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Show "Business of Utah." Utah's important position on an international scale in the natural resources industry will complement General Electric's long term plans to increase the volume of its international business. General Electric's international sales have increased at a rate roughly twice as fast as its domestic sales in recent years. Utah's sizable mineral reserves in foreign countries and its proven record in international operations are among the factors which recommend it as a beneficial addition to General Electric's consolidated operations. Although the recent relative market prices of the common stock of General Electric and Utah indicate that the exchange ratio contemplates that General Electric will be paying a premium in terms of such market values (see "Comparative Stock Prices Per Share" below), and notwithstanding that the arrangements entered into to insulate Utah's uranium business from General Electric's control constitute a restraint on General Electric's freedom of action in respect of Utah's business (see "Business of UtahUranium"), General Electric's management regards the proposed transaction favorably in the context of all of the foregoing. Utah's management expects that Utah's stockholders will benefit from the Merger through their affiliation with a larger and more diversified corporation of established reputation, from any premium in market value, and, although General Electric's future dividend policy may change, from the increased cash dividends to such stockholders following the Merger which would result to the extent that General Electric's current dividend policy continues (and assuming continuation of Utah's present dividend policy, as to which see "Certain Terms of the AgreementDividends on Utah Common Stock"). See also "Comparative Per Share Earnings, Dividends and Book Value" below. Taking into account developments of significant benefit to Utah which have occurred since determination of the ratio of exchange, such as the announcements by the Commonwealth Government of Australia of reduction of the export duty on coking coal and of approval of Utah's proposal for development of the Norwich Park project in Queensland, Australia, based on increased equity participation in Utah's Australian interests by Australian joint venturers, and the Government of Peru's proposed compensation of Marcona Mining Company for its expropriated Peruvian properties (see "Business of Utah" and Note 19 of Utah's notes to consolidated financial statements), Utah's management continues to believe that the Merger is advantageous to Utah's stockholders. E. W. Littlefield, Chairman of the Board of Utah, has been a director of General Electric since 1964, and Fred J. Borch, retired Chairman of the Board of General Electric, has been a director of Utah since 1971. Mr. Littlefield owns 1,000 shares of GE Common Stock and holds an additional 1,500 shares in trust for his children and owns 341,149 shares of Utah Common Stock. In addition, Mr. Littlefield holds 321,552 shares of Utah Common Stock in trust for his children, is trustee and retains a reversionary interest in trusts holding 10,200 shares, has a beneficial interest in two trusts holding an aggregate of 34,204 shares, and is a co-trustee of three trusts which presently hold 29,922 shares and are beneficiaries of an estate holding 459,106 shares. Mr. Littlefield's wife holds 15,816 shares as her separate property. Mr. Borch owns 9,616 shares of GE Common Stock and 6,700 shares of Utah Common Stock and owns 80% of the stock of a corporation which holds an additional 400 shares of Utah Common Stock. There are also 32,874 shares of GE Common Stock allotted to him under General Electric's Incentive Compensation Plan on a deferred payment basis. Mr. Borch's wife owns 100 shares of GE Common Stock as her separate property. Val A. Browning, Thomas D. Dee II and William R. Kimball, directors of Utah, own 240 shares, 100 shares and 700 shares, respectively, of GE Common Stock. The wife of William R. Hewlett, a director of Utah, owns 300 shares of GE Common Stock. Val A. Browning, Thomas D. Dee II, George S. Eccles, Marriner S. Eccles, William R. Kimball, E. W. Littlefield and Paul L. Wattis, Jr., all of whom are directors of Utah, have agreed that, if between December 31, 1975 and the day of the special meeting of stockholders of Utah there has not occurred a material adverse change in the business, properties, results of operations or business or financial condition of General Electric and its subsidiaries considered as a whole, they will each vote all shares of Utah Common Stock owned by them or which they have the right to vote (which constitute approximately 7.7% of the shares of Utah Common Stock outstanding on September 30, 1976) to approve the Agreement. Reginald H. Jones, Chairman of the Board and Chief Executive Officer of General Electric, and Thomas S. Gates, who was a director of General Electric at the time the Merger was originally approved by the Board of Directors and subsequently resigned