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[BDM LOGO] BDM International, Inc.
1501 BDM Way
McLean, Virginia 22102
November 26, 1997
To Our Stockholders:
We are pleased to inform you that on November 20, 1997, BDM International,
Inc. entered into a Merger Agreement with TRW Inc. and Systems Acquisition Inc.,
a wholly owned subsidiary of TRW, pursuant to which that subsidiary has
commenced a tender offer (the "Offer") to purchase all of the outstanding shares
of BDM's common stock for a cash price of $29.50 per share. The Offer is
conditioned upon, among other things, the tender of a majority of the
outstanding shares. The Merger Agreement provides that following consummation of
the Offer, the TRW subsidiary will be merged with and into BDM (the "Merger")
and those BDM shares that are not acquired in the Offer will be converted into
the right to receive $29.50 per share in cash.
Your Board of Directors has unanimously approved the Merger Agreement, the
Offer and the Merger and has determined that the terms of the Offer and the
Merger are fair to, and in the best interests of, BDM and its stockholders, and
unanimously recommends that stockholders accept the Offer and tender their
shares pursuant to the Offer. In arriving at its recommendation, the Board of
Directors considered the factors described in the accompanying Schedule 14D-9,
including the opinion of BDM's financial advisor, Wasserstein Perella & Co.,
Inc., to the effect that the consideration to be received by BDM stockholders
pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view. A copy of Wasserstein Perella's written opinion is
attached to the Schedule 14D-9 as Schedule I.
The accompanying Offer to Purchase sets forth all of the terms of the
Offer. Additionally, the enclosed Schedule 14D-9 sets forth additional
information regarding the Offer and the Merger relevant to making an informed
decision. We urge you to read these materials carefully and in their entirety.
Very truly yours,
/s/ Philip A. Odeen
Philip A. Odeen
President and Chief Executive Officer
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------
BDM INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
BDM INTERNATIONAL, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
05537W209
(CUSIP NUMBER OF CLASS OF SECURITIES)
PHILIP A. ODEEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BDM INTERNATIONAL, INC.
1501 BDM WAY
MCLEAN, VIRGINIA 22102
(703) 848-5000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT.)
WITH COPIES TO:
WILLIAM J. GRANT, JR.
WILLKIE FARR & GALLAGHER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 821-8000
================================================================================
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is BDM International, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 1501 BDM Way, McLean, Virginia 22102. The title of the class
of equity securities to which this statement relates is the common stock, par
value $0.01 per share (the "Common Stock"), of the Company.
ITEM 2. TENDER OFFER OF OFFEROR.
This statement relates to the tender offer filed as part of a Tender Offer
Statement on Schedule 14D-1, dated November 26, 1997 (the "Schedule 14D-1"), by
Systems Acquisition Inc., a Delaware corporation ("Purchaser") and wholly owned
subsidiary of TRW Inc., an Ohio corporation ("Parent"), to purchase all the
outstanding shares of Common Stock (the "Shares") at a price of $29.50 per
Share, net to the seller in cash without interest thereon (the "Price Per
Share"), upon the terms and subject to the conditions set forth in Purchaser's
Offer to Purchase, dated November 26, 1997 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 20, 1997 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, that as soon as
practicable after the satisfaction or waiver of the conditions set forth in the
Merger Agreement, Purchaser will be merged with and into the Company (the
"Merger"), and the Company will continue as the surviving corporation in the
Merger (the "Surviving Corporation") and a wholly owned subsidiary of Parent. At
the the effective time of the Merger, subject to certain exceptions, each issued
and outstanding Share will be converted into the right to receive the price paid
by Purchaser for Shares in the Offer. A copy of the Merger Agreement is filed
herewith as Exhibit 1 and is incorporated herein by reference.
As set forth in the Schedule 14D-1, the principal executive office of
Purchaser is located at 1900 Richmond Road, Cleveland, Ohio 44124.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) (i) Certain contracts, agreements, arrangements or understandings
between the Company or its affiliates and certain of its directors and executive
officers are described in Schedule II hereto and are incorporated herein by
reference. Except as described herein (including in Schedule II hereto), to the
knowledge of the Company, as of the date hereof, there exist no material
contracts, agreements, arrangements or understandings and no actual or potential
conflicts of interest between the Company or its affiliates and (i) the
Company's executive officers, directors or affiliates or (ii) Purchaser, Parent
or their respective executive officers, directors or affiliates.
(ii) MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement
which constitutes a summary of all of the material provisions of the Merger
Agreement. The summary of Merger Agreement provisions herein is qualified in its
entirety by reference to the Merger Agreement. A copy of the Merger Agreement
has been filed with the Securities and Exchange Commission (the "Commission") as
Exhibit 1 hereto and is incorporated herein by reference. Capitalized terms not
otherwise defined below shall have the respective meanings set forth in the
Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable, but in no event later than five business days
following public announcement of the Merger Agreement. The obligation of Parent
to cause Purchaser to accept for payment any Shares tendered shall be subject to
the satisfaction of only the Offer Conditions described below under the caption
"Offer Conditions." Under the Merger Agreement, unless previously approved by
the Company in writing, Parent shall not permit Purchaser to (i) decrease the
Per Share Amount or change the form of consideration payable in the Offer,
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(ii) decrease the number of Shares sought in the Offer, (iii) amend or waive
satisfaction of the Minimum Condition (as defined below), or (iv) impose
additional conditions to the Offer or amend any other term of the Offer in any
manner adverse to the holders of Shares ("Stockholders"), provided that nothing
in the Merger Agreement will prohibit any waiver of any condition or term of the
Offer (other than the Minimum Condition) or any other action permitted thereby.
Upon the terms and subject to the conditions of the Offer, Parent is required to
cause Purchaser to accept for payment and purchase, as soon as practicable after
the Expiration Date (as defined in the Merger Agreement), all Shares validly
tendered and not properly withdrawn prior to the Expiration Date. Parent and
Purchaser may not terminate or withdraw the Offer or extend the Expiration Date,
unless at the Expiration Date, the Offer Conditions shall not have been
satisfied or earlier waived. Notwithstanding the foregoing, Purchaser may (i)
extend the Expiration Date (including as it may be extended) for up to ten
business days in connection with an increase in the consideration to be paid
pursuant to the Offer so as to comply with applicable rules and regulations of
the Commission, (ii) in its sole discretion, extend the initial Expiration Date
for up to ten business days after the initial Expiration Date, and (iii) extend
the initial Expiration Date (including as it may be extended) for up to ten
business days, notwithstanding that on such Expiration Date the Offer Conditions
shall have been satisfied or waived, if the number of Shares that have been
validly tendered and not properly withdrawn represent more than 50% but less
than 90% of the voting power of the then issued and outstanding Shares;
provided, however, that, in the case of clause (iii) of this sentence, Parent
and Purchaser expressly and irrevocably waive any Offer Condition that
subsequently may not be satisfied during such extension of the Offer.
Directors. The Merger Agreement provides that, promptly upon the purchase
by Purchaser of any Shares pursuant to the Offer (and assuming that the Minimum
Condition has been satisfied), and from time to time thereafter as Shares are
acquired by Purchaser, Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Company Board as will
give Purchaser, subject to compliance with Section 14(f) of the Exchange Act (as
defined in the Merger Agreement), representation on the Company's Board of
Directors (the "Company Board") equal to at least that number of directors which
equals the product of the total number of members of the Company Board (giving
effect to the directors appointed or elected pursuant to this sentence and
including current directors serving as officers of the Company) multiplied by
the percentage that the aggregate number of Shares beneficially owned by
Purchaser or any affiliate of Parent (including for purposes of such
calculations such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company) bears to the number of Shares outstanding.
At such times, if requested by Parent, the Company will also cause each
committee of the Company Board and the Board of Directors of each Company
Subsidiary (as defined in the Merger Agreement) to include persons designated by
Parent constituting the same percentage of each such committee and the Board of
Directors of each Company Subsidiary as Purchaser's designees are of the Company
Board. The Company shall, upon request of Parent, promptly increase the size of
the Company Board by whatever number of directors as is necessary to enable
Purchaser's designees to be elected to the Company Board in accordance with the
terms of the Merger Agreement and shall cause Purchaser's designees to be so
elected.
The Merger Agreement further provides that in the event that Purchaser's
designees are appointed or elected to the Company Board, until the Effective
Time, the Company Board shall have at least one member who is a director of the
Company on the date of the Merger Agreement and who is neither an officer of the
Company nor a designee, stockholder, affiliate or associate (within the meaning
of the federal securities laws) of Parent (one or more of such directors being
referred to herein as the "Independent Directors"). If no Independent Directors
remain, the other members of the Company Board shall designate one person to
fill one of the vacancies who shall not be either an officer of the Company or a
designee, shareholder, affiliate or associate of Parent, and such person shall
be deemed to be an Independent Director for purposes of the Merger Agreement.
Following the election or appointment of Purchaser's designees pursuant to the
Merger Agreement and prior to the Effective Time, any (i) amendment or
termination of the Merger Agreement on behalf of the Company, (ii) exercise or
waiver of any of the Company's rights or remedies under the Merger Agreement,
(iii) extension of the time for performance of Parent's obligations under the
Merger Agreement or (iv) other action required to be taken by the Company Board
in connection with the Merger Agreement will require the affirmative vote of a
majority of the Independent Directors then in office.
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The Merger. The Merger Agreement provides that as soon as practicable
after the satisfaction or waiver of the conditions to the Merger set forth in
the Merger Agreement, on the terms and subject to the conditions of the Merger
Agreement and in accordance with the Delaware Code, Purchaser shall be merged
with and into the Company, and the Company, as the Surviving Corporation in the
Merger shall continue its corporate existence under the laws of the State of
Delaware as a subsidiary of Parent. At Parent's election, any direct or indirect
subsidiary of Parent other than Purchaser may be merged with and into the
Company instead of Purchaser. In the event of such an election, the parties
agree to execute an appropriate amendment to the Merger Agreement to reflect
such election. The parties shall prepare and execute a certificate of merger in
order to comply in all respects with the requirements of the Delaware Code and
with the provisions of the Merger Agreement or, if applicable, a certificate of
ownership and merger.
Pursuant to the Merger Agreement, in the Merger each then outstanding Share
(other than shares held in the treasury of the Company or owned by Parent or any
direct or indirect wholly owned subsidiary of Parent (other than Shares held by
TRW Investment Management Company, its advisors or Parent's employee benefit
plans) or Dissenting Shares, as defined below) will be canceled and extinguished
and converted into the right to receive an amount in cash equal to the Per Share
Amount or such higher price as is paid by Purchaser pursuant to the Offer,
without interest thereon (the "Merger Consideration"). Although it is Parent's
intention to consummate the Merger as promptly as practicable, there can be no
assurance that the Merger will be consummated or, if consummated, of the timing
thereof.
The Merger Agreement also provides that the Certificate of Incorporation
and the Bylaws of the Surviving Corporation shall be the Certificate of
Incorporation and the Bylaws of Purchaser in effect at the Effective Time
(subject to any subsequent amendments) and that the directors of Purchaser
immediately prior to the Effective Time shall be the directors 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
their successors are duly elected or appointed and qualified.
Stockholders Meeting and Approval. Pursuant to the Merger Agreement, as
soon as practicable after the consummation of the Offer and if required by
applicable law, the Company will take all steps necessary to duly call, give
notice of, convene and hold a meeting of its Stockholders for the purpose of
voting upon the approval and adoption of the Merger Agreement and the
transactions contemplated thereby (the "Company Proposals"). The Merger
Agreement provides that (i) the Company shall prepare and file with the
Commission, and promptly thereafter shall mail to Stockholders, a proxy
statement in connection with a meeting of the Stockholders to consider the
Merger, or an information statement, as appropriate (such proxy statement or
information statement, as amended or supplemented, is referred to as the "Proxy
Statement"), (ii) the Proxy Statement will include the unanimous recommendation
of the Company Board that the Stockholders of the Company vote in favor of the
adoption of the Merger Agreement and the transactions contemplated thereby and
the written fairness opinion of Wasserstein Perella & Co., Inc. ("WP&Co."), the
Company's financial advisor, that the consideration to be received by the
Stockholders of the Company pursuant to the Offer and the Merger is fair from a
financial point of view and (iii) the Company will use its reasonable best
efforts to obtain any necessary approval by the Stockholders of the Company
Proposals.
The Merger Agreement provides that, notwithstanding the foregoing, in the
event that Purchaser shall acquire at least 90% of the outstanding Shares, the
Company will, at the request of Purchaser, subject to the satisfaction of the
conditions to the Merger set forth in the Merger Agreement, take all necessary
and appropriate action to cause the Merger to become effective as soon as
reasonably practicable after such acquisition, without a meeting of the
Company's Stockholders, in accordance with the "short form" merger provisions of
Section 253 of the Delaware Code.
Conversion of Shares. At the Effective Time, by virtue of the Merger and
without any action on the part of Purchaser, the Company or the holder of any of
the following securities:
(i) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled as described in clause
(ii) below and any Dissenting Shares) shall be canceled and extinguished
and be converted into the right to receive the Merger Consideration
promptly upon
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surrender of the certificate representing such Share or appropriate proof
of lost certificates, in accordance with the Merger Agreement and from and
after the Effective Time, the holders of certificates evidencing ownership
of any such Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares except as
otherwise provided for in the Merger Agreement or by applicable law;
(ii) each Share held in the treasury of the Company and each Share
owned by Parent or any direct or indirect wholly owned subsidiary of Parent
(other than Shares held by TRW Investment Management Company, its advisors,
or Parent's employee benefit plans) immediately before the Effective Time
shall be canceled and extinguished and no payment or other consideration
shall be made with respect thereto; and
(iii) the shares of Purchaser common stock outstanding immediately
prior to the Merger shall be converted into one validly issued, fully paid
and non-assessable share of the common stock of the Surviving Corporation,
which such share shall constitute all of the issued and outstanding capital
stock of the Surviving Corporation and shall be owned by Parent.
The Merger Agreement further provides that, notwithstanding any provision
of the Merger Agreement to the contrary, any Shares issued and outstanding
immediately prior to the Effective Time and held by a Stockholder who has
demanded and perfected his demand for appraisal of his Shares in accordance with
the Delaware Code (including, but not limited to Section 262 thereof) and as of
the Effective Time has neither effectively withdrawn nor lost his right to such
appraisal ("Dissenting Shares") shall not be converted into or represent a right
to receive the Merger Consideration, but the holder thereof shall be entitled to
only such rights as are granted by the Delaware Code. If any Stockholder who
demands appraisal of his Shares under the Delaware Code shall effectively
withdraw or lose (through failure to perfect or otherwise) his right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever occurs later, such Stockholder's Shares shall automatically be
converted into and represent only the right to receive the Merger Consideration,
without interest thereon, upon surrender of the Share Certificate(s).
Termination of the Merger Agreement. The Merger Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after adoption of the Merger Agreement by the
Stockholders:
(i) by mutual written consent of the Company and Parent or by the
mutual action of their respective Boards of Directors;
(ii) by either Parent or the Company if any nation or government, any
state or other political subdivision thereof, any entity, authority or body
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, domestic or foreign (each a
"Governmental Authority") shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the consummation of the transactions contemplated by the Merger
Agreement or, for the benefit of Parent only, the Stockholders Agreement
(as defined below), and such order, decree or ruling or other action shall
have become final and nonappealable;
(iii) by Parent if the Company shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements in the Merger Agreement and such breach is incapable of being
cured or has not been cured within one business day prior to the then
scheduled Expiration Date;
(iv) by Parent if (a) the Company Board or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Offer or the approval or adoption of any of the
Company Proposals, or failed to reconfirm its recommendation within five
business days after a written request to do so, or approved or recommended
any Takeover Proposal (as defined below) or (b) the Company Board or any
committee thereof shall have resolved to take any of the foregoing actions;
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(v) by Parent if the Offer shall have expired or been terminated or
withdrawn in accordance with the Merger Agreement without any Shares being
purchased under the Offer by Purchaser or any of the events that are Offer
Conditions shall have occurred and be continuing at the time of
termination;
(vi) by the Company or Parent if the Offer shall not have been
consummated on or before March 20, 1998, provided that the Company's
failure to perform any of its obligations under the Merger Agreement does
not result in the failure of the Offer to be so consummated by such time;
(vii) by the Company if Parent shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in the Merger Agreement, which breach or failure to
perform is incapable of being cured or has not been cured within one
business day prior to the Expiration Date;
(viii) by the Company in order to enter into a definitive agreement
providing for a Superior Proposal (as defined below) entered into in
accordance with the exceptions to the non-solicitation covenants described
below, provided that prior thereto the Company has paid the Termination Fee
(as defined below) in accordance with the Merger Agreement; or
(ix) by Parent if the Company, any of its officers or directors or
financial or legal advisors shall take any of the actions that would be
proscribed by the non-solicitation covenants described below but for the
exceptions thereto described below.
Non-Solicitation Covenants. The Merger Agreement provides that the Company
may not, nor permit any of the Company Subsidiaries to, nor authorize or permit
any of its officers, directors or employees, or any investment banker, attorney,
accountant or other representative retained by it or any of the Company
Subsidiaries 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 Takeover
Proposal or (ii) participate in any discussions or negotiations regarding any
Takeover Proposal. In addition, pursuant to the Merger Agreement, neither the
Company Board nor any committee thereof may (a) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by the Company Board or such committee of the Offer, the
Stockholders Agreement or the Company Proposals, (b) approve or recommend, or
propose to approve or recommend, any Takeover Proposal, or (c) cause the Company
to enter into any letter of intent, agreement in principle, acquisition
agreement or similar agreement related to any Takeover Proposal.
The foregoing restrictions contain exceptions so that if, at any time prior
to the Expiration Date and following the receipt of a Superior Proposal, the
Company Board determines in good faith, based upon the advice of outside
counsel, that such action is necessary for the Company Board to comply with its
fiduciary duties to the Stockholders under applicable law, in response to a
Superior Proposal that was made in circumstances not otherwise involving a
breach of the Merger Agreement, and subject to compliance with the covenants
described in the second succeeding paragraph, (i) the Company may (a) furnish
information with respect to the Company to any person pursuant to a
confidentiality agreement having terms substantially the same as the
Confidentiality Agreement, provided that (1) such confidentiality agreement may
not include any provision calling for an exclusive right to negotiate with the
Company and (2) the Company advises Parent of all such nonpublic information
delivered to such person concurrently with its delivery to the requesting party,
and (b) participate in negotiations regarding such Superior Proposal and (ii)
the Company Board may (a) withdraw or modify its approval or recommendation of
the Offer or the Company Proposals or (b) approve or recommend a Superior
Proposal, provided, however, that any actions described in the preceding clauses
(a) and (b) of this clause (ii) may be taken only at a time that is after the
fifth business day following Parent's receipt of written notice (a "Board Action
Notice") advising Parent that the Company Board has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal, identifying the person making such Superior Proposal and providing
notice of the determination of the Company Board of what action referred to
above that the Company Board has determined to take (provided further that the
foregoing proviso shall not prevent the Company Board from taking any actions
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described in clause (ii)(a) above within five business days of the Expiration
Date so long as the Board Action Notice is received by Parent prior to 12:00
Noon, New York City time, on the then-scheduled Expiration Date.
Under the Merger Agreement (i) the term "Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 15% or more of the assets of the Company and the
Company Subsidiaries or 15% or more of any class of equity securities of the
Company or any Company Subsidiary, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any Company Subsidiary, any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
Company Subsidiary, other than the transactions contemplated by the Merger
Agreement and (ii) the term "Superior Proposal" means a bona fide written
Takeover Proposal which the majority of the disinterested members of the Company
Board determines, in their good faith judgment (based on the opinion of
independent financial advisors) that the value of the consideration provided for
in such proposal exceeds 110% of the Per Share Amount then provided in the
Offer, and, considering all relevant factors, is as or more favorable to the
Company and the Stockholders than the Offer and the Merger and for which
financing, to the extent required, is fully committed or which, in the good
faith judgment of a majority of the disinterested members of the Company Board
(based on the advice of independent financial advisors), is reasonably capable
of being financed by such third party.
The Merger Agreement requires the Company to promptly advise Parent orally
and in writing of any request for information or of any Takeover Proposal, the
material terms and conditions of such request or Takeover Proposal and the
identity of the person making such request or Takeover Proposal and to promptly
advise Parent of all significant developments which could reasonably be expected
to culminate in the Company Board withdrawing, modifying or amending its
recommendation of the Offer, the Merger and the transactions contemplated by the
Merger Agreement.
The Merger Agreement does not prohibit the Company from (i) taking and
disclosing to the Stockholders a position contemplated by Rule 14e-2(a) under
the Exchange Act or (ii) from making any disclosure to the Stockholders,
provided, however, that neither the Company nor the Company Board nor any
committee thereof shall, except in accordance with the covenants in the Merger
Agreement described above, withdraw or modify, or propose publicly to withdraw
or modify, its position with respect to the Offer or the Company Proposals or
approve or recommend, or propose publicly to approve or recommend, a Takeover
Proposal.
Termination Fee. The Merger Agreement provides that the Company shall pay
to Parent a fee of $35,000,000 (the "Termination Fee") in the event that:
(i) a Takeover Proposal has been made known to the Company or has been
made directly to the Stockholders generally or any person or entity has
publicly announced an intention (whether or not conditional) to make a
Takeover Proposal and thereafter the Merger Agreement has been terminated
by the Company because the Offer has not been consummated on or before
March 20, 1998 (provided the Company's failure to perform any of its
obligations under the Merger Agreement does not result in the failure of
the Offer to be consummated by such time);
(ii) the Company terminates the Merger Agreement in order to enter
into a definitive agreement providing for a Superior Proposal entered into
in accordance with the non-solicitation provisions of the Merger Agreement;
(iii) Parent terminates the Merger Agreement after the Company Board
or any committee thereof has withdrawn or modified in a manner adverse to
Parent its approval or recommendation of the Offer or any of the Company
Proposals, or failed to reconfirm its recommendation within five business
days after a written request to do so, or approved or recommended any
Takeover Proposal or the Company Board or any committee thereof has
resolved to take any of the foregoing actions;
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(iv) Parent terminates the Merger Agreement after the Company or any
of its officers or directors or financial or legal advisors takes any
action that would be proscribed by the non-solicitation provisions of the
Merger Agreement, but for the exceptions contained therein; or
(v) Parent terminates the Merger Agreement after a Takeover Proposal
has been made and the Company has intentionally breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in the Merger Agreement which breach or failure to
perform is incapable of being cured and has not been cured within one
business day prior to the then scheduled Expiration Date;
provided that the Termination Fee will not become payable under clauses (i) or
(v) above unless and until, within 18 months of such termination, the Company or
any of the Company Subsidiaries enters into a definitive agreement providing for
any Takeover Proposal.
In the event a Termination Fee becomes payable pursuant to the Merger
Agreement, in addition to the Termination Fee, the Company is obligated to pay
up to $5,000,000 of Parent's reasonable out-of-pocket charges and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby. Such charges and expenses and the Termination Fee must be
paid by the Company regardless of any alleged breach by Parent of its
obligations under the Merger Agreement, provided that no payment of such amounts
by the Company will operate or be construed as a waiver by the Company of any
breach of the Merger Agreement by Parent or Purchaser or of any rights of the
Company in respect thereof.
Except as described above, each party will bear its own expenses in
connection with the Merger Agreement and the transactions contemplated thereby.
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date thereof to the Effective Time, the Company is obligated to, and to
cause its accountants and legal counsel to, give Parent and its respective
authorized representatives (including, without limitation, its financial
advisors, accountants and legal counsel), at all reasonable times, access as
reasonably requested to all personnel, offices and other facilities and to all
contracts, agreements, commitments, books and records of or pertaining to the
Company and the Company Subsidiaries. The Company will also permit the foregoing
to make such reasonable inspections as they may require and will cause its
officers promptly to furnish Parent with (i) such financial and operating data
and other information with respect to the business and properties of the Company
and the Company Subsidiaries as Parent may from time to time reasonably request,
and (ii) a copy of each report, schedule and other document filed or received by
the Company or any of the Company Subsidiaries pursuant to the requirements of
applicable securities laws or the National Association of Securities Dealers
("NASD").
The parties to the Merger Agreement will continue to be bound by the terms
of the Confidentiality Agreement, dated as of September 12, 1997, between Parent
and the Company (the "Confidentiality Agreement") except that the
non-solicitation of Company employees, standstill and certain other provisions
of the Confidentiality Agreement are terminated as of the date of the Merger
Agreement and all of Parent's obligations under the Confidentiality Agreement
will be extinguished as of the Effective Time. In the event of a termination of
the Merger Agreement in accordance with its terms, Parent's covenants regarding
non-solicitation of Company employees, the standstill provisions and certain
other provisions in the Confidentiality Agreement will be reinstated as of the
date of such termination.
