entitled to do so under applicable law) submit as soon as
practicable in duplicate to each U.S. Borrower duly completed and signed
copies of any such Form or information.
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12.4 Collecting Agents Rules
In relation to the Facilities, each Bank represents to the Agent that, on
the date on which it becomes a Party to this Agreement, it is:
(a) either:
(i) not resident in the United Kingdom for United Kingdom tax
purposes; or
(ii) a bank as defined in section 840A of the Income and Corporation
Taxes Act 1988 and resident in the United Kingdom; and
(b) beneficially entitled to the principal and interest payable by the
Agent to it under this Agreement,
and it shall forthwith notify the Agent if either representation ceases to
be correct.
12.5 Tax Credit
(a) If an Obligor makes a payment pursuant to Clause 12.1 (Gross up) for the
account of any Finance Party and such Finance Party has received or been
granted a credit against, or relief or remission or repayment of, any tax
paid or payable by it (a "Tax Credit") which is attributable to that
payment or the corresponding payment under the Finance Document such
Finance Party shall, to the extent that it can do so without prejudice to
the retention of the amount of such credit, relief, remission or
repayment, pay to the Obligor concerned such amount as is attributable to
such payments and which will leave the Finance Party (after such payment)
in no better or worse position than it would have been if the Obligor
concerned had not been required to make any deduction or withholding.
(b) Nothing in this Clause 12.5 shall interfere with the right of a Finance
Party to arrange its tax affairs in whatever manner it thinks fit and
without limiting the foregoing no Finance Party shall be under any
obligation to claim a Tax Credit or to claim a Tax Credit in priority to
any other claims, relief, credit or deduction available to it (however,
each Bank shall, if practicable, seek any Tax Credit available to it
consequent upon any deductions for tax being made from any payment to it
under Clause 12.1 (Gross up)). No Finance Party shall be obliged to
disclose any confidential information relating to its tax affairs or any
computations in respect thereof.
(c) If any Finance Party makes any payment to an Obligor pursuant to paragraph
(a) above and that Finance Party (acting reasonably) subsequently
determines that the credit, relief, remission or repayment in respect of
which such payment was made was not available to it or has been withdrawn
from it or that it was unable to use such credit, relief, remission or
repayment in full, the Obligor shall reimburse that Finance Party to the
extent (but not exceeding the relevant payment by that Finance Party under
paragraph (a) above) that it determines (acting reasonably) to have been
required to place it in the same after-tax position as it would have been
in if such credit, relief, remission or repayment had been obtained and
fully used and retained by that Finance Party.
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13. MARKET DISRUPTION
13.1 Absence of quotations
If, in relation to any Advance, LIBOR is to be determined in accordance
with paragraph (b) of its definition but a Reference Bank does not supply
an offered rate by 1.00 p.m. on a Rate Fixing Day, the applicable LIBOR
shall, subject to Clause 13.2 (Market disturbance), be determined on the
basis of the quotations of the remaining Reference Banks.
13.2 Market disturbance
Notwithstanding anything to the contrary herein contained, if and each
time that prior to or on a Utilisation Date relative to an Advance to be
made:
(a) LIBOR is to be determined in accordance with paragraph (b) of its
definition and only one or no Reference Bank supplies a rate for the
purposes of determining LIBOR; or
(b) only one or no Reference Bank supplies a rate for the purposes of
determining EBDR; or
(c) the Agent is notified by the Majority Banks that:
(i) deposits in the currency of that Advance are not in the
ordinary course of business available in the London interbank
market for a period equal to the Term or Interest Period
concerned in amounts sufficient to fund their participations in
that Advance; or
(ii) by reason of circumstances affecting the London interbank
market generally, adequate and fair means do not exist for
ascertaining the LIBOR applicable to such Advance during its
Term or Interest Period or LIBOR does not adequately represent
the cost of funding to the Majority Banks; or
(iii) adequate and fair means do not exist for ascertaining EBDR,
the Agent shall promptly give written notice of such determination or
notification to the Parent and to each of the Banks.
13.3 Alternative Rates
If the Agent gives a notice under Clause 13.2 (Market disturbance):
(a) the Parent and the Banks may (through the Agent) agree that, if not
already drawn, the Advances concerned shall not be borrowed or Bills
should not be drawn; or
(b) in the absence of such agreement:
(i) the Term or Interest Period of the Advances concerned shall be
one month;
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(ii) in the case of Clause 13.2(c) (Market disturbance), the
Advances shall be made in euros, in an amount equal to the
Original Euro Amount of the Advance concerned;
(iii) in the case of Bills where Clauses 13.2(b) and (c)(iii) apply,
the relevant Bills shall not be accepted and the relevant Banks
will instead make an Advance in Sterling in accordance with
Clause 6.6 (Advances as an alternative); and
(iv) during the Term or Interest Period of each Advance concerned
(other than an Advance under (b)(iii) above unless Clause
13.2(a) or (c) (Market Disturbance) applies to that Advance)
the rate of interest applicable to the participation of each
Bank in such Advance shall be the Margin plus, if applicable,
MLA Cost plus the rate per annum notified by the Bank concerned
to the Agent before the last day of such Term or Interest
Period to be that which expresses as a percentage rate per
annum the cost to such Bank of funding its participation in
such Advance from whatever sources it may reasonably select
with a view to providing funding at the lowest reasonably
practicable rate.
14. AVAILABILITY OF CURRENCIES
14.1 Revocation of currency
If the currency selected in accordance with Clause 5.2(b) (Completion of
Requests) is an Optional Currency other than Sterling or U.S. Dollars,
and, before 9.30 a.m. on any Rate Fixing Day relating to the start of any
Term, the Agent receives notice from a Bank that:
(a) it is impossible for that Bank to fund its participation in the
relevant Advance in the relevant Optional Currency during its Term in
the ordinary course of business in the London interbank market;
and/or
(b) the use of the proposed Optional Currency would contravene any law or
regulation,
the Agent shall give notice to the relevant Borrower to that effect before
11.00 a.m. on that day. In this event:
(i) the relevant Borrower and the Bank may agree that the Advance will
not be made; or
(ii) in the absence of agreement:
(1) that Bank's participation in the Advance (or, if more than one
Bank is similarly affected, those Banks' participations in the
Advance) shall be treated as a separate Advance denominated in
Sterling; and
(2) in the definition of "LIBOR" (insofar as it applies to that
Advance) in Clause 1.1 (Definitions) there shall be substituted
for the time "11.00 a.m." the time "1.00 p.m.".
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14.2 ECU
(a) If, at any time prior to the Commencement Date:
(i) the ECU ceases to be utilised as the basic accounting unit of the
European Union, (otherwise than as a result of the introduction of
the euro); or
(ii) the ECU ceases to be used in the European Monetary System
(otherwise than as a result of the introduction of the euro); or
(iii) for reasons affecting the market in ECU generally, ECU are not
freely traded between banks in the London interbank market; or
(iv) it becomes illegal or impossible for payments to be made under this
Agreement in ECU,
then:
(1) the Agent shall notify the Parent and the Banks promptly upon
becoming aware of the event;
(2) the Banks shall not be obliged to make any Advances denominated in
ECU on or after the date of that notification; and
(3) subsequently each amount which would otherwise have been payable by
the Borrowers under this Agreement in ECU shall be paid by the
Borrowers in Sterling or another currency acceptable to the
Majority Banks (the "replacement currency") and the amount of the
replacement currency so payable will be determined in accordance
with paragraph (b) below.
(b) (i) The equivalent in the replacement currency of any Advance in ECU
for the purposes of paragraph (a) above will be calculated by the
Agent as the sum of the equivalent in the replacement currency of
the components of the ECU;
(ii) the components of the ECU for this purpose will be the currency
amounts that were components of the ECU when the ECU was most
recently used in the European Monetary System, except that, if the
ECU is being used for the settlement of transactions by public
institutions of or within the European Community, or was so used
after its most recent use in the European Monetary System, the
components will be:
(1) the currency amounts that are components of the ECU as so used
on the day the calculation of the amount of the replacement
currency is to be made (the "day of valuation"); or
(2) the currency amounts that were components of the ECU when it
was most recently so used, as appropriate;
(iii) the rates to be used by the Agent for the above purposes will be
its rates for the purchase in the London foreign exchange market of
the replacement currency with each
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of the components at or about 11.00 am on the day of valuation for
value on the day the relevant payment in the replacement currency
is due; and
(iv) the day of valuation will be the day determined by the Agent for
the purposes of calculating the equivalent in the replacement
currency of any amount in ECU and will be the day two Business Days
before the relevant payment in the replacement currency is due.
(c) Clauses 14.2 (a) and (b) will not apply after the Commencement Date.
15. INCREASED COSTS
15.1 Increased costs
(a) Subject to Clause 15.2 (Exceptions), the Parent shall within five Business
Days of demand by a Finance Party pay that Finance Party the amount of any
increased cost incurred by it or any of its holding companies as a result
of any change in (or change in any official or judicial interpretation of)
or introduction of any law or regulation (including any relating to
taxation or reserve asset, special deposit, cash ratio, liquidity or
capital adequacy requirements or any other form of banking or monetary
control).
(b) In this Agreement "increased cost" means:
(i) an additional cost incurred by a Finance Party or any of its holding
companies as a result of it performing, maintaining or funding its
obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance Party or
any of its holding companies in making, funding or maintaining all
or any advances comprised in a class of advances formed by or
including the Advances made or to be made by it under this Agreement
as is attributable to it making, funding or maintaining its
Advances; or
(iii) a reduction in any amount payable to a Finance Party or the
effective return to a Finance Party under this Agreement or on its
capital (or the capital of any of its holding companies); or
(iv) the amount of any payment made by a Finance Party, or the amount of
interest or other return foregone by a Finance Party, calculated by
reference to any amount received or receivable by a Finance Party
from any other Party under this Agreement.
(c) A Finance Party shall notify the Parent promptly upon becoming aware that
it has incurred an increased cost as a result of any law or regulation
referred to in paragraph (a) above and shall provide calculations in
reasonable detail of the basis of such increased cost and its allocation
to this Agreement.
15.2 Exceptions
Clause 15.1 (Increased costs) does not apply to any increased cost:
(a) compensated for by the payment of the MLA Cost; or
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(b) any part of which is attributable to the delay by a Bank in notifying
the Parent of the increased cost; or
(c) attributable to any tax or amounts in respect of tax which must be
deducted from any amounts payable or paid by a Borrower or paid or
payable by the Agent to a Finance Party under the Finance Documents
(or which would have been payable but for Clause 12.2 (Qualifying
Bank)); or
(d) which is, or is attributable to, any tax on the overall net income,
profits or gains of a Bank or any of its holding companies (or the
overall net income, profits or gains of a division or branch of the
Bank or any of its holding companies); or
(e) resulting from a Finance Party breaching a regulation imposed on it
after the Signing Date by any fiscal, monetary or other regulatory
authority; or
(f) which is attributable to the introduction of the euro (other than an
increased cost which the Majority Banks reasonably determine is being
incurred generally and on a consistent basis by banks (or a class of
banks of which a Bank forms part) transacting euro business in the
London interbank market).
16. ILLEGALITY AND MITIGATION
16.1 Illegality
If it becomes unlawful or contrary to any regulation in any jurisdiction
for a Bank to give effect to any of its obligations as contemplated by
this Agreement or to fund or maintain any Advance, then the Bank may
notify the Parent through the Agent accordingly and thereupon:
(a) each Borrower shall, to the extent required and within the period
allowed by such regulation or, if no period is allowed, forthwith:
(i) repay any Advances made to it by that Bank together with all
other amounts payable by it to that Bank under this Agreement;
and
(ii) perform its obligations under Clause 8.3 (Payment of Bills) in
respect of all outstanding Bills accepted by that Bank as if
that day were the Maturity Date of each of those Bills; and
(b) the Bank's Tranche A Commitment and Tranche B Commitment shall be
cancelled.
16.2 Mitigation
Notwithstanding the provisions of Clauses 12 (Taxes), 15 (Increased Costs)
and 16.1 (Illegality), if in relation to a Bank or (as the case may be)
the Agent circumstances arise which would result in:
(a) any deduction, withholding or payment of the nature referred to in
Clause 12 (Taxes); or
(b) any increased cost of the nature referred to in Clause 15 (Increased
Costs); or
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(c) a notification pursuant to Clause 16.1 (Illegality),
then without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the Agent, such Bank shall promptly upon becoming
aware of the same notify the Agent thereof (whereupon the Agent shall
promptly notify the Parent) and such Bank shall endeavour to transfer its
participation in the Facility and its rights hereunder and under the
Finance Documents to another financial institution or Facility Office not
affected by the circumstances having the results set out in (a), (b) or
(c) above and shall otherwise take such reasonable steps as may be open to
it to mitigate the effects of such circumstances. No Bank, however, is
required to take any action which would be prejudicial to it or which
would conflict with its general banking policies, or give rise to any
material cost or expense.
17. GUARANTEE
17.1 Guarantee
The Parent irrevocably and unconditionally:
(a) as principal obligor, guarantees to each Finance Party prompt
performance by each Borrower (other than the Parent) of all its
obligations under the Finance Documents;
(b) undertakes with each Finance Party that whenever a Borrower does not
pay any amount when due under or in connection with any Finance
Document, the Parent shall upon demand by the Agent given no earlier
than on the expiry of any grace period applicable under Clause 20
(Default) pay that amount as if the Parent instead of the relevant
Borrower were expressed to be the principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or
liability suffered by it if any obligation guaranteed by the Parent
is or becomes unenforceable, invalid or illegal.
17.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate
balance of all sums payable by the Borrowers under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
17.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of any Borrower
or any security for those obligations or otherwise) is made in whole or in
part or any arrangement is made on the faith of any payment, security or
other disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of the Parent
under this Clause 17 shall continue as if the discharge or arrangement had
not occurred (but only to the extent that such payment, security or other
disposition is avoided or restored).