to accept a U.S. ambassadorial position, own 200 shares and 600 shares, respectively, of Utah Common Stock. For 4 further information on the shareholdings of the managements of Utah and General Electric, see "Management of General ElectricDirectors" and "Management of UtahDirectors." General Electric and Utah have from time to time engaged in arm's length commercial transactions of an immaterial nature. From January 1, 1975 through August 31, 1976 these involved approximately $9.5 million of purchases by General Electric from Utah and the purchase or lease by Utah from General Electric of approximately $2.2 million of equipment and services. In addition, certain associates of directors of General Electric have from time to time engaged in arm's length commercial transactions of an immaterial nature with Utah. The Marion Power Shovel Company, Inc., an associate of Henry L. Hillman, has received payments from Utah of approximately $33 million from January 1, 1974 through August 31, 1976 relating to the sale to Utah of five major pieces of mining equipment. Loans and commitments have been made since January 1, 1975 by Citibank, N.A., an associate of Walter B. Wriston, to Utah and subsidiaries and affiliates of Utah. Such loans and commitments were made on substantially the same terms as those prevailing at the time for comparable transactions. The Boards of Directors and managements of both General Electric and Utah recommend a vote FOR the proposal relating to the Merger. Investment Bankers' Evaluations of Exchange Ratio General Electric has engaged Morgan Stanley & Co. Incorporated as financial advisor to General Electric for the purpose of providing certain financial and investment advice and to evaluate the exchange ratio provided for in the Agreement. On October 20, 1976, Morgan Stanley & Co. Incorporated delivered to General Electric's Board of Directors its opinion letter, a conformed copy of which is attached hereto as Annex III, stating in part that it is the opinion of such firm that the exchange ratio provided for in the Agreement is fair and equitable to the share owners of General Electric from a financial point of view. General Electric will pay Morgan Stanley & Co. Incorporated a fee of $1,000,000 plus certain expenses for its financial and investment advisory services, and has agreed to indemnify it and certain of its affiliates against certain liabilities. Morgan Stanley & Co. Incorporated and affiliates have for many years acted as investment advisor to, and manager or co-manager in the underwriting of over $2.6 billion of securities for, General Electric and affiliates. Morgan Stanley & Co. Incorporated has acted as a broker and a dealer for General Electric, the General Electric Pension Trust, and the General Electric Foundation in the normal course of its brokerage business. Brooks, Harvey & Co., Inc., Morgan Stanley & Co. Incorporated's real estate subsidiary, has represented various borrowers, on an agency basis, in connection with real estate investments made by General Electric Credit Corporation and the General Electric Pension Trust. Utah has engaged Lehman Brothers Incorporated and Dean Witter & Co. Incorporated as financial advisors for the purpose of evaluating and advising Utah's Board of Directors as to the exchange ratio provided for in the Agreement. On October 20, 1976 Lehman Brothers Incorporated and Dean Witter & Co. Incorporated delivered to Utah's Board of Directors their respective opinions, conformed copies of which are attached hereto as Annex IV and Annex V, respectively, each stating in part that it is the opinion of such firm that the exchange ratio provided for upon the Merger is fair and equitable to the stockholders of Utah. Lehman Brothers Incorporated and Dean Witter & Co. Incorporated have for many years acted as financial advisors to, and managers and co-managers in the underwriting of securities for, Utah and Utah International Finance Corp., a wholly-owned subsidiary of Utah. Utah will pay Lehman Brothers Incorporated and Dean Witter & Co. Incorporated together a fee of $600,000 for their services in rendering their opinions, and has agreed to indemnify such firms and certain of their affiliates against certain liabilities. Government Approvals As the result of a joint request by General Electric and Utah, the Department of Justice has issued a letter dated October 1, 1976, pursuant to its Business Advisory Clearance Procedure indicating the absence of a present intention to take legal action to prevent or otherwise challenge the Merger. This action was in response to a second request to the Department of Justice. Previously, on July 23, 1976, the Antitrust Division advised that it was "unable to state a present intention not to sue to enjoin the proposed transaction under Section 7 of the Clayton Act" based upon its investigation and analysis of the "probable anticompetitive impact of the GE/Utah merger, particularly in the NSSS [nuclear steam supply system] market." Following receipt of that letter, the parties entered into the Amendment attached hereto as 5 |