The Merger Agreement further provides that each of Parent and Purchaser
will hold and will cause its respective officers, employees, accountants,
counsel, financial advisors and other representatives to hold, any nonpublic
information in accordance with the terms of the Confidentiality Agreement. A
copy of such Confidentiality Agreement is filed herewith as Exhibit 4 and is
incorporated herein by reference.
Efforts to Consummate. On the terms and subject to the conditions of the
Merger Agreement, each of the parties has agreed to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by the Merger
Agreement, including, but not limited to,
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(i) obtaining all consents, approvals, waivers or authorizations of, notices to
or declarations or filings ("Consents") with Governmental Authorities and each
party's respective other third parties required for the consummation of the
Offer and the Merger and the transactions contemplated thereby, (ii) timely
making all necessary filings under the HSR Act (as defined in the Merger
Agreement) and German anticompetition laws and (iii) having vacated, dismissed
or withdrawn any order, stay, decree, judgment or injunction of any Governmental
Authority which temporarily, preliminarily or permanently prohibits or prevents
the transactions contemplated by the Merger Agreement. Upon the terms and
subject to the conditions of the Merger Agreement, each party has committed to
use their reasonable best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary to satisfy the other conditions
to the closing of the transactions contemplated by the Merger Agreement.
Notwithstanding any other provision contained in the Merger Agreement, in
no event will Parent, Purchaser or any of their affiliates be required to take
or fail to take any action in order to obtain or make a Consent arising out of
any contractual or legal obligation of or applicable to the Company or the
Company Subsidiaries, other than obligations such as those under the HSR Act
which apply to both the Company and Parent, Purchaser and any of their
affiliates, and in no event will Parent, Purchaser or any of their affiliates be
required to enter into or offer to enter into any divestiture, hold-separate,
business limitation or similar agreement or undertaking in connection with the
Merger Agreement or the transactions contemplated thereby.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
the Company has covenanted and agreed that, except for certain limited
exceptions set forth in the Company Disclosure Letter dated November 20, 1997,
during the period from the date of the Merger Agreement to the Effective Time,
the Company shall conduct, and shall cause the Company Subsidiaries to conduct,
its or their businesses in the ordinary course and consistent with past
practice, and the Company shall, and shall cause the Company Subsidiaries to,
use its or their reasonable commercial efforts to preserve intact its business
organization, to keep available the services of its officers and employees and
preserve intact the present commercial relationships of the Company and the
Company Subsidiaries with all persons with whom it does business. Without
limiting the generality of or effect of the foregoing, the Company has agreed
that neither it nor any of the Company Subsidiaries will:
(i) amend or propose to amend its certificate of incorporation or
bylaws (or comparable governing instruments);
(ii) authorize for issuance, issue, deliver, grant, sell, pledge,
dispose of or propose to issue, deliver, grant, sell, pledge or dispose of
any shares of, or any rights of any kind to acquire or sell any shares of,
the capital stock or other securities of the Company or any of the Company
Subsidiaries, except for (a) the issuance of up to 3,327,445 Shares
pursuant to the exercise of either incentive or non-qualified stock options
outstanding on November 19, 1997 in accordance with their present terms and
(b) shares issued under the Company's 1996 Employee Stock Purchase Plan
that are issuable on or prior to the date of the Merger Agreement;
(iii) split, combine or reclassify any shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, other than dividends or distributions to the Company or a
Company Subsidiary in the ordinary course of business, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire,
directly or indirectly, any shares of its capital stock or other
securities;
(iv) (a) other than in the ordinary course of business consistent with
past practice, (1) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for
the obligations of any person or (2) make any loans, advances or capital
contributions to, or investments in, any other person (other than to a
Company Subsidiary and customary travel, relocation or business advances to
employees); (b) acquire the stock or assets of, or merge or consolidate
with, any other person; (c) voluntarily incur any material liability or
obligation (absolute, accrued, contingent or otherwise) other than in the
ordinary course of business consistent with past practice; (d) sell,
transfer,
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<PAGE> 11
mortgage, pledge or otherwise dispose of, or encumber, or agree to sell,
transfer, mortgage, pledge or otherwise dispose of or encumber, any assets
or properties, real, personal or mixed material to the Company and the
Company Subsidiaries other than sales of products in the ordinary course of
business and in a manner consistent with past practice; (e) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any other person (other than in the
ordinary course of business, consistent with past practice); (f) enter into
any contract or agreement other than in the ordinary course of business
consistent with past practice; or (g) authorize any single capital
expenditure which is in excess of $1,400,000 or capital expenditures
(during any two month period) which are, in the aggregate, in excess of
$4,000,000 for the Company and the Company Subsidiaries taken as a whole;
(v) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health
or other welfare, stock option or other equity, pension, retirement,
vacation, severance, deferred compensation or other compensation or benefit
plan, policy, agreement, trust, fund or arrangement with, for or in respect
of, any Stockholder, officer, director, other employee, agent, consultant
or affiliate other than (a) as required pursuant to the terms of agreements
in effect on the date of the Merger Agreement and specifically disclosed to
Parent (b) increases in salaries of employees who are not directors or
officers or Key Employees ("Key Employees" being all employees entitled to
severance and retention bonuses under arrangements established pursuant to
the Merger Agreement) made in the ordinary course of business consistent
with past practice, or (c) increases in salaries of Key Employees (other
than to Key Employees who are officers or are entitled to senior management
severance) with Parent's written consent, which may not be unreasonably
withheld;
(vi) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(vii) make any material tax election, settle or compromise any
material federal, state, local or foreign tax liability, or waive any
statute of limitations for any tax claim or assessment;
(viii) settle or compromise any pending or threatened suit, action or
claim which is material or which relates to the transactions contemplated
thereby;
(ix) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of the Company Subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(x) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction (a) in the ordinary course of
business consistent with past practice of liabilities reflected or reserved
against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice and (b) of
liabilities required to be paid, discharged or satisfied pursuant to the
terms of any contract in existence on the date hereof (including, without
limitation, benefit plans relating to directors) or entered into in
accordance with the Merger Agreement;
(xi) permit any insurance policy naming the Company or any of the
Company Subsidiaries as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Parent, except in the ordinary
course of business consistent with past practice; or
(xii) take, or offer or propose to take, or agree to take in writing
or otherwise, any of the actions described above or any action which would
make any of the representations or warranties of the Company contained in
the Merger Agreement untrue and incorrect in any material respect as of the
date when made if such action had then been taken, or would result in any
of the Offer Conditions not being satisfied.
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The Company also agreed to, and to cause the Company Subsidiaries to, use
its or their best efforts to comply in all material respects with all laws
applicable to it or any of its properties, assets or business and maintain in
full force and effect all the permits of the Company necessary for, or otherwise
material to, such business.
Severance And Employee Benefit Arrangements. The Merger Agreement provides
that prior to the Effective Time, the Company will terminate its existing
severance plan, which was adopted as of September 26, 1997 (the "Company
Supplemental Severance Plan"), and that Parent will (i) enter into new
individual employment agreements with certain of the Company's executive
officers which will become effective upon the consummation of the Offer and (ii)
adopt the new severance arrangements described below. The Company Supplemental
Severance Plan provided, among other things, for the payment of severance
amounts and benefits of up to three times salary to the Company's executive
officers and certain other employees, including all those in positions of vice
president and above, upon certain terminations of employment following a change
in control. If the Merger Agreement is terminated prior to the Effective Time,
the new employment agreements and severance arrangements will not be effective,
and the Company Supplemental Severance Plan will continue in effect. The
following is a summary of the material terms of the new employment agreements
(the "New Employment Agreements") (the form of which is filed herewith as
Exhibit 3 and is incorporated herein by reference), severance arrangements and
other employee benefits arrangements made pursuant to the Merger Agreement.
New Employment Agreements. Each of Philip A. Odeen, the Company's
President and Chief Executive Officer, William C. Hoover, an Executive Vice
President of the Company, Thomas A. Grissen, President, State and Local Systems,
David L. Patterson, President, Integrated Supply Chain, Helen M. Seltzer,
Corporate Vice President of the Company, and Roy V. Woodle, President and Chief
Executive Officer of Vinnell Corporation, a subsidiary of the Company, will
enter into a New Employment Agreement. During the three year term of each New
Employment Agreement, the executive will receive (i) an annual base salary of
not less than his or her annual base salary in effect immediately prior to the
Effective Time, (ii) annual incentive compensation based on incentive target
percentages of base salary comparable to such percentages in effect immediately
prior to the Effective Time and (iii) a continuation of comparable benefits. If
the executive is involuntarily terminated other than for cause, or if the
executive voluntarily terminates for certain specified limited reasons, he or
she will receive a termination payment determined as follows: (i) if the
termination occurs on or prior to the second anniversary of the Effective Time,
the termination payment will be three times the sum of the executive's annual
salary and target annual incentive compensation in effect immediately prior to
the termination, multiplied by a fraction the numerator of which is the number
of full months remaining in the employment term and the denominator of which is
36 and (ii) if the termination occurs after the second anniversary of the
Effective Time, the termination payment will be the sum of the executive's
annual salary and target annual compensation in effect immediately prior to the
termination.
Management Severance. Up to 30 management employees and five senior
management employees who are not parties to a New Employment Agreement, will be
covered by a management severance policy which, among other things, will provide
for a termination payment if the employee is involuntarily terminated, other
than for cause, within two years of the Effective Time. The amount of the
termination payment will vary depending upon the time of their termination
relative to the Effective Time with a maximum termination payment of two times
the sum of the employee's annual salary and target annual incentive compensation
in effect at the time of termination.
Senior Management Severance. Five members of senior management who are not
parties to New Employment Agreements will, in addition to severance the benefits
described in the foregoing paragraph, receive a retention bonus equal to between
two and four months base salary provided they remain employed by the Surviving
Corporation, or another corporation designated by Parent, for a period between
six and twelve months after the Effective Time.
Professional Severance. Up to 85 management employees will be covered by a
professional severance policy which, among other things, will provide for a
termination payment if the employee is involuntarily
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terminated, other than for cause, within one year of the Effective Time. The
amount of the termination payment will vary depending upon the time of the
termination relative to the Effective Time with a maximum termination payment of
the sum of the employee's annual salary and target annual incentive compensation
in effect at the time of termination.
Long-Term Incentive Plan; Retention Bonuses. In the Merger Agreement,
Parent and the Company agreed to develop a new long-term incentive plan that is
designed to incentivize and retain key employees of the Company. In addition, in
the Merger Agreement, Parent and the Company agreed to adopt a retention bonus
program to encourage certain employees not covered by the New Employment
Agreements or the new severance policies described above to remain employed by
the Surviving Corporation following the Effective Time. A covered employee will
receive a bonus equal to between two and four months base salary (in addition to
remaining eligible for normal severance benefits), provided such employee
remains employed for a period of between six and 12 months after the Effective
Time. If a covered employee remains employed for a period of at least four
months, but less than six months, after the Effective Time, the employee will
receive a bonus equal to between one and two months base salary (in addition to
remaining eligible for normal severance benefits).
Continuation of Certain Company Employee Benefit Plans. The Merger
Agreement provides that Parent will continue the Company's Supplemental
Executive Retirement Plan for current plan participants and Executive Deferred
Compensation Plan, or, in either case, provide comparable benefits. The Merger
Agreement also provides for the continuation of the Company 401(k) Savings Plan
and the Company-Oklahoma 401(k) Savings Plan, subject to certain amendments made
in connection with the Merger.
Indemnification. Purchaser and Parent have agreed in the Merger Agreement
that all rights to indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time existing in favor of the
current or former directors, officers or employees of the Company as provided in
the Company's certificate of incorporation or by-laws will be assumed by the
Surviving Corporation, and Parent will cause the Surviving Corporation to honor
such obligations in accordance with the terms thereof, without further action,
as of the Effective Time, and such rights will continue in full force and effect
in accordance with their respective terms. Such rights, and the Surviving
Corporation's and Parent's concomitant obligations, shall apply in all respects
to the current or former directors, officers and employees of each of the
Company Subsidiaries as though such directors, officers and employees were
entitled to indemnification rights pursuant to the Company's certificate of
incorporation or bylaws as in effect on the date of the Merger Agreement. In
addition, from and after the Effective Time, directors and officers of the
Company who become or remain directors or officers of Parent will be entitled to
the same indemnity rights and protections (including those provided by
directors' and officers' liability insurance) as are afforded to other directors
and officers of Parent. The Merger Agreement provides further that Parent will,
and will cause the Surviving Corporation to, maintain for a period of not less
than six years from the Effective Time policies of directors' and officers'
liability insurance equivalent in all material respects to those maintained by
or on behalf of the Company and the Company Subsidiaries on the date of the
Merger Agreement (and having coverage and containing terms and conditions which
in the aggregate are not less advantageous to the persons currently covered by
such policies as insured) with respect to claims arising from any actual or
alleged wrongful act or omission occurring prior to the Effective Time for which
a claim has not been made against any director or officer of the Company and/or
any director or officer of the Company Subsidiaries prior to the Effective Time,
so long as the aggregate annual premium therefor would not be in excess of 150%
of the premium currently paid by the Company and the Company Subsidiaries for
such insurance on the date of the Merger Agreement (such 150% amount, the
"Maximum Premium"). If the annual premium for such insurance exceeds the Maximum
Premium, then Parent will cause the Surviving Corporation to provide the maximum
coverage available for the Maximum Premium.
Options. In the Merger Agreement, the Company represented and warranted
and Parent and Purchaser acknowledged that all outstanding options to purchase
Shares (the "Company Options") granted under the Company's stock option plans,
each as amended (collectively, the "Company Option Plans"), whether or not then
exercisable or vested, pursuant to the terms of the Company Option Plans, will
be fully exercisable and
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vested during the ten-day period immediately prior to the initial Expiration
Date, and that, pursuant to the terms of the Company Option Plans, all Company
Options which are outstanding immediately prior to the consummation of the Offer
shall be canceled as of the consummation of the Offer and the holders of Company
Options will be entitled to receive from the Company (or, at Parent's option,
Parent) upon consummation of the Offer, in respect of each Share subject to such
Company Option, an amount in cash equal to the excess, if any, of the Per Share
Amount over the exercise price per share of such Company Option (such payment to
be net of applicable withholding taxes). With respect to any person subject to
Section 16(a) of the Exchange Act, any such amount shall be paid as soon as
practicable after the first date payment can be made without liability to such
person under Section 16(b) of the Exchange Act. Upon the consummation of the
Offer, Parent shall provide the Company with the funds necessary to satisfy any
such obligations under the Merger Agreement.
The Company has agreed to cause the Company Option Plans to terminate as of
the Effective Time and all Company Option Plans provide, or have been amended to
provide, for the actions described in the preceding paragraph.
As of November 19, 1997, 3,327,445 Shares were issuable pursuant to Company
Options (and will therefore become exercisable and canceled pursuant to the
foregoing paragraph) and the aggregate exercise price of such options is
approximately $49 million.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's capitalization, the absence of any required filings and consents, the
absence of conflicts with charter documents and contracts, Commission filings
and financial statements, the absence of certain changes or events, compliance
with laws, the absence of litigation, employee benefit plans, the filing and
compliance of reports with the requirements of the Commission, environmental
matters, brokers and taxes.
Offer Conditions. Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
promulgated under the Exchange Act (relating to Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and subject to any such rules or regulations, may delay the
acceptance for payment of any tendered Shares and (except as provided in the
Merger Agreement) amend or terminate the Offer (whether or not any Shares have
been theretofore purchased or paid for pursuant to the Offer) (i) unless the
following conditions shall have been satisfied: (a) there shall be validly
tendered and not withdrawn prior to the Expiration Date a number of Shares which
represents at least a majority of the total voting power of the outstanding
securities of the Company entitled to vote in the election of directors or in a
merger ("Voting Securities") calculated on a fully diluted basis (the "Minimum
Condition") ("on a fully diluted basis" having the following meaning as of any
date: the number of Voting Securities outstanding, together with Voting
Securities issuable pursuant to obligations outstanding at that date under
employee stock option or other benefit plans or otherwise) and (b) any
applicable waiting period under the HSR Act and similar German laws (see Item
8(c)) shall have expired or been terminated prior to the Expiration Date or (ii)
if at any time after the date of the Merger Agreement and before the time of
payment for any such Shares (whether or not any Shares have theretofore been
accepted for payment or paid for pursuant to the Offer), any of the following
events shall occur and be continuing:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction or
a law shall have been promulgated, enacted, taken or threatened by a
Governmental Authority of competent jurisdiction which in any such case (1)
restrains or prohibits the making or consummation of the Offer, the
consummation of the Merger or the transactions contemplated by the
Stockholders Agreement, (2) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or subsidiaries) of any
portion of its or the Company's business or assets which is material to the
business of all such entities taken as a whole, or compels Parent (or any
of its affiliates or subsidiaries) to dispose of or hold separate any
portion of its or the Company's business or assets which is material to the
business of all such entities taken as a whole, (3) imposes material
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limitations on the ability of Purchaser effectively to acquire or to hold
or to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by Purchaser on all
matters properly presented to the Stockholders, or (4) imposes any material
limitations on the ability of Parent or any of its affiliates or
subsidiaries effectively to control in any material respect the business
and operations of the Company;
(b) any Governmental Authority shall have instituted any action, suit
or proceeding seeking any relief or remedy referred to in paragraph (a) or
material damages as a result of any of the Merger Agreement, the
Stockholders Agreement or any transactions contemplated thereby;
(c) the Merger Agreement shall have been terminated by the Company or
Parent in accordance with its terms or any event shall have occurred which
gives Parent or Purchaser the right to terminate the Merger Agreement or
not to consummate the Merger;
(d) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely
in the future to have a material adverse effect on the business, assets,
condition (financial or otherwise), liabilities or results of operations of
the Company and the Company Subsidiaries taken as a whole (a "Company
Material Adverse Effect").
(e) there shall have occurred (1) any general suspension of, or
limitation on prices (other than suspensions or limitations triggered on
the New York Stock Exchange, Inc. by price fluctuations on a trading day)
for, trading in securities on any national securities exchange or the
over-the-counter market, (2) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (3) any
material limitation (whether or not mandatory) by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, on, the extension of credit by banks or other lending
institutions, (4) a commencement of a war or armed hostilities or other
national calamity directly involving the United States and Parent shall
have determined that there is a reasonable likelihood that such event may
be of material adverse significance to it or the Company, (5) any decline
of at least 20% in the Dow Jones Average of Industrial Stocks or 20% in the
Standard & Poor's 500 Index from the levels thereof as of the last trading
day immediately preceding the date of the Merger Agreement or (6) in the
case of any of the foregoing existing at the time of the execution of the
Merger Agreement, a material acceleration or worsening thereof;
(f) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 25% of the outstanding Shares has been acquired by any
person (including the Company, any of the Company Subsidiaries or
affiliates thereof) or group (as defined in Section 13 (d) (3) of the
Exchange Act), other than Purchaser or any of its affiliates;
(g) the Company or any of its officers, directors or financial or
legal advisors shall have, directly or indirectly, (1) solicited,
initiated, encouraged (including by way of furnishing information) or taken
any other action designed or reasonably likely to facilitate, any inquiries
or the making of any proposal which constituted, or may reasonably be
expected to lead to, any Takeover Proposal or (2) participated in any
discussions or negotiations regarding any Takeover Proposal regardless of
whether or not any of the foregoing actions are permitted by the Merger
Agreement;
(h) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified by reference to materiality or a
Company Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be true
and correct in any respect that is reasonably likely to have a Company
Material Adverse Effect, in each case as if such representations and
warranties were made at the time of such determination;
(i) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under the Merger Agreement; or
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(j) Parent and the Company shall have agreed that Parent shall amend
the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto;
which, in the judgment of Parent with respect to each and every matter referred
to above and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances giving rise to any such
condition (except for any action or inaction by Parent or any of its affiliates
constituting a breach of the Merger Agreement) or (other than the Minimum
Condition) may be waived by Parent in whole or in part at any time and from time
to time in its sole discretion (subject to the terms of the Merger Agreement).
The failure by 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 other 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.
Merger Conditions. Under the Merger Agreement, the obligations of each
party to effect the Merger shall be subject to the fulfillment or waiver at or
prior to the Effective Time of the following conditions, provided that the
obligation of each party to effect the Merger shall not be relieved by the
failure of any such conditions if such failure is the proximate result of any
breach by such party of any of its material obligations under the Merger
Agreement:
(i) Purchaser shall have accepted for payment all Shares validly
tendered in the Offer and not withdrawn; provided, however, that neither
Parent nor Purchaser may invoke this condition if Parent shall have failed
to purchase Shares so tendered and not withdrawn in violation of the terms
of the Merger Agreement or the Offer;
(ii) if required, the Company Proposals shall have been approved at or
prior to the Effective Time by the requisite vote of the Stockholders of
the Company in accordance with the Delaware Code (as defined in the Merger
Agreement) and the Company's Certificate of Incorporation, which shall be
solely the affirmative vote of a majority of the outstanding Shares;
(iii) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or other Governmental Authority which
temporarily, preliminarily or permanently prohibits or prevents the
consummation of the Merger which has not been vacated, dismissed or
withdrawn prior to the Effective Time; or
(iv) on or prior to the closing date of the Merger, the waiting period
(and any extensions thereof) applicable to the Merger under the HSR Act and
similar German laws (see Item 8(c)) shall have been terminated or shall
have expired.
Pursuant to the Merger Agreement, the obligations of Parent and Purchaser
to effect the Merger are subject to the satisfaction of the condition (which may
be waived in whole or in part by Parent) that the Company shall have performed
in all material respects all material obligations required to be performed by it
under the Merger Agreement on or before the earlier of (i) such time as Parent's
or Purchaser's designees shall constitute at least a majority of the Company
Board and (ii) the closing date; provided, however, that no failure by the
Company to have so performed any such material obligation shall constitute a
failure of satisfaction of the foregoing condition where the Company's failure
of performance was caused by Parent or occurred, and was actually known to
Parent, at or prior to the time Parent, Purchaser or any of their affiliates
accepted for payment any Shares pursuant to the Offer.
STOCKHOLDERS AGREEMENT
The following summary of the material terms of the Stockholders Agreement
is qualified in its entirety by reference to the copy of the Stockholders
Agreement filed herewith as Exhibit 2 and incorporated herein by reference.
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In connection with the execution of the Merger Agreement, certain
affiliates of The Carlyle Group, L.P. (each, a "Carlyle Stockholder") which
beneficially own 7,660,000 Shares, or approximately 25.8% of the issued and
outstanding Shares (the "Option Shares"), entered into a definitive agreement
(the "Stockholders Agreement") in which they have agreed to tender their Shares
pursuant to the Offer and have granted Purchaser an option (the "Option") to
purchase such Shares at $29.50 per Share if (i) the Company becomes obligated to
pay the Termination Fee by reason of a termination of the Merger Agreement (a)
by Parent because the Company has breached in any material respect any of its
representations, warranties, covenants or other agreements in the Merger
Agreement (subject to opportunity to cure), (b) by Parent because the Company
Board has withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Offer or any of the Company Proposals or failed to
reconfirm its recommendation within five business days after a written request
to do so, or approved or recommended any Takeover Proposal or the Company Board
or any committee thereof has resolved to take any such action, or (c) by the
Company in order to enter into a definitive agreement providing for a Superior
Proposal or (ii) the Merger Agreement is terminated in accordance with its terms
for reasons other than the failure of Parent or Purchaser to fulfill any
obligation under the Merger Agreement. The Option also becomes exercisable if
the Offer is consummated but (due to failure by any Carlyle Stockholder to
validly tender and not properly withdraw) Purchaser has not accepted for payment
or paid for the Option Shares (in which case the price per Option Share will be
equal to the highest price paid in the Offer). The Option will become
exercisable in whole but not in part on the first to occur of the foregoing
events or, if later, the date on which the HSR Act and similar German law
waiting periods have expired or terminated or been waived or there exists no
injunction with respect to exercise of the Option and will remain exercisable
for a period of 30 days after the Option first becomes exercisable.
Voting of Shares. In the Stockholders Agreement, each Carlyle Stockholder
agrees that from the date thereof until the termination of the Stockholders
Agreement, at any meeting of the Stockholders, however called, and in any action
by consent of the Stockholders, such Carlyle Stockholder shall vote its Shares
(i) in favor of the Merger and the Merger Agreement (as amended from time to
time), (ii) against any Takeover Proposal and against any proposal for action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or which is reasonably likely to result in any of the conditions of
the Company's obligations under the Merger Agreement not being fulfilled, any
change in the directors of the Company, any change in the present capitalization
of the Company or any amendment to the Company's Certificate of Incorporation or
Bylaws, any other material change in the Company's corporate structure or
business, or any other action which in the case of each of the matters referred
to in this clause (ii) could reasonably be expected to impede, interfere with,
delay, postpone or materially adversely affect the transactions contemplated by
the Merger Agreement or the likelihood of such transactions being consummated
and (iii) in favor of any other matter necessary for consummation of the
transactions contemplated by the Merger Agreement which is considered at any
such meeting of Stockholders or in such consent, and in connection therewith to
execute any documents which are necessary or appropriate in order to effectuate
the foregoing, including the ability for Purchaser or its nominees to vote the
Shares directly.