(b) Each Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
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17.4 Waiver of defences
The obligations of the Parent under this Clause 17 will not be affected by
any act, omission, matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under this Clause 17
or prejudice or diminish those obligations in whole or in part, including
(whether or not known to it or any Finance Party):
(a) any time or waiver granted to, or composition with, any Borrower or
other person;
(b) the taking, variation, compromise, exchange, renewal or release of,
or refusal or neglect to perfect, take up or enforce, any rights
against, or security over assets of, any Borrower or other person or
any non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise
the full value of any security;
(c) any incapacity or lack of powers, authority or legal personality of
or dissolution or change in the members or status of a Borrower or
any other person;
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to that
Finance Document in this Clause 17 shall include each variation or
replacement;
(e) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that the Parent's obligations under this
Clause 17 shall remain in full force and its guarantee be construed
accordingly, as if there were no unenforceability, illegality or
invalidity; and
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Borrower under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order so that
each such obligation shall for the purposes of the Parent's
obligations under this Clause 17 be construed as if there were no
such circumstance.
17.5 Immediate recourse
The Parent waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any person
before claiming from the Parent under this Clause 17.
17.6 Appropriations
Until all amounts which may be or become payable by the Borrowers under or
in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and the Parent shall not be
entitled to the benefit of the same; and
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(b) hold in a suspense account (bearing interest at a commercial rate)
any moneys received from the Parent or on account of the Parent's
liability under this Clause 17, without liability to pay interest on
those moneys.
17.7 Non-competition
Until all amounts which may be or become payable by the Borrowers under or
in connection with the Finance Documents have been paid in full, the
Parent shall not, after a claim has been made and by virtue of any payment
or performance by it under this Clause 17:
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of the
Parent's liability under this Clause 17; or
(b) claim, rank, prove or vote as a creditor of any Borrower or its
estate in competition with any Finance Party (or any trustee or agent
on its behalf); or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of any Borrower or exercise any right of
set-off as against any Borrower.
The Parent shall within five Business Days of receipt pay or transfer to
the Agent for the Finance Parties any payment or distribution or benefit
of security received by it contrary to this Clause 17.7.
17.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by any
other security now or hereafter held by any Finance Party.
18. REPRESENTATIONS AND WARRANTIES
18.1 Representations and warranties
Each Obligor represents and warrants that:
(a) due incorporation: it has been duly incorporated in accordance with
the laws of its place of incorporation and is validly existing;
(b) powers and authority: this Agreement is within its powers and the
execution, delivery and performance thereof has been duly authorised;
(c) validity: subject to any qualifications as to matters of law in the
relevant forms of opinion referred to in Schedule 3, this Agreement
constitutes its legal, valid and binding obligation; and
(d) no breach: this Agreement and the transactions hereby contemplated do
not and will not contravene in any material respect (i) its
constitutional documents, (ii) any law or
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regulation in its country of incorporation, or (iii) any loan stock,
debenture, mortgage or other contract in respect of any Borrowings to
which it is party;
(e) no Event of Default: no Event of Default has occurred and is
continuing;
(f) accounts: the most recent audited annual consolidated profit and loss
account and balance sheet of the Parent which have been delivered to
the Agent from time to time together with the notes thereto give a
true and fair view of the results of the operations of the Parent and
its Subsidiaries for the period to which they relate and the
financial position of the Parent and its Subsidiaries as at the date
to which they were prepared;
(g) U.S. Borrowers: no U.S. Borrower is an investment company under the
United States Investment Company Act of 1940, as amended, or is
exempt from the provisions of that Act pursuant to an exemption under
that Act, all of the conditions of which have been and are being
fulfilled;
(h) ERISA: if there is a U.S. Borrower, each member of the Controlled
Group is in compliance with the applicable provisions of law,
including ERISA, the Code and the applicable minimum funding standard
requirements of ERISA and the Code with respect to each Plan except
where such non compliance could reasonably be expected not to have a
material adverse effect on the ability of any Obligor to perform its
obligations under the Finance Documents. No Reportable Event which
has or could reasonably be expected to result in any material
liability has occurred with respect to any Plan. No member of the
Controlled Group has:
(i) sought a waiver of the minimum funding standard under Section
412 of the Code in respect of any Plan; or
(ii) made any amendment to any Plan, which has resulted or could
result in the imposition of a lien or the posting of a bond or
other security under ERISA or the Code; and
(i) Margin Stock: none of the proceeds of any Advance shall be used,
directly or indirectly, and whether immediately, ultimately or
incidentally, for any purpose which entails a violation of, or that
is inconsistent with, the provisions of Regulation U or Regulation X
of the regulations of the Board of Governors of the Federal Reserve
System of the United States. None of the Obligors nor any of their
respective Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of buying or carrying "margin stock" (within the meaning of
such Regulation U).
18.2 Times for making representations and warranties
The representation and warranties contained in Clause 18.1:
(a) will be made by the Parent and the Original Borrowers on the Signing
Date;
(b) will be deemed to be repeated by each Obligor on each Utilisation
Date and first day of each Interest Period for Term-out Advances with
reference to the facts and circumstances then existing; and
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(c) will be deemed to be made by an Additional Borrower on the date it
executes a Borrower Accession Agreement under Clause 28.4 (Additional
Borrowers) with reference to the facts and circumstances then
existing.
19. UNDERTAKINGS
19.1 Financial Information
The Parent will supply to the Agent in sufficient copies for the Banks:
(a) as soon as practicable after publication (and in any event within the
periods specified below):
(i) in the case of the Parent, the audited consolidated accounts of
the Group for that financial year, within 180 days of the end of
each of its financial years; and
(ii) in the case of any other Borrower, its unaudited (or, if
available, audited) unconsolidated accounts for that financial
year, within 180 days of the end of each of its financial years;
and
(b) as soon as practicable after publication (and in any event within 90
days of the end of the first half of each of its financial years) the
unaudited consolidated interim accounts of the Group for that half-
year; and
(c) all documents despatched by it to its shareholders (or any class of
them) in their capacity as such as soon as practicable after the time
they are so despatched.
19.2 Authorisations
Each Obligor will promptly obtain, maintain and comply with the terms of
any authorisation required under any law or regulation in any applicable
jurisdiction to enable it to perform its obligations under, or for the
validity or enforceability of, this Agreement in all material respects.
19.3 Pari passu ranking
Each Obligor will procure that its obligations under this Agreement do and
will rank at least pari passu with all its other present and future
unsecured and unsubordinated obligations, except for obligations which are
mandatorily preferred by law.
19.4 Negative Pledge
No Obligor will create or permit to subsist any Security Interest over all
or any part of its assets to secure any Borrowings except for any Permitted
Security Interest.
19.5 Notification of Event of Default
Each Obligor will notify the Agent of the occurrence of any Event of
Default (and the steps, if any, being taken to remedy it) promptly upon
becoming aware of it.
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20. DEFAULT
20.1 Events of Default
Each of the events set out in Clauses 20.2 (Non-Payment) to 20.12 (Material
Adverse Change), both inclusive, is an Event of Default (whether or not
caused by any reason whatsoever outside the control of any Obligor).
20.2 Non-Payment
Any Obligor fails to pay within five Business Days of the Agent giving
notice to the Parent of such non-payment any amount payable by it under
this Agreement in respect of principal or interest at the place at and in
the currency in which it is expressed to be payable.
20.3 Breach of other obligations
Any Obligor fails to comply with any provision of this Agreement (other
than those referred to in Clause 20.2 (Non-Payment)) and, if that default
is capable of remedy, the Obligor fails to cure that default within thirty
days of the Agent giving notice to the Parent requiring remedy.
20.4 Misrepresentation
Any representation or warranty made or repeated in this Agreement is
incorrect in any material respect when made or deemed to be repeated and,
in the case of a matter capable of being remedied, is not remedied within
thirty days of the Agent giving notice to the Parent requiring remedy.
20.5 Cross Acceleration
Any other Borrowings of any Obligor are:
(a) declared due and payable prior to their normal maturity date as a
result of a default (however described) by that Obligor; or
(b) not paid within five Business Days of their due date or, if longer,
within any applicable grace period,
unless, in any such case, the aggregate amount of the Borrowings is less
than euro 50,000,000 or its equivalent or the payment in question is being
contested by the Obligor owing the amount by reason of a bona fide dispute.
20.6 Suspension of payments
Any Obligor is unable to pay its debts as they fall due or suspends making
payments (whether of principal or interest) with respect to all or any
class of its debts as a result of financial difficulties.
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20.7 Insolvency proceedings
A resolution is passed at a meeting of any Obligor for (or to petition
for) its winding up or administration or any Obligor presents any petition
for the winding up or administration of that Obligor or an order for the
winding up or administration of that Obligor is made unless in each case
it is a voluntary solvent winding up, amalgamation, reconstruction or
reorganisation or part of a solvent scheme of arrangement.
20.8 Creditors' arrangements
An Obligor agrees to any kind of composition, rescheduling, scheme,
compromise or arrangement involving that Obligor and its creditors
generally (or any class of them) as a result of financial difficulties.
20.9 Creditors' process
Any administrative or other receiver or any manager of substantially all
of the assets of an Obligor is appointed or an encumbrancer takes
possession of, or any execution or distress is levied against,
substantially all of the assets of any Obligor, in all cases:
(a) in respect of Borrowings in an aggregate principal amount of not less
than euro 50,000,000 or its equivalent; and
(b) which is not paid out or discharged within thirty days after such
appointment, taking of possession or levy.
20.10 Insolvency equivalent
There occurs, in relation to any Obligor, in any country or territory in
which it carries on business or to the jurisdiction of whose courts it or
any of its assets are subject, any event which corresponds in that country
or territory with any of those mentioned in Clauses 20.7 (Insolvency
proceedings), 20.8 (Creditors' arrangements) or 20.9 (Creditors' process)
inclusive above (subject to the same thresholds, grace periods and
exceptions).
20.11 Ownership of Borrowers
Any Borrower ceases to be a wholly-owned Subsidiary of the Parent (unless
the Majority Banks have otherwise agreed).
20.12 Material Adverse Change
There has been a material adverse change in the financial condition of the
Group taken as a whole since the date of the latest annual accounts
delivered to the Agent pursuant to Clause 19.1 (Financial information)
which has had or will have a material adverse effect on the ability of the
Parent to comply with its payment obligations under this Agreement.
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20.13 Acceleration
On and at any time after the occurrence of an Event of Default, provided
that the event is continuing, the Agent may, and shall if so directed by
the Majority Banks, by notice to the Parent:
(a) declare the Advances to be forthwith due and payable together with
interest thereon and all other amounts payable hereunder,
notwithstanding that their respective Maturity Dates may not have
occurred, and the same shall thereupon become due and payable; and/or
(b) declare that each Borrower's obligations under Clause 8.3 (Payment of
Bills) in respect of all outstanding Bills are immediately due and
payable, whereupon they shall become immediately due and payable;
and/or
(c) cancel the Total Commitments (or such part of them as may be
specified in such notice); and/or
(d) demand that all Advances and obligations in respect of Bills be
payable on demand, whereupon they will immediately become payable on
demand.
21. THE AGENTS AND THE JOINT LEAD ARRANGERS
21.1 Appointment and duties of the Agents
Each Finance Party (other than the Agent) irrevocably appoints the Agent
to act as its agent under and in connection with the Finance Documents and
each Swingline Bank appoints the US Swingline Agent to act as its agent in
relation to the US Swingline Facility, and each Finance Party irrevocably
authorises the Agent or, as the case may be, the US Swingline Agent on its
behalf to perform the duties and to exercise the rights, powers and
discretions that are specifically delegated to it under or in connection
with the Finance Documents, together with any other incidental rights,
powers and discretions. The Agent or, as the case may be, the US Swingline
Agent shall have only those duties which are expressly specified in this
Agreement. Those duties are solely of a mechanical and administrative
nature.
21.2 Role of the Joint Lead Arrangers
Except as otherwise provided in this Agreement, the Joint Lead Arrangers
have no obligations of any kind to any other Party under or in connection
with any Finance Document.
21.3 Relationship
The relationship between the Agent or, as the case may be, the US
Swingline Agent and the other Finance Parties is that of agent and
principal only. Nothing in this Agreement constitutes the Agent or, as the
case may be, the US Swingline Agent as trustee or fiduciary for any other
Party or any other person and the Agent or, as the case may be, the US
Swingline Agent need not hold in trust any moneys paid to it for a Party
or be liable to account for interest on those moneys.
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21.4 Majority Banks' directions
The Agent or, as the case may be, the US Swingline Agent will be fully
protected if it acts in accordance with the instructions of the Majority
Banks in connection with the exercise of any right, power or discretion or
any matter not expressly provided for in the Finance Documents. Any such
instructions given by the Majority Banks will be binding on all the Banks.
In the absence of such instructions the Agent or, as the case may be, the
US Swingline Agent may act as it considers to be in the best interests of
all the Banks.
21.5 Delegation
The Agent or, as the case may be, the US Swingline Agent may act under the
Finance Documents through its personnel and agents.
21.6 Responsibility for documentation
Neither the Agent, the US Swingline Agent nor any of the Joint Lead
Arrangers is responsible to any other Party for:
(a) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document; or
(b) the collectability of amounts payable under any Finance Document; or
(c) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
21.7 Default
(a) The Agent or, as the case may be, the US Swingline Agent is not obliged to
monitor or enquire as to whether or not a Default or a Mandatory
Prepayment Event has occurred. Neither the Agent nor the US Swingline
Agent will be deemed to have knowledge of the occurrence of a Default or a
Mandatory Prepayment Event. However, if the Agent or, as the case may be,
the US Swingline Agent receives notice from a Party referring to this
Agreement, describing the Default or Mandatory Prepayment Event and
stating that the event is a Default or a Mandatory Prepayment Event, it
shall promptly notify the Banks.
(b) The Agent or, as the case may be, the US Swingline Agent may require the
receipt of security satisfactory to it, whether by way of payment in
advance or otherwise, against any liability or loss which it will or may
incur in taking any proceedings or action arising out of or in connection
with any Finance Document before it commences these proceedings or takes
that action.
21.8 Exoneration
(a) Without limiting paragraph (b) below, the Agent or, as the case may be,
the US Swingline Agent will not be liable to any other Party for any
action taken or not taken by it under or in connection with any Finance
Document, unless directly caused by its gross negligence or wilful
misconduct.