Agreement not to Dispose or Encumber Shares. Each Carlyle Stockholder
agreed that during the term of the Stockholders Agreement, it will not, and will
not offer or agree to, sell, transfer, tender, assign, pledge, hypothecate or
otherwise dispose of, or create or permit to exist any encumbrance on any of
such Carlyle Stockholder's Shares.
Grant of Proxy. Each Carlyle Stockholder agrees to revoke any and all
prior proxies or powers of attorney in respect of any of their respective Shares
and constituted and appointed Purchaser and Parent, or any nominee of Purchaser
and Parent, with full power of substitution and resubstitution, at any time
during the term of the Stockholders Agreement, as its true and lawful attorney
and proxy (its "Proxy"), for and in its name, place and stead, to demand that
the Secretary of the Company call a special meeting of Stockholders for the
purpose of considering any matter referred to in the above paragraph captioned
"Voting of Shares" and to vote each of such Shares as its Proxy, at every
annual, special, adjourned or postponed meeting of Stockholders, including the
right to sign its name (as stockholder) to any consent, certificate or other
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document relating to the Company that the law of the State of Delaware may
permit or require in connection with any such matter.
Agreement to Tender. Each Carlyle Stockholder agreed to validly tender (or
cause the record owner of such Shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer, its Shares. For its Shares
validly tendered in the Offer and not properly withdrawn, each Carlyle
Stockholder will be entitled to receive the highest price paid by Parent
pursuant to the Offer.
No Solicitation. Each Carlyle Stockholder agreed in the Stockholders
Agreement that during the term of the Stockholders Agreement, it will not,
directly or indirectly, through any officer, director, agent or other
representative, solicit, initiate or encourage, or take any other action
designed or reasonably likely to facilitate, any inquiries or the making of any
proposal from any person (other than Parent, Purchaser and any of their
affiliates) relating to (i) any acquisition of all or any of the Carlyle
Stockholder's Shares or (ii) any transaction that constitutes a Takeover
Proposal, or participate in any negotiations regarding, or furnish to any person
any information with respect to, or otherwise cooperate in any way with, or
assist or participate in or facilitate or encourage, any effort or attempt by
any person to do or seek any of the foregoing. Each Carlyle Stockholder agreed
to notify Parent and Purchaser promptly if any such proposal or offer, or any
inquiry or contact with any person with respect thereto, is made and shall, in
any such notice to Parent and Purchaser, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact.
Notwithstanding any provision of this paragraph to the contrary, if any Carlyle
Stockholder or any officer, director, agent or representative of such Carlyle
Stockholder is a member of the Company Board, such member may take actions in
such capacity to the extent permitted by the Merger Agreement.
Representations and Warranties. The Stockholders Agreement contains
various customary representations and warranties of the parties thereto
including, without limitation, representations and warranties by the Carlyle
Stockholders as to organization, power and authority, the absence of any
required filings and consents, the absence of conflicts with charter documents
and contracts and title to Shares. The Stockholders Agreement also provides
that, as of the Effective Time, each Carlyle Stockholder terminates on behalf of
itself and its affiliates, any and all contractual rights in favor of such
Carlyle Stockholder and its affiliates then in effect between such Carlyle
Stockholder or affiliates, on the one hand, and the Company, on the other hand,
including without limitation, any monitoring and advisory fees to The Carlyle
Group, L.P.
Termination. The Stockholders Agreement shall terminate and be of no
further force and effect (i) by the written mutual consent of the parties
thereto, (ii) by Parent or any Carlyle Stockholder (with respect to such Carlyle
Stockholder) if the Offer or the Merger shall not have been consummated on or
before March 20, 1998, or (iii) automatically and without any required action of
the parties thereto upon the earlier to occur of (a) the Effective Time of the
Merger and (b) immediately after the termination of the Merger Agreement in
accordance with its terms; provided, however, that in the event that the Stock
Option shall become exercisable, the provisions of the Stockholders Agreement
governing the exercise and exercisability of the Option, the representations,
warranties and covenants (other than covenants with respect to voting, grant of
proxy, agreement to tender, and transfer restrictions) of the Stockholders,
representations and warranties of Parent and Purchaser and other miscellaneous
matters of the Stockholders Agreement shall survive the termination of the
Stockholders Agreement until the earlier to occur of the closing of the exercise
of the Stock Option and the expiration of the Stock Option. No such termination
of the Stockholders Agreement shall relieve any party thereto from any liability
for any breach of the Stockholders Agreement prior to termination.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
At a meeting held on November 20, 1997, the Company Board unanimously
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer, the Merger and the Stockholders
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<PAGE> 19
Agreement, and determined that the terms of the Offer and the Merger are fair
to, and in the best interests of, the Stockholders.
THE COMPANY BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
A letter to the Company's stockholders communicating the Company Board's
recommendation and the press release announcing the Merger Agreement and related
transactions are filed herewith as Exhibits 5 and 6, respectively, and are
incorporated herein by reference.
(b)(i) BACKGROUND OF THE OFFER
During the summer of 1997, the senior management of the Company considered
various strategic options in pursuit of its objective of building one of the
global leaders in the information technology services industry. The most
desirable options were either to complete a large acquisition or entertain a
merger with another large information technology services firm in order to
achieve a more substantial base for strategic development. Due to the high
multiples at which commercial information technology companies traded in the
marketplace, the Company gravitated towards the idea of a merger of the Company
with another company, a merger that would most probably result in the
acquisition of the Company by the ultimate business partner.
During the summer of 1997, as part of the same evaluation effort, the
Company's senior management had a number of meetings with leading investment
banks, both in the United States and Europe, related to potential acquisitions
and other ways to build stockholder value. The Company ultimately conducted a
series of meetings with WP&Co., its financial advisor, which advised the Company
concerning a range of strategic options available to the Company. At one of
these meetings, the advantages of a possible combination (involving the sale of
the Company) with various companies, including Parent, was first discussed.
During the last week of August 1997, Philip A. Odeen, President and Chief
Executive Officer of the Company, conferred with several other Company
executives and members of the Company Board and decided to explore the
possibility of various strategic combinations, including a sale to Parent.
WP&Co. was formally engaged to act as the financial advisor to the Company on
September 8, 1997. At a meeting of the Executive Committee of the Company Board
held on September 9, 1997, the Company decided to pursue discussions with
several companies, including Parent, that were believed to be candidates for
pursuing discussions of a possible business combination.
In September 1997, a representative of WP&Co. contacted those companies,
including Parent, and information regarding the Company was made available to
them. A representative of Parent indicated that Parent would be interested in
exploring the possible acquisition of the Company and, on September 29, 1997,
Parent executed a confidentiality/standstill agreement providing for, among
other things, Parent's receipt and treatment of confidential information
regarding the Company.
A meeting between the senior management of the Company and representatives
of Parent was held on October 10, 1997. Representatives of the parties exchanged
information and held a number of conversations over the following two-week
period. Concurrently with such conversations, representatives of the Company
continued to hold discussions with, and provided information to, other parties
that expressed interest in the Company.
On October 31, 1997, a representative of Parent informed a representative
of WP&Co. that Parent would be interested in pursuing the possible acquisition
of the Company at $28.00 per Share. The representative of WP&Co. expressed the
view that the Company Board would not be interested in pursuing a sale of the
Company at that price indication. The representative of Parent informed the
representative of WP&Co. that Parent would be willing to consider enhancing its
indication only if it had a high level of assurance that the transaction would
be completed.
On November 4, 1997, a representative of WP&Co. suggested that the Company
would be unlikely to proceed to enter into exclusive negotiations with Parent
unless Parent increased its indicated price. A representative of Parent informed
the WP&Co. representative that Parent's willingness to enhance its indication
from $28.00 per Share would depend on the specific terms of the transaction,
particularly the terms
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<PAGE> 20
relevant to the likelihood that the transaction would be completed. Accordingly,
the Company furnished Parent drafts of the Merger Agreement and the Stockholders
Agreement.
On November 6, 1997, Mr. Odeen met with, among other representatives of
Parent, Joseph T. Gorman, the Chairman and Chief Executive Officer of Parent.
Mr. Gorman indicated at the meeting that, if the transaction were to proceed,
Parent would require that arrangements be developed to ensure the continuity of
management of the Company.
On November 10, 1997, a representative of Parent informed a representative
of WP&Co. that Parent would be prepared to increase its $28.00 per Share price
indication, subject to modifying the terms of draft documentation so as to
provide a high level of assurance that the transaction would be completed. These
modifications included the receipt of an irrevocable option and agreement to
tender by the Carlyle Stockholders, a $35 million break-up fee and a no-shop
covenant which specifically defined the types of transactions that would be
excepted therefrom. Parent's representative also reiterated Parent's requirement
that satisfactory employment arrangements be agreed upon by certain members of
senior management of the Company as a part of the transaction. The WP&Co.
representative indicated that these terms might be acceptable at a price close
to $30.00 per Share. The Parent representative requested that the WP&Co.
representative confirm whether these conditions would be acceptable before
further price discussions were conducted. Thereafter, a WP&Co. representative
informed a Parent representative that Parent's preconditions to further price
negotiations were acceptable in principle to the Company, subject to final
agreement on price, and, based on a conversation with the Carlyle Stockholders,
were similarly acceptable to them.
On November 12, 1997, a representative of Parent informed a representative
of WP&Co. that, subject to the Company's agreement to the terms outlined on
November 10, 1997 and to the Company's willingness to negotiate exclusively with
Parent for the period required to reach an agreement on definitive
documentation, Parent would be willing to increase its indicated price to $29.50
per Share. A representative of WP&Co., on behalf of the Company, informed a
representative of Parent that the Company would be willing to begin a period of
exclusive negotiations based on the foregoing. A meeting of the Company Board
was held on November 14, 1997 to receive an update on the progress of
discussions with Parent. At such meeting, the Company Board was informed of,
among other things, the market check undertaken, the failure of any party to
indicate price and other terms comparable to those indicated by Parent and
Parent's preconditions for continuing discussions at the $29.50 per Share level,
and authorized the Company to enter into an agreement to negotiate with Parent
exclusively, for up to 17 days, regarding a possible acquisition. The Carlyle
Stockholders executed the exclusivity agreement, as well. Over the course of the
next week, representatives of the parties continued to exchange information and
meet or otherwise communicate on a substantially continuous basis to finalize
the documentation relating to the Offer and the Merger.
At a special meeting of the Board of Directors of Parent held on November
20, 1997, Bear, Stearns & Co. Inc. rendered its opinion to the Board of
Directors of Parent that the $29.50 per Share price to be paid pursuant to the
Offer is fair, from a financial point of view, to the public shareholders of
Parent. After receiving such opinion, the Board of Directors of Parent
unanimously approved the Merger Agreement, the Stockholders Agreement and the
transactions contemplated thereby. Later that afternoon, the Company Board
unanimously approved the Merger Agreement, the Stockholders Agreement and the
transactions contemplated thereby.
Late in the evening on November 20, 1997, the parties executed the Merger
Agreement and the Stockholders Agreement. At approximately 3:00 a.m., New York
City time, on November 21, 1997, Parent and the Company published a joint press
release announcing the transaction.
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<PAGE> 21
(b)(ii) REASONS FOR THE COMPANY BOARD'S RECOMMENDATION
In approving the Merger Agreement and the transactions contemplated thereby
and recommending that Stockholders tender their Shares pursuant to the Offer,
the Company Board considered a number of factors, including:
1. The strategic assessment conducted by the Company's management and
the Company Board in the Summer of 1997 and the determination by management
and the Company Board that the Company had to become substantially larger
to meet its business objectives;
2. The determination by management and the Company Board that it
would be difficult for the Company to become substantially larger within a
reasonable period of time through acquisitions by the Company of other
businesses;
3. The results of discussions with possible candidates to enter into
a strategic business combination with the Company;
4. The course of the negotiations with Parent with respect to the
Merger Agreement, including Parent's indication that $29.50 per Share
represented its best offer and that Parent would not proceed with the Offer
and the Merger unless it had a high level of assurance that the transaction
would be completed;
5. The financial and other terms and covenants of the Offer and the
Merger, including the non-solicitation covenants, the termination
provisions and the Termination Fee;
6. The historical market price of, and recent trading activity in,
the Shares, particularly the fact that the Offer and the Merger will enable
the Stockholders to realize a premium of 31.1% over the closing price of
the Shares on the last trading day prior to the public announcement of the
Merger Agreement on November 21, 1997 and a 36.5% premium over the 30-day
average closing price of the Shares preceding announcement of the Offer;
7. The fact that the Carlyle Stockholders, the beneficial owners of
25.8% of the outstanding Shares, were willing to enter into the
Stockholders Agreement pursuant to which the Carlyle Stockholders agreed to
tender all of their Shares pursuant to the Offer and, in the event a
Stockholder vote is required, to vote their Shares in favor of the Merger,
it being noted by the Company Board that the Carlyle Stockholders will be
treated the same as all other Stockholders in the Offer and the Merger. In
addition, the Carlyle Stockholders were willing to grant Parent an option
(exercisable in certain specified future circumstances) to acquire their
Shares at $29.50 per Share;
8. The presentations of WP&Co. at the November 14, 1997 and the
November 20, 1997 meetings of the Company Board and the opinion of WP&Co.
dated November 20, 1997, to the effect that, as of the date of its opinion,
and based upon and subject to certain matters stated therein, the $29.50
per Share cash consideration to be received by the Stockholders pursuant to
the Offer and the Merger is fair to such Stockholders from a financial
point of view. (WP&Co. reconfirmed its opinion following the Company Board
meeting based on a review of the executed Merger Agreement. The full text
of such opinion, which sets forth the assumptions made, matters considered
and limitations on the review undertaken by WP&Co., is attached hereto as
Schedule I and is incorporated herein by reference. Stockholders are urged
to read the opinion carefully and in its entirety.);
9. The conditions to the Offer and to the Merger, including the fact
that the obligations of Parent and Purchaser to consummate the Offer and
the Merger pursuant to the terms of the Merger Agreement are not
conditioned upon financing, and the regulatory approvals required to
consummate the Merger, including, among others, antitrust approvals, and
the prospects for receiving such approvals; and
10. Parent's requirement that the Company terminate its
change-in-control severance plan and adopt certain other arrangements
designed to assure continuity of management and the terms of those
arrangements and other provisions of the Merger Agreement relevant to
employee matters.
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<PAGE> 22
For additional information in regard to the foregoing factors, see Item 4(b)(i)
with respect to the matters referred to in subparagraphs 1-4 above and Item 3(b)
with respect to the matters referred to in subparagraphs 5, 7, 9-10 above.
The Company Board did not assign relative weights to the factors or
determine that any factor was of particular importance. Rather, the Company
Board viewed their position and recommendation as being based on the totality of
the information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
WP&Co. was retained to act as financial advisor to the Company with respect
to, among other things, a possible restructuring or sale of the Company and to
assist the Company in considering the fairness to Stockholders, from a financial
point of view, of the consideration to be received by Stockholders pursuant to
the Offer and the Merger. WP&Co. will receive from the Company upon the
consummation of the Merger total compensation equal to approximately $4.6
million, the payment of which is contingent upon the consummation of the Merger.
The Company also has agreed, whether or not the Merger is consummated, to
reimburse WP&Co., in an amount not to exceed $75,000, for its travel and other
out-of-pocket expenses (including all fees, disbursements and other charges of
counsel and of other consultants and advisors retained with the Company's
consent) and to indemnify WP&Co. (and its affiliates and their respective
directors, officers, agents, employees and controlling persons) against certain
liabilities relating to or arising out of WP&Co.'s engagement. In the ordinary
course of its business, WP&Co. may actively trade the debt and equity securities
of the Company and Parent for its own account and for the accounts of customers
and, accordingly, may at any time hold a long or short position in such
securities. Except as disclosed herein, neither the Company nor any person
acting on its behalf currently intends to employ, retain or compensate any other
person to make solicitations or recommendations to Stockholders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for the issuance of Shares upon exercise of outstanding options
described in Schedule II, Shares purchased under the 1996 Employee Stock
Purchase Plan and Shares purchased under the 1997 Executive Deferred
Compensation Plan, no transactions in the Shares have been effected during the
past 60 days by the Company or, to the Company's knowledge, by any executive
officer, director or affiliate of the Company.
(b) To the Company's knowledge, all of its executive officers, directors
and affiliates currently intend to tender pursuant to the Offer all Shares
beneficially owned by them (other than Shares that may be donated to charitable
organizations and Shares, if any, which if tendered could cause such persons to
incur liability under the provisions of Section 16(b) of the Exchange Act).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as described herein, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company; (iii)
a tender offer for or other acquisition of securities by or of the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company. As described in Item 3(b) above, the Company Board, in connection with
the exercise of its fiduciary duties, is permitted under certain conditions to
engage in negotiations in response to an unsolicited Superior Proposal.
(b) Except as described in Items 3(b) and 4 above (the provisions of which
are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) The Information Statement attached as Schedule II hereto and
incorporated herein by reference is being furnished in connection with the
potential designation by Parent, pursuant to the Merger Agreement, of certain
persons to be appointed to the Company Board other than at a meeting of
Stockholders as described in Item 3.
(b) Section 203 of the Delaware General Corporation Law
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the Delaware General Corporation Law. Under Section 203, certain
"Business Combinations" (defined generally to include (i) mergers or
consolidations between a Delaware corporation and an "Interested Stockholder"
(as defined below), (ii) transactions with an Interested Stockholder involving
the assets or stock of the corporation or its majority owned subsidiaries and
(iii) transactions which increase an Interested Stockholder's percentage
ownership of stock) between a Delaware corporation whose stock is publicly
traded or has more than 2,000 stockholders of record and an "Interested
Stockholder" (defined generally as a person that is the beneficial owner of 15%
or more of a corporation's outstanding voting stock) are prohibited for a
three-year period following the date that such a stockholder became an
Interested Stockholder, unless (i) the corporation has elected in its original
certificate of incorporation not to be governed by Section 203 (the Company did
not make such an election), (ii) the transaction in which the stockholder became
an Interested Stockholder or the Business Combination was approved by the Board
of Directors of the corporation before the other party to the Business
Combination became an Interested Stockholder, (iii) upon consummation of the
transaction that made it an Interested Stockholder, the Interested Stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
commencement of the transaction (excluding voting stock owned by the directors
who are also officers or held in employee benefit plans in which the employees
do not have a confidential right to tender or vote stock held by the plan) or
(iv) the Business Combination was approved by the Board of Directors of the
corporation and ratified by 66-2/3% of the voting stock which the Interested
Stockholder did not own.
In accordance with the Merger Agreement and Section 203, the Company Board
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer, the Merger and the Stockholders Agreement, and, therefore,
the restrictions of Section 203 are inapplicable to the Merger Agreement, the
Offer, the Merger, the Stockholders Agreement and the related transactions.
(c) Antitrust
Under the HSR Act and the rules that have been promulgated thereunder by
the Federal Trade Commission ("FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to such requirements. There may be
similar antitrust requirements in other jurisdictions.
On November 25, 1997, Parent filed with the FTC and the Antitrust Division
a Premerger Notification and Report Form in connection with the purchase of
Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to
the Offer, the purchase of Shares pursuant to the Offer may not be consummated
until the expiration of a 15-calendar day waiting period following the filing by
Parent, unless both the Antitrust Division and the FTC terminate the waiting
period prior thereto. If, within such 15-calendar day waiting period, either the
Antitrust Division or the FTC requests additional information or documentary
material from Parent, the waiting period would be extended for an additional 10
calendar days following substantial compliance by Parent with such request.
Thereafter, the waiting period could be extended only by court order. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not, be extended and in any event the
purchase of and payment for Shares will be deferred until 10 days after the
request is substantially complied with, unless the waiting period is sooner
terminated by the FTC and the Antitrust Division. Only one extension of such
waiting period pursuant to a request for additional information is authorized by
the HSR Act and the rules promulgated thereunder, except by court order. Any
such extension of the waiting period will not give rise to any withdrawal rights
not otherwise provided for by applicable law.
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The November 25, 1997 Premerger Notification and Report Form filing
described above was also applicable to the Option granted to Purchaser pursuant
to the Stockholders Agreement. Under the provisions of the HSR Act applicable to
the Option, the purchase of Shares pursuant to the Option may not be consummated
until the expiration of a 30-calendar day waiting period following the filing by
Parent, unless both the Antitrust Division and the FTC terminate the waiting
period thereto. If, within such 30-calendar day waiting period, either the
Antitrust Division or the FTC requests additional information or documentary
material from Parent, the waiting period would be extended for an additional 20
calendar days following substantial compliance by Parent with such request.
Thereafter, the waiting period could be extended only by court order. Only one
extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order. Pursuant to the Stockholders Agreement, if the Option
becomes exercisable, it would continue to be exercisable until 30 days after the
waiting period (including as extended) under the HSR Act has expired.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase by
Purchaser of Shares pursuant to the Offer, either of the FTC or the Antitrust
Division 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 seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, its subsidiaries
or the Company. Private parties and state attorneys general may also bring legal
action under federal or state antitrust laws under certain circumstances.
In connection with the acquisition of the Shares pursuant to the Offer or
the Merger, Parent and the Company will be required to file a pre-merger
notification with the German Federal Cartel Office ("FCO"), which is the
governmental authority charged with enforcing German competition laws applicable
to mergers and acquisitions. Parent and the Company intend to make the
appropriate filings with the FCO as promptly as practicable following the
commencement of the Offer. The FCO has one month following the filing to advise
the parties of its intention to investigate the transactions, in which case the
FCO has four months from the date of filing in which to take steps to oppose the
transactions. There can be no assurance that the FCO will not investigate or
oppose the transactions.
Based upon an examination of publicly available information, and
information provided to the Company by Parent, relating to the businesses in
which Parent and its subsidiaries are engaged, the Company has determined that
the Company and Parent both provide similar services in certain geographic
areas. Although the Company believes that the Purchaser's acquisition of Shares
pursuant to the Offer would not violate the antitrust laws, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such challenge is made, what the outcome will be. See Item 3(b) for
certain conditions to the Offer, including conditions with respect to litigation
and certain government actions.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Agreement and Plan of Merger, dated as of November 20, 1997,
among the Company, Parent and Purchaser.
Exhibit 2. Stockholders Agreement, dated as of November 20, 1997, among
Parent, Purchaser and the Carlyle Stockholders.
Exhibit 3. Form of Employment Agreement, dated as of November 20, 1997,
between Parent and each of Thomas A. Grissen, Helen M. Seltzer,
William C. Hoover, Philip A. Odeen, David L. Patterson and Roy
V. Woodle.
Exhibit 4. Confidentiality Agreement, dated as of September 12, 1997,
between the Company and Parent.
Exhibit 5. Recommendation Letter of the Company Board addressed to the
Stockholders.
Exhibit 6. Press Release announcing the Merger Agreement on November 21,
1997.
Exhibit 7. Opinion of Wasserstein Perella & Co., Inc., dated November 20,
1997.
Exhibit 8. Exclusivity Agreement, dated November 14, 1997, among the
Company, the Carlyle Stockholders and Parent.
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SIGNATURE
After reasonable 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: November 26, 1997
BDM INTERNATIONAL, INC.
By: /s/ JOHN F. MCCABE
------------------------------------
Name: John F. McCabe
Title: Corporate Vice President
and General Counsel
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<PAGE> 26
SCHEDULE I
Wasserstein Perella & Co., Inc.
555 California Street, 43rd Floor
San Francisco, CA 94104
Telephone 415-677-4960
Wasserstein Logo Fax 415-288-3960
November 20, 1997
BDM International, Inc.
1501 BDM Way
McLean, VA 22102-3204
Members of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders of the Shares of common stock, par value
$.01 per share (the "Shares"), of BDM International, Inc. (the "Company") of the
consideration to be received by such holders pursuant to the terms of the
Agreement and Plan of Merger, dated as of November 20, 1997 (the "Merger
Agreement"), among the Company, TRW, Inc. ("Parent"), and Sub ("Sub"). The
Merger Agreement provides for, among other things, a cash tender offer by Sub to
acquire all of the outstanding Shares at a price of $29.50 per Share (the
"Tender Offer"), and for a subsequent merger of Sub with and into the Company
pursuant to which each outstanding Share will be converted into the right to
receive $29.50 in cash (the "Merger" and, together with the Tender Offer, the
"Transaction"). The terms and conditions of the Transaction are set forth in
more detail in the Merger Agreement.
In connection with rendering our opinion, we have reviewed the Merger
Agreement. We have also reviewed and analyzed certain publicly available
business and financial information relating to the Company for recent years and
interim periods to date, as well as certain internal financial and operating
information, including financial forecasts, analyses and projections prepared by
or on behalf of the Company and provided to us for purposes of our analysis, and
we have met with management of the Company to review and discuss such
information and, among other matters, the Company's business, operations,
assets, financial condition and future prospects.
We have reviewed and considered certain financial and stock market data
relating to the Company, and we have compared that data with similar data for
certain other companies, the securities of which are publicly traded, that we
believe may be relevant or comparable in certain respects to the Company or one
or more of its businesses or assets, and we have reviewed and considered the
financial terms of certain recent acquisitions and business combination
transactions in the commercial and government information technology services
industry specifically, and in other industries generally, that we believe to be
reasonably comparable to the Transaction or otherwise relevant to our inquiry.
We have also performed such other financial studies, analyses, and
investigations and reviewed such other information as we considered appropriate
for purposes of this opinion.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all the financial and other
information provided to or discussed with us or publicly available, and we have
not assumed any responsibility for independent verification of any of such
information. We have also relied upon the reasonableness and accuracy of the
financial projections, forecasts and analyses provided to us and we have
assumed, with your consent, that such projections, forecasts and analyses were
reasonably prepared in good faith and on bases reflecting the best currently
available judgments and estimates of the Company's management and we express no
opinion with respect to such projections, forecasts and analyses or the
assumptions upon which they are based. In addition, we have not reviewed any of
the books and records of the Company, or assumed any responsibility for
conducting a physical inspection of the properties or facilities of the Company,
or for making or obtaining an independent valuation or appraisal of the
<PAGE> 27
assets or liabilities of the Company, and no such independent valuation or
appraisal was provided to us. We have assumed that the transactions described in
the Merger Agreement will be consummated on the terms set forth therein, without
material waiver or modification. Our opinion is necessarily based on economic
and market conditions and other circumstances as they exist and can be evaluated
by us as of the date hereof.
We are acting as financial advisor to the Company in connection with the
proposed Transaction and will receive a fee for our services upon consummation
of the Transaction.
In the ordinary course of our business, we may actively trade the debt and
equity securities of the Company and the Parent for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Our opinion addresses only the fairness from a financial point of view to
the stockholders of the Company of the consideration to be received by such
stockholders pursuant to the Transaction, and we do not express any views on any
other terms of the Transaction. Specifically, our opinion does not address the
Company's underlying business decision to effect the transactions contemplated
by the Merger Agreement.
It is understood that this letter is for the benefit and use of the Board
of Directors of the Company in its consideration of the Transaction and except
for inclusion in its entirety in a proxy statement circulated to stockholders of
the Company relating to the Merger or in a tender offer recommendation statement
on Schedule 14D-9 from the Company to the holders of Shares relating to the
Tender Offer, may not be disseminated, quoted, referred to or reproduced at any
time or in any manner without our prior written consent. This opinion does not
constitute a recommendation to any stockholder with respect to whether such
holder should tender Shares pursuant to the Tender Offer or as to how such
holder should vote with respect to the Merger, and should not be relied upon by
any stockholder as such.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that as of the date hereof,
the $29.50 per Share cash consideration to be received by the stockholders of
the Company pursuant to the Transaction is fair to such stockholders from a
financial point of view.
Very truly yours,
/s/ Wasserstein Perella & Co., Inc.
<PAGE> 28
SCHEDULE II
INFORMATION PURSUANT TO SECTION 14(f)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
The following information is being furnished to holders of shares of the
common stock ("Stockholders"), par value $.01 per share ("Shares"), of BDM
International, Inc., a Delaware corporation (the "Company"), in connection with
the possible designation by Systems Acquisition Inc., a Delaware corporation
("Purchaser") and wholly owned subsidiary of TRW Inc., an Ohio corporation
("Parent"), of at least a majority of the board of directors of the Company (the
"Board of Directors") pursuant to the terms of an Agreement and Plan of Merger,
dated as of November 20, 1997 (the "Merger Agreement"), by and among the
Company, Parent and Purchaser. THIS INFORMATION IS BEING PROVIDED SOLELY FOR
INFORMATIONAL PURPOSES AND NOT IN CONNECTION WITH A VOTE OF THE COMPANY'S
STOCKHOLDERS.
Section 1.3 of the Merger Agreement provides that promptly upon purchase by
Purchaser of any Shares pursuant to the cash tender offer to purchase all of the
outstanding Shares ("Offer") and from time to time thereafter as Shares are
acquired by Purchaser, Purchaser shall be entitled to designate such number of
members ("Purchaser Designees"), rounded up to the next whole number, of the
Board of Directors as will give Purchaser representation on the Board of
Directors equal to at least that number of directors which is the product of the
total number of directors on the Board of Directors (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Purchaser or any affiliate
of Parent bears to the number of Shares outstanding; provided that prior to the
consummation of the merger contemplated by the Merger Agreement ("Merger"), the
Board of Directors shall always have at least one member who is neither an
officer of the Company nor designee, stockholder, affiliate or associate of
Parent (an "Independent Director"). If no Independent Director remains, the
other members of the Board of Directors shall designate one person to fill one
of the vacancies who shall not be either an officer of the Company or a
designee, shareholder, affiliate or associate of Parent, and such person shall
be deemed to be an Independent Director for purposes of the Merger Agreement.
Purchaser is similarly entitled to proportionate representation on committees of
the Board of Directors. The Company has agreed to increase the size of the Board
of Directors to ensure that it has complied with this provision of the Merger
Agreement. Prior to the consummation of the Merger, the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend or
terminate the Merger Agreement on behalf of the Company, (ii) exercise or waive
any of the Company's rights or remedies under the Merger Agreement, (iii) extend
the time for performance of Parent's obligations under the Merger Agreement or
(iv) take any other action by the Company in connection with the Merger
Agreement required to be taken by the Board of Directors.
The information contained in this Schedule II concerning Parent has been
furnished to the Company by Parent and Purchaser, and the Company assumes no
responsibility for the accuracy or completeness of any such information.
VOTING SECURITIES OF THE COMPANY
As of November 19, 1997, there were issued and outstanding 29,723,431
Shares, each of which entitles the holder to one vote.
BOARD OF DIRECTORS, ACQUISITION DESIGNEES
AND EXECUTIVE OFFICERS
BOARD BIOGRAPHICAL INFORMATION
The persons named below are the current members of the Board of Directors
("Directors"). The following sets forth as to each director, his or her age (as
of November 24, 1997), and principal occupation and business experience, the
period during which each has served as a director, all positions and offices
held with the Company, any family relationship with any other director or
executive officer of the Company and the directorships currently held by him in
corporations whose shares are publicly registered.
1
<PAGE> 29
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION DIRECTOR SINCE
- ------------------------------ --------------------------------------------------- --------------
<S> <C> <C>
Dr. Jeanette Grasselli Brown Dr. Brown is a member of the Compensation 1995
Age 69 Committee. She is a member of the Ohio Board of
Regents. She was a Distinguished Visiting Professor
and Director of Research Enhancement at Ohio
University from 1989-1995. From 1950 until her
retirement in 1988, she was employed by BP America
(formerly The Standard Oil Company) in various
research positions. She retired as director of
corporate research, environmental and analytical
sciences. She is a member of the Board of Directors
of AGA Gas, Inc., The BF Goodrich Company, McDonald
& Company Investments and USX Corporation.
Frank C. Carlucci Mr. Carlucci is the Chairman of the Board of 1990
Age 67 Directors of the Company. He is also a member of
the Executive and Nominating Committees and
Chairman of the Compensation Committee. Mr.
Carlucci has been Chairman of the Board and a
Managing Director of The Carlyle Group, L. P.
("Carlyle"), a Washington, D.C.- based private
merchant bank, since 1993 and served as Vice
Chairman of Carlyle from 1989 to 1993. Mr. Carlucci
served as U.S. Secretary of Defense from 1987 to
1989 and has served in a number of other government
positions, including Ambassador to Portugal, Deputy
Secretary of Defense and Assistant to the President
for National Security Affairs. Mr. Carlucci
presently serves on the Board of Directors of
Ashland Oil, Inc., General Dynamics Corporation,
Kaman Corporation, Neurogen Corporation, Northern
Telecom, Ltd., The Quaker Oats Company, SunResorts,
Ltd., N.V., Texas Biotechnology Corporation,
Pharmacia & Upjohn, Inc. and Westinghouse Electric
Corporation. He also presently serves on the Board
of Directors of several privately-held companies
controlled by Carlyle.
William E. Conway, Jr. Mr. Conway is Vice Chairman of the Board of 1990
Age 48 Directors of the Company. He is also Chairman of
the Audit and Ethics Committee and a member of the
Executive and Compensation Committees. Mr. Conway
has been a Managing Director of Carlyle since 1987.
Mr. Conway presently serves on the Board of
Directors of GTS Duratek Inc., Nextel
Communications, Inc., Tracor, Inc. and of several
privately-held companies controlled by Carlyle.
Phillip R. Cox Since 1973, Mr. Cox has been President and Chief 1996
Age 51 Executive of Cox Financial Corporation, a financial
investment and consulting firm. He is a member of
the Board of Directors of Cincinnati Bell, CINergy
Corporation, The Federal Reserve Bank, PNC Bank and
The Touchstone Mutual Funds.
</TABLE>
2
<PAGE> 30
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION DIRECTOR SINCE
- ------------------------------ --------------------------------------------------- --------------
<S> <C> <C>
Neil Goldschmidt Mr. Goldschmidt is a member of the Nominating 1993
Age 57 Committee. He is currently President of Neil
Goldschmidt, Inc., a company focusing on strategic
planning and problem solving for national and
international businesses. From 1987 to 1991, Mr.
Goldschmidt was Governor of Oregon. From 1981 to
1986, he served as Vice President of Nike
International and President of Nike Canada. Mr.
Goldschmidt served as Secretary of Transportation
from 1979 to 1981 and as Mayor of Portland, Oregon
from 1972 to 1979. He is a member of the Board of
Directors of Analogy, Inc. and the Claremont
Technology Group.
Walther Leisler Kiep Mr. Kiep has been General Partner of Gradmann & 1995
Age 71 Holler, an insurance brokerage firm based in
Stuttgart, Germany, since 1968. He is currently
Chairman of the Supervisory Board of
Industrieanlagen-Betriebsgesellschaft mit
beschrankter Haftung (IABG) and Zeneca GmbH. He is
a member of the Supervisory Board of Volkswagen AG,
Glunz AG, CS-Interglass, AG, and Bau Assekuranz-
Vermittlungs GmbH. He is a member of the Advisory
Council of the Deutsche Bank AB, is Chairman of the
International Advisory Board of Marsh & McLennan
Companies and is a member of the International
European Advisory Board of Fuji-Wolfensohn
International.
Philip A. Odeen Mr. Odeen is President and Chief Executive Officer 1992
Age 62 of the Company. He is also Chairman of the
Executive Committee. Mr. Odeen served with Coopers
& Lybrand, an international auditing and consulting
company, as Vice Chairman, Management Consulting
Services from 1991 to 1992, and as Managing Partner
from 1978 to 1991. Mr. Odeen has served in a number
of government positions, including Director,
Program Analysis, National Security Council, and
Principal Deputy Assistant Secretary of Defense.
Thomas G. Ricks Mr. Ricks is a member of the Audit and Ethics 1992
Age 44 Committee. He has served as President and Chief
Executive Officer of The University of Texas
Investment Management Company since March 1, 1996.
Mr. Ricks also served as Vice Chancellor for Asset
Management for The University of Texas System from
1992 to 1996. From 1988 to 1992, he served as
Executive Director of Finance and Private
Investments for The University of Texas System. Mr.
Ricks is a member of the Board of Directors of DTM
Corporation and Newfield Exploration Co.
Dr. William E. Sweeney, Jr. Dr. Sweeney has served as Executive Vice President 1990
Age 59 and a Director of the Company since October 1990
and as Chairman of the Board of BDM Europe BV and
General Manager and Chairman of the Management
Board of Industrieanlagen-Betriebsgesellschaft mbH
(IABG) since 1993. Dr. Sweeney joined the Company
in 1977 and has held a number of senior management
positions.
Earle C. Williams Mr. Williams is also a member of the Audit and 1990
Age 68 Ethics and Nominating Committees. From 1972 until
his retirement in 1992, Mr. Williams served as
President and Chief Executive Officer of the
Company. Mr. Williams is presently a member of the
Board of Directors of GAMMA-A Technologies, Inc.,
GTS Duratek, Inc. and The Parsons Corporation.
</TABLE>
3
<PAGE> 31
PURCHASER DESIGNEE BIOGRAPHICAL INFORMATION
Purchaser has informed the Company that it will choose the Purchaser
Designees from the individuals shown in the table below to serve on the Board of
Directors.
The following table, prepared from information furnished to the Company by
Purchaser, sets forth the name, occupation and age of each of the Purchaser
Designees. Each of the Purchaser Designees is a citizen of the United States of
America, except for Dr. Blankenstein, who is a German citizen.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION DIRECTOR SINCE
- ------------------------------ --------------------------------------------------- --------------
<S> <C> <C>
Joseph T. Gorman Mr. Gorman has been Chairman of the Board and Chief 1984
Age 60 Executive Officer of Parent since 1988. He also
served as President of Parent from 1985 to 1991 and
as Chief Operating Officer of Parent from 1985 to
1988. Mr. Gorman currently is a director of
Aluminum Company of America and The Procter &
Gamble Company.
Peter S. Hellman Mr. Hellman has been President and Chief Operating 1995
Age 48 Officer of Parent since 1995. He was Executive Vice
President and Assistant President of Parent from
1994 to 1995. Previously, Mr. Hellman served as
Executive Vice President and Chief Financial
Officer of Parent from 1991 to 1994. He also is a
director of Arkwright Mutual Insurance Company.
Bernd Blankenstein Dr. Blankenstein has been Executive Vice President
Age 59 and General Manager, TRW Steering, Suspension &
Engine Group since 1996. He was Managing Director,
TRW Deutschland GmbH from 1995 to 1996; Vice
President and General Manager, TRW's Global Engine
Components business from 1994 to 1996; and Managing
Director, TRW Motokomponenten GmbH & Co. KG from
1991 to 1995.
Timothy W. Hannemann Mr. Hannemann has been Executive Vice President and
Age 54 General Manager, TRW Space & Electronics Group
since 1993. He was Executive Vice President and
General Manager, TRW Space & Defense Sector from
1991 to 1992.
Howard V. Knicely Mr. Knicely has been Executive Vice President,
Age 61 Human Resources and Communications since 1995. He
was Executive Vice President, Human Resources,
Communications & Information Resources from 1989 to
1994.
William B. Lawrence Mr. Lawrence has been Executive Vice President,
Age 53 General Counsel and Secretary since June 1997. He
was Executive Vice President, Planning, Development
& Government Affairs from 1989 to June 1997.
Carl G. Miller Mr. Miller has been Executive Vice President and
Age 55 Chief Financial Officer since 1996. He was
Executive Vice President, Chief Financial Officer
and Controller in 1996 and Vice President and
Controller from 1990 to 1996.
James S. Remick Mr. Remick has been Executive Vice President and
Age 59 General Manager, TRW Occupant Restraint Systems
Group since 1996. He was Executive Vice President
and General Manager, TRW Steering, Suspension &
Engine Group from 1995 to 1996; Vice President and
Deputy General Manager, Automotive in 1995; and
Vice President and General Manager, TRW Steering &
Suspension Systems, North and South America from
1991 to 1995.
</TABLE>
4
<PAGE> 32
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION DIRECTOR SINCE
- ------------------------------ --------------------------------------------------- --------------
<S> <C> <C>
John P. Stenbit Mr. Stenbit has been Executive Vice President and
Age 57 General Manager, TRW Systems Integration Group
since 1994. He was Vice President and General
Manager, TRW Systems Integration Group from 1990 to
1994.
Ronald D. Sugar Mr. Sugar has been Executive Vice President and
Age 49 General Manager, TRW Automotive Electronics Group
since 1996. He was Executive Vice President and
Chief Financial Officer from 1994 to 1996; Vice
President, Group Development, TRW Space &
Electronics Group from 1992 to 1994; Vice
President, Strategic Business Development, TRW
Space & Defense Sector in 1992; and Vice President
and General Manager, TRW Space Communications
Division from 1987 to 1992.
</TABLE>
Purchaser has informed the Company that each of the directors and officers
listed above has consented to act as a Director of the Company, if so
designated. None of such directors and officers (i) is currently a director of,
or holds any position with, the Company, (ii) has a familial relationship with
any of the directors or executive officers of the Company or (iii) as
represented by Purchaser, to the best of its knowledge, beneficially owns any
securities (or rights to acquire any securities) of the Company. The Company has
been advised by Purchaser that, to the best of Purchaser's knowledge, none of
such directors and officers has been involved in any transaction with the
Company or any of its directors, executive officers or affiliates which are
required to be disclosed pursuant to the rules and regulations of the Securities
and Exchange Commission (the "SEC"), except as may be disclosed herein or in the
Schedule 14D-9.
BOARD COMMITTEES AND MEETINGS
The Board of Directors met four times during 1996. Each director attended
at least 75% of the aggregate number of board meetings and meetings held by
committees on which he served. The Board of Directors has four standing
committees -- Executive, Audit and Ethics, Compensation and Nominating. The
Nominating Committee is composed of Messrs. Carlucci, Goldschmidt and Williams,
and met once in 1996. The principal functions of the Nominating Committee are to
review and determine the nominees for election as members of the Board of
Directors; recommend candidates for approval of the Board to fill any vacancies
in the Board; and evaluate the performance of each of the directors of the
Company.
The Executive Committee, composed of Messrs. Carlucci, Conway and Odeen,
did not meet in 1996, but took action on nine occasions by unanimous written
consent. The Executive Committee may act, subject to certain limitations, on all
matters concerning management of the business of the Company which may arise
between scheduled Board of Directors' meetings.
The Audit and Ethics Committee, composed of Messrs. Conway, Ricks and
Williams, met four times in 1996. The principal function of the Audit and Ethics
Committee is to oversee the performance and review the scope of the audit
performed by the Company's independent auditors. The Audit and Ethics Committee
also reviews, among other things, the audit report and related findings and
recommendations by the auditors and management's responses thereto, and the fees
payable to the independent accountants for their services. Additionally, the
Audit and Ethics Committee reviews and makes recommendations to the Board of
Directors with respect to accounting matters, including financial reporting
systems and internal accounting controls for the Company. In performing its
duties, the Audit and Ethics Committee consults with the financial and
accounting officers and the internal auditors of the Company, as well as the
independent accountants.
The Compensation Committee, composed of Messrs. Carlucci and Conway and Dr.
Brown, met once in 1996, and took action on fifteen occasions by unanimous
written consent. The principal functions of the Compensation Committee are to
determine the compensation of the President and Chief Executive officer of the
Company, review the compensation of all officers of the Company and officers of
subsidiaries at the position of Senior Vice President and above, determine the
aggregate cash bonus awards to key employees, administer the 1990 Stock Option
Plan ("1990 Plan") and 1994 Stock Option Plan ("1994 Plan") and select key
employees who will receive stock option grants and determine the terms of those
grants.
5
<PAGE> 33
COMPENSATION OF DIRECTORS
Messrs. Carlucci and Conway and each director who was not an officer of the
Company or any of its subsidiaries was paid a director's fee at an annual rate
of $24,000, plus $1,000 per day or any portion of a day for attendance at
meetings of the Board of Directors and any committees of the Board of Directors,
and $250 per hour (travel time excluded) for consulting services outside of such
meetings and for visits to the Company's offices or other locations on behalf of
the Company for any special purpose, at the request of the President of the
Company. Directors are reimbursed for out-of-pocket expenses incurred to attend
such meetings and to make such visits.
EXECUTIVE OFFICERS
Executive officers serve at the discretion of the Board of Directors. The
following table sets forth certain information concerning the executive officers
of the Company (as of November 24, 1997) who are expected to serve in such
capacity until the consummation of the Merger (none of whom has a family
relationship with another executive officer):
<TABLE>
<CAPTION>
NAME POSITION AGE
- ---------------------------- ------------------------------------------------------------- ---
<S> <C> <C>
Frank C. Carlucci........... Chairman of the Board of Directors since October 1990 67
William E. Conway, Jr. ..... Vice Chairman and Director since October 1990 48
Philip A. Odeen............. President, Chief Executive Officer and Director since May 62
1992
C. Thomas Faulders, III..... Executive Vice President, Treasurer and Chief Financial 48
Officer since April 1995
Thomas A. Grissen........... Senior Vice President of the Company and President, State and 38
Local Systems unit since March 1997
William C. Hoover........... Executive Vice President of Company and President, Federal 48
Systems unit since June 1996
David L. Patterson.......... President, Integrated Supply Chain unit since June 1997 47
Helen M. Seltzer............ Corporate Vice President of the Company since May 1997 and 51
President, BDM Technologies since January 1997
Dr. William E. Sweeney,
Jr. ...................... Chairman of the Board, BDM Europe, General Manager and 59
Chairman of the Management Board, IABG and Director since
October 1990
Roy V. Woodle............... President, Enterprise Management Services unit since January 62
1997 and President and Chief Executive Officer, Vinnell since
June 1993 and January 1994, respectively.
</TABLE>
BUSINESS EXPERIENCE
Frank C. Carlucci has served as Chairman of the Board of Directors of the
Company since October 1990. Mr. Carlucci has been Chairman and a Managing
Director of The Carlyle Group, L.P. ("Carlyle") since 1993 and served as Vice
Chairman of Carlyle from 1989 to 1993. Mr. Carlucci served as U.S. Secretary of
Defense from 1987 to 1989 and has served in a number of other government
positions, including Ambassador to Portugal, Deputy Secretary of Defense and
Assistant to the President for National Security Affairs.
William E. Conway, Jr. has served as Vice Chairman of the Board of
Directors of the Company since October 1990. Mr. Conway has been a Managing
Director of Carlyle since 1987.
Philip A. Odeen has served as President, Chief Executive Officer and a
Director of the Company since May 1992. Mr. Odeen served with Coopers & Lybrand,
an international auditing and consulting firm, as Vice Chairman, Management
Consulting Services from 1991 to 1992, and as Managing Partner from 1978 to
1991. Mr. Odeen has served in a number of government positions, including
Director, Program Analysis, National Security Council and Principal Deputy
Assistant Secretary of Defense.
C. Thomas Faulders, III has served as Executive Vice President, Treasurer
and Chief Financial Officer of the Company since April 24, 1995. Mr. Faulders
served with Comsat Corporation, a provider of international communications and
entertainment, as Vice President and Chief Financial Officer from 1992 to 1995.
From
6
<PAGE> 34
1985 to 1992, he served in several senior management positions with MCI
Communications Corporation, a long distance service provider.
Thomas A. Grissen joined the Company on March 31, 1997 as President of its
State and Local Systems unit. Prior to joining the Company, Mr. Grissen worked
at Unisys Corporation since 1981, most recently as Principal and Managing
Director, Social Services National Practice -- West. He served as Principal and
Managing Director, Social Services National Practice -- West from January 1996
to March 1997, as Director of Business Development, Central Region Public Sector
from June 1995 to January 1996, as Client Relationship Manager/Team Leader from
January 1994 to May 1995 and as Regional Manager/Branch Manager from January
1987 to January 1994.
William C. Hoover joined the Company on June 3, 1996 as Executive Vice
President of the Company. He also serves as President of the Company's Federal
Systems unit. From November 1994 to May 1996, Mr. Hoover served as President and
Chief Operating Officer of PRC, Inc., which provides systems engineering and
integration and software development, engineering and information services to
federal government customers. From September 1992 to October 1994, he served as
President of PRC/Federal Systems Group. From April 1992 to September 1992, he
was Executive Vice President and General Manager of USI/Commercial Systems
Group. From January 1992 to March 1992, he served as Senior Vice President and
General Manager of PRC/Engineering Technology Group. Mr. Hoover initially joined
PRC in 1980.
David L. Patterson joined the Company on June 2, 1997 as President of its
Integrated Supply Chain unit. From June 1995 to May 1997, Mr. Patterson was a
partner of KPMG Peat Marwick LLP, serving as national practice leader for Plant
Operations Systems. Prior to that, he worked for IBM from 1978, most recently as
Plant Production Solution Executive. He served as Plant Production Solution
Executive from January 1995 to May 1995, as Area Consulting & Services Executive
from January 1994 to December 1994, as Industrial Sector Executive for South
Carolina from January 1992 to December 1993 and as Industry Center Manager from
January 1990 to December 1991.
Helen M. Seltzer joined the Company as Senior Vice President, Product
Marketing, on March 15, 1996. She currently serves as President of the BDM
Technologies unit and as Corporate Vice President of the Company. Ms. Seltzer
served as Vice President, Marketing/Sales Access Services at Bell Atlantic from
1993 to 1995. From 1983 to 1993, she served in several senior management
positions at MCI Communications Corporation.