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(b) No Party may take any proceedings against any officer, employee or agent
of the Agent or, as the case may be, the US Swingline Agent in respect of
any claim it might have against the Agent or, as the case may be, the US
Swingline Agent or in respect of any act or omission of any kind
(including gross negligence or wilful misconduct) by that officer,
employee or agent in relation to any Finance Document.
21.9 Reliance
The Agent or, as the case may be, the US Swingline Agent may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any person
regarding any matters which may reasonably be assumed to be within
his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's or, as the case may
be, the US Swingline Agent's employment and those representing a
Party other than the Agent or, as the case may be, the US Swingline
Agent).
21.10 Credit approval and appraisal
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance Document,
each Bank confirms that it:
(a) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Agent, the US Swingline Agent or a Joint Lead Arranger in connection
with any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while any
amount is or may be outstanding under the Finance Documents or any
Commitment is in force.
21.11 Information
(a) The Agent or, as the case may be, the US Swingline Agent shall promptly
forward to the person concerned the original or a copy of any document
which is delivered to the Agent or, as the case may be, the US Swingline
Agent by a Party for that person.
(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clauses 4 (Conditions Precedent) and 28.4
(Additional Borrowers) upon the request of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Agent or,
as the case may be, the US Swingline Agent is not obliged to review or
check the accuracy or completeness of any document it forwards to another
Party.
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(d) Except as provided above, the Agent or, as the case may be, the US
Swingline Agent has no duty:
(i) either initially or on a continuing basis to provide any Bank with
any credit or other information concerning the financial condition or
affairs of any Obligor or any related entity of any Obligor whether
coming into its possession or that of any of its related entities
before, on or after the date of this Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance with
this Agreement, to request any certificates or other documents from
any Obligor.
21.12 The Agents and the Joint Lead Arrangers individually
(a) If it is also a Bank, each of the Agent, the US Swingline Agent and the
Joint Lead Arrangers has the same rights and powers under this Agreement
as any other Bank and may exercise those rights and powers as though it
were not the Agent, the US Swingline Agent or a Joint Lead Arranger.
(b) Each of the Agent, the US Swingline Agent and the Joint Lead Arrangers
may:
(i) carry on any business with an Obligor or its related entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, an Obligor or its related entities; and
(iii) retain any profits or remuneration in connection with its activities
under this Agreement or in relation to any of the foregoing.
21.13 Indemnities
(a) Without limiting the liability of any Obligor under the Finance Documents,
each Bank shall forthwith on demand indemnify the Agent or, as the case
may be, the US Swingline Agent for its proportion of any liability or loss
incurred by the Agent or, as the case may be, the US Swingline Agent in
any way relating to or arising out of its acting as the Agent or, as the
case may be, the US Swingline Agent, except to the extent that the
liability or loss arises directly from the Agent's or, as the case may be,
the US Swingline Agent's gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a)
above is the proportion which the Original Euro Amount of its
Utilisation(s) bears to the Original Euro Amount of all Utilisation(s)
outstanding on the date of the demand. If, however, no Utilisation(s) are
outstanding on the date of demand, then the proportion will be the
proportion which its Commitment bears to the Total Commitments at the date
of demand or, if the Total Commitments have been cancelled, bore to the
Total Commitments immediately before being cancelled.
(c) The Parent shall within five Business Days of demand reimburse each Bank
for any payment made by it under paragraph (a) above.
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21.14 Compliance
(a) The Agent or, as the case may be, the US Swingline Agent may refrain from
doing anything which might, in its opinion, constitute a breach of any law
or regulation or be otherwise actionable at the suit of any person, and
may do anything which, in its opinion, is necessary or desirable to comply
with any law or regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, the Agent or, as the case may be,
the US Swingline Agent need not disclose any information relating to any
Obligor or any of its related entities if the disclosure might, in the
opinion of the Agent, or, as the case may be, the US Swingline Agent,
constitute a breach of any law or regulation or any duty of secrecy or
confidentiality or be otherwise actionable at the suit of any person.
21.15 Resignation and removal of Agents
(a) The Majority Banks may, by notice to the Agent or, as the case may be, the
US Swingline Agent, remove either or both of them and replace them with a
successor agent approved by the Parent (such approval not to be
unreasonably withheld).
(b) Notwithstanding its irrevocable appointment, the Agent or, as the case may
be, the US Swingline Agent may resign by giving notice to the Banks and
the Parent, in which case the Agent or, as the case may be, the US
Swingline Agent may forthwith appoint one of its Affiliates as successor
Agent, or as the case may be successor US Swingline Agent or, failing
that, the Majority Banks may, with the prior written consent of the Parent
(such consent not to be unreasonably withheld), appoint a successor Agent
or, as the case may be, successor US Swingline Agent.
(c) If the appointment of a successor Agent or, as the case may be, successor
US Swingline Agent is to be made by the Majority Banks under paragraph (b)
above but they have not, within 30 days after notice of resignation,
appointed a successor Agent or, as the case may be, successor US Swingline
Agent which accepts the appointment, the retiring Agent or, as the case
may be, retiring US Swingline Agent may, with the prior written consent of
the Parent (such consent not to be unreasonably withheld), appoint a
successor Agent or, as the case may be, successor US Swingline Agent.
(d) The resignation or removal of the retiring Agent or, as the case may be,
retiring US Swingline Agent and the appointment of any successor Agent or,
as the case may be, successor US Swingline Agent will both become
effective only upon the successor Agent or, as the case may be, successor
US Swingline Agent notifying all the Parties that it accepts the
appointment and provided the successor Agent or, as the case may be,
successor US Swingline Agent has, if required under paragraphs (a), (b) or
(c) above, been approved by the Parent. On giving the notification and
receiving such approval, the successor Agent or, as the case may be,
successor US Swingline Agent will succeed to the position of the retiring
Agent or, as the case may be, retiring US Swingline Agent and the term
"Agent" or, as the case may be, "US Swingline Agent" will mean the
successor Agent or, as the case may be, successor US Swingline Agent.
(e) The retiring Agent or, as the case may be, retiring US Swingline Agent
shall, at its own cost, make available to the successor Agent or, as the
case may be, successor US Swingline Agent such documents and records and
provide such assistance as the successor Agent or, as the case may be,
successor US Swingline Agent may reasonably request for the purposes of
performing
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its functions as the Agent or, as the case may be, the US Swingline Agent
under this Agreement.
(f) Upon its resignation or removal becoming effective, this Clause 21 shall
continue to benefit the retiring Agent or, as the case may be, retiring US
Swingline Agent in respect of any action taken or not taken by it under or
in connection with the Finance Documents while it was the Agent or, as the
case may be, the US Swingline Agent, and, subject to paragraph (e) above,
it shall have no further obligation under any Finance Document.
21.16 Banks
The Agent or, as the case may be, US Swingline Agent may treat each Bank
as a Bank, entitled to payments under this Agreement and as acting through
its Facility Office(s) until it has received notice from the Bank to the
contrary by not less than five Business Days prior to the relevant
payment.
21.17 Chinese Wall
In acting as Agent, US Swingline Agent or Joint Lead Arranger, the agency
and syndications division of each of the Agent, US Swingline Agent and
Joint Lead Arrangers shall be treated as a separate entity from its other
divisions and departments. Any information acquired at any time by the
Agent, US Swingline Agent or any Joint Lead Arranger otherwise than in the
capacity of Agent, US Swingline Agent or Joint Lead Arranger through its
agency and syndications division (whether as financial advisor to any
member of the Group or otherwise) may be treated as confidential by the
Agent, US Swingline Agent or Joint Lead Arranger and shall not be deemed
to be information possessed by the Agent, US Swingline Agent or Joint Lead
Arranger in its capacity as such. Each Finance Party acknowledges that the
Agent, US Swingline Agent and the Joint Lead Arrangers may, now or in the
future, be in possession of, or provided with, information relating to the
Obligors which has not or will not be provided to the other Finance
Parties. Each Finance Party agrees that, except as expressly provided in
this Agreement, neither the Agent, US Swingline Agent nor the Joint Lead
Arrangers will be under any obligation to provide, or under any liability
for failure to provide, any such information.
22. FEES
22.1 Commitment fee
(a) The Parent shall pay to the Agent for distribution to each Bank pro rata
to the proportion its Commitment bears to the Tranche A Total Commitments
or, as the case may be, Tranche B Commitment bears to the Tranche B Total
Commitments, from time to time a commitment fee at the rate of:
(i) 0.035 per cent. per annum in relation to the Tranche A Commitments;
and
(ii) 0.075 per cent. per annum in relation to the Tranche B Commitments,
on, in each case, any undrawn, uncancelled amount of the Tranche A Total
Commitments or the Tranche B Total Commitments, as the case may be, on
each day.
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(b) The commitment fee is calculated and accrues on a daily basis from the
Signing Date and is payable quarterly in arrear with the first payment due
three months after the Signing Date. Accrued commitment fee is also
payable to the Agent for the relevant Bank(s) on the cancelled amount of
its Tranche A Commitment or, as the case may be, Tranche B Commitment at
the time the cancellation takes effect.
22.2 Agent's fee
The Parent shall pay to the Agent for its own account an agency fee in the
amounts and on the dates agreed in the relevant Fee Letter.
22.3 Up-front fee
The Parent shall pay to the Joint Lead Arrangers an up-front fee, in each
case in the amount and on the dates specified in the relevant Fee Letter.
22.4 Utilisation Fee
(a) The Parent shall pay to the Agent for distribution to each Bank (pro rata
to the proportion the principal amount of its outstanding Tranche B
Advances and Bills drawn under Tranche B bears to the aggregate principal
outstanding Tranche B Advances and Bills drawn under Tranche B in each
currency on each day) a utilisation fee on the aggregate principal amount
each day of all outstanding Utilisations under Tranche B at the rate
specified in Column (1) below if on that day the Original Euro Amount of
all outstanding Utilisations under Tranche B falls within the range set
opposite that rate in Column (2) below:
(1) (2)
UTILISATION FEE ORIGINAL EURO AMOUNT OF ALL
% PER ANNUM OUTSTANDING DRAWN
TRANCHE B ADVANCES
AND TRANCHE B BILLS
Nil 0-2,500,000,000
0.025 Above 2,500,000,000 up to and including
3,500,000,000
0.050 Above 3,500,000,000
(b) Utilisation fee is calculated and, if payable, accrues on a daily basis
and is payable quarterly in arrear in the same currencies as the
Utilisations to which it relates with the first such payment, if any, due
three months after the Signing Date. Accrued utilisation fee, if any, is
also payable to the Agent for the relevant Banks on the Tranche B Final
Maturity Date.
(c) The Parent shall pay an additional utilisation fee of 0.05 per cent. flat
on the principal amount of any Term-out Advance in the same currency as
that Term-out Advance to the Agent for distribution to each Bank (pro rata
to the participation of that Bank in that Term-out Advance). Such amount,
if any, is payable on the Utilisation Date for that Term-out Advance.
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23. EXPENSES
23.1 Initial costs
The Parent shall within five Business Days of demand pay the Joint Lead
Arrangers the amount of all their out-of-pocket costs (including travel,
telecommunication and printing expenses) and other expenses (including the
legal fees of no more than one firm of solicitors and any value added tax
thereon) reasonably incurred by them in connection with:
(a) the arranging, underwriting and primary syndication of the
Facilities; and
(b) the negotiation, preparation, printing and execution of this
Agreement and any other documents referred to in this Agreement.
23.2 Enforcement costs
The Parent shall within five Business Days of demand pay to each Finance
Party the amount of all reasonable costs and expenses (including legal
fees) properly incurred by it in connection with the enforcement of, or
the preservation of any rights under, any Finance Document.
24. STAMP DUTIES
The Parent shall pay and within five Business Days of demand indemnify
each Finance Party against any liability it incurs in respect of any
stamp, registration and similar tax which is or becomes payable in the
U.K. or the jurisdiction of the place of incorporation of any Borrower
directly attributable to the entry into, performance or enforcement of
this Agreement (other than a Novation Certificate).
25. INDEMNITIES
25.1 Currency indemnity
Subject to Clause 11.4 (Currency), if a Finance Party receives an amount
in respect of an Obligor's liability under the Finance Documents or if
that liability is converted into a claim, proof, judgment or order in a
currency other than the currency (the "contractual currency") in which the
amount is expressed to be payable under the relevant Finance Document:
(a) that Obligor shall indemnify that Finance Party as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
(b) if the amount received by that Finance Party, when converted into the
contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
the Obligor concerned shall within five Business Days of demand pay
to that Finance Party an amount in the contractual currency equal to
the deficit; and
(c) the Obligor shall pay to the Finance Party concerned on demand any
exchange costs and taxes payable properly incurred in connection with
any such conversion.
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25.2 Other indemnities
The Parent shall forthwith on demand indemnify each Finance Party against
any loss or liability which that Finance Party directly incurs as a
consequence of:
(a) the occurrence of any Event of Default or Mandatory Prepayment Event;
(b) any payment of principal or an overdue amount being received from any
source otherwise than:
(i) in the case of Tranche A Advances and Tranche B Advances, on its
Maturity Date (and, for the purposes of this paragraph (b), the
Maturity Date of an overdue amount is the last day of each
Designated Term (as defined in Clause 10.4 (Default interest)));
or
(ii) in the case of Term-out Advances, on the last day of its
applicable Interest Period;
(c) (other than by reason of negligence or default by a Finance Party) a
Utilisation not being effected after a Borrower has delivered a
Request for that Utilisation.
The Parent's liability in each case includes any loss or expense (other
than loss of Margin) on account of funds borrowed, contracted for or
utilised to fund any amount payable under any Finance Document, any amount
repaid or prepaid or any Advance or Bill.
26. EVIDENCE AND CALCULATIONS
26.1 Accounts
Accounts maintained by a Finance Party in connection with this Agreement
are, in the absence of manifest error, prima facie evidence of the matters
to which they relate.
26.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount
under this Agreement is, in the absence of manifest error, prima facie
evidence of the matters to which it relates.
26.3 Calculations
Interest (and any MLA Cost) and the fees payable under Clause 22.1
(Commitment fee) and Clause 22.4 (Utilisation fee) accrue from day to day
and are calculated on the basis of the actual number of days elapsed and a
year of 360 days, or, in the case of interest payable on an amount
denominated in Sterling, 365 days. Acceptance commission is calculated on
the basis of the number of days in the relevant Term and a year of 365
days.
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27. AMENDMENTS AND WAIVERS
27.1 Procedure
(a) Subject to Clause 27.2 (Exceptions), any provision of the Finance
Documents may be amended or waived with the agreement of the Parent and
the Majority Banks. The Agent will and is authorised to effect, on behalf
of the Finance Parties, an amendment or waiver to which the Majority Banks
(or all Banks) and the Parent have agreed.
(b) In addition to (a) above, the Agent may agree with the Parent (after
consultation by the Agent with the Banks) that any references in this
Agreement to a Business Day, day-count fraction or other convention
(whether for the calculation of interest, determination of payment dates
or otherwise) shall, with effect from or after the Commencement Date, if
different, be amended to comply with any generally accepted conventions
and market practice from time to time applicable to euro-denominated
obligations in the London interbank market. The agreement of the Agent and
the Parent under this Clause 27.1(b) is not to be unreasonably withheld or
delayed.
(c) The Agent shall promptly notify the other Parties of any amendment or
waiver effected under paragraphs (a) or (b) above, and any such amendment
or waiver shall be binding on all the Parties.
27.2 Exceptions
An amendment or waiver under paragraph 27.1(a) above which relates to:
(a) the definition of "Majority Banks" in Clause 1.1 (Definitions); or
(b) an extension of the date for, or a decrease in an amount or a change
in the currency of, any payment under the Finance Documents; or
(c) an increase in a Bank's Commitment; or
(d) a term of a Finance Document which expressly requires the consent of
each Bank; or
(e) Clause 31 (Pro Rata Sharing) or this Clause 27 (Amendments and
Waivers); or
(f) a change to, or the release of the Parent from any of its obligations
under, Clause 17 (Guarantee),
may not be effected without the consent of each Bank. No amendment may be
effected under this Clause 27 which would increase the obligations, rights
or duties of the Agent without the consent of the Agent.
27.3 Waivers and remedies cumulative
The rights of each Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
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(b) are cumulative and not exclusive of its rights under the general law;
and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
28. CHANGES TO THE PARTIES
28.1 Transfers by Obligors
Subject to Clause 9.5 (Changes to Borrowers), no Obligor may assign,
transfer, novate or dispose of any of, or any interest in, its rights
and/or obligations under this Agreement.
28.2 Transfers by Banks
(a) A Bank (the "Existing Bank") may at any time assign, transfer or novate
any of its rights and/or obligations under this Agreement, but only to
another bank or institution which is a Qualifying Bank and a U.S.
Qualifying Bank (the "New Bank"), and only with the prior written consent
of the Parent (such consent not to be unreasonably withheld or delayed),
unless the New Bank is another Bank or an Affiliate of a Bank in which
case no such consent is required. Any such assignment, transfer or
novation must be in a minimum aggregate amount of euro 25,000,000 (unless
to an Affiliate or the Agent and the Parent agree otherwise) and, except
in the case of an assignment, transfer or novation to an Affiliate, must
be pro rata between Tranches A and B. In the case of an assignment,
transfer or novation by a Swingline Bank, a portion of that Swingline
Bank's Swingline Commitment must also be assigned, transferred or novated
to the extent necessary (if at all) to ensure that the Swingline Bank's
Swingline Commitment does not exceed its Tranche B Commitment after the
assignment, transfer or novation.
(b) A Bank may at any time sub-participate any of its rights and/or
obligations under this Agreement but only with the prior written consent
of the Parent (such consent not to be unreasonably withheld or delayed),
unless the sub-participant is another Bank or an Affiliate of a Bank in
which case no consent is required.
(c) The consent of the Parent will be deemed to be given under paragraph (a)
or, as the case may be, (b) above if:
(i) the Existing Bank has given notice to the Parent addressed to the
Treasurer and the Finance Director requesting such consent (which
expressly states that the consent of the Parent is required under
this Clause 28.2, specifies the full name of the New Bank and amount
of the proposed transaction and states that consent will be deemed to
have been given if no response is given by the Parent within the
period specified in this paragraph (c)) and the Parent has not
responded within 10 days; and
(ii) after expiry of that 10 day period the Existing Bank has given a
further notice to the Parent addressed in the same way and in similar
terms (referring to the earlier notice) and the Parent has not
responded within a further five London Business Days (being business
days when banks in London are open for business generally in the
London interbank market).
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(d) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with Clause 28.3 (Procedure
for novations); or
(ii) the New Bank confirms to the Agent and the Parent that it undertakes
to be bound by the terms of this Agreement as a Bank in form and
substance satisfactory to the Agent and the Parent. On the transfer
becoming effective in this manner the Existing Bank shall be relieved
of its obligations under this Agreement to the extent that they are
transferred to the New Bank.
(e) On each occasion an Existing Bank assigns, transfers or novates any of its
rights and/or obligations under this Agreement, the New Bank shall, on the
date the assignment, transfer and/or novation takes effect, pay to the
Agent for its own account a fee of (Pounds)750.
(f) An Existing Bank is not responsible to a New Bank for:
(i) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document; or
(ii) the collectability of amounts payable under any Finance Document; or
(iii) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
(g) Each New Bank confirms to the Existing Bank and the other Finance Parties
that it:
(i) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Existing Bank in connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while any
amount is or may be outstanding under this Agreement or any
Commitment is in force.
(h) Nothing in any Finance Document obliges an Existing Bank to:
(i) accept a re-transfer from a New Bank of any of the rights and/or
obligations assigned, transferred or novated under this Clause; or
(ii) support any losses incurred by the New Bank by reason of the non-
performance by any Obligor of its obligations under this Agreement or
otherwise.
(i) Any reference in this Agreement to a Bank includes a New Bank but excludes
a Bank if no amount is or may be owed to or by it under this Agreement and
its Commitment has been cancelled or reduced to nil.
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28.3 Procedure for novations
(a) A novation is effected if:
(i) the Existing Bank and the New Bank deliver to the Agent (with a copy
to the Parent) a duly completed certificate (a "Novation
Certificate"), substantially in the form of Part I of Schedule 6 or
such other form as the Agent and the Parent may agree (which may be
delivered by fax and confirmed by delivery of a hard copy original
but the fax will be effective irrespective of whether confirmation
is received); and
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank) irrevocably
authorises the Agent to execute any duly completed Novation Certificate on
its behalf.
(c) To the extent that they are expressed to be the subject of the novation in
the Novation Certificate:
(i) the Existing Bank and the other Parties (the "existing Parties")
will be released from their obligations to each other (the
"discharged obligations");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged obligations only
insofar as they are owed to or assumed by the New Bank instead of
the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties and
vice versa (the "discharged rights") will be cancelled; and
(iv) the New Bank and the existing Parties will acquire rights against
each other which differ from the discharged rights only insofar as
they are exercisable by or against the New Bank instead of the
Existing Bank,
all on the date of execution of the Novation Certificate by the Agent or,
if later, the date specified in the Novation Certificate.
28.4 Additional Borrowers
(a) If the Parent wishes one of its Subsidiaries to become an Additional
Borrower, then it may deliver to the Agent the documents listed in Part II
of Schedule 3. Any Additional Borrower must be a wholly owned Subsidiary
of the Parent unless the Majority Banks agree otherwise.
(b) On delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Parent, the Subsidiary concerned will become an
Additional Borrower. However, it may not submit a Request or become a
Substitute Borrower under Clause 9.5(b) (Changes to Borrowers) until the
Agent confirms to the other Finance Parties and the Parent that it has
received all the documents referred to in paragraph (a) above.
(c) Delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Parent, constitutes confirmation:
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62
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(i) by that Subsidiary and the Parent that the representations and
warranties set out in Clause 18.1 (Representations and warranties)
to be made by them on the date of the Borrower Accession Agreement
are correct, as if made by them with reference to the facts and
circumstances then existing; and
(b) by the Parent that such Subsidiary is a wholly owned Subsidiary of
the Parent (unless the Majority Banks have otherwise agreed).
28.5 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be a Bank, the Agent shall (in
consultation with the Parent) appoint another Bank or an Affiliate of a
Bank which is not a Reference Bank to replace that Reference Bank.
28.6 Change of Facility Office
Each Bank will participate in any Utilisation and receive the benefit of
any payment due to it under this Agreement at its Facility Office. No Bank
may change its Facility Office to a different jurisdiction to that notified
to the Agent and the Parent on or before the date it became a Bank without
the prior written consent of the Parent (such consent not to be
unreasonably withheld or delayed).
28.7 Additional Costs
If, at the time of or immediately after any novation, transfer, sub-
participation or assignment by a Bank or any change of Facility Office,
circumstances exist which, but for this Clause 28.7, would require any
Obligor to pay to the New Bank, transferee or assignee (or, in the case of
a change of Facility Office, the Bank concerned) any amount under this
Agreement in excess of the amount it would otherwise have been required to
pay to that Bank in the absence of that novation, transfer, sub-
participation, assignment or change of Facility Office, no Obligor will be
required to pay that excess.
28.8 Register
The Agent shall keep a register of all the Parties (including in the case
of Banks the details of their Facility Office notified to the Agent from
time to time) and shall supply any other Party (at that Party's expense)
with a copy of the register on request.
29. DISCLOSURE OF INFORMATION
(a) Subject to paragraph (b) below, a Bank may disclose to one of its
Affiliates or any person with whom it is proposing to enter, or has entered
into, any kind of transfer, participation or other agreement in relation to
this Agreement:
(i) a copy of any Finance Document; and
(ii) any information which that Bank has acquired under or in connection
with any Finance Document,
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63
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provided that a Bank shall not disclose any such information to a person
unless that person has provided to the Parent a confidentiality undertaking
addressed to the Parent in such other form as the Parent may reasonably
require.
(b) If the consent of the Parent is required under Clause 28.2 (Transfers by
Banks) for any proposed assignment, transfer, novation, or sub-
participation then a Bank may only disclose confidential information
referred to in paragraph (a)(ii) above to a proposed New Bank if it has
obtained the Parent's prior written consent (such consent not to be
unreasonably withheld).
30. SET-OFF
After an Event of a Default which is continuing, a Finance Party may set
off any matured obligation owed by an Obligor under this Agreement (to the
extent beneficially owned by that Finance Party) against any obligation
(whether or not matured) owed by that Finance Party to that Obligor,
regardless of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, the Finance
Party may convert either obligation at a market rate of exchange in its
usual course of business for the purpose of the set-off. If either
obligation is unliquidated or unascertained, the Finance Party may set off
in an amount estimated by it in good faith to be the amount of that
obligation.
31. PRO RATA SHARING
31.1 Redistribution
If any amount owing by an Obligor under this Agreement to a Finance Party
(the "recovering Finance Party") is discharged by payment, set-off or any
other manner other than through the Agent in accordance with Clause 11
(Payments) (a "recovery"), then:
(a) the recovering Finance Party shall, within three Business Days,
notify details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of the
amount which the recovering Finance Party would have received had
the recovery been received by the Agent and distributed in
accordance with Clause 11 (Payments);
(c) subject to Clause 31.3 (Exception), the recovering Finance Party
shall, within three Business Days of demand by the Agent, pay to the
Agent an amount (the "redistribution") equal to the excess;
(d) the Agent shall treat the redistribution as if it were a payment by
the Obligor concerned under Clause 11 (Payments); and
(e) after payment of the full redistribution, the recovering Finance
Party will be subrogated to the portion of the claims paid under
paragraph (d) above and that Obligor will owe the recovering Finance
Party a debt which is equal to the redistribution, immediately
payable and of the type originally discharged.
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31.2 Reversal of redistribution
If under Clause 31.1 (Redistribution):
(a) a recovering Finance Party must subsequently return a recovery, or
an amount measured by reference to a recovery, to an Obligor; and
(b) the recovering Finance Party has paid a redistribution in relation
to that recovery,
each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution paid to
that Finance Party. Thereupon the subrogation in Clause 31.1(e)
(Redistribution) will operate in reverse to the extent of the
reimbursement.
31.3 Exceptions
(a) A recovering Finance Party need not pay a redistribution to the extent that
it would not, after the payment, have a valid claim against the Obligor
concerned in the amount of the redistribution pursuant to Clause 31.1(e)
(Redistribution).
(b) If a Finance Party has become a recovering Finance Party by virtue of
having started an action or proceeding in any court to enforce it rights,
that recovering Finance Party will not be required to share any portion of
any recovery with any Bank that has the legal right to, but does not join
such action or proceeding or start a separate action or proceeding to
enforce its rights in the same or another court. Any Finance Party
instituting legal proceedings to recover sums owing to it under this
Agreement will, as soon as practicable thereafter, give notice to the Agent
which will, as soon as practicable, give notice to all the other Finance
Parties.
32. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions of
that or any other provision of the Finance Documents.
33. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single
copy of this Agreement.
34. NOTICES
34.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by facsimile. Any such notice will
be deemed to be given as follows:
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(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received on a non-
working day or after business hours in the place of receipt will only be
deemed to be given on the next working day in that place. Facsimile
requests are to be confirmed by the relevant Borrower in writing (but may
be relied upon by the Agent and the Banks irrespective of receipt of such
confirmation).
34.2 Addresses for notices
(a) The address and facsimile number of each Party (other than the Agent, the
US Swingline Agent and the Parent) for all notices under or in connection
with this Agreement are:
(i) that notified by that Party for this purpose to the Agent on or
before it becomes a Party; or
(ii) any other notified by that Party for this purpose to the Agent by
not less than five Business Days' notice.
(b) The address and facsimile numbers of the Agent are:
HSBC Investment Bank plc
Vinters Place
68 Upper Thames Street
London EC4V 3BJ
Contact: Specialised Financing Support
Facsimile: (0171) 336 9293
(0171) 336 9302,
or such other as the Agent may notify to the other Parties by not less than
five Business Days' notice.