Dr. William E. Sweeney, Jr. has served as an Executive Vice President and a
Director of the Company since October 1990 and as Chairman of the Board of BDM
Europe and General Manager and Chairman of the Management Board of IABG since
1993. Dr. Sweeney joined the Company in 1977 and has held a number of senior
management positions.
Roy V. Woodle has served as President, Enterprise Management Services unit
since January 1997 and President and Chief Executive Officer of Vinnell since
June 1993 and January 1994, respectively. Mr. Woodle joined Vinnell in 1983 as
Vice President, Program Development and from 1988 to 1993, he served as Senior
Vice President.
7
<PAGE> 35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership of the Company's Shares
on November 24, 1997 by (i) each Stockholder known by the Company to be the
beneficial owner of more than five percent of the outstanding Shares, (ii) each
Director of the Company, (iii) each named executive officer of the Company and
(iv) all executive officers and Directors of the Company as a group. Unless
otherwise indicated, all Shares are owned directly and the indicated owner has
sole voting and dispositive power with respect thereto. Unless otherwise
indicated, the address of each person is the Company's principal executive
office.
<TABLE>
<CAPTION>
DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS AMOUNT(1) PERCENTAGE
- ------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
The Carlyle Group L.P.(2)...................................................... 7,660,000 25.8%
Philip A. Odeen(3)............................................................. 433,000 1.5%
Dr. William E. Sweeney, Jr.(4)................................................. 258,448 *
Earle C. Williams.............................................................. 94,712 *
William E. Conway, Jr.......................................................... 75,618 *
Frank C. Carlucci(5)........................................................... 76,308 *
C. Thomas Faulders, III(6)..................................................... 187,147 *
Roy V. Woodle(7)............................................................... 28,423 *
Neil Goldschmidt............................................................... 15,082 *
Dr. Jeanette Grasselli Brown................................................... 4,655 *
William C. Hoover(8)........................................................... 171,999 *
Phillip R. Cox................................................................. 795 *
Walther Leisler Kiep........................................................... 0 *
Thomas G. Ricks................................................................ 0 *
All Directors and Executive Officers as a group (total 16 persons)............. 1,482,368 5.0%
</TABLE>
- ---------------
* Less than 1% of the outstanding Shares.
(1) Pursuant to the regulations of the SEC, shares are deemed to be
"beneficially owned" by a person if such person directly or indirectly has
or shares the power to vote or dispose of such shares whether or not such
person has any pecuniary interest in such shares or the right to acquire
the power to vote or dispose of such shares within 60 days, including any
right to acquire through the exercise of any option, warrant or right.
Pursuant to the respective option plans, all options shall be deemed vested
within 10 days prior to the consummation of the Offer contemplated.
(2) Includes 6,470,000 Shares held by The Carlyle Partners Leveraged Capital
Fund I, L.P. ("The Carlyle Fund"), 1,000,000 Shares held by BDM Acquisition
Partners II L.P. ("BDM Partners II") and 190,000 Shares held by BDM
Acquisition Partners, L.P. ("BDM Partners"). Carlyle is the sole General
Partner of The Carlyle Fund, BDM Partners II and BDM Partners. TWC
Virginia, Inc. is the sole General Partner of Carlyle. Frank C. Carlucci is
Chairman and a Managing Director and William E. Conway, Jr. is a Managing
Director of Carlyle. Messrs. Carlucci and Conway are each Directors and
shareholders of the Company. The address of Carlyle is 1001 Pennsylvania
Avenue, N.W., Washington, D.C. 20004.
(3) Includes 12,550 Shares held by The Philip and Marjorie Odeen Charitable
Remainder Unitrust, of which Mr. Odeen is the sole trustee. Also includes
options (both vested and unvested) to purchase 188,000 Shares granted under
the 1990 Plan or the 1994 Plan.
(4) Includes 210,000 Shares held by the William E. Sweeney, Jr. & Elizabeth W.
Sweeney Revocable Trust, of which Dr. Sweeney and his wife are the sole
trustees. Also includes options to purchase 46,000 Shares granted under the
1990 Plan which are currently exercisable.
(5) Voting power for 75,618 of these Shares is shared with Mr. Carlucci's wife.
(6) Includes options (both vested and unvested) to purchase 150,000 Shares
granted under the 1990 Plan, 1994 Plan or the Management Incentive Stock
Program.
(7) Includes options (both vested and unvested) to purchase 25,000 Shares
granted under the 1990 Plan and 1994 Plan.
(8) Includes options (both vested and unvested) to purchase 162,500 Shares of
Common Stock granted under the 1994 Plan and Management Incentive Stock
Program.
8
<PAGE> 36
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains information on compensation for the years
ended December 31, 1996, 1995 and 1994 paid to the Chief Executive Officer and
the four most highly compensated executive Officers of the Company, other than
the Chief Executive Officer, whose aggregate cash compensation exceeded $100,000
during such years (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) AWARDS(4)(5) OPTIONS(5) COMPENSATION(6)
- -------------------------- ----- -------- -------- --------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Philip A. Odeen........... 1996 $498,077 $350,000 $ 0 $ 0 40,000 $65,223
President and Chief 1995 400,000 300,000 0 0 40,000 66,033
Executive Officer 1994 400,000 175,000 0 0 20,000 66,033
C. Thomas Faulders,
III(1).................. 1996 $302,083 $140,000 0 0 30,000 11,125
Financial Officer 1995 183,333 175,000 0 431,000 60,000 458
1994 N/A N/A N/A N/A N/A N/A
William C. Hoover(1)...... 1996 $181,684 $150,000 0 1,118,500 100,000 3,500
Executive Vice President 1995 N/A N/A N/A N/A N/A N/A
1994 N/A N/A N/A N/A N/A N/A
Dr. William E. Sweeney.... 1996 $249,792 $160,000 99,937 0 0 7,000
General Manager, IABG 1995 240,000 0 177,973 0 0 5,933
1994 241,258 145,000 116,551 0 20,000 7,040
Roy V. Woodle............. 1996 $260,000 $131,000 0 0 10,000 62,636
President and Chief 1995 250,000 106,000 0 0 10,000 62,720
Executive Officer,
Vinnell 1994 250,000 106,000 0 0 10,000 60,834
</TABLE>
- ---------------
(1) Mr. Faulders joined the Company in April 1995. The bonus award shown for Mr.
Faulders in 1995 includes a $25,000 bonus paid in connection with his
employment. Mr. Hoover joined the Company in June 1996.
(2) Bonus awards are reflected in the year to which they are attributable and
not the year in which they are actually paid.
(3) Fringe benefit amounts are omitted to the extent the aggregate value of such
benefits is less than the lesser of 10% of salary and bonus or $50,000. The
amounts shown for Dr. Sweeney reflects reimbursement of relocation and
travel expenses, cost of living allowance, quarters allowance and exchange
rate fluctuation allowance associated with his overseas assignment.
(4) Restricted stock awards were issued pursuant to the Management Incentive
Stock ("MIS") Program under which certain members of management were granted
options to purchase Shares at an exercise price of $0.01 per share. These
options vest over a period greater than three years. The options are subject
to forfeiture in the event certain tenure and, in part, certain Company
performance criteria are not met. The amounts shown represent the full
dollar value of the Shares based on the closing market price on the date of
grant, less the $.01 per share exercise price, regardless of whether the
shares were actually purchased. At December 31, 1996, Messrs. Odeen,
Faulders and Hoover, Dr. Sweeney and Mr. Woodle held 200,000, 50,000,
50,000, 175,000 and 10,000 Shares of restricted stock, respectively, worth
$5,424,000, $1,356,000, $1,356,000, $4,746,000 and $271,200, respectively.
The value of the common stock ownership at year end is based on the last
reported sale price of the Shares on December 31, 1996, as reported by
Nasdaq Stock Market less the $.01 per Share exercise price paid by the named
executive officer upon purchase thereof. The Shares of restricted stock are
entitled to the same dividends as all other outstanding Shares.
9
<PAGE> 37
(5) Each of the Company's option plans contains a "change of control" provision
pursuant to which all outstanding options, whether or not then exercisable
or vested, become vested and fully exercisable at least ten days prior to
the occurrence of a change of control of the Company and all options
outstanding upon the consummation of the change of control transaction are
cancelled. The consummation of the Offer will be treated as a "change of
control" for such purposes, and options outstanding upon such consummation
will be cancelled, and the difference between the exercise price of the
option and the Offer price will be paid to the option holder in cash.
(6) Amounts shown for 1996 include the dollar value of the life insurance
premiums paid on behalf of Messrs. Odeen, Faulders and Hoover, Dr. Sweeney
and Mr. Woodle for the last fiscal year, which amounts are $6,500, $9,625,
$3,500, $5,500 and $5,616, respectively. Amounts shown for 1996 also include
$1,500 of employer matched salary deferral contributions to the 401(k)
Savings Plan for each of Messrs. Odeen and Faulders, Dr. Sweeney and Mr.
Woodle. The amount shown for 1996 for Mr. Woodle includes a contribution of
$11,520 on his behalf to the Vinnell Corporation Retirement Plan (the
"Vinnell Plan"), a defined contribution money purchase plan. The amounts
shown for 1996 for Messrs. Odeen and Woodle also include a contribution of
$57,223 and $44,000, respectively, to a defined contribution supplemental
executive retirement plan ("SERP") on their behalf.
OPTION GRANT TABLE
The following table sets forth information regarding grants of stock
options made to the Named Executive Officers during the last fiscal year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS MARKET POTENTIAL REALIZABLE VALUE AT
SECURITIES GRANTED TO PRICE ON ASSUMED ANNUAL RATES OF STOCK
UNDERLYING EMPLOYEES EXERCISE OR GRANT PRICE APPRECIATION FOR OPTION TERM
OPTIONS IN FISCAL BASE PRICE DATE EXPIRATION ----------------------------------
NAME GRANTED YEAR ($/SH) ($/SH) DATE(3) 0% 5% 10%
- ------------------------ ---------- ---------- ----------- -------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Philip A. Odeen......... 40,000(1) 4% $ 17.75 $ 17.75 2/23/06 -0- 446,515 1,131,557
C. Thomas Faulders,
III................... 30,000(1) 3% 17.75 17.75 2/23/06 -0- 334,886 848,668
William C. Hoover....... 100,000(1) 10% 22.375 22.375 6/3/06 -0- 760,580 1,218,198
50,000(2) 5% 0.01 22.375 7/3/00 $1,118,500 1,265,512 1,427,583
Dr. William E.
Sweeney............... -0-(1) 0% N/A N/A N/A -0- -0- -0-
Roy V. Woodle........... 10,000(1) 1% 17.75 17.75 2/23/06 -0- 111,629 282,889
</TABLE>
- ---------------
(1) Included in the above options granted in 1996 are 70,000 options granted
under the 1990 Plan and 110,000 options granted under the 1994 Plan. All
options granted in 1996 for the individuals listed above vest and become
exercisable at the rate of 25% per year over the course of four years from
the date of grant.
(2) Of the 50,000 management incentive stock options grant to Mr. Hoover, 41,116
were issued under the 1994 Plan and 8,884 were issued under the MIS Plan.
Options for 12,500 Shares become exercisable in each of June 1997, 1998,
1999 and 2000.
(3) Each of the Company's option plans contains a "change of control" provision
pursuant to which all outstanding options, whether or not then exercisable
or vested, become vested and fully exercisable at least ten days prior to
the occurrence of a change of control of the Company and all options
outstanding upon the consummation of the change of control transaction are
cancelled. The consummation of the Offer will be treated as a "change of
control" for such purposes, and options outstanding upon such consummation
will be cancelled, and the difference between the exercise price of the
option and the Offer price will be paid to the option holder in cash.
10
<PAGE> 38
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information regarding the exercise of options
during the Company's last fiscal year and the number and value of unexercised
options held at year end by each of the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS AT FY-END MONEY OPTIONS AT FY-END
ACQUIRED ON VALUE --------------------------- ---------------------------------
NAME EXERCISE REALIZED(3) UNEXERCISABLE EXERCISABLE UNEXERCISABLE(4) EXERCISABLE(4)
- ------------------------ ----------- ----------- ------------- ----------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Philip A. Odeen......... 22,000(1) $ 492,250 84,060 63,940 $1,207,698 $1,478,303
C. Thomas Faulders,
III................... -0-(1) -0- 76,320 13,680 1,138,170 253,080
12,500(2) 295,250 37,500 -0- 1,017,000 -0-
------ ---------- ------- ------ ---------- ----------
12,500 295,250 113,820 13,680 2,155,170 253,080
William C. Hoover....... -0-(1) -0- 100,000 -0- 475,000 -0-
-0-(1) -0- 50,000 -0- 1,356,000 -0-
------ ---------- ------- ------ ---------- ----------
-0- -0- 150,000 -0- 1,831,000 -0-
Dr. William E.
Sweeney............... 18,000(1) 441,000 6,666 39,334 140,819 904,931
Roy V. Woodle........... 40,254(1) 1,007,939 20,832 7,914 302,889 160,621
</TABLE>
- ---------------
(1) Option activity and/or status of options granted under the 1990 Plan and
1994 Plan.
(2) Option activity and/or status of options granted under the MIS Program.
(3) The values disclosed in this column are based on the fair market value of
the Shares on the date of exercise less the exercise price.
(4) The values disclosed in these columns are based on the last reported sales
price of the Shares on December 31, 1996, as reported by the Nasdaq Stock
Market.
PENSION PLANS
The BDM Retirement Plan (the "Retirement Plan") is a defined benefit plan
funded entirely by the Company. The retirement benefit formula, coupled with
expected benefits from Social Security, is designed to provide a defined level
of income during retirement. Employees of BDM International, Inc. and its
domestic affiliates, except for the MSC Division, Vinnell Corporation, The BDM
Corporation of Saudi Arabia, BDM-Oklahoma, Inc. and IT Services Company, who
complete a specified number of hours of employment in a plan year accrue benefit
service under the Retirement Plan. Under the Retirement Plan, the normal
retirement age is 60. Employees are eligible for early retirement at age 55, if
they have completed 24 months of active, regular, full-time employment.
Participants in the Retirement Plan are generally entitled upon retirement to a
benefit equal to the sum of (a) for each year of benefit accrual service for
plan years after December 25, 1989, 1.4% of annual compensation up to the
35-year average of the Social Security-covered compensation plus 1.82% of annual
compensation in excess of the 35-year average of the Social Security-covered
compensation, and (b) 1.333% of average annual compensation up to the 35-year
average of the Social Security-covered compensation for 1989, plus 2% of the
average annual compensation in excess of the 35-year average of the Social
Security-covered compensation for 1989 multiplied by the number of years of
benefit accrual service for plan years prior to December 26, 1989. The maximum
number years of benefit accrual service allowed in making the calculation is 20.
The Company intends to supplement the benefit payments to Messrs. Odeen and
Woodle under the Company's retirement plans through a defined contribution SERP.
An annual contribution will be credited to accounts established in the Company
for Messrs. Odeen and Woodle in the amounts of $57,223 and $44,000,
respectively, which are expected to provide an actuarially determined benefit
when Messrs. Odeen and Woodle reach the age of 65, that, when combined with the
benefits from the Company's retirement plans, will equal $90,000.
11
<PAGE> 39
The Company intends to supplement the benefit payment to Messrs. Faulders
and Hoover and Dr. Sweeney under the Retirement Plan through a defined benefit
SERP to the extent necessary to ensure that such individuals who retire on or
after their normal retirement age with 20 or more years of benefit service
receive a stated target retirement benefit of 45% of average compensation for
the five highest consecutive years of such individuals, employment.
The years of benefit accrual service under the Retirement Plan and the
estimated maximum anticipated annual benefits at normal retirement date for the
Named Executive Officers participating in the Retirement Plan, as of December
31, 1996, are presented in the table below. The estimated maximum anticipated
annual benefits at normal retirement date for each of such officers who are
participants in the SERP as of December 31, 1996 are also presented. In
calculating benefits at retirement, annual earnings have been estimated based on
no escalation of current plan year earnings. Benefit payments may be subject to
a legislated ceiling at the time of retirement.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL
CURRENT BENEFIT UNDER THE
YEARS OF BDM RETIREMENT PLAN
BENEFIT AT NORMAL ESTIMATED ANNUAL
CURRENT AGE ACCRUAL RETIREMENT BENEFIT UNDER THE
NAME (1) SERVICE (AGE 60) SERP (3)
- --------------------------------------- -------------- -------- ------------------- -----------------
<S> <C> <C> <C> <C>
Philip A. Odeen........................ 62 5 $17,263 $ 62,300
C. Thomas Faulders, III................ 48 2 39,562 101,915
William C. Hoover...................... 48 1 34,390 91,920
Dr. William E. Sweeney, Jr............. 59 20 60,295 99,954
Roy V. Woodle(2)....................... 62 N/A N/A 47,464
</TABLE>
- ---------------
(1) As of November 24, 1997.
(2) Mr. Woodle does not participate in the Retirement Plan.
(3) Benefits for Messrs. Odeen and Woodle are calculated based on retirement at
age 65. Benefits for Messrs. Faulders and Hoover and Dr. Sweeney are
calculated based on retirement at age 60.
MANAGEMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
On November 20, 1997, Parent executed an employment agreement ("New
Employment Agreement") with each of Thomas A. Grissen, William C. Hoover, Philip
A. Odeen, David L. Patterson, Helen Seltzer, and Roy Woodle. During the three
year term of each New Employment Agreement, the executive will receive (i) an
annual base salary of not less than his or her annual base salary in effect
immediately prior to the Effective Time, (ii) annual incentive compensation
based on incentive target percentages of base salary comparable to such
percentages in effect immediately prior to the Effective Time and (iii) a
continuation of comparable benefits. If the executive is involuntarily
terminated other than for cause, or if the executive voluntarily terminates for
certain specified limited reasons, he or she will receive a termination payment
determined as follows: (i) if the termination occurs on or prior to the second
anniversary of the Effective Time, the termination payment will be three times
the sum of the executive's annual salary and target annual incentive
compensation in effect immediately prior to the termination, multiplied by a
fraction the numerator of which is the number of full months remaining in the
employment term and the denominator of which is 36 and (ii) if the termination
occurs after the second anniversary of the Effective Time, the termination
payment will be the sum of the executive's annual salary and target annual
compensation in effect immediately prior to the termination. Pursuant to the
Merger Agreement, C. Thomas Faulders, III will be entitled to severance
protection for involuntary termination (other than for cause) for up to two
years following the Merger. Specifically, (a) if termination occurs during the
first 12 months following the Merger, the severance payment will be equal to (i)
the sum of his total monthly salary and one-twelfth of his target incentive, in
effect at that time of termination, multiplied by (ii) the number of full months
remaining until the second anniversary of the Merger; and (b) if termination
occurs after the first anniversary of the Merger, the severance payment will be
equal to his total annual salary and target annual incentive in effect at that
time of termination and the severance period will be defined as 12 months. In
addition, if Mr. Faulders remains in the employ of the
12
<PAGE> 40
Company following the Merger, or another company designated by Parent, for a
period of between six months and twelve months following the Merger, he will be
entitled to a retention bonus equal to between two months and four months base
salary.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors of
the Company is composed entirely of independent outside directors. The members
of the Committee in 1996 were Frank C. Carlucci, Chairman, William E. Conway,
Jr. and Dr. Jeanette Grasselli Brown. Messrs. Carlucci and Conway have been
members of the Committee since 1990; Dr. Brown became a member of the Committee
in May 1996; and Mr. Phillip R. Cox became a member in May 1997.
The Committee has the following authority and responsibilities: reviewing
and recommending to the Board the compensation of members of the Board of
Directors of the Company; determining the compensation of the President,
including fringe benefits and incentive compensation; reviewing and making
recommendations concerning the compensation of all officers of the Company other
than the President of the Company; and reviewing the compensation of all
employees of any wholly owned subsidiary of the Company who are at an executive
level in such company.
The Committee annually evaluates salary compensation and incentive
compensation in the form of cash bonus awards and incentive stock options. Such
evaluations are made following a review of the Company's financial performance,
results of operations, contract awards and proposal activity, and the
achievement of business goals. In order to ensure that the Company's salaries
are competitive with the marketplace, the Company participates in five or six
executive compensation surveys on an annual basis. By benchmarking its executive
positions to the midpoint of related positions within the industry, the Company
ensures that not only its salaries but its total compensation is competitive.
This information is reviewed on an annual basis.
Compensation is given to executive officers (including the Named Executive
Officers) in the form of salary, cash bonus incentive compensation awards, and
stock option awards under the 1990 Plan, the 1994 Plan, and the vesting of
Management Incentive Stock under the MIS Program (together, the "Plans").
Receipt of shares under the MIS Program is dependent on the continued employment
of such executives through the vesting dates of such shares and, in part, the
Company meeting certain financial performance goals.
The Plans are designed to allow certain key employees, upon whose efforts
the Company is dependent for the successful conduct of its business, to derive
financial benefit from the appreciation in the value of the Company's stock and
to take a proprietary interest in the Company. The financial reward derived at
the time of the sale of the shares should serve as an incentive for the employee
to continue employment and increase his or her efforts. Stock options are
designed to motivate, retain, and reward employees with meaningful financial
gains, tied to Company performance, in exchange for a sustained (multi-year)
contribution to the Company. The primary purpose of the cash bonus incentive
program is to reward individual performance, in the context of the Company
performance, evaluated over the last twelve months. Thus, cash bonuses are a
short-term incentive program.
Evaluation factors for 1996 incentives were as follows. With respect to
cash bonus incentive compensation, awards were made on the basis of 1996
performance in the following key contribution areas, where appropriate:
generating revenue, direct labor, and profit in accordance with individual
projections and goals; developing new or expanded market positions; and
capturing significant business that builds a new base for the future. The
executives were also evaluated in terms of leadership and overall past
performance in the following applicable areas: human resources development,
including mentoring, training, meeting equal employment opportunity and
affirmative action goals, and reducing turnover; teamwork and cooperation within
the Company; resource management, including the human resources of his or her
organizational unit, as well as the effective utilization of the Company's
administrative resources; organizational effectiveness and discipline (meaning
that their organization runs smoothly according to established Company policies
and procedures); and overall effectiveness, both within the Company and
externally with clients and the business community.
13
<PAGE> 41
Certain executives of the Company have a portion of their incentive compensation
determined based on the financial and other performance of the Company as a
whole.
Awards of incentive stock options to executive employees for 1996 were
based on current performance, as well as factors related to expected future
performance and contributions to the Company. In addition to the specific
performance and leadership evaluation, the full range of considerations
included, where appropriate: the potential for increased contribution during
1997; the expected level of achievement and contribution in years after 1997;
the contribution of the employee to the Company as a whole; the amount of
incentive stock options and the Management Incentive Stock rights held by the
employee relative to his or her peers; and the importance (motivational value)
of incentive stock options to the employee.
Philip A. Odeen was employed as President and Chief Executive Officer of
the Company, effective May 1, 1992. The compensation of Mr. Odeen was initially
determined by the Committee at the time of his employment with the Company. Mr.
Odeen's annual salary was established at a rate of $400,000. The Committee
determined to increase Mr. Odeen's annual salary to $500,000 effective January
1, 1996. His incentive compensation related to 1996, in the form of a cash bonus
approved February 21, 1997, and incentive stock options granted March 3, 1997,
was based on the Company's performance in 1996. See Summary Compensation Table
above.
COMPENSATION COMMITTEE
Frank C. Carlucci
William E. Conway, Jr.
Dr. Jeanette Grasselli Brown
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For fiscal years 1996, the Compensation Committee of the Board of Directors
made all determinations with respect to executive officer compensation. Messrs.
Carlucci and Conway and Dr. Brown, each a Director of the Company, served as
members of the Compensation Committee in 1996. The Company is not aware of any
Compensation Committee interlocks.
14
<PAGE> 42
STOCK PERFORMANCE GRAPH
The following graph shows changes over the past five-year period (the
Shares were registered under Section 12(g) of the Exchange Act on April 29,
1994) in the value of $100 invested in (1) the Shares; (2) the Standard & Poor's
500 Index; and (3) and industry group of 12 other information systems and
technology services companies: American Management Systems, Inc., Analysis &
Technology, Inc., Analysts International Corp., CACI International Inc.,
Computer Horizons Corp., Computer Sciences Corp., Computer Task Group, Inc., EDS
Corp., Keane Inc., Logicon, Inc., Nichols Research Corp., and Systems and
Computer Technology Corp. The values of each investment are based on share price
appreciation plus dividends, with reinvestment of dividends. The calculations
exclude trading commissions and taxes.
[THE TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE DESCRIPTION OF GRAPHIC OR
IMAGE MATERIAL OMITTED FOR THE PURPOSE OR ELECTRONIC FILING.]
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
--------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
BDM International, Inc........................... 100 100 162 229 552 1,033
S&P 500.......................................... 100 108 118 120 165 203
Industry Group................................... 100 111 113 152 224 273
</TABLE>
15
<PAGE> 43
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Frank C. Carlucci, the Chairman and a Director of the Company, and William
E. Conway, Jr., Vice Chairman and a Director, are Managing Directors of Carlyle,
which rendered financial advisory services to the Company during 1996. Mr.