(c) The address and facsimile numbers of the US Swingline Agent are:
Marine Midland Bank
26th Floor
One Marine Midland Center
Buffalo, NY 14203
U.S.A.
Contact: Lynn M. Griffin
Telephone: 001 716 841 1362
Facsimile: 001 716 841 2325,
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or such other as the US Swingline Agent may notify to the other Parties by
not less than five New York Business Days' notice.
(d) The address and facsimile numbers of the Parent are:
One Bruton Street
London W1X 8AQ
Attention: The Secretary
Facsimile: 0171 493 1974,
or such other as the Parent may notify to the other Parties by not less
than five Business Days' notice.
(e) The Agent shall, promptly upon request from any Party, give to that Party
the address or facsimile number of any other Party applicable at the time
for the purposes of this Clause.
35. LANGUAGE
(a) Any notice given under or in connection with any Finance Document shall be
in English.
(b) All other documents provided under or in connection with any Finance
Document shall be:
(i) in English; or
(ii) if not in English, accompanied by a certified English translation
and, in this case, the English translation shall prevail unless the
document is a statutory or other official document.
36. JURISDICTION
36.1 Submission
For the benefit of each Finance Party, each Obligor agrees that the courts
of England have jurisdiction to settle any disputes in connection with any
Finance Document and accordingly submits to the jurisdiction of the English
courts.
36.2 Service of process
Without prejudice to any other mode of service, each Obligor (other than an
Obligor incorporated in England and Wales):
(a) irrevocably appoints the Parent as its agent for service of process
relating to any proceedings before the English courts in connection
with any Finance Document;
(b) agrees that failure by a process agent to notify the Obligor of the
process will not invalidate the proceedings concerned; and
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(c) consents to the service of process relating to any such proceedings
by prepaid posting of a copy of the process to its address for the
time being applying under Clause 34.2 (Addresses for notices).
36.3 Forum convenience and enforcement abroad
Each Obligor:
(a) waives objection to the English courts on grounds of inconvenient
forum or otherwise as regards proceedings in connection with a
Finance Document; and
(b) agrees that a judgment or order of an English court in connection
with a Finance Document is conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.
36.4 Non-exclusivity
Nothing in this Clause 36 limits the right of a Finance Party to bring
proceedings against an Obligor in connection with any Finance Document:
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
37. GOVERNING LAW
This Agreement is governed by English law.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
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SCHEDULE 1
PART I
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
Column 1 Column 2
Bank Tranche A Tranche B
Commitments Commitments
euro euro
<S> <C> <C> <C> <C>
Banca Commerciale Italiana S.p.A., London Branch 65,250,000 195,750,000
Barclays Bank PLC 65,250,000 195,750,000
Banque Nationale de Paris 65,000,000 195,000,000
The Chase Manhattan Bank 65,000,000 195,000,000
Midland Bank plc 65,000,000 195,000,000
Morgan Guaranty Trust Company of New York 65,000,000 195,000,000
Swiss Bank Corporation 65,000,000 195,000,000
Westdeutsche Landesbank Girozentrale 65,000,000 195,000,000
Banca Nazionale del Lavoro S.p.A., London Branch 62,500,000 187,500,000
Bayerische Landesbank Girozentrale London Branch 62,500,000 187,500,000
Citibank, N.A. 62,500,000 187,500,000
Credit Suisse First Boston 62,500,000 187,500,000
Den Danske Bank Aktieselskab 62,500,000 187,500,000
Deutsche Bank AG London 62,500,000 187,500,000
National Westminster Bank Plc 62,500,000 187,500,000
Australia and New Zealand Banking Group Limited (acting 60,500,000 181,500,000
through its ANZ Investment Bank division)
Banco Central Hispanoamericano, S.A. London Branch 60,500,000 181,500,000
Commerzbank Aktiengesellschaft, London Branch 60,500,000 181,500,000
The Royal Bank of Scotland plc 60,500,000 181,500,000
L-Bank 50,000,000 150,000,000
ABN AMRO Bank N.V. London Branch 31,250,000 93,750,000
Banca di Roma S.p.A. - London Branch 31,250,000 93,750,000
Banca Monte dei Paschi di Siena SpA 31,250,000 93,750,000
Banco Bilbao Vizcaya 31,250,000 93,750,000
The Bank of Tokyo-Mitsubishi, Ltd. 31,250,000 93,750,000
CARIPLO - Cassa di Risparmio delle Provincie Lombarde 31,250,000 93,750,000
S.p.A., London Branch
Credito Italiano SpA 31,250,000 93,750,000
Istituto Bancario San Paolo di Torino S.p.A. 31,250,000 93,750,000
----------------- -----------------
euro 1,500,000,000 euro 4,500,000,000
----------------- -----------------
</TABLE>
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SCHEDULE 1
PART II
SWINGLINE BANKS AND SWINGLINE COMMITMENTS
Swingline Bank* Swingline Commitments
euro
Banca Commerciale Italiana S.p.A., London Branch 125,000,000
Barclays Bank PLC 125,000,000
Banque Nationale de Paris 125,000,000
The Chase Manhattan Bank 125,000,000
Midland Bank plc 125,000,000
Morgan Guaranty Trust Company of New York 125,000,000
Swiss Bank Corporation 125,000,000
Westdeutsche Landesbank Girozentrale 125,000,000
--------------------
Total euro 1,000,000,000
--------------------
- ---------------------
* in each case lending through its Facility Office in the United States
notified to the Agent for the purposes of US Swingline Advances.
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SCHEDULE 2
ORIGINAL BORROWERS
(if any)
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SCHEDULE 3
CONDITIONS PRECEDENT DOCUMENTS
PART I
TO BE DELIVERED BEFORE THE FIRST ADVANCE
1. A copy (certified as a true copy by a director or officer of an Obligor) of
the memorandum and articles of association and certificate of incorporation
(or equivalent constitutional documents) of each Obligor.
2. A copy (certified as a true copy by a director or officer of an Obligor) of
a resolution of the board of directors of each Obligor:
(a) approving the terms of, and the transactions contemplated by, the
Finance Documents and resolving that it execute and, where applicable,
deliver the Finance Documents to which it is a party;
(b) authorising a specified person or persons to execute and, where
applicable, deliver the Finance Documents to which it is a party on
its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and
endorse Bills and to sign and/or despatch all documents and notices
(including Requests) to be signed and/or despatched by it under or in
connection with the Finance Documents.
3. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 2 above.
4. A favourable legal opinion of Clifford Chance in relation to English law.
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PART II
TO BE DELIVERED BY AN ADDITIONAL BORROWER
1. A Borrower Accession Agreement, duly executed by the Additional Borrower
and the Parent.
2. A copy (certified as a true copy by a director or officer of the Additional
Borrower) of the memorandum and articles of association and certificate of
incorporation (or equivalent constitutional documents) of the Additional
Borrower.
3. A copy (certified as a true copy by a director or officer of the Additional
Borrower) of a resolution of the board of directors of the Additional
Borrower:
(a) approving the terms of, and the transactions contemplated by, the
Borrower Accession Agreement and resolving that it execute the
Borrower Accession Agreement;
(b) authorising a specified person or persons to execute the Borrower
Accession Agreement on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign and
endorse Bills and to sign and/or despatch all other documents and
notices (including Requests) to be signed and/or despatched by it
under or in connection with this Agreement.
4. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 3 above.
5. A favourable legal opinion from lawyers approved by the Agent and the
Parent in the place of incorporation of the Additional Borrower, addressed
to the Finance Parties.
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SCHEDULE 4
CALCULATION OF THE MLA COST
(a) The MLA Cost for an Advance denominated in Sterling is calculated in
accordance with the following formula:
BY + L(Y-X) + S(Y-Z) % per annum = MLA Cost
--------------------
100-(B + S)
where on the day of application of the formula:
B is the arithmetic mean of the respective percentage of each Reference
Bank's eligible liabilities which the Bank of England requires that
Reference Bank to hold on a non-interest-bearing deposit account in
accordance with its cash ratio requirements;
Y is the arithmetic mean of the respective rates at which Sterling
deposits are offered by each Reference Bank to leading banks in the
London interbank market at or about 11.00 a.m. on that day for the
relevant period;
L is the arithmetic mean of the respective percentage of eligible
liabilities which the Bank of England requires each Reference Bank to
maintain as secured money with members of the London Discount Market
Association and/or as secured call money with certain money brokers
and gilt-edged primary market makers;
X is the arithmetic mean of the respective rates at which secured Sterling
deposits in the relevant amount may be placed by each Reference Bank
with members of the London Discount Market Association and/or as
secured call money with certain money brokers and gilt-edged primary
market makers at or about 11.00 a.m. on that day for the relevant
period;
S is the arithmetic mean of the respective percentage of each Reference
Bank's eligible liabilities which the Bank of England requires that
Reference Bank to place as a special deposit; and
Z is the interest rate per annum allowed by the Bank of England on special
deposits.
(b) For the purposes of this Schedule 4:
(i) "eligible liabilities" and "special deposits" have the meanings given
to them at the time of application of the formula by the Bank of
England;
(ii) "relevant period" in relation to an Advance, means:
(A) if its Term or Interest Period is three months or less, its Term
or Interest Period; or
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(B) if its Term or Interest Period is more than three months, each
successive period of three months and any necessary shorter
period comprised in that Term or Interest Period.
(c) In the application of the formula, B, Y, L, X, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY
is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each relevant period
comprised in the Term or Interest Period of the relevant Advance.
(ii) Each rate calculated in accordance with the formula is, if necessary,
rounded upward to four decimal places.
(e) If a change in circumstances has rendered, or will render, the formula
inappropriate, the Agent (after consultation with the Reference Banks and
the Parent) shall notify the Parent of the manner in which the MLA Cost
will subsequently be calculated so as to leave the Obligors and the Banks,
so far as is practicable, in no better or worse a position than they were
in prior to that change. The manner of calculation so notified by the
Agent shall, in the absence of manifest error, be binding on all the
Parties.
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SCHEDULE 5
FORM OF REQUEST
To: HSBC Investment Bank plc as Agent/Marine Midland Bank as US Swingline
Agent*
From: [BORROWER] Date: [ ]
The General Electric Company, p.l.c. -- euro 6,000,000,000 Syndicated Credit
Facility dated 25th March, 1998
We wish to utilise Tranche A* and/or*/Tranche B* by way of Advance(s)* and/or
Bills and/or Swingline Advances as follows:
(a) Utilisation Date: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(b) Requested Amount (including currency): Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(c) Term*: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(d) Payment Instructions: Tranche A: [ ]*
Tranche B: [ ]*
Swingline Facility [ ]*
(e) Initial Interest Period
(for Term-out Advances only)*
(f) Maturity Date
(for Term-out Advances only)* Tranche A: [ ]*
(g) Clausing (for Bills only)* Tranche A: [ ]*
Tranche B: [ ]*
We confirm that no Default has occurred which is continuing and the
representations and warranties in Clause 18 (Representations and Warranties) to
be repeated in accordance with Clause 18.2 (Times for making representations and
warranties) on those dates are correct and will be correct immediately after the
Utilisation referred to above except in all cases to the extent waived by the
Majority Banks.
By:
[BORROWER]
Authorised Signatory
- -----------------------------------
* Delete as appropriate.
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SCHEDULE 6
FORMS OF ACCESSION DOCUMENTS
PART I
NOVATION CERTIFICATE
To: HSBC Investment Bank plc as Agent and on behalf of the Obligors
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
The General Electric Company, p.l.c. - euro 6,000,000,000 Syndicated Credit
Agreement dated 25th March, 1998
We refer to Clause 28.3 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ] (the "New Bank")
agree to the Existing Bank and the New Bank novating all the Existing
Bank's rights and obligations referred to in the Schedule in accordance
with Clause 28.3 (Procedure for novations).
2. The specified date for the purposes of Clause 28.3(c) (Procedure for
novations) is [date of novation].
3. The prior written consent of The General Electric Company, p.l.c. [is not
required]* [has been obtained]* in accordance with Clause 28 (Changes to
the Parties).
4. The Facility Office and address for notices of the New Bank for the
purposes of Clause 34.2 (Addresses for notices) are set out in the
Schedule.
5. This Novation Certificate is governed by English law.
- ----------------------------------
* Delete as appropriate.
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THE SCHEDULE
Rights and obligations to be novated
[Details of the rights and obligations of the Existing Bank to be novated].
[New Bank]
[Facility Office Address for notices]
[Existing Bank] [New Bank] [ ]
By: By: By:
Date: Date: Date:
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PART II
BORROWER ACCESSION AGREEMENT
To: HSBC Investment Bank plc as Agent
From: [PROPOSED BORROWER] and The General Electric Company, p.l.c.
[Date]
The General Electric Company, p.l.c. -- euro 6,000,000,000 Syndicated Credit
Facility dated
25th March, 1998 (the "Credit Agreement")
We refer to Clause 28.4 (Additional Borrowers).
[Name of company] of [address] (Registered no. [ ], if any) (the "Proposed
Borrower") is a Subsidiary of The General Electric Company, p.l.c. as required
by the Credit Agreement and agrees to become an Additional Borrower and to be
bound by the terms of the Credit Agreement as an Additional Borrower in
accordance with Clause 28.4 (Additional Borrowers).
The address for notices of the Proposed Borrower for the purposes of Clause 34.2
(Addresses for notices) is:
[
]
This Agreement is governed by English law.
By:
[PROPOSED BORROWER]
Authorised Signatory
By:
THE GENERAL ELECTRIC COMPANY, P.L.C.
Authorised Signatory
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PART III
FORM OF BORROWER NOVATION AGREEMENT
A NOVATION AGREEMENT dated [ ]
BETWEEN:
(1) [ ] (the "Existing Borrower");
(2) [ ] (the "Substitute Borrower");
(3) THE GENERAL ELECTRIC COMPANY, p.l.c. on behalf of itself and each other
Borrower (as such capitalised term is defined in the Credit Agreement
referred to below) (the "Parent"); and
(4) HSBC INVESTMENT BANK PLC as agent (the "Agent") on behalf of itself and the
Banks (as defined in the Credit Agreement referred to below),
and is supplemental to the Syndicated Credit Agreement dated [ ], 1998
(the "Credit Agreement") and made between The General Electric Company, p.l.c.,
the subsidiaries of the Parent listed in Schedule 2 thereto, the financial
institutions listed in Schedule 1 thereto, and the Agent.