Conway owns more than 10% of the capital stock of the general partner of
Carlyle. Carlyle is the general partner of The Carlyle Fund, BDM Partners and
BDM Partners II, stockholders of the Company.
The Company has retained Carlyle to provide certain financial and
investor-relations services, to assist management in evaluating corporate
acquisition opportunities and financial strategies and to provide similar other
services. In consideration of such services, the Company pays Carlyle an annual
fee of $500,000 plus expenses, a portion of which is offset by the amount which
ordinarily would be payable to Mr. Conway for services rendered in his capacity
as Director of the Company. In addition, Carlyle serves as a financial advisor
to the Company in connection with any acquisition, corporate reorganization,
financing, stock offering or similar transaction by the Company, and has
received fees commensurate with its services in connection with any such
transaction. Carlyle will not receive any fees in connection with the Offer and
the Merger and has terminated its rights to receive any fees from the Company
thereafter. The Company paid Carlyle approximately $503,000, $506,000 and
$505,000, for the provision of these services for the years ended December 31,
1996, 1995 and 1994, respectively.
In connection with this transaction, Carlyle entered into a Stockholder's
Agreement dated November 20, 1997, and Messrs. Grissen, Hoover, Odeen,
Patterson, and Woodle, Ms. Seltzer entered into the Employment Agreement.
All future transactions (other than ordinary course transactions such as
fixing salaries or awarding employee benefits) and loans between the Company and
its directors, officers and principal shareholders will be ratified by a
majority of the members of the Board of Directors not having any interest in the
transactions and will be on terms believed to be no less favorable to the
Company than those generally available from unaffiliated third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC on Forms 3, 4 and 5 and to furnish to the Company copies
of all such reports. Based solely on its review of the copies of such forms
received by it, the Company believes that during fiscal 1996, Messrs. Faulders
and Woodle each submitted late one Form 4. The Form 4 submitted by Mr. Faulders
reported late one acquisition of Shares. The Form 4 submitted by Mr. Woodle
reported late two acquisitions and one disposition of Shares.
16
<PAGE> 1
EXHIBIT 1
================================================================================
==============================
BDM INTERNATIONAL, INC.,
TRW INC.
and
SYSTEMS ACQUISITION INC.
==============================
==============================
AGREEMENT AND PLAN OF MERGER
==============================
==============================
Dated as of November 20, 1997
==============================
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I.
TENDER OFFER AND MERGER
1.1. The Offer........................................................... 2
1.2. Company Action...................................................... 4
1.3. Directors........................................................... 5
1.4. The Merger.......................................................... 6
1.5. Effective Time...................................................... 7
1.6. Conversion of Shares................................................ 7
1.7. Dissenting Shares................................................... 8
1.8. Surrender of Shares................................................. 8
1.9. Options............................................................. 10
1.10. Certificate of Incorporation and Bylaws............................. 11
1.11. Directors and Officers.............................................. 11
1.12. Other Effects of Merger............................................. 11
1.13. Proxy Statement..................................................... 11
1.14. Additional Actions.................................................. 12
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization and Good Standing...................................... 12
2.2. Capitalization...................................................... 13
2.3. Subsidiaries........................................................ 14
2.4. Authorization; Binding Agreement.................................... 14
2.5. Governmental Approvals.............................................. 15
2.6. No Violations....................................................... 15
2.7. Securities Filings.................................................. 16
2.8. Company Financial Statements........................................ 17
2.9. Absence of Certain Changes or Events................................ 17
2.10. Compliance with Laws................................................ 18
2.11. Permits............................................................. 18
2.12. Litigation.......................................................... 18
2.13. Contracts........................................................... 19
2.14. Employee Benefit Plans.............................................. 19
2.15. Taxes and Returns................................................... 21
2.16 Intellectual Property............................................... 22
2.17. Environmental Matters............................................... 22
2.18. Offer Documents; Proxy Statement.................................... 24
2.19. Finders and Investment Bankers...................................... 25
2.20. Fairness Opinion.................................................... 25
2.21. Related Party Transactions.......................................... 25
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT
3.1. Organization and Good Standing...................................... 25
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3.2. Authorization; Binding Agreement.................................... 25
3.3. Governmental Approvals.............................................. 26
3.4. No Violations....................................................... 26
3.5. Offer Documents; Proxy Statement.................................... 27
3.6. Finders and Investment Bankers...................................... 27
3.7. Financing Arrangements.............................................. 27
3.8. No Prior Activities................................................. 27
ARTICLE IV.
ADDITIONAL COVENANTS OF THE COMPANY
4.1. Conduct of Business of the Company and the Company Subsidiaries..... 28
4.2. Notification of Certain Matters..................................... 31
4.3. Access and Information.............................................. 31
4.4. Proxy Statement..................................................... 32
4.5. Reasonable Best Efforts............................................. 32
4.6. Public Announcements................................................ 32
4.7. Compliance.......................................................... 33
4.8. No Solicitation..................................................... 33
4.9. SEC and Stockholder Filings......................................... 35
4.10. Takeover Statutes................................................... 35
4.11. Related Party Agreements............................................ 35
ARTICLE V.
ADDITIONAL COVENANTS OF PARENT
5.1. Reasonable Best Efforts............................................. 36
5.2. Public Announcements................................................ 36
5.3. Compliance.......................................................... 36
5.4. Employee Benefit Plans.............................................. 37
5.5. Indemnification, Exculpation and Insurance.......................... 37
ARTICLE VI.
MERGER CONDITIONS
6.1. Offer............................................................... 38
6.2. Stockholder Approval................................................ 38
6.3. No Injunction or Action............................................. 38
6.4. Other Approvals..................................................... 38
6.5. Conditions of Obligations of Parent and Merger Sub.................. 38
ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1. Termination......................................................... 39
7.2. Effect of Termination and Abandonment............................... 40
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ARTICLE VIII.
MISCELLANEOUS
8.1. Confidentiality..................................................... 41
8.2. Amendment and Modification.......................................... 42
8.3. Waiver of Compliance; Consents...................................... 42
8.4. Survival............................................................ 42
8.5. Notices............................................................. 42
8.6. Binding Effect; Assignment.......................................... 43
8.7. Expenses............................................................ 44
8.8. Governing Law....................................................... 44
8.9. Counterparts........................................................ 44
8.10. Interpretation...................................................... 44
8.11. Entire Agreement.................................................... 44
8.12. Severability........................................................ 44
8.13. Specific Performance................................................ 45
8.14. Third Parties....................................................... 45
8.15. Disclosure Letters.................................................. 45
ANNEX I
Conditions to the Offer.................................................... 1
iii
<PAGE> 5
GLOSSARY OF DEFINED TERMS
Acquisition Agreement................... 34
Affiliate............................... 44
Agreement............................... 1
Benefit Plan............................ 19
Certificate of Merger................... 7
Closing................................. 7
Closing Date............................ 7
Company................................. 1
Company Benefit Plan.................... 19
Company Class B Stock................... 13
Company Disclosure Letter............... 12
Company Filed Documents................. 16
Company Financial Statements............ 17
Company Material Adverse Effect ........ 13
Company Material Contract............... 19
Company Option Plans.................... 10
Company Options......................... 10
Company Permits......................... 18
Company Proposals....................... 32
Company Securities Filings.............. 16
Company Stock........................... 1
Company Subsidiary...................... 13
Confidentiality Agreement............... 41
Consent................................. 15
Delaware Code........................... 6
Dissenting Shares....................... 8
Effective Time.......................... 7
Environmental Claim..................... 23
Environmental Laws...................... 24
Environmental Permit.................... 24
ERISA................................... 19
Exchange Agent.......................... 8
Expiration Date......................... 3
Financial Advisor....................... 4
Governmental Authority.................. 15
Hazardous Materials..................... 24
HSR Act................................. 15
Independent Directors................... 6
Key Employees........................... 18
Law..................................... 16
Litigation.............................. 18
Merger.................................. 1
Merger Consideration.................... 7
Merger Sub.............................. 1
Minimum Condition....................... 1
Multiemployer Plan...................... 19
NASD.................................... 15
Offer................................... 1
Offer Conditions........................ 2
Offer Documents......................... 3
Offer to Purchase....................... 3
Parent.................................. 1
Parent Disclosure Letter................ 25
Parent Group............................ 36
Parent Information...................... 27
Per Share Amount........................ 1
Person.................................. 44
Proxy Statement......................... 11
Related Party........................... 25
Schedule 14D-1.......................... 3
Schedule 14D-9.......................... 4
SEC..................................... 3
Securities Act.......................... 19
Securities Exchange Act................. 2
Shares.................................. 1
Stockholders............................ 1
Stockholders Agreement.................. 1
Subsidiary.............................. 44
Superior Proposal....................... 34
Surviving Corporation................... 6
Surviving Corporation Common Stock ..... 8
Takeover Proposal....................... 33
Takeover Statute........................ 35
Tax..................................... 21
Tax Return.............................. 22
Termination Fee......................... 41
Voting Securities....................... 1
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This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of November 20, 1997, by and among, BDM International, Inc., a
Delaware corporation (the "Company"), TRW Inc., an Ohio corporation ("Parent"),
and Systems Acquisition Inc., a Delaware corporation and wholly owned subsidiary
of Parent ("Merger Sub").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company, Merger
Sub and Parent have approved the acquisition by Parent of the Company in
accordance with the provisions of this Agreement;
WHEREAS, in furtherance thereof, it is proposed that, upon the terms
and subject to the conditions set forth herein, Parent will make a cash tender
offer (as it may be amended from time to time in accordance herewith, the
"Offer") to purchase all of the outstanding shares ("Shares") of common stock,
$.01 par value, of the Company ("Company Stock"), for $29.50 per Share or such
higher price as may be paid in the Offer (the "Per Share Amount"), in each case
net to the seller in cash, without interest;
WHEREAS, also in furtherance of such acquisition, the respective
Boards of Directors of the Company, Merger Sub and Parent have each approved the
merger (the "Merger") of Merger Sub with and into the Company following the
expiration of the Offer in accordance with the laws of the State of Delaware and
the provisions of this Agreement;
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless, immediately
after the execution and delivery hereof, certain holders of Shares (the
"Stockholders") enter into an agreement (the "Stockholders Agreement") providing
for certain matters with respect to their Shares, the tender of their Shares and
certain other actions relating to the Offer and the other transactions
contemplated by this Agreement and, in order to induce Parent and Merger Sub to
enter into this Agreement, the Company has approved the execution and delivery
by Parent and Merger Sub and such Stockholders of the Stockholders Agreement,
and such Stockholders have agreed to execute and deliver the Stockholders
Agreement;
WHEREAS, the Board of Directors of the Company has approved this
Agreement and the Stockholders Agreement, has resolved to recommend acceptance
of the Offer and the Merger to the holders of Shares and has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and to recommend that the holders of such Shares
accept the Offer and adopt this Agreement and the transactions contemplated
hereby; and
<PAGE> 7
WHEREAS, the Company, Merger Sub and Parent desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I.
TENDER OFFER AND MERGER
1.1. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 7.1 hereof and no event set forth in
Annex I hereto shall have occurred and be existing, Parent shall cause Merger
Sub to commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the
"Securities Exchange Act")) the Offer as promptly as practicable, but in no
event later than five business days following the public announcement of this
Agreement; provided, however, that Parent may designate another direct
subsidiary of Parent as the bidder (within the meaning of Rule 14d-1(c) under
the Securities Exchange Act) in the Offer, in which case references herein to
Merger Sub shall be deemed to apply to such subsidiary, as appropriate. The
obligation of Parent to cause Merger Sub to accept for payment any Shares
tendered shall be subject to the satisfaction of only those conditions set forth
in Annex I hereto (the "Offer Conditions"). The Per Share Amount shall be net to
each seller in cash, subject to reduction only for any applicable federal
back-up withholding or stock transfer taxes payable by such seller. The Company
agrees that no Shares held by the Company will be tendered pursuant to the
Offer.
(b) Without the prior written consent of the Company, Parent shall
not permit Merger Sub to (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought in
the Offer, (iii) amend or waive satisfaction of the Minimum Condition (as
defined in Annex I hereto) or (iv) impose additional conditions to the Offer or
amend any other term of the Offer in any manner adverse to the holders of
Shares, provided that nothing herein will prohibit any waiver of any condition
or term of the Offer (other than the Minimum Condition) or any other action
permitted hereby. Upon the terms and subject to the conditions of the Offer,
Parent will cause Merger Sub to accept for payment and purchase, as soon as
practicable after the expiration of the Offer, all Shares validly tendered and
not withdrawn prior to the expiration of the Offer. It is agreed that the Offer
Conditions are for the benefit of Merger Sub and may be asserted by Merger Sub
regardless of the circumstances giving rise to any such condition (except for
any action or inaction by Parent or Merger Sub
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<PAGE> 8
constituting a breach of this Agreement) or, except with respect to the Minimum
Condition, may be waived by Merger Sub, in whole or in part at any time and from
time to time, in its sole discretion.
(c) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") having only the conditions set forth in Annex I hereto. On
the date the Offer is commenced, Parent and Merger Sub shall file with the
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer that will contain (including as an
exhibit) or incorporate by reference the Offer to Purchase and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, and any other SEC schedule
or form which is filed in connection with the Offer and related transactions,
are referred to collectively herein as the "Offer Documents"). Each of Parent,
Merger Sub and the Company agrees promptly to correct any information provided
by it for use in the Schedule 14D-1 or the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and to
supplement the information provided by it specifically for use in the Schedule
14D-1 or the Offer Documents to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and Parent and Merger Sub further
agree to take all steps necessary to cause the Schedule 14D-1, as so corrected
or supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given a reasonable opportunity to review and comment on
any Offer Documents before they are filed with the SEC.
(d) The Offer to Purchase shall provide for an initial expiration
date (the "Expiration Date") of 20 business days (as defined in Rule 14d-1 under
the Securities Exchange Act) from the date of commencement. Parent and Merger
Sub agree that they shall not terminate or withdraw the Offer or extend the
Expiration Date unless at the Expiration Date any of the Offer Conditions shall
not have been satisfied or earlier waived. Notwithstanding but without limiting
the foregoing, Merger Sub may (i) extend the Expiration Date (including as it
may be extended) for up to ten business days in connection with an increase in
the consideration to be paid pursuant to the Offer so as to comply with
applicable rules and regulations of the SEC, (ii) in its sole discretion, extend
the initial Expiration Date for up to ten business days after the initial
Expiration Date, and (iii) extend the initial Expiration Date (including as it
may be extended) for up to ten business days, notwithstanding that on such
Expiration Date the Offer Conditions shall have been
3
<PAGE> 9
satisfied or waived, if the number of Shares that have been validly tendered and
not withdrawn represent more than 50% but less than 90% of the voting power of
the then issued and outstanding Shares, provided that, in the case of clause
(iii) of this Section 1.1(d), Parent and Merger Sub expressly and irrevocably
waive any Offer Condition that subsequently may not be satisfied during such
extension of the Offer.
1.2. COMPANY ACTION. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that (A) the Board of
Directors of the Company, at a meeting duly called and held on November 20,
1997, at which all of the Directors were present, duly approved by unanimous
vote this Agreement and the transactions contemplated hereby, including the
Offer, the Merger and the Stockholders Agreement, resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and adopt this Agreement and the transactions contemplated hereby,
including the Merger, and determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the stockholders of the Company and (B) Wasserstein Perella &
Co., Inc. (the "Financial Advisor") has delivered to the Board of Directors of
the Company its written opinion that as of the date hereof the consideration to
be received by the stockholders of the Company pursuant to each of the Offer and
the Merger is fair to the stockholders of the Company from a financial point of
view. The Company has been authorized by the Financial Advisor to permit the
inclusion of such fairness opinion (or a reference thereto) in the Offer
Documents and in the Schedule 14D-9 referred to below. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Company's Board of Directors described in this Section 1.2(a).
(b) The Company shall file with the SEC, no later than the fifth
business day following the public announcement of this Agreement, a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that will comply in all
material respects with the provisions of all applicable Law (as hereinafter
defined), including federal securities Laws. The Company shall mail such
Schedule 14D-9 to the stockholders of the Company promptly after the
commencement of the Offer together with the initial mailing of the Offer
Documents. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors of the Company described in Section
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of Parent and Merger Sub, with respect to written information supplied
by it specifically for use in the Schedule 14D-9, shall promptly notify the
Company of any required corrections of such information and cooperate with the
Company with respect to correcting such
4
<PAGE> 10
information) and to supplement the information contained in the Schedule 14D-9
to include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and the Company shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the
Company's stockholders to the extent required by applicable Laws, including
federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 before it is filed with
the SEC.
(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish Parent with mailing labels containing the
names and addresses of all record holders of Shares, non-objecting beneficial
owner lists (to the extent reasonably available), security position listings of
Shares held in stock depositories, each as of a recent date, and shall promptly
furnish Parent with such additional information, including updated lists of
stockholders, mailing labels and security position listings, and such other
information and assistance as Parent or its agents may reasonably request for
the purpose of communicating the Offer to the record and beneficial holders of
Shares.
1.3. DIRECTORS. Promptly upon the purchase by Merger Sub of any
Shares pursuant to the Offer (and assuming that the Minimum Condition has been
satisfied), and from time to time thereafter as Shares are acquired by Merger
Sub, Merger Sub shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Board of Directors of the Company as will
give Merger Sub, subject to compliance with Section 14(f) of the Securities
Exchange Act, representation on the Board of Directors of the Company equal to
at least that number of directors which equals the product of the total number
of directors on the Board of Directors of the Company (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent or any affiliate of
Parent (including for purposes of this Section 1.3 such Shares as are accepted
for payment pursuant to the Offer, but excluding Shares held by the Company)
bears to the number of Shares outstanding. At such times, if requested by
Parent, the Company will also cause each committee of the Board of Directors of
the Company and the Board of Directors of each Company Subsidiary (as
hereinafter defined) to include persons designated by Parent constituting the
same percentage of each such committee and the Board of Directors of each
Company Subsidiary as Parent's designees are of the Board of Directors of the
Company. The Company shall, upon request by Parent, promptly increase the size
of the Board of Directors of the Company as is necessary to enable Parent
designees to be elected to the Board of Directors of the Company in accordance
with the terms of this Section 1.3 and shall cause Parent's
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<PAGE> 11
designees to be so elected; provided, however, that, subject to the following
proviso, in the event that Parent's designees are appointed or elected to the
Board of Directors of the Company, until the Effective Time (as hereinafter
defined) the Board of Directors of the Company shall have at least one director
who is a director on the date hereof and who is neither an officer of the
Company nor a designee, stockholder, affiliate or associate (within the meaning
of the federal securities laws) of Parent (one or more of such directors, the
"Independent Directors"); provided further, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of Parent, and such person shall be deemed
to be an Independent Director for purposes of this Agreement. Subject to
applicable Law, the Company shall promptly take all action necessary pursuant to
Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this Section 1.3 and shall
include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f-1 if Parent has not theretofore designated directors) such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3. Parent will supply the Company and be solely responsible
for any information with respect to itself and its nominees, officers, directors
and affiliates required by Section 14(f) and Rule 14f-1. Notwithstanding
anything in this Agreement to the contrary, prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(i) amend or terminate this Agreement on behalf of the Company, (ii) exercise or
waive any of the Company's rights or remedies hereunder, (iii) extend the time
for performance of Parent's obligations hereunder or (iv) take any other action
by the Company in connection with this Agreement required to be taken by the
Board of Directors of the Company.
1.4. THE MERGER. Upon the terms and subject to the conditions of
this Agreement, the Merger shall be consummated in accordance with the Delaware
General Corporation Law (the "Delaware Code"). At the Effective Time (as defined
in Section 1.5 hereof), upon the terms and subject to the conditions of this
Agreement, Merger Sub shall be merged with and into the Company in accordance
with the Delaware Code and the separate existence of Merger Sub shall thereupon
cease, and the Company, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall continue its corporate existence under the laws
of the State of Delaware as a subsidiary of Parent. At Parent's election, any
direct or indirect subsidiary of Parent other than Merger Sub may be merged with
and into the Company instead of Merger Sub. In the event of such an election,
the parties agree to execute an appropriate amendment to this
6
<PAGE> 12
Agreement to reflect such election. The parties shall prepare and execute a
certificate of merger in order to comply in all respects with the requirements
of the Delaware Code and with the provisions of this Agreement or, if
applicable, a certificate of ownership and merger (each, a "Certificate of
Merger").
1.5. EFFECTIVE TIME. The Merger shall become effective at the time
of the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the applicable provisions of the Delaware Code or at
such later time as may be specified in the Certificate of Merger. As soon as
practicable after all of the conditions set forth in Article VI of this
Agreement have been satisfied or waived by the party or parties entitled to the
benefit of the same, the parties hereto shall cause the Merger to become
effective. Parent and the Company shall mutually determine the time of such
filing and the place where the closing of the Merger (the "Closing") shall
occur. The time when the Merger shall become effective is herein referred to as
the "Effective Time" and the date on which the Effective Time occurs is herein
referred to as the "Closing Date."
1.6. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be cancelled pursuant to Section 1.6(b)
hereof and any Dissenting Shares (as hereinafter defined)) shall be cancelled
and extinguished and be converted into the right to receive the Per Share Amount
(the "Merger Consideration") in cash payable to the holder thereof, without
interest, promptly upon surrender of the certificate representing such Share or
appropriate proof of lost certificates, in accordance with Section 1.8 hereof.
From and after the Effective Time, the holders of certificates evidencing
ownership of any such Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares except as otherwise
provided for herein or by applicable Law.
(b) Each Share held in the treasury of the Company and each Share
owned by Parent or any direct or indirect wholly owned subsidiary of Parent
(other than Shares held by TRW Investment Management Co., its advisors or
Parent's employee benefit plans) immediately before the Effective Time,
including without limitation Merger Sub, shall be cancelled and extinguished and
no payment or other consideration shall be made with respect thereto.
(c) The shares of Merger Sub common stock outstanding immediately
prior to the Merger shall be converted into one
7
<PAGE> 13
validly issued, fully paid and non-assessable share of the common stock of the
Surviving Corporation (the "Surviving Corporation Common Stock"), which one
share of the Surviving Corporation Common Stock shall constitute all of the
issued and outstanding capital stock of the Surviving Corporation and shall be
owned by Parent.
1.7. DISSENTING SHARES.(a) Notwithstanding any provision of this
Agreement to the contrary, any Shares issued and outstanding immediately prior
to the Effective Time and held by a holder who has demanded and perfected his
demand for appraisal of his Shares in accordance with the Delaware Code
(including but not limited to Section 262 thereof) and as of the Effective Time
has neither effectively withdrawn nor lost his right to such appraisal
("Dissenting Shares") shall not be converted into or represent a right to
receive the Merger Consideration, but the holder thereof shall be entitled to
only such rights as are granted by the Delaware Code.
(b) Notwithstanding the provisions of Section 1.7(a) hereof, if any
holder of Shares who demands appraisal of his Shares under the Delaware Code
shall effectively withdraw or lose (through failure to perfect or otherwise) his
right to appraisal, then as of the Effective Time or the occurrence of such
event, whichever occurs later, such holder's Shares shall automatically be
converted into and represent only the right to receive the Merger Consideration,
without interest thereon, upon surrender of the certificate or certificates
representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, withdrawals of
such demands, and any other instruments served pursuant to the Delaware Code
received by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the Delaware Code. The
Company shall not voluntarily make any payment with respect to any demands for
appraisal and shall not, except with the prior written consent of Parent, settle
or offer to settle any such demands.
1.8. SURRENDER OF SHARES. (a) Prior to the Closing Date, Parent
shall appoint First Chicago Trust Company of New York or another agent
reasonably acceptable to the Company to act as exchange agent (the "Exchange
Agent") for the Merger. When and as needed, Parent shall make available to the
Exchange Agent for the benefit of holders of Shares, the aggregate consideration
to which such holders shall be entitled at the Effective Time pursuant to
Section 1.6 hereof. Such funds shall be invested by the Exchange Agent as
directed by Parent or, after the Effective Time, the Surviving Corporation,
provided that such investments shall be in obligations of or guaranteed by the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investors Service, Inc. or Standard & Poor's
8
<PAGE> 14
Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Merger Sub or Parent, as Parent directs.
In the event that such funds as invested are inadequate to pay the full Merger
Consideration for all Shares converted into the Merger Consideration pursuant to
the Merger, the Parent shall provide additional funds to do so.
(b) On the Closing Date, Parent shall instruct the Exchange Agent
to mail to each holder of record of a certificate representing any Shares
cancelled upon the Merger pursuant to Section 1.6(a) hereof, within five
business days of receiving from the Company a list of such holders of record,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates shall pass, only upon
delivery of the certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the certificates. Each holder
of a certificate or certificates representing any Shares cancelled upon the
Merger pursuant to Section 1.6(a) hereof may thereafter surrender such
certificate or certificates to the Exchange Agent, as agent for such holder, to
effect the surrender of such certificate or certificates on such holder's behalf
for a period ending one year after the Effective Time. Upon the surrender of
certificates representing the Shares, Parent shall cause the Exchange Agent to
pay the holder of such certificates in exchange therefor cash in an amount equal
to the Per Share Amount multiplied by the number of Shares represented by such
certificate. Until so surrendered, each such certificate (other than
certificates representing Dissenting Shares or Shares held by Parent or in the
treasury of the Company) shall represent solely the right to receive the
aggregate Merger Consideration relating thereto.
(c) If payment of cash in respect of cancelled Shares is to be made
to a person other than the person in whose name a surrendered certificate or
instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other Taxes (as hereinafter defined)
required by reason of such payment in a name other than that of the registered
holder of the certificate or instrument surrendered or shall have established to
the satisfaction of Parent or the Exchange Agent that such Tax either has been
paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and no transfer of Shares shall be made thereafter, other than
transfers of Shares that have occurred prior to the Effective Time. In the event
that, after
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<PAGE> 15
the Effective Time, certificates for Shares are presented to the Surviving
Corporation, its transfer agent or the Exchange Agent, they shall be cancelled
and exchanged for cash as provided in Section 1.6(a) hereof. No interest shall
accrue or be paid on any cash payable upon the surrender of a certificate or
certificates which immediately before the Effective Time represented outstanding
Shares.
(e) The Merger Consideration paid in the Merger shall be net to the
holder of Shares in cash, subject to reduction only for any applicable federal
back-up withholding or, as set forth in Section 1.8(c) hereof, stock transfer
Taxes payable by such holder.
(f) Promptly following the date which is 180 calendar days after
the Effective Time, the Exchange Agent shall deliver to Parent all cash
(including interest received with respect thereto), certificates and other
documents in its possession relating to the transactions contemplated hereby,
and the Exchange Agent's duties shall terminate. Thereafter, each holder of a
certificate representing Shares (other than certificates representing Dissenting
Shares and certificates representing Shares to be cancelled pursuant to Section
1.6(b) hereof) may surrender such certificate to Parent and (subject to
applicable abandoned property, escheat and similar Laws) receive in
consideration thereof the aggregate Merger Consideration relating thereto
payable upon surrender of such certificate, without any interest or dividends
thereon.
(g) None of the Company, Merger Sub, Parent or the Exchange Agent
shall be liable to any holder of Shares for cash delivered to a public official
pursuant to any abandoned property, escheat or similar law, rule, regulation,
statute, order, judgment or decree.
1.9. OPTIONS. (a) The Company hereby represents and warrants, and
based thereon Parent and Merger Sub hereby acknowledge, that (i) all outstanding
options to purchase Shares (the "Company Options") granted under the Company's
stock option plans referred to in Section 2.14 of the Company Disclosure Letter
(as hereinafter defined), each as amended (collectively, the "Company Option
Plans"), whether or not then exercisable or vested, shall, pursuant to the terms
of the Company Option Plans, be fully exercisable and vested during the ten-day
period immediately prior to the initial Expiration Date and (ii) pursuant to the
terms thereof, all Company Options which are outstanding immediately prior to
the consummation of the Offer shall be cancelled as of the consummation of the
Offer and the holders thereof shall be entitled to receive from the Company (or,
at Parent's option, Parent) upon consummation of the Offer, in respect of each
Share subject to such Company Option, an amount in cash equal to the excess, if
any, of the Per Share Amount over the exercise price per share thereof (such
payment to
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be net of applicable withholding taxes), provided, however, that with respect to
any person subject to Section 16(a) of the Securities Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Securities
Exchange Act. Upon the consummation of the Offer, Parent shall provide the
Company with the funds necessary to satisfy any of its obligations under this
Section 1.9(a).
(b) The Company hereby represents and warrants that all Company
Option Plans provide, or have been or will be amended to provide, for the
actions described in Section 1.9(a) hereof. The Company shall cause the Company
Option Plans to terminate as of the Effective Time.
1.10. CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to Section
5.5 hereof, at the Effective Time, the Certificate of Incorporation and the
Bylaws of the Surviving Corporation shall be the Certificate of Incorporation
and the Bylaws of Merger Sub in effect at the Effective Time (subject to any
subsequent amendments).
1.11. DIRECTORS AND OFFICERS. At the Effective Time, the directors
of Merger Sub immediately prior to the Effective Time shall be the directors 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 their successors are duly elected or appointed and qualified.
1.12. OTHER EFFECTS OF MERGER. The Merger shall have all further
effects as specified in the applicable provisions of the Delaware Code.
1.13. PROXY STATEMENT. (a) As promptly as practicable after the
consummation of the Offer and if required by applicable Law, the Company shall
prepare and file with the SEC, and shall use all reasonable best efforts to have
cleared by the SEC, and promptly thereafter shall mail to stockholders, a proxy
statement in connection with a meeting of the Company's stockholders to consider
the Merger or an information statement, as appropriate (such proxy statement or
information statement, as amended or supplemented, is herein referred to as the
"Proxy Statement"). The Proxy Statement shall contain the recommendation of the
Board of Directors of the Company in favor of the Merger and the fairness
opinion of the Financial Advisor and such other disclosures as are required by
Law.
(b) Parent will furnish the Company with such information
concerning Parent and its subsidiaries as is necessary in order to cause the
Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply
with applicable Law. Parent agrees promptly to advise the Company if, at any
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time prior to the meeting of stockholders of the Company referenced herein, any
information provided by it specifically for inclusion in the Proxy Statement is
or becomes incorrect or incomplete in any material respect and to provide the
Company with the information needed to correct such inaccuracy or omission.
Parent will furnish the Company with such supplemental information as may be
necessary in order to cause the Proxy Statement, insofar as it relates to Parent
and its subsidiaries, to comply with applicable Law after the mailing thereof to
the stockholders of the Company.
(c) The Company and Parent agree to cooperate in making any
preliminary filings of the Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 under the Securities Exchange Act.
(d) The Company shall provide Parent for its review a copy of the
Proxy Statement at least such amount of time prior to each filing thereof as is
customary in transactions of the type contemplated hereby. Parent authorizes the
Company to utilize in the Proxy Statement the information concerning Parent and
its subsidiaries provided to the Company in connection with, or contained in,
the Proxy Statement.
1.14. ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Merger Sub or the Company or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of Merger Sub or
the Company, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of Merger Sub or the Company, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the correspondingly numbered Sections of the letter,
dated the date hereof, from the Company to Parent (the "Company Disclosure
Letter"):
2.1. ORGANIZATION AND GOOD STANDING. The Company and each of the
Company Subsidiaries is a corporation or partnership
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duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate or partnership power and authority and any necessary governmental
approval to own, lease and operate its properties and to carry on its business
as now being conducted. The Company and each of the Company Subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the character of the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, have or be reasonably
likely in the future to have a material adverse effect on the business, assets,
condition (financial or otherwise), liabilities or results of operations of the
Company and the Company Subsidiaries taken as a whole ("Company Material Adverse
Effect") or prevent or delay the consummation of the Offer or Merger. The
Company has heretofore made available to Parent accurate and complete copies of
the Certificate of Incorporation and Bylaws, as currently in effect, of the
Company. For purposes of this Agreement, the term "Company Subsidiary" shall
mean any corporation, partnership or other legal entity of which the Company
(either alone or through or together with any other subsidiary) owns a majority
of the capital stock or other equity interests, and the Company is entitled to
vote for the election of the board of directors or other governing body of such
corporation, partnership or other legal entity.
2.2. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of (a) 50,000,000 shares of Company Stock, (b)
2,000,000 of Class B Common Stock, par value $0.01 per share (the "Company Class
B Stock"), and (c) 500,000 shares of preferred stock, par value $0.01 per share.
As of the close of business on the day immediately preceding the date hereof,
(a) 29,723,431 shares of Company Stock were issued and outstanding, (b) no
shares of Company Class B Stock were issued and outstanding, (c) no shares of
preferred stock were issued and outstanding and (d) 22,891 shares of Company
Stock were issued and held in the treasury of the Company. No other capital
stock of the Company is authorized or issued. All issued and outstanding shares
of the Company Stock are duly authorized, validly issued, fully paid and
non-assessable and free of preemptive or similar rights. Except as set forth in
the Company Filed Documents (as hereinafter defined) or Section 2.2 of the
Company Disclosure Letter, as of the date hereof there were no, and as of the
Expiration Date there will be no, outstanding rights, subscriptions, warrants,
puts, calls, unsatisfied preemptive rights, options or other agreements of any
kind relating to any of the outstanding, authorized but unissued, unauthorized
or treasury shares of the capital stock or any other interest in the ownership
or earnings of the Company or other security of the Company, and there is no
authorized or outstanding security of any kind convertible into
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<PAGE> 19
or exchangeable for any such capital stock or other security. Except as set
forth in Section 2.2 of the Company Disclosure Letter, there are no outstanding
contractual obligations of the Company or any Company Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any Company Subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity.
2.3. SUBSIDIARIES. Section 2.3 of the Company Disclosure Letter
sets forth the name and jurisdiction of incorporation or organization of each
Company Subsidiary, each of which is wholly owned by the Company except as
otherwise indicated in said Section 2.3 of the Company Disclosure Letter. All of
the capital stock and other interests of the Company Subsidiaries so held by the
Company are owned by it or a Company Subsidiary as indicated in said Section 2.3
of the Company Disclosure Letter, free and clear of any claim, lien,
encumbrance, security interest or agreement with respect thereto. All of the
outstanding shares of capital stock in each of the Company Subsidiaries directly
or indirectly held by the Company are duly authorized, validly issued, fully
paid and non-assessable and were issued free of preemptive or similar rights and
in compliance with applicable Laws. No equity securities or other interests of
any of the Company Subsidiaries are or may become required to be issued or
purchased by reason of any options, warrants, rights to subscribe to, puts,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any capital stock of any
Company Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue additional shares
of its capital stock, or options, warrants or rights to purchase or acquire any
additional shares of its capital stock or securities convertible into or
exchangeable for such shares.
2.4. AUTHORIZATION; BINDING AGREEMENT. The Company has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including, but not
limited to, the Merger, have been duly and validly authorized by the Company's
Board of Directors and no other corporate proceedings on the part of the Company
or any Company Subsidiary are necessary to authorize the execution and delivery
of this Agreement or to consummate the transactions contemplated hereby (other
than the adoption of this Agreement by the stockholders of the Company to the
extent required by the Delaware Code). This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding agreements of the Company, enforceable against the Company in accordance
with its terms. The Board of Directors
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of the Company has approved this Agreement, the Stockholders Agreement and the
transactions contemplated hereby and thereby (including but not limited to the
Offer, the Merger and the matters provided for in the Stockholders Agreement) so
as to render inapplicable hereto and thereto the limitation on business
combinations contained in Section 203 of the Delaware Code (or any similar
provision), assuming Parent and its "associates" and "affiliates" (as defined in
Section 203 of the Delaware Code) collectively beneficially own and have
beneficially owned at all times during the three-year period prior to the
execution of this Agreement and the Stockholders Agreement less than 15% of the
Shares outstanding. As a result, the only vote of holders of any class or series
of the Company's capital stock required to adopt this Agreement and the
transactions contemplated hereby, including the Merger, is the affirmative vote
of a majority of the outstanding Shares, and if Section 253 of the Delaware Code
is applicable to the Merger, no such vote will be required. No other state
takeover or control share statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, the Stockholder Agreement or any of
the transactions contemplated hereby or thereby.
2.5. GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("Consent"), any
nation or government, any state or other political subdivision thereof, any
entity, authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any governmental or regulatory authority, agency,
department, board, commission, administration or instrumentality, any court,
tribunal or arbitrator and any self-regulatory organization, domestic or foreign
("Governmental Authority"), on the part of the Company or any of the Company
Subsidiaries is required in connection with the execution, delivery or
performance by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the Delaware Code, (ii) filings with the SEC and the National Association of
Securities Dealers, Inc. ("NASD"), (iii) filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") and similar foreign requirements, (iv)
such filings as may be required in any jurisdiction where the Company is
qualified or authorized to do business as a foreign corporation in order to
maintain such qualification or authorization and (v) those Consents that, if
they were not obtained or made, individually or in the aggregate, would not have
or be reasonably likely in the future to have a Company Material Adverse Effect,
or prevent or materially delay consummation of the Offer or the Merger or the
Company from performing its obligations under this Agreement.
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2.6. NO VIOLATIONS. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of the Company or any of
the Company Subsidiaries, (ii) require any Consent under or result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any Company
Material Contract (as hereinafter defined), (iii) result in the creation or
imposition of any lien or encumbrance of any kind upon any of the assets of the
Company or any Company Subsidiary or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in Section 2.5 hereof, contravene any
applicable provision of any statute, law, rule or regulation or any order,
decision, injunction, judgment, award or decree ("Law") to which the Company or
any Company Subsidiary or its or any of their respective assets or properties
are subject, except, in the case of clauses (ii), (iii) and (iv) above, for any
deviations from the foregoing which would not, individually or in the aggregate,
have or be reasonably likely in the future to have a Company Material Adverse
Effect or prevent or materially delay consummation of the Offer or the Merger or
the Company from performing its obligations under this Agreement.
2.7. SECURITIES FILINGS. The Company and, to the extent applicable,
each of its then or current Company Subsidiaries, has filed all forms, reports,
statements and documents required to be filed with the SEC since December 31,
1994, each of which has complied in all material respects with the applicable
requirements of the Securities Act (as hereinafter defined) or the Securities
Exchange Act, each as in effect on the date so filed. The Company has made
available to Parent true and complete copies of (i) its Annual Reports on Form
10-K, as amended, for the years ended December 31, 1994, 1995 and 1996, as filed
with the SEC, (ii) its proxy statements relating to all of the meetings of
stockholders (whether annual or special) of the Company since January 1, 1995,
as filed with the SEC, and (iii) all other reports, statements and registration
statements and amendments thereto (including, without limitation, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by the
Company with the SEC since January 1, 1994, or, in the case of Quarterly Reports
on Form 10-Q, since October 1, 1996, and prior to the date hereof (collectively,
the "Company Filed Documents"). The reports and statements required to be filed
or furnished to stockholders pursuant to the Securities Exchange Act subsequent
to the date hereof, collectively with the Company Filed Documents, are referred
to collectively herein as the "Company Securities Filings." As of their
respective dates, or as of the date of the last amendment thereof, if amended
after filing, none of the Company Securities Filings contained or, as
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to the Company Securities Filings subsequent to the date hereof, will contain,
any untrue statement of a material fact or omitted or, as to the Company
Securities Filings subsequent to the date hereof, will omit, to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Company has heretofore furnished or made available to Parent a complete and
correct copy of any amendments or modifications which have not yet been filed
with the SEC to executed agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act or the Securities Exchange Act.
2.8. COMPANY FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited interim financial statements of the Company
included in the Company Securities Filings (the "Company Financial Statements")
have been or will be, as the case may be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except, with
respect to any Company Filed Documents, as may be indicated therein or in the
notes thereto) and present fairly, in all material respects, the consolidated
financial position of the Company and the Company Subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended subject, in the case of the unaudited interim financial
statements, to normal year-end audit adjustments (which in the aggregate are not
material in nature or amount), any other adjustments described in the Company
Filed Documents and the fact that certain information and notes have been
condensed or omitted in accordance with the Securities Exchange Act.
2.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Company Filed Documents, since December 31, 1996, the Company and the
Company Subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since such date, there has
not been: (i) any event that, individually or in the aggregate, has had or is
reasonably likely in the future to have a Company Material Adverse Effect, (ii)
any declaration, payment or setting aside for payment of any dividend or other
distribution or any redemption or other acquisition of any shares of capital
stock or securities of the Company by the Company, (iii) any material damage or
loss to any material asset or property, whether or not covered by insurance,
(iv) any change by the Company in accounting principles or practices, (v) any
revaluation by the Company of any of its material assets, including but not
limited to, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business, (vi) any entry by the
Company or any Company Subsidiaries into any commitment or transactions material
to the Company and the Company Subsidiaries taken as a whole (other than
commitments or transactions entered into in the ordinary course
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of business), or (vii) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including without limitation the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan or agreement or arrangement, or, since
July 1, 1997, any other increase in the compensation payable or to become
payable to any present or former directors or officers, or any employment,
consulting or severance agreement or arrangement entered into with any such
present or former directors, officers or employees of the Company or any of the
Company Subsidiaries covered by Section 5.4 of the Company Disclosure Letter
("Key Employees"). Since January 1, 1997, neither the Company nor any Company
Subsidiary has taken, or failed to take, any action that would have constituted
a breach of Section 4.1 hereof had the covenants therein applied since that
date, except as described in Section 2.9 of the Company Disclosure Schedule or
ordinary course increases in compensation as relates to Key Employees (other
than those entitled under Section 5.4 of the Company Disclosure Letter to
"Senior Management Severance").
2.10. COMPLIANCE WITH LAWS. The business and operations of the
Company and each of the Company Subsidiaries have been operated in compliance
with all Laws applicable thereto, except for any instances of non-compliance
which, individually or in the aggregate, have had or would be reasonably likely
in the future to have a Company Material Adverse Effect.
2.11. PERMITS. (i) The Company and the Company Subsidiaries have
all permits, certificates, licenses, approvals and other authorizations required
in connection with the operation of their respective businesses (collectively,
"Company Permits"), (ii) neither the Company nor any of the Company Subsidiaries
is in violation of any Company Permit and (iii) no proceedings are pending or,
to the knowledge of the Company, threatened, to revoke or limit any Company
Permit, except, in each case, those the absence or violation of which,
individually or in the aggregate, have had or would be reasonably likely in the
future to have a Company Material Adverse Effect or prevent or result in a
material delay of the consummation of the Offer or the Merger.
2.12. LITIGATION. Except as disclosed in the Company Filed
Documents, there is no suit, action, investigation, claim or proceeding
("Litigation") pending or, to the best knowledge of the Company, threatened
against the Company or any of the Company Subsidiaries which, individually or in
the aggregate, has had or would be reasonably likely in the future to have a
Company Material Adverse Effect, nor is there any judgment, decree, writ, award,
injunction, rule or order of any Governmental Authority outstanding against the
Company or any of the Company Subsidiaries which, individually or in the
aggregate, has had or
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would be reasonably likely in the future to have a Company Material Adverse
Effect or prevent or result in a material delay of the consummation of the Offer
or the Merger.
2.13. CONTRACTS. Neither the Company nor any of the Company
Subsidiaries is a party or is subject to any note, bond, mortgage, indenture,
contract, lease, license, agreement or instrument that is required to be
described in or filed as an exhibit to any Company Securities Filing ("Company
Material Contract") that is not so described in or filed as required by the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), or the Securities Exchange Act in respect of the Company
Filed Documents, as the case may be. All such Company Material Contracts are
valid and binding and are in full force and effect and enforceable against the
Company or such subsidiary and, to the knowledge of the Company, against the
other parties thereto in accordance with their respective terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies. Neither the Company nor any of the Company
Subsidiaries is in violation or breach of or default under any such Company
Material Contract where such violation or breach, individually or in the
aggregate, has had or would be reasonably likely in the future to have a Company
Material Adverse Effect.
2.14. EMPLOYEE BENEFIT PLANS. (a) Section 2.14 of the Company
Disclosure Letter contains a complete and accurate list of all material Benefit
Plans (as hereinafter defined) maintained or contributed to by the Company or
any of the Company Subsidiaries ("Company Benefit Plan"). A "Benefit Plan" shall
include (i) an employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, together with all
regulations thereunder ("ERISA"), even if, because of some other provision of
ERISA, such plan is not subject to any or all of ERISA's provisions, and (ii)
whether or not described in the preceding clause, any pension, profit sharing,
severance, employment, change-in-control, bonus, stock bonus, deferred or
supplemental compensation, retirement, thrift, stock purchase or stock option
plan or any other compensation, welfare, fringe benefit or retirement plan,
program, policy or arrangement providing for benefits for or the welfare of any
or all of the current or former employees or agents of the Company or any of the
Company Subsidiaries or their beneficiaries or dependents; provided that Benefit
Plans shall not include any multiemployer plan, as defined in Section 3(37) of
ERISA (a "Multiemployer Plan"). Each of the Company Benefit Plans has been
maintained in compliance with its terms and all applicable Law, except where the
failure to do so would not be reasonably likely in the future to result in a
Company Material Adverse Effect. Neither the Company nor any of the Company
Subsidiaries
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contributes to, or has any outstanding liability with respect to, any
Multiemployer Plan.
(b) Except to the extent that any of the following would not have
or be reasonably likely in the future to have a Company Material Adverse Effect:
(i) each Benefit Plan has been established and administered in accordance with
its terms and in compliance with applicable provisions of ERISA, the Code and
other applicable laws, rules and regulations; (ii) each Benefit Plan which is
intended to be qualified (within the meaning of Code Section 401(a)) is so
qualified in form and operation and has received a favorable determination
letter as to its qualification, and nothing has occurred, whether by action or
failure to act, that would cause the loss of such qualification; (iii) no event
has occurred and no condition exists that would subject the Company or any of
the Company Subsidiaries, either directly or by reason of their affiliation with
an ERISA Affiliate (as hereinafter defined) to any tax, fine, lien or penalty
imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv)
for each Benefit Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the matters covered by the most
recent Form 5500 since the date thereof; and (v) no "reportable event" (as such
term is defined in ERISA Section 4043), "prohibited transactions" (as such term
is defined in ERISA Section 406 and Code Section 4975), "accumulated funding
deficiency" (as such term is defined in ERISA Section 302 and Code Section 412
(whether or not waived)) or failure to make by its due date a required
installment under Code Section 412(m) has occurred with respect to any Benefit
Plan or any other plan maintained for employees of any ERISA Affiliate of the
Company or any of the Company Subsidiaries. "ERISA Affiliate," as applied to any
person, means (i) any corporation which is a member of a controlled group of
corporations (within the meaning of Code Section 414(b)) of which that person is
a member, (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control (within the
meaning of Code Section 414(c)) of which that person is a member and (iii) any
member of an affiliated service group (within the meaning of Code Section 414(m)
and (o)) of which that person, any corporation described in clause (i) above or
any trade or business described in clause (ii) above is a member.
(c) With respect to any Benefit Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of the Company, threatened which has had or would
be reasonably likely in the future to have a Company Material Adverse Effect and
(ii) no facts or circumstances exist, to the knowledge of the Company, that
could give rise to any such actions, suits or claims which would be reasonably
likely in the future to result in a Company Material Adverse Effect.
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(d) Except for (i) payments required to be made under the Company
Supplemental Severance Program and (ii) the accelerated vesting and cash-out of
Company Options as described in Section 1.9 hereof, no Benefit Plan exists that
could result in the payment to any present or former employee of the Company or
any Company Subsidiary of any money or other property, or accelerate or provide
any other rights or benefits, to any present or former employee of the Company
or any Company Subsidiary as a result of the transactions contemplated by this
Agreement, whether or not such payment would constitute a parachute payment
within the meaning of Code Section 280G, which payments, acceleration or
provision of benefits would be reasonably likely in the future to result in a
Company Material Adverse Effect.
2.15. TAXES AND RETURNS. (a) The Company and each of the Company
Subsidiaries and any consolidated, combined, unitary or aggregate group for tax
purposes of which the Company or any of the Company Subsidiaries is or has been
a member has timely filed, or caused to be timely filed all Tax Returns (as
hereinafter defined) required to be filed by it, and has paid, collected or
withheld, or caused to be paid, collected or withheld, all Taxes required to be
paid, collected or withheld, other than such Taxes for which adequate reserves
in the Company Financial Statements have been established in accordance with
generally accepted accounting principles, consistently applied, or which are
being contested in good faith. All such Tax Returns were true, correct and
complete in all material respects. There are no claims or assessments pending
against the Company or any of the Company Subsidiaries for any alleged
deficiency in any Tax, and the Company has not been notified in writing of any
proposed Tax claims or assessments against the Company or any of the Company
Subsidiaries (other than in each case, claims or assessments for which adequate
reserves in the Company Financial Statements have been established or which are
being contested in good faith and are immaterial in amount). Neither the Company
nor any of the Company Subsidiaries has any waivers or extensions of any
applicable statute of limitations to assess any Taxes. There are no outstanding
requests by the Company or any of the Company Subsidiaries for any extension of
time within which to file any Tax Return or within which to pay any material
amounts of Taxes shown to be due on any return. To the best knowledge of the
Company, there are no liens for Taxes on the assets of the Company or any of the
Company Subsidiaries except for statutory liens for current Taxes not yet due
and payable.