IT IS AGREED:
1. Novation
In consideration of a payment made by the Existing Borrower to the
Substitute Borrower and the release of the Existing Borrower from its
obligations and liabilities (actual or contingent) specified in the
Schedule hereto under the Credit Agreement and with effect on and from
[ ] (the "Effective Date") the Substitute Borrower hereby undertakes
to observe and perform all the obligations and liabilities (actual or
contingent) of the Existing Borrower under the Credit Agreement in respect
of the Advances and Bills specified in the Schedule.
2. Integration
This Novation Agreement shall be read as one with the Credit Agreement so
that any reference therein to "this Agreement", "hereunder" and similar
shall include and be deemed to include this Novation Agreement.
3. Continuing Liability
The Parent acknowledges and confirms that its obligations under Clause 17
of the Credit Agreement apply to the obligations and liabilities assumed by
the Substitute Borrower hereunder.
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SCHEDULE
[
]
IN WITNESS whereof the parties hereto have caused this Novation Agreement
to be duly executed on the date first written above.
.........................................
For and on behalf of
[The Existing Borrower]
.........................................
For and on behalf of
[The Substitute Borrower]
.........................................
For and on behalf of the
Parent
.........................................
For and on behalf of each
Bank and the Agent
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SCHEDULE 7
FORM OF BILL
Face of Bill
No. for (Pounds) ..............
....................19....
To
On.................19.. pay against this Bill of Exchange to our order the sum
of ............................... for value received against [ ].
Accepted by:
For and on behalf of For and on behalf of
[ACCEPTING BANK] [BORROWER]
........................... ...........................
Authorised signatory Authorised signatory
Reverse of Bill
For and on behalf of
[BORROWER]
...........................
Authorised signatory
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SIGNATORIES
Parent
THE GENERAL ELECTRIC COMPANY, p.l.c.
By: John Mayo
Original Borrowers
[if any]
Joint Lead Arrangers
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
By: Stephen Byrne
BANQUE NATIONALE DE PARIS
By: S. Juyoung Shin
BARCLAYS CAPITAL
By: G.M. Rody
CHASE MANHATTAN plc
By: Janin Campos
MIDLAND BANK plc
By: Doug Lack
J. P. MORGAN SECURITIES LTD.
By: S. Juyoung Shin
SBC WARBURG DILLON READ
By: Annette P. Alford
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: Caroline Powell Tony Dennis
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Agent
HSBC INVESTMENT BANK PLC
By: David Stent
US Swingline Agent
MARINE MIDLAND BANK
By: David Stent
Banks
BANCA COMMERCIALE ITALIANA S.p.A., LONDON BRANCH
By: Stephen Byrne
BARCLAYS BANK PLC
By: G.M. Rody
BANQUE NATIONALE DE PARIS
By: S. Juyoung Shin
THE CHASE MANHATTAN BANK
By: Sinead English
MIDLAND BANK plc
By: D.G. Lack
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: S. Juyoung Shin
SWISS BANK CORPORATION
By: Annette P. Alford
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: Caroline Powell Tony Dennis
BANCA NAZIONALE DEL LAVORO S.p.A., LONDON BRANCH
By: L.F. Wybraniec D.A. Rosser
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BAYERISCHE LANDESBANK GIROZENTRALE LONDON BRANCH
By: Kevin Buck
CITIBANK, N.A.
By: J.W.G. Parsons
CREDIT SUISSE FIRST BOSTON
By: L. Smith-Morgan Andrew Nimmo
DEN DANSKE BANK AKTIESELSKAB
By: S. Juyoung Shin
DEUTSCHE BANK AG LONDON
By: B.D. Stevenson R.H. Sedlacek
NATIONAL WESTMINSTER BANK Plc
By: A.J. Gill
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED (ACTING THROUGH ITS ANZ
INVESTMENT BANK DIVISION)
By: R.J. Heyhoe
BANCO CENTRAL HISPANOAMERICANO,
S.A. LONDON BRANCH
By: H.J.W. Bright J.M. Inches
COMMERZBANK AKTIENGESELLSCHAFT,
LONDON BRANCH
By: Bernd Meist James Weber
THE ROYAL BANK OF SCOTLAND plc
By: Dean White
L-BANK
By: S. Juyoung Shin
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ABN AMRO BANK N.V. LONDON BRANCH
By: S. Juyoung Shin
BANCA DI ROMA S.p.A. - LONDON BRANCH
By: J.G. Connolly Raymond Pandolfino
BANCA MONTE DEI PASCHI DI SIENA SpA
By: G.N.H. Furzland Roberto Boccanera
BANCO BILBAO VIZCAYA
By: S. Juyoung Shin
BANK OF TOKYO-MITSUBISHI, LTD
By: C.B. Griffiths
CARIPLO - CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE S.p.A., LONDON BRANCH
By: L.K. Barnes
CREDITO ITALIANO SpA
By: Robert G.A. Sanderson
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.p.A.
By: S. Juyoung Shin
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<PAGE>
EXHIBIT (C)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GEC INCORPORATED
("PARENT"),
GEC ACQUISITION CORP.
("PURCHASER")
AND
TRACOR, INC.
(THE "COMPANY")
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS................................................................... 1
SECTION 1.1 Definitions............................................. 1
SECTION 1.2 Rules of Construction................................... 2
ARTICLE II
THE OFFER..................................................................... 2
SECTION 2.1 The Offer............................................... 2
SECTION 2.2 Company Actions......................................... 3
SECTION 2.3 Stockholder Lists....................................... 4
SECTION 2.4 Composition of the Board of Directors; Section 14(f).... 4
ARTICLE III
THE MERGER.................................................................... 5
SECTION 3.1 The Merger.............................................. 5
SECTION 3.2 Effective Time.......................................... 6
SECTION 3.3 Effect of the Merger.................................... 6
SECTION 3.4 Certificate of Incorporation; Bylaws.................... 6
SECTION 3.5 Directors and Officers.................................. 6
SECTION 3.6 Stock Options and Warrants.............................. 6
SECTION 3.7 Stockholders' Meeting................................... 7
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES............................ 8
SECTION 4.1 Merger Consideration; Conversion and Cancelation of
Securities.............................................. 8
SECTION 4.2 Exchange of Certificates................................ 9
SECTION 4.3 Dissenting Shares.......................................10
SECTION 4.4 Closing.................................................11
SECTION 4.5 Stock Transfer Books....................................11
AGREEMENT AND PLAN OF MERGER
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Page
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................11
SECTION 5.1 Organization and Qualification; Subsidiaries............11
SECTION 5.2 Certificate of Incorporation and Bylaws.................12
SECTION 5.3 Capitalization..........................................12
SECTION 5.4 Authorization of Agreement..............................14
SECTION 5.5 Approvals...............................................14
SECTION 5.6 No Violation............................................15
SECTION 5.7 Reports and Financial Statements........................15
SECTION 5.8 No Undisclosed Liabilities..............................16
SECTION 5.9 No Material Adverse Effect; Conduct.....................17
SECTION 5.10 Schedule 14D-9; Offer Documents; Proxy Statement........17
SECTION 5.11 Properties and Assets...................................18
SECTION 5.12 Material Contracts......................................18
SECTION 5.13 Litigation; Compliance with Laws........................19
SECTION 5.14 Employee Benefit Plans..................................19
SECTION 5.15 Labor Matters...........................................22
SECTION 5.16 Taxes...................................................22
SECTION 5.17 Environmental Matters...................................23
SECTION 5.18 Intellectual Property...................................24
SECTION 5.19 Brokers.................................................24
SECTION 5.20 Opinion of Financial Advisor............................24
SECTION 5.21 Year 2000...............................................25
SECTION 5.22 Insurance...............................................25
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES........................25
SECTION 6.1 Organization and Qualification; Subsidiaries............25
SECTION 6.2 Authorization of Agreement..............................25
SECTION 6.3 Approvals...............................................26
SECTION 6.4 No Violation............................................26
SECTION 6.5 Proxy Statement; Schedule 14D-9.........................26
SECTION 6.6 Sufficient Funds........................................27
SECTION 6.7 Brokers.................................................27
ARTICLE VII
COVENANTS.....................................................................27
SECTION 7.1 Conduct of Business of the Company......................27
SECTION 7.2 Prohibited Actions by the Company.......................28
SECTION 7.3 No Solicitation.........................................30
SECTION 7.4 Access to Information...................................33
AGREEMENT AND PLAN OF MERGER
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Page
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SECTION 7.5 Confidentiality Agreement...............................33
SECTION 7.6 Reasonable Efforts......................................34
SECTION 7.7 Permits.................................................34
SECTION 7.8 HSR Act and Exon-Florio Filings.........................34
SECTION 7.9 Public Announcements....................................35
SECTION 7.10 Employee Agreements.....................................35
SECTION 7.11 Company's Rights Agreement; State Takeover Statutes.....35
SECTION 7.12 Employee Benefit Plans..................................36
SECTION 7.13 Indemnification of Directors and Officers...............37
SECTION 7.14 Event Notices and Other Actions.........................38
SECTION 7.15 Third Party Standstill Agreements;
Tortious Interference...................................39
ARTICLE VIII
CLOSING CONDITIONS............................................................39
SECTION 8.1 Conditions to Obligations of Each Party Under This
Agreement...............................................39
SECTION 8.2 Additional Conditions to Obligations of the Parent
Companies...............................................39
SECTION 8.3 Additional Condition to Obligations of the Company......40
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER.............................................41
SECTION 9.1 Termination.............................................41
SECTION 9.2 Effect of Termination...................................42
SECTION 9.3 Amendment...............................................43
SECTION 9.4 Extension; Waiver.......................................43
SECTION 9.5 Fees, Expenses and Other Payments.......................43
ARTICLE X
GENERAL PROVISIONS............................................................44
SECTION 10.1 Nonsurvival of Representations, Warranties and
Agreements..............................................44
SECTION 10.2 Notices.................................................45
SECTION 10.3 Headings................................................46
SECTION 10.4 Severability............................................46
SECTION 10.5 Entire Agreement........................................46
SECTION 10.6 Assignment..............................................46
SECTION 10.7 Parties in Interest.....................................47
SECTION 10.8 Failure or Indulgence Not Waiver; Remedies Cumulative...47
SECTION 10.9 Governing Law...........................................47
SECTION 10.10 Enforcement.............................................47
SECTION 10.11 Counterparts............................................48
AGREEMENT AND PLAN OF MERGER
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<PAGE>
ANNEXES
Annex A - Schedule of Defined Terms
Annex B - Conditions of the Offer
AGREEMENT AND PLAN OF MERGER
-iv-
<PAGE>
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>
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
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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.
AGREEMENT AND PLAN OF MERGER
-3-
<PAGE>
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."
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
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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.
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
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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.
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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.
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
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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
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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
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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.
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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.
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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 compensa tion, 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.
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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, (P) 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
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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.
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(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.
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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.
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(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
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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 connec tion 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.
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.
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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
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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.
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
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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
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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
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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
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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
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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
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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.
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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
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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.
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(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.
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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
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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.
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-
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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.
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
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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.
AGREEMENT AND PLAN OF MERGER
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<PAGE>
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: /s/ MICHAEL LESTER
-------------------------------------
Name: Michael Lester
Title: Director
GEC ACQUISITION CORP.
By: /s/ JOHN CURRIER
-------------------------------------
Name: John Currier
Title: Secrectary and Vice President
TRACOR, INC.
By: /s/ JAMES B. SKAGGS
-------------------------------------
Name: James B. Skaggs
Title: President and Chief Executive
Officer
AGREEMENT AND PLAN OF MERGER
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<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.
<PAGE>
"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.
AGREEMENT AND PLAN OF MERGER
ANNEX A-2
<PAGE>
"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 March 6, 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).
AGREEMENT AND PLAN OF MERGER
ANNEX A-3
<PAGE>
"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. (Section) 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.
AGREEMENT AND PLAN OF MERGER
ANNEX A-4
<PAGE>
"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.
AGREEMENT AND PLAN OF MERGER
ANNEX A-5
<PAGE>
"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.
AGREEMENT AND PLAN OF MERGER
ANNEX A-6
<PAGE>
"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.
AGREEMENT AND PLAN OF MERGER
ANNEX A-7
<PAGE>
(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.
AGREEMENT AND PLAN OF MERGER
ANNEX A-8
<PAGE>
"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
AGREEMENT AND PLAN OF MERGER
ANNEX A-9
<PAGE>
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.
AGREEMENT AND PLAN OF MERGER
ANNEX A-10
<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
AGREEMENT AND PLAN OF MERGER
ANNEX B-1
<PAGE>
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
AGREEMENT AND PLAN OF MERGER
ANNEX B-2
<PAGE>
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.
AGREEMENT AND PLAN OF MERGER
ANNEX B-3
<PAGE>
EXHIBIT (C)(2)
STOCKHOLDER AGREEMENT, dated as of April 21,
1998, among GEC INCORPORATED, a Delaware corporation
("Parent"), GEC ACQUISITION CORP., a Delaware
corporation and a wholly owned subsidiary of Parent
("Purchaser"), and the persons listed on Schedule A
hereto (each a "Stockholder" and, collectively, the
"Stockholders").
WHEREAS, Parent, Purchaser and Tracor, Inc., a Delaware corporation
(the "Company"), propose to enter into an Agreement and Plan of Merger dated as
of the date hereof (as the same may be amended or supplemented, the "Merger
Agreement") providing for the making of a cash tender offer (as such offer may
be amended from time to time as permitted under the Merger Agreement, the
"Offer") by Purchaser for shares of Common Stock, par value $.01 per share, of
the Company (the "Common Stock") and the merger of the Company and Purchaser
(the "Merger");
WHEREAS, each Stockholder is the beneficial owner of the shares of
Common Stock set forth opposite such Stockholder's name on Schedule A hereto;
such shares of Common Stock, as such shares may be adjusted by stock dividend,
stock split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, together with shares of Common Stock that may be acquired after the
date hereof by such Stockholder, including shares of Common Stock issuable upon
the exercise of options or warrants to purchase Common Stock (as the same may be
adjusted as aforesaid), being collectively referred to herein as the "Shares" of
such Stockholder; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholders enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Grant of Purchase Option.
(a) Each Stockholder hereby severally and not jointly agrees that it
shall tender the Shares it owns as of the date hereof and any Shares it may
acquire
<PAGE>
2
prior to the expiration of the Offer and that it shall not withdraw any
Shares so tendered (it being understood that the obligation contained in
this sentence is unconditional, subject to Section 8). In addition, each
Stockholder hereby severally and not jointly grants to Purchaser an
irrevocable option (as to each Stockholder, the "Option") to purchase any
of or all the Shares owned by such Stockholder and any of or all the Shares
for which any stock options and warrants owned by such Stockholder are then
exercisable on the date the Option is exercised by Purchaser (on any date,
the "Vested Options and Warrants") in each case at a price per Share equal
to $40.00 (the "Original Offer Price"). Subject to Section 8, the Option
may be exercised at any time and from time to time after the date hereof,
in whole or in part. If Purchaser shall for any reason have increased the
price per share payable in the Offer over the Original Offer Price (and
Purchaser accepts Shares for payment pursuant to the Offer), then,
immediately following Purchaser's payment for the Shares pursuant to the
Offer, each Stockholder shall pay to Purchaser on demand an amount in cash
equal to the product of (x) the number of such Stockholder's Shares
purchased pursuant to the Offer and (y) the excess of (A) the per share
cash consideration received by the Stockholder as a result of the Offer, as
amended, over (B) the Original Offer Price.
(b) In the event that Purchaser wishes to exercise the Option as to a
Stockholder, Purchaser shall give written notice (the date of such notice
being called the "Notice Date") to such Stockholder and to the Company
specifying the number (if less than all) of such Stockholder's Shares,
including shares of Common Stock underlying Vested Options and Warrants,
and a place, time and date not later than 10 Business Days (as defined in
the Merger Agreement) from the Notice Date for the closing of such
purchase. Prior to the closing, such Stockholder will take all action
necessary to exercise the Vested Options and Warrants and obtain possession
of the underlying Shares.
2. Representations and Warranties of the Stockholders. Each
Stockholder hereby, severally and not jointly, represents and warrants to Parent
and Purchaser as follows:
<PAGE>
3
(a) Authority. The Stockholder has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Stockholder. This Agreement has been duly
executed and delivered by the Stockholder and constitutes a valid and
binding obligation of the Stockholder enforceable against the Stockholder
in accordance with its terms, except as the same may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar Laws (as defined in the Merger Agreement) relating to
creditors' rights generally and (b) legal principles of general
applicability governing the application and availability of equitable
remedies. Except for the expiration or termination of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), neither the execution, delivery or
performance of this Agreement by the Stockholder nor the consummation by
the Stockholder of the transactions contemplated hereby will (i) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Authority (as defined in the Merger Agreement), (ii) result in
a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, or give rise to any right of
termination, amendment, cancelation or acceleration under, or result in the
creation of any Lien (as defined in the Merger Agreement) other than a
Permitted Encumbrance (as defined in the Merger Agreement) upon any of the
properties or assets of the Stockholder under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license,
permit, concession, franchise, contract, agreement or other instrument or
obligation (a "Contract") to which the Stockholder is a party or by which
the Stockholder or any of the Stockholder's properties or assets, including
the Stockholder's Shares, may be bound or (iii) violate any Order (as
defined in the Merger Agreement) or any Law applicable to the Stockholder
or any of the Stockholder's properties or assets, including the
Stockholder's Shares, other than, in the case of clause (ii) above, such
items that, individually or in the aggregate, have not and could not
reasonably be expected to have a material adverse
<PAGE>
4
effect on the ability of the Stockholder to perform its
obligations under this Agreement.
(b) The Shares. The Stockholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof
will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, and the Stockholder has good and marketable
title to such Shares, free and clear of any Liens, proxies, voting trusts
or agreements, understandings or arrangements, except for any such Liens or
proxies arising hereunder.
(c) Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of the Stockholder.
(d) Merger Agreement. The Stockholder understands and acknowledges
that Parent is entering into, and causing Purchaser to enter into, the
Merger Agreement in reliance upon the Stockholder's execution and delivery
of this Agreement.
3. Representations and Warranties of Parent and Purchaser. Parent
and Purchaser hereby represent and warrant to the Stockholders as follows:
(a) Authority. Each of Parent and Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by Parent and Purchaser and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and
Purchaser. This Agreement has been duly executed and delivered by Parent
and Purchaser and constitutes a valid and binding obligation of Parent and
Purchaser enforceable 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.
<PAGE>
5
(b) Securities Act. The Shares will be acquired in compliance with,
and Purchaser will not offer to sell or otherwise dispose of any Shares so
acquired by it in violation of the registration requirements of, the
Securities Act of 1933, as amended.
4. Covenants of the Stockholders. Each Stockholder, severally and
not jointly, agrees as follows:
(a) The Stockholder shall not, except as contemplated by the terms of
this Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of,
or enter into any Contract, option or other arrangement (including any
profit sharing arrangement) or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of, the Shares to any
person other than Purchaser or Purchaser's designee, (ii) enter into any
voting arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney or otherwise, with respect to the Shares or (iii) take
any other action that would in any way restrict, limit or interfere with
the performance of its obligations hereunder or the transactions
contemplated hereby.
(b) Subject to Section 11 hereof, until the Merger is consummated or
the Merger Agreement is terminated, the Stockholder shall not, nor shall
the Stockholder permit any investment banker, financial adviser, attorney,
accountant or other representative or agent of the Stockholder to, directly
or indirectly (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed or reasonably
likely to facilitate, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal (as defined in the Merger Agreement) or (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by an investment banker,
financial advisor, attorney, accountant or other representative or agent of
the Stockholder shall be deemed to be a violation of this Section 4(b) by
the Stockholder.
(c) At any meeting of stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other
<PAGE>
6
circumstances upon which a vote, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the Stockholder's
Shares in favor of the Merger, the adoption by the Company of the Merger
Agreement and the approval of the other transactions contemplated by the
Merger Agreement. At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the Stockholder
shall vote (or cause to be voted) the Stockholder's Shares against (i) any
merger agreement or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Acquisition Proposal (collectively,
"Alternative Transactions") or (ii) any amendment of the Company's
certificate of incorporation or bylaws or other proposal or transaction
involving the Company or any of its subsidiaries, which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Offer, the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement (collectively,
"Frustrating Transactions").
5. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each
Stockholder hereby irrevocably grants to, and appoints, Mark Ronald and John
Currier and any other individual who shall hereafter be designated by Parent,
and each of them, such Stockholder's proxy and attorney-in-fact (with full power
of substitution), for and in the name, place and stead of such Stockholder, to
vote such Stockholder's Shares, or grant a consent or approval in respect of
such Shares, at any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, in favor of the Merger, the adoption by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement and against any Alternative
Transaction or Frustrating Transaction.
(b) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
<PAGE>
7
(c) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of such Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked, subject to Section 8. Such Stockholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of the General
Corporation Law of the State of Delaware. Such irrevocable proxy shall be valid
until the earlier of (i) December 31, 1998 or (ii) the termination of this
Agreement pursuant to Section 8.
6. Further Assurances. Each Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Purchaser may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement and to vest the
power to vote such Stockholder's Shares as contemplated by Section 5. Parent and
Purchaser jointly and severally agree to use reasonable efforts to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements that may be imposed with respect to the transactions contemplated
by this Agreement (including any applicable legal requirements of the HSR Act).
7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Purchaser
may assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by, the parties and
their respective successors and assigns. Each Stockholder agrees that this
Agreement and the obligations of such Stockholder hereunder shall attach to such
Stockholder's Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of such Shares shall pass, whether by operation of
law or otherwise, including such Stockholder's heirs, guardians, administrators
or successors.
<PAGE>
8
8. Termination. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate upon the earlier of (a) the date upon
which the Merger Agreement is terminated pursuant to Section 9.1(a) or (f)
thereof or pursuant to Section 9.1(d)(i) thereof under circumstances when Parent
did not have the right to terminate the Merger Agreement pursuant to Section
9.1(e)(iv) thereof and (b) December 31, 1998; provided, however, that Sections
1, 4(a), 6, 7, 10 and 13 hereof and this Section 8 shall survive any termination
until the date that is 75 days after the date of termination of the Merger
Agreement (other than any termination referred to in clause (a) above).
9. Stop Transfer. The Company agrees with, and covenants to, Parent
and Purchaser that the Company shall not register the transfer of any
certificate representing any Stockholder's Shares unless such transfer is made
in accordance with the terms of this Agreement.
10. General Provisions.
(a) Payments. All payments required to be made to any party to this
Agreement shall be made by wire transfer of immediately available funds to
an account designated by such party at least one trading day prior to such
payment.
(b) Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt
requested) to the parties at the
<PAGE>
9
following addresses (or at such other address for a party as shall be
specified by like notice):
(i) if to Parent or Purchaser, 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, Esq.
Telecopy No: (212) 474-3700
and
(ii) if to a Stockholder, to the address set forth under the name of
such Stockholder on Schedule A hereto
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
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. 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. Wherever the words "include", "includes"
or "including"
<PAGE>
10
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation". Words in the singular include the plural, and
words in the plural include the singular.
(f) 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.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(h) 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
conflict of Law.
(i) Publicity. Except as otherwise required by Law, court process or
the rules of a national securities exchange or the Nasdaq National Market
or as contemplated or provided in the Merger Agreement, for so long as this
Agreement is in effect, no Stockholder shall issue or cause the publication
of any press release or other public announcement with respect to the
transactions contemplated by this Agreement or the Merger Agreement without
the consent of Parent, which consent shall not be unreasonably withheld.
11. Stockholder Capacity. No person executing this Agreement makes
any agreement or understanding herein in his or her capacity as a director or
officer of the Company or any subsidiary of the Company. Each Stockholder signs
solely in his or her capacity as the beneficial owner of such Stockholder's
Shares and nothing herein shall limit or affect any actions taken by a
Stockholder in its capacity as an officer or director of the Company or any
subsidiary of the Company to the extent specifically permitted by the Merger
Agreement.
<PAGE>
11
12. Performance by Purchaser. Parent covenants and agrees for the
benefit of the Stockholders that it shall cause Purchaser to perform in full
each obligation of Purchaser set forth in this Agreement.
13. 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 federal court located in the
State of Delaware or in any Delaware state court, 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 (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court located in the state
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby. 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.
<PAGE>
IN WITNESS WHEREOF, each of Parent and Purchaser has caused this
Agreement to be signed by its officer or director thereunto duly authorized and
each Stockholder has signed this Agreement, all as of the date first written
above.
GEC INCORPORATED
By /s/ MICHAEL LESTER
-------------------------------------
Name: Michael Lester
Title: Director
GEC ACQUISITION CORP.
By /s/ JOHN CURRIER
-------------------------------------
Name: John Currier
Title: Vice President
and Secretary
<PAGE>
STOCKHOLDERS
/s/ JAMES B. SKAGGS
---------------------------------------
James B. Skaggs
/s/ WILLIAM E. CONWAY, JR.
---------------------------------------
William E. Conway, Jr.
/s/ JULIAN DAVIDSON
---------------------------------------
Julian Davidson
/s/ ANTHONY GRILLO
---------------------------------------
Anthony Grillo
/s/ BOB MARBUT
---------------------------------------
Bob Marbut
<PAGE>
/s/ ELVIS L. MASON
---------------------------------------
Elvis L. Mason
/s/ THOMAS P. STAFFORD
---------------------------------------
Thomas P. Stafford
/s/ K. BRUCE HAMILTON
---------------------------------------
K. Bruce Hamilton
/s/ BARRY G. CAMPBELL
---------------------------------------
Barry G. Campbell
/s/ GEORGE R. MELTON
---------------------------------------
George R. Melton
/s/ TERRY A. STRAETER
---------------------------------------
Terry A. Straeter
<PAGE>
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 9:
TRACOR, INC.
By /s/ JAMES B. SKAGGS
-------------------------------------
Name: James B. Skaggs
Title: President and
Chief Executive
Officer
<PAGE>
16
Schedule A
-----------
Total number Total number Total number
of shares of shares of shares
underlying underlying
stock options warrants
------------ ------------- ------------
James B. Skaggs 43,364 663,700 4,000
4700 Toreador Drive
Austin, TX 78746
William E. Conway, Jr. 15,046 6,000 N/A
The Carlyle Group
Suite 220 South
1001 Pennsylvania Ave, N.W.
Washington, DC 20004
Julian Davidson 3,000 6,000 N/A
Davidson Enterprises
991 Discovery Dr.
Huntsville, AL 35806
Anthony Grillo 13,000 6,000 N/A
Pleasantville Road
New Vernon, NJ 07976
Bob Marbut 27,500 6,000 N/A
200 Concord Plaza, Suite 700
San Antonio, TX 78216
Elvis L. Mason 7,000 6,000 N/A
Mason Best
2121 San Jacinto Suite 1000
Dallas, TX 75201
Thomas P. Stafford 7,000 6,000 N/A
Stafford, Burke and Hecker, Inc.
1006 Cameron Street
Alexandria, VA 22314
K. Bruce Hamilton 0 98,000 N/A
Tracor Systems Technologies, Inc.
1601 Research Blvd.
Rockville, MD 20850
Barry G. Campbell 1,887 99,000 N/A
Tracor Systems Technologies, Inc.
1601 Research Blvd.
Rockville, MD 20850
George R. Melton 12,600 119,400 N/A
Tracor Aerospace, Inc.
6500 Tracor Lane
Austin, TX 78725
Terry A. Straeter 176,331 82,000 2,000
GDE System, Inc.
16550 W. Bernardo Dr.
San Diego, CA 92127
<PAGE>
EXHIBIT (C)(3)
March 6, 1998
Mr. Mark Ronald
GEC-Marconi North America Inc.
164 Totowa Road
Wayne, New Jersey 07474-0975
Dear Mr. Ronald:
We have agreed to exchange information regarding Tracor, Inc. (hereinafter the
"Company") and GEC-Marconi North America Inc. ("GEC") in connection with your
consideration of the possible acquisition of the Company ("Possible
Transaction") by GEC. In consideration of our exchanging the Evaluation
Materials (as defined below) we agree as follows:
Confidentiality of Evaluation Materials
Each of us will treat confidentially any information (whether written or oral)
that each of us or our representatives furnish to the other in connection with a
Possible Transaction, together with analyses, compilations, studies, or other
documents prepared by us or GEC which contain or otherwise reflect such
information (collectively, the "Evaluation Materials"). We each recognize and
acknowledge the competitive value of the Evaluation Materials and the damage
that could result to either party if the Evaluation Materials were used or
disclosed except as authorized by this Agreement.
The term "Evaluation Materials" includes information furnished by either party
to the other, orally or in writing (whatever the form or storage medium) or
gathered by inspection, and regardless of whether such information is
specifically identified as confidential. The term "Evaluation Materials" does
not include information which (i) is or becomes generally available to the
public other than as a result of a disclosure by either party or our
representatives; (ii) was or becomes available to either party on a non-
confidential basis from a source other than the other party or its
representatives, provided that, to the best of such receiving party's knowledge,
such source is not prohibited from disclosing such information by a contractual,
legal or fiduciary obligation; (iii) is independently developed by a party
without further reference to or benefit from the information received from the
other party or its representatives; (iv) is possessed by a party without such
restrictions prior to receipt from the other party or its representatives; (v)
is disclosed on a non-confidential basis by a party or its representatives to a
business or entity other than the other party; or (vi) is disclosed to the other
party without any confidentiality restrictions in connection with any other
business dealings or potential dealings of the parties, past, present, and
future, including those related to teaming agreements, joint ventures,
contracts, subcontracts, or business pursuits or dealings of any kind not
related to a Possible Transaction.
<PAGE>
Mr. Mark Ronald
March 6, 1998
Page 2 of 6
Use of Evaluation Materials
Neither GEC nor the Company will use any of the Evaluation Materials for any
purpose other than the exclusive purpose of evaluating a Possible Transaction.
Each of GEC and the Company will keep the Evaluation Materials completely
confidential; provided, however, that (i) any of such information may be
disclosed to those of each us of our or our affiliates' directors, officers,
employees, agents, representatives (including attorneys, accountants, and
financial advisors), and lenders and other sources of financing (collectively,
"our representatives") who need to know such information for the purpose of
evaluating a Possible Transaction (it being understood that each of our or our
affiliates' representatives shall be informed of the confidential nature of such
information and shall be directed by each of us, and shall each expressly agree,
to treat such information confidentially in accordance with this Agreement) and
(ii) any other disclosure of such information may only be made if the other
party consents in writing prior to any such disclosure. Without limiting the
generality of the foregoing, in the event that a Possible Transaction is not
consummated neither the Company nor GEC shall use any of the Evaluation
Materials for any purpose.
In the event that either party shall receive a request or be required (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process) to disclose all or any part of the Evaluation
Materials, the party receiving such request shall (i) immediately notify the
other of the existence, terms, and circumstances surrounding such a request;
(ii) consult with the other on the advisability of taking legally available
steps to resist or narrow such request; and (iii) assist such party, at such
party's expense, in seeking a protective order or other appropriate remedy. In
the event that such protective order or other remedy is not obtained or that
either party waives compliance with the provisions hereof, (i) the other party
may disclose to any tribunal only that portion of the Evaluation Materials which
it is advised by counsel is legally required to be disclosed, and (ii) the
disclosing party shall not be liable for such disclosure unless disclosure to
any such tribunal was caused by or resulted from a previous disclosure by such
party not permitted by this Agreement.
Non-Disclosure
The disclosure of your possible interest in purchasing the Company could have a
material adverse effect on your or the Company's business if for any reason an
agreement of purchase and sale is not consummated. Accordingly, unless required
by applicable law, prior to the closing of a Possible Transaction, without the
prior written consent of the other party hereto, neither party will, and will
direct its representatives not to, disclose to any person either the fact that
discussions or negotiations are taking place concerning a Possible Transaction
or any of the terms, conditions or other facts with respect to any such Possible
Transaction, including the status thereof, otherwise than as required by law or
the rules of any relevant stock exchange and each will, in any event, consult
with the other prior to making any announcement. The term "person"
<PAGE>
Mr. Mark Ronald
March 6, 1998
Page 3 of 6
as used in this letter shall be broadly interpreted to include, without
limitation, any corporation, the Company, GEC, or governmental agency or body,
stock exchange, partnership, association or individual.
No Representation or Warranty
Although the Company has endeavored and will endeavor to include in the
Evaluation Materials information known to it which it believes to be relevant
for the purpose of your investigation, you acknowledge and agree that none of
the Company or any of the Company's representatives or agents is making any
representation or warranty, expressed or implied, as to the accuracy or
completeness of the Evaluation Materials, and none of the Company, or any of the
Company's representatives, stockholders, owners, affiliates, advisors, or
agents, will have any liability under this Letter Agreement or otherwise to you
or any other person resulting from the use of Evaluation Materials by you or any
of your representatives. Only those representations or warranties that are made
to a purchaser in a definitive sale agreement for the Company ("Sale Agreement")
when, as, and if it is executed, and subject to such limitations and
restrictions as may be specified in such Sale Agreement, will have any legal
effect.
It is also acknowledged and agreed that no contract or agreement providing for
the sale of the Company shall be deemed to exist between you and the Company
unless and until a Sale Agreement has been executed and delivered by you and
each of the other parties thereto, and the parties hereby waive, in advance, any
claims (including, without limitation, breach of contract) in connection with
the sale of the Company unless and until a Sale Agreement has been executed and
delivered by you and each of the other parties thereto. It is also agreed that
unless and until a Sale Agreement between the Company and you with respect to
the acquisition of the Company has been executed and delivered by you and each
of the other parties thereto, there shall not be any legal obligation of any
kind whatsoever with respect to any such transaction by virtue of this agreement
or any other written or oral expression with respect to such transaction except,
in the case of this Agreement, for the matters specifically agreed to herein.
For purposes of this Agreement, the term "Sale Agreement" does not include an
executed letter of intent or any other preliminary written agreement, nor does
it include any oral acceptance of an offer or bid by you.
Return of Documents
Upon either party's request, the other party shall promptly either deliver to
such party or, at such other party's option, destroy and certify in writing the
destruction of all written Evaluation Materials without (except as provided
below) retaining, in whole or in part, any copies, extracts or other
reproductions (whatever the form or storage medium) of such materials. Provided
that we each may retain one copy of the Evaluation Materials for archival
purposes.
<PAGE>
Mr. Mark Ronald
March 6, 1998
Page 4 of 6
No Authorized Contact or Solicitation
During the course of our evaluation, all inquiries and other communications are
to be made directly to James B. Skaggs, President, or employees or
representatives of the Company specified thereby. Accordingly, we each agree
not to directly or indirectly contact or communicate with any executive or other
employee of the other concerning a Possible Transaction, or to seek any
information in connection therewith from such person, without the other's
express consent. You also agree not to discuss with or offer to any third party
an equity participation in a Possible Transaction or any other form of joint
acquisition by you and such third party without the Company's prior written
consent.
Without the Company's prior written consent, you will not for a period of two
years from the date of this Agreement directly solicit for employment any person
who is now employed by the Company (or whose activities are dedicated to the
Company) in an executive or management level position or otherwise considered by
the Company to be a key employee. It is understood and agreed that the above
provisions against direct solicitation shall not prohibit any general
solicitation not directed specifically to such employees and shall also not
prohibit contact through a search firm which is not aware of this Agreement and
which is not told by you to target company employees.
Standstill
You agree that until one year from the date of this Agreement, you will not
without the prior approval of the Board of Directors of the Company, or unless
(a) a third party makes an offer to acquire 20% or more of the stock of the
Company, or (b) an announcement is made of a proposal to merge the Company with
a third party or of any other proposal to acquire the Company, in each respect
such offer or proposal not having been endorsed by the board of directors of the
Company (i) acquire or make any proposal to acquire any securities or property
of the Company; (ii) propose to enter into any merger or business combination
involving the Company or purchase a material portion of the assets of the
Company; (iii) make or participate in any solicitation of proxies to vote, or
seek to advise or influence any person with respect to the voting of any
securities of the Company; (iv) form, join, or participate in a "group" (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) with
respect to any voting securities of the Company; (v) otherwise act or seek to
control or influence the management, Board of Directors or policies of the
Company; (vi) disclose any intention, plan or arrangement inconsistent with the
foregoing; or (vii) take any action which might require the Company to make a
public announcement regarding the possibility of a business combination or
merger. Except as provided above, you also agree during such period not to
request the Company (or its directors, officers, employees, agents, or
representatives) to amend or waive any provision of this paragraph. Provided,
however that if the Company enters into an agreement comparable to this one with
any third party, wherein the standstill provisions are more favorable
<PAGE>
Mr. Mark Ronald
March 6, 1998
Page 5 of 6
to the third party than this Agreement is to you, you will automatically receive
the benefit of the more favorable standstill provisions, it being the intent of
the parties to this Agreement that you and such third party be subject to the
same standstill provisions.
Legal Remedy
Money damages would not be a sufficient remedy for any breach of this Agreement
by either party hereto and each party will be entitled to specific performance
and injunctive relief as remedies for any such breach. Such remedies shall not
be deemed to be the exclusive remedies for a breach of this Agreement but shall
be in addition to all other remedies available at law or equity.
Other
This Agreement constitutes the entire agreement between the parties thereto
regarding the subject matter hereof. This Agreement may be changed only by a
written agreement signed by the parties hereto or their authorized
representatives.
This Agreement shall be governed and construed in accordance with the laws of
the State of Delaware, without regard to the conflicts of law principles
thereof. The parties agree that any and all disputes with respect to this
Agreement shall be litigated only in the State of Delaware. Each party hereby
consents to jurisdiction and venue in the State of Delaware and hereby waives
any jury trial.
If you are in agreement with the foregoing, please sign and return one copy of
this letter, it being understood that all counterpart copies will constitute but
one agreement with respect to the subject matter of this letter.
Very truly yours,
/s/ JAMES B. SKAGGS
James B. Skaggs
President
JBS:cdm
<PAGE>
Mr. Mark Ronald
March 6, 1998
Page 6 of 6
ACCEPTED AND AGREED TO AS OF THE DATE HEREOF:
GEC-Marconi North America Inc.
("GEC")
By:/s/ MARK H. RONALD
------------------------------------
Mark H. Ronald
------------------------------------
Printed Name
President & CEO
------------------------------------
Title
<PAGE>
EXHIBIT (c)(4)
[LETTERHEAD OF THE GENERAL ELECTRIC COMPANY, P.L.C. APPEARS HERE]
JB Skaggs Esq.
President, CEO and Chairman
Tracor Inc
6500 Tracor Lane
Austin, TX 78725-2000
21 April 1998
Dear Mr Skaggs
Reference is hereby made to (i) the Agreement and Plan of Merger dated as
of April 21, 1998 (the "Merger Agreement"), by and among GEC Incorporated, a
Delaware corporation ("GEC Inc") and a wholly-owned subsidiary of The General
Electric Company, p.l.c., Company No. 67307 ("GEC p.l.c."), GEC Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of GEC Inc.
("Purchaser"), and Tracor, Inc, a Delaware corporation (the "Company"), and (ii)
the Agreement dated March 25, 1998, for a Euro 6,000,000,000 Syndicated Credit
Facility for GEC p.l.c. (the "Credit Agreement"), arranged by the banks named
therein, with HSBC Investment Bank PLC, as Agent, and Marine Midland Bank, as
U.S. Swingline Agent.
In connection with the Merger Agreement, GEC p.l.c. hereby represents and
warrants to, and agrees with, you as follows:
1. GEC Inc. is a "Subsidiary" of GEC p.l.c., as such term is defined in the
Credit Agreement.
2. Promptly after the date hereof, GEC p.l.c. will deliver the documents
required by Section 28.4(a) of the Credit Agreement, including a Borrower
Accession Agreement (as defined in the Credit Agreement) executed by GEC
p.l.c. and GEC Inc., so that GEC Inc. shall become an "Additional Borrower"
under the Credit Agreement, and, prior to the earlier to occur of (i) the
date which is one day after the Effective Time (as defined in the Merger
Agreement) and (ii) the date the Merger Agreement is terminated, GEC p.l.c.
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will not exercise its rights under Section 9.5 of the Credit Agreement to
request that GEC Inc. cease to be a Borrower under the Credit Agreement.
3. From and after the date hereof until the earlier to occur of (i) the date
which is one day after the Effective Time (as defined in the Merger
Agreement) and (ii) the date the Merger Agreement is terminated, GEC p.l.c.
shall cause the total amount of advances (as defined in the Credit
Agreement) for all the Borrowers to be in an amount such that, upon
satisfaction of the conditions precedent set forth in the Credit Agreement,
GEC Inc. may borrow Advances in the aggregate amount then necessary to
complete the acquisition of all the outstanding Company Common Stock (as
defined in the Merger Agreement), upon the terms and conditions set forth
in the Merger Agreement.
4. As of the date hereof, the Credit Agreement is in full force and effect and
constitutes a legal, valid and binding obligation of GEC p.l.c. (assuming
due authorisation, execution and delivery by the other parties thereto),
enforceable against GEC p.l.c. in accordance with its terms. As of the
date hereof, GEC p.l.c. could satisfy all the conditions precedent to
borrowing an Advance under the Credit Agreement if a Request (as defined in
the Credit Agreement) for an Advance was made by GEC p.l.c. under the
Credit Agreement on this date.
Yours sincerely
/s/ Michael Lester