(b) For purposes of this Agreement, the term "Tax" shall mean any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, alternative or
added minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty imposed by any
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Governmental Authority. The term "Tax Return" shall mean a report, return or
other information (including any attached schedules or any amendments to such
report, return or other information) required to be supplied to or filed with a
governmental entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
2.16. INTELLECTUAL PROPERTY. The Company or its Subsidiaries own,
or are licensed or otherwise possess legal enforceable rights to use all
patents, trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, trade secrets, computer software programs or
applications, domain names and tangible or intangible proprietary information or
materials that are used in the respective businesses of the Company and the
Company Subsidiaries as currently conducted, except for any such failures to
own, be licensed or possess that, individually or in the aggregate, has not had
and is not reasonably likely in the future to have a Company Material Adverse
Effect. To the best knowledge of the Company, all patents, trademarks, trade
names, service marks and copyrights held by the Company or its Subsidiaries are
valid and subsisting.
2.17. ENVIRONMENTAL MATTERS. (a) Except as set forth in Section
2.17 of the Company Disclosure Letter and except as, individually or in the
aggregate, have not had and are not reasonably likely in the future to have a
Company Material Adverse Effect or prevent or materially delay the consummation
of the Offer or the Merger, to the Company's knowledge;
(i) the Company and the Company Subsidiaries are, and within
the period of all applicable statutes of limitation have been, in
compliance with all Environmental Laws (as hereinafter defined);
(ii) the Company and the Company Subsidiaries hold all
Environmental Permits (as hereinafter defined) (each of which is in
full force and effect) required for any of their current operations
and for any property owned, leased, or otherwise operated by any of
them, and are, and within the period of all applicable statutes of
limitation have been, in compliance with the terms of all such
Environmental Permits;
(iii) no review by, or approval of, any Governmental
Authority or other person is required under any Environmental Law in
connection with the execution or delivery of this Agreement;
(iv) neither the Company nor any of the Company Subsidiaries
has received any written notice of Environmental Claim (as
hereinafter defined) and no
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such Environmental Claims are currently pending or threatened;
(v) Hazardous Materials are not present on any property
owned, leased or operated by the Company or any Company Subsidiaries
that is reasonably likely to form the basis of any Environmental
Claim against any of them, and neither the Company nor any of the
Company Subsidiaries has reason to believe that Hazardous Materials
are present on any other property that is reasonably likely to form
the basis of any Environmental Claim against any of them; and
(vi) the Company has informed the Parent and Merger Sub of:
(A) all material facts which the Company reasonably believes could
form the basis of a material Environmental Claim against any person
(including, without limitation, any predecessor of the Company or
any of the Company Subsidiaries whose liability the Company or any
of the Company Subsidiaries has or may have retained or assumed,
either contractually or by operation of law, arising out of
non-compliance with any Environmental Law or the presence of
Hazardous Materials (as hereinafter defined) at any location owned,
operated or leased by the Company or the Company Subsidiaries or on
any other property; (B) all currently estimated material costs the
Company reasonably expects it and any of the Company Subsidiaries to
incur to comply with Environmental Laws during the next three years;
and (C) all currently estimated material costs the Company and any
of the Company Subsidiaries reasonably expect to incur for ongoing,
and reasonably anticipated, investigation and remediation of
Hazardous Materials (including, without limitation, any payments to
resolve any threatened or asserted Environmental Claim for
investigation and remediation costs).
(b) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or notice
of alleged noncompliance, violation or liability, by any person or entity
asserting liability or potential liability (including without limitation,
liability or potential liability for enforcement, investigatory costs,
remediation costs, operation and maintenance costs, governmental response costs,
natural resource damages, property damage, personal injury, fines or penalties),
regardless of legal theory, arising out of, based on or resulting from (i) the
presence, discharge, emission, release or threatened release of any
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Hazardous Materials at any location or (ii) otherwise relating to obligations or
liabilities under any Environmental Law.
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees or other legally
enforceable requirement (including, without limitation, common law) of any
foreign government, the United States or any state, local, municipal or other
governmental authority regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment.
"Environmental Permit" means all permits, licenses, registrations,
approvals, exemptions and other filings with or authorizations by any
Governmental Authority under any Environmental Law.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof), petroleum products, asbestos, asbestos-containing materials,
pollutants, contaminants and all other materials, whether or not defined as
such, that are regulated pursuant to any Environmental Laws.
2.18. OFFER DOCUMENTS; PROXY STATEMENT. The Proxy Statement will
comply in all material respects with the applicable requirements of the
Securities Exchange Act except that no representation or warranty is being made
by the Company with respect to any information supplied to the Company by Parent
or Merger Sub specifically for inclusion in the Proxy Statement. The Proxy
Statement will not, at the time the Proxy Statement is filed with the SEC or
first sent to stockholders, at the time of the Company's stockholders' meeting
or at the Effective Time, 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 were made, not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
meeting of the Company's stockholders held for approval of the Merger which has
become false or misleading. The Schedule 14D-9 will comply in all material
respects with the Securities Exchange Act. Neither the Schedule 14D-9 nor any of
the information relating to the Company or its affiliates provided by or on
behalf of the Company specifically for inclusion in the Schedule 14D-1 or the
Offer Documents will, at the respective times the Schedule 14D-9, the Schedule
14D-1 and the Offer Documents are filed with the SEC or are first published,
sent or given to stockholders of the Company, 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. No representation is
made by the Company with respect to written
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information supplied by Parent or Merger Sub specifically for inclusion in the
Schedule 14D-9.
2.19. FINDERS AND INVESTMENT BANKERS. Neither the Company nor any
of its officers or directors has employed any broker, finder or financial
advisor or otherwise incurred any liability for any brokerage fees, commissions
or financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with the Financial
Advisor, a copy of which has been provided to Parent.
2.20. FAIRNESS OPINION. The Company's Board of Directors has
received from the Financial Advisor a written opinion addressed to it to the
effect that, as of the date hereof, the consideration to be paid to stockholders
pursuant to each of the Offer and the Merger is fair to such stockholders from a
financial point of view.
2.21. RELATED PARTY TRANSACTIONS. Except as set forth in the
Company Filed Documents, no director, officer or affiliate of the Company,
including for these purposes, the Stockholders, or director, officer or partner
of such affiliate (each a "Related Party")(i) has outstanding any indebtedness
or other similar obligation to the Company or any of the Company Subsidiaries or
(ii) other than employment-related benefits contemplated by or disclosed in this
Agreement, is a party to any legally binding material contract, commitment or
obligation to, from or with the Company or any Company Subsidiary.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that, except as set
forth in the correspondingly numbered Sections of the letter, dated the date
hereof, from Parent to the Company (the "Parent Disclosure Letter"):
3.1. ORGANIZATION AND GOOD STANDING. Parent and Merger Sub are each
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority and any necessary governmental authority to own, lease and
operate its properties and to carry on its business as now being conducted.
3.2. AUTHORIZATION; BINDING AGREEMENT. Parent and Merger Sub have
all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
including,
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but not limited to, the Merger, have been duly and validly authorized by the
respective Boards of Directors of Parent and Merger Sub, as appropriate, and no
other corporate proceedings on the part of Parent, Merger Sub or any other
subsidiary of Parent are necessary to authorize the execution and delivery of
this Agreement or to consummate the transactions contemplated hereby (other than
the requisite approval by the sole stockholder of Merger Sub of this Agreement
and the Merger). This Agreement has been duly and validly executed and delivered
by each of Parent and Merger Sub and constitutes the legal, valid and binding
agreements of Parent and Merger Sub, enforceable against each of Parent and
Merger Sub in accordance with its terms.
3.3. GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of Parent or Merger Sub is required in
connection with the execution or delivery by Parent and Merger Sub of this
Agreement or the consummation by Parent and Merger Sub of the transactions
contemplated hereby other than (i) filings under the HSR Act and similar foreign
requirements, (ii) filings with the SEC and the NASD, (iii) those Consents that,
if they were not obtained or made, would not prevent or materially delay
consummation of the Offer or the Merger, Parent or Merger Sub from performing
its obligations under this Agreement and (iv) such filings as may be required in
any jurisdiction where Parent is qualified or authorized to do business as a
foreign corporation in order to maintain such qualification or authorization.
3.4. NO VIOLATIONS. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent with any of the provisions hereof will not (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of Parent or any of the
Parent Subsidiaries, (ii) require any Consent under or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any material contract,
instrument, permit, license or franchise to which the Parent is a party or by
which Parent or any of its assets or property is subject, (iii) result in the
creation or imposition of any material lien or encumbrance of any kind upon any
of the assets of Parent or any subsidiary of Parent or (iv) subject to obtaining
the Consents from Governmental Authorities referred to in Section 3.4 hereof,
contravene any Law to which Parent or any subsidiary of Parent or its or any of
their respective assets or properties are subject, except, in the case of
clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which
would not, individually or in the aggregate, have or be reasonably likely in the
future to have a material adverse effect on the business, assets, condition
(financial or otherwise),
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liabilities or results of operations of Parent and its subsidiaries taken as a
whole.
3.5. OFFER DOCUMENTS; PROXY STATEMENT. None of the information
supplied by Parent, its officers, directors, representatives, agents or
employees (the "Parent Information"), specifically for inclusion in the Proxy
Statement will, on the date the Proxy Statement is first mailed to stockholders,
at the time of the Company's stockholders' meeting or at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it will be made, will be false or misleading with respect to any
material fact, or will omit to state any material fact necessary in order to
make the statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for such stockholders' meeting which has become false or misleading.
Neither the Offer Documents nor any amendments thereof or supplements thereto
will, at any time the Offer Documents are filed with the SEC or first published,
sent or given to the Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, neither Parent nor Merger Sub
makes any representation or warranty with respect to any information that has
been supplied by the Company or its accountants, counsel or other authorized
representatives for use in any of the foregoing documents. The Offer Documents
will comply as to form in all material respects with the provisions of the
Securities Exchange Act.
3.6. FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its
officers or directors has employed any broker, finder or financial advisor or
otherwise incurred any liability for any brokerage fees, commissions or
financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with Bear Stearns &
Co., Inc.
3.7. FINANCING ARRANGEMENTS. At the Effective Time, Parent will
have funds available to it sufficient to purchase the Shares in accordance with
the terms of this Agreement and to pay all amounts due (or which will, as a
result of the transactions contemplated hereby, become due) in respect of any
indebtedness of the Company for money borrowed.
3.8. NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing in connection therewith), Merger Sub has not incurred
any obligations or liabilities, and has not engaged in any
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business or activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person or entity.
ARTICLE IV.
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
4.1. CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. (a) Except as expressly contemplated by Section 4.1 of the Company
Disclosure Letter, during the period from the date of this Agreement to the
Effective Time, (i) the Company shall conduct, and it shall cause the Company
Subsidiaries to conduct, its or their businesses in the ordinary course and
consistent with past practice, and the Company shall, and it shall cause the
Company Subsidiaries to, use its or their reasonable commercial efforts to
preserve intact its business organization, to keep available the services of its
officers and employees and preserve intact the present commercial relationships
of the Company and the Company Subsidiaries with all persons with whom it does
business and (ii) without limiting the generality or effect of the foregoing,
neither the Company nor any of the Company Subsidiaries will:
(A) amend or propose to amend its Certificate of
Incorporation or Bylaws (or comparable governing instruments);
(B) authorize for issuance, issue, deliver, grant, sell,
pledge, dispose of or propose to issue, deliver, grant, sell, pledge or
dispose of any shares of, or any options, warrants, commitments,
subscriptions or rights of any kind to acquire or sell any shares of, the
capital stock or other securities of the Company or any of the Company
Subsidiaries including, but not limited to, stock appreciation rights,
phantom stock, any securities convertible into or exchangeable for shares
of stock of any class of the Company or any of the Company Subsidiaries,
except for (a) the issuance of up to 3,327,445 Shares pursuant to the
exercise of either incentive or non-qualified stock options, including
management stock options, outstanding on the close of business on the day
immediately preceding the date of this Agreement and listed in Section 2.2
of the Company Disclosure Schedule in accordance with their present terms
and (b) shares issued in accordance with the Company's Employee Stock
Purchase Plan that are issuable on or prior to the date hereof (the
specific number of which the Company will inform Parent within three
business days of the date hereof);
(C) split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any
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dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends
or distributions to the Company or a Company Subsidiary in the ordinary
course of business, or directly or indirectly redeem, purchase or
otherwise acquire or offer to acquire, directly or indirectly, any shares
of its capital stock or other securities;
(D) (a) other than in the ordinary course of business
consistent with past practice, (i) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, indirectly, contingently
or otherwise) for the obligations of any person or (ii) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to a Company Subsidiary (or other entity in which the Company
directly or indirectly owns at least 100% of the outstanding voting
securities) and customary travel, relocation or business advances to
employees); (b) acquire the stock or the assets of, or merge or
consolidate with, any other person; (c) voluntarily incur any material
liability or obligation (absolute, accrued, contingent or otherwise) other
than in the ordinary course of business and in a manner consistent with
past practice; or (d) sell, transfer, mortgage, pledge or otherwise
dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or
otherwise dispose of or encumber, any assets or properties, real, personal
or mixed material to the Company and the Company Subsidiaries other than
sales of products in the ordinary course of business and in a manner
consistent with past practice; (e) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of
any person, or make any loans, advances or capital contributions to, or
investments in, any other person (other than in the ordinary course of
business consistent with past practice); (f) enter into any contract or
agreement other than in the ordinary course of business consistent with
past practice; or (g) authorize any single capital expenditure which is in
excess of $1,400,000 or capital expenditures (during any two-month period)
which are, in the aggregate, in excess of $4,000,000 for the Company and
the Company Subsidiaries taken as a whole;
(E) increase in any manner the compensation of any of
its directors, officers or employees or enter into, establish, amend or
terminate any employment, consulting, retention, change in control,
collective bargaining, bonus or other incentive compensation, profit
sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any stockholder, officer,
director, other
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employee, agent, consultant or affiliate other than (i) as required
pursuant to the terms of agreements in effect on the date of this
Agreement and set forth in Section 4.1 of the Company Disclosure Schedule,
(ii) increases in salaries of employees who are not directors or officers
of the Company or Key Employees made in the ordinary course of business
consistent with past practice or (iii) increases in salaries of Key
Employees who are not officers or entitled to "Senior Management
Severance" pursuant to Section 5.4 of the Company Disclosure Letter, with
Parent's prior written consent (which will not be unreasonably withheld);
(F) except as may be required as a result of a change in
Law or in generally accepted accounting principles, change any of the
accounting practices or principles used by it;
(G) make any material Tax election, settle or compromise
any material federal, state, local or foreign Tax liability, or waive any
statute of limitations for any Tax claim or assessment;
(H) settle or compromise any pending or threatened suit,
action or claim which is material or which relates to the transactions
contemplated hereby;
(I) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any Company Subsidiary not
constituting an inactive subsidiary (other than the Merger);
(J) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (a) in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and consistent
with past practice and (b) of liabilities required to be paid, discharged
or satisfied pursuant to the terms of any contract in existence on the
date hereof (including, without limitation, benefit plans relating to
directors) or entered into in accordance with this Section 4.1;
(K) permit any material insurance policy naming the
Company or any Company Subsidiary as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent, except in the
ordinary course of business and consistent with past practice; or
(L) take, or offer or propose to take, or agree to take
in writing or otherwise, any of the actions
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described in Section 4.1(a) or any action which would make any of the
representations or warranties of the Company contained in this Agreement
untrue and incorrect in any material respect as of the date when made if
such action had then been taken, or would result in any of the Offer
Conditions not being satisfied.
(b) The Company shall, and the Company shall cause each of the
Company Subsidiaries to, use its or their best efforts to comply in all material
respects with all Laws applicable to it or any of its properties, assets or
business and maintain in full force and effect all the Company Permits necessary
for, or otherwise material to, such business.
4.2. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent if any of the following occur after the date of this Agreement:
(i) receipt of any notice or other communication in writing from any third party
alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement; (ii) receipt of
any notice or other communication from any Governmental Authority (including,
but not limited to, the NASD or any securities exchange) in connection with the
transactions contemplated by this Agreement; (iii) the occurrence of an event
which would or would be reasonably likely in the future to (A) have a Company
Material Adverse Effect or prevent or delay the consummation of the Offer or the
Merger or (B) cause any Offer Condition to be unsatisfied at any time prior to
the consummation of the Offer; (iv) any breach by the Company of any provision
hereof; or (v) the commencement or threat of any Litigation involving or
affecting the Company or any of the Company Subsidiaries, or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer, in his or her capacity as such, of the Company or any of
the Company Subsidiaries which, if pending on the date hereof, would have been
required to have been disclosed in this Agreement or which relates to the
consummation of the Merger.
4.3. ACCESS AND INFORMATION. Between the date of this Agreement and
the Effective Time, the Company will give, and shall cause its accountants and
legal counsel to give, Parent and its respective authorized representatives
(including, without limitation, its financial advisors, accountants and legal
counsel), at all reasonable times, access as reasonably requested to all
personnel, offices and other facilities and to all contracts, agreements,
commitments, books and records of or pertaining to the Company and the Company
Subsidiaries, will permit the foregoing to make such reasonable inspections as
they may require and will cause its officers promptly to furnish Parent with (a)
such financial and operating data and other information with respect to the
business and properties of the Company and the Company Subsidiaries as Parent
may from time to time reasonably request, and (b) a copy of each report,
schedule
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and other document filed or received by the Company or any of the Company
Subsidiaries pursuant to the requirements of applicable securities laws or the
NASD.
4.4. STOCKHOLDER APPROVAL. As soon as practicable following the
consummation of the Offer, the Company will take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders for the
purpose of voting upon the approval and adoption of this Agreement and the
transactions contemplated hereby and thereby (the "Company Proposals"), if such
meeting is required. Except as otherwise contemplated by this Agreement, (i) the
Board of Directors of the Company will recommend to the stockholders of the
Company that they approve the Company Proposals, (ii) the Company will include
in the Proxy Statement the unanimous recommendation of the Company's Board of
Directors that the stockholders of the Company vote in favor of the adoption of
this Agreement and the transactions contemplated hereby and the written opinion
of the Financial Advisor that the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is fair from a
financial point of view and (iii) the Company will use its reasonable best
efforts to obtain any necessary approval by the Company's stockholders of the
Company Proposals. Notwithstanding the foregoing, in the event that Merger Sub
shall acquire at least 90% of the outstanding Shares, the Company agrees, at the
request of Merger Sub, subject to Article VI, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the Delaware Code.
4.5. REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein provided, the Company agrees to use its reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, but not
limited to, (i) obtaining all Consents from Governmental Authorities and other
third parties required for the consummation of the Offer and the Merger and the
transactions contemplated thereby, (ii) timely making all necessary filings
under the HSR Act and German anticompetition laws and (iii) having vacated,
dismissed or withdrawn any order, stay, decree, judgment or injunction of any
Governmental Authority which temporarily, preliminarily or permanently prohibits
or prevents the transactions contemplated by this Agreement. Upon the terms and
subject to the conditions hereof, the Company agrees to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the other conditions of the closing set
forth herein.
4.6. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
the Company shall not, and shall cause its
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affiliates not to, issue or cause the publication of any press release or any
other announcement with respect to the Offer or the Merger or the transactions
contemplated hereby without the consent of Parent, except for such as the
foregoing as the Company determines that such release or announcement is
required by applicable Law or pursuant to any applicable listing agreement with,
or rules or regulations of, the NASD, in which case the Company, prior to making
such announcement, will, if practicable in the circumstances, consult with
Parent regarding the same.
4.7. COMPLIANCE. In consummating the transactions contemplated
hereby, the Company shall comply, and/or cause the Company Subsidiaries to
comply or to be in compliance, in all material respects, with all applicable
Laws.
4.8. NO SOLICITATION. (a) The Company shall, and shall cause its
officers, directors, employees, representatives and agents to, immediately cease
any discussions or negotiations with any parties that may be ongoing with
respect to a Takeover Proposal (as hereinafter defined). The Company shall not,
nor shall it permit any of the Company Subsidiaries to, nor shall it authorize
or permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of the Company Subsidiaries 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 Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any time prior
to the Expiration Date and following the receipt of a Superior Proposal, the
Board of Directors of the Company determines in good faith, based upon the
advice of outside counsel, that such action is necessary for the Board of
Directors to comply with its fiduciary duties to the Company's stockholders
under applicable Law, the Company may, in response to a Superior Proposal that
was made in circumstances not otherwise involving a breach of this Agreement,
and subject to compliance with Section 4.8(c), (x) furnish information with
respect to the Company to any person pursuant to a confidentiality agreement
having terms substantially the same as the Confidentiality Agreement (as
hereinafter defined), provided that (i) such confidentiality agreement may not
include any provision calling for an exclusive right to negotiate with the
Company and (ii) the Company advises Parent of all such nonpublic information
delivered to such person concurrently with its delivery to the requesting party,
and (y) participate in negotiations regarding such Superior Proposal. "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 15% or more of the assets of the
Company and the Company Subsidiaries or 15% or more of any class of equity
securities of the Company or any Company Subsidiary, any tender offer or
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exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of the Company or any
Company Subsidiary, any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Company Subsidiary, other than the transactions
contemplated by this Agreement.
(b) Except as set forth in this Section 4.8, 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, the
approval or recommendation by such Board of Directors or such committee of the
Offer, the Stockholders Agreement or the Company Proposals, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal. Notwithstanding the
foregoing, in the event that prior to the Expiration Date the Board of Directors
of the Company determines in good faith, in response to a Superior Proposal that
was made in circumstances not otherwise involving a breach of this Agreement,
after consultation with outside counsel, that such action is necessary for the
Board of Directors to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Board of Directors of the Company may
(subject to this and the following sentences) (x) withdraw or modify its
approval or recommendation of the Offer or the Company Proposals or (y) approve
or recommend a Superior Proposal, provided, however, that any actions described
in clauses (x) and (y) may be taken only at a time that is after the fifth
business day following Parent's receipt of written notice advising Parent that
the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal and providing notice of the
determination of the Board of Directors of the Company of what action referred
to herein the Board of Directors of the Company has determined to take,
provided, further, that the foregoing proviso shall not prevent the Board of
Directors of the Company from taking any actions described in clause (x) within
five business days of the Expiration Date so long as the notice described in the
foregoing proviso is received by Parent prior to Noon, New York City time, on
the then scheduled Expiration Date. For purposes of this Agreement, a "Superior
Proposal" means a bona fide written Takeover Proposal which (i) a majority of
the disinterested members of the Board of Directors of the Company determines,
in their good faith judgment (based on the opinion of independent financial
advisors) that the value of the consideration provided for in such proposal
exceeds 110% of the Per Share Amount then provided in the Offer, and,
considering all relevant factors, is as or more favorable to the Company and its
stockholders than the
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Offer and the Merger and (ii) for which financing, to the extent required, is
then fully committed or which, in the good faith judgment of a majority of the
disinterested members of the Board of Directors (based on the advice of
independent financial advisors), is reasonably capable of being financed by such
third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.8, the Company shall promptly advise
Parent orally and in writing of any request for information or of any Takeover
Proposal, the material terms and conditions of such request or the Takeover
Proposal and the identity of the person making such request or Takeover Proposal
and shall keep Parent promptly advised of all significant developments which
could reasonably be expected to culminate in the Board of Directors of the
Company withdrawing, modifying or amending its recommendation of the Offer, the
Merger and the Transaction contemplated by this Agreement.
(d) Nothing contained in this Section 4.8 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making
any disclosure to the Company's stockholders; provided, however, neither the
Company nor its Board of Directors nor any committee thereof shall, except as in
accordance with Section 4.8(b), withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to the Offer or the Company
Proposals or approve or recommend, or propose publicly to approve or recommend,
a Takeover Proposal.
4.9. SEC AND STOCKHOLDER FILINGS. The Company shall send to Parent
a copy of all public reports and materials as and when it sends the same to its
stockholders, the SEC or any state or foreign securities commission.
4.10. TAKEOVER STATUTES. If any "fair price," "moratorium,"
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States (each a "Takeover
Statute") is or may become applicable to the Offer or the Merger, the Company
and the members of its Board of Directors will grant such approvals, and take
such actions as are necessary so that the transactions contemplated by this
Agreement and the Company Proposals may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of any Takeover Statute on any of the transactions
contemplated hereby.
4.11. RELATED PARTY AGREEMENTS. Except as set forth in Section 4.11
of the Company Disclosure Letter and except for employment-related agreements or
obligations contemplated by or disclosed in this Agreement, the Company shall
take all actions
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necessary to terminate, effective as of the Effective Time, all contracts,
commitments or obligations to, from or with the Company or Company Subsidiary,
on the one hand, and any Related Party, on the other hand.
ARTICLE V.
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
5.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein provided, Parent agrees to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, but not
limited to, (i) obtaining all Consents from Governmental Authorities and other
third parties required for the consummation of the Offer and the Merger and the
transactions contemplated thereby, (ii) timely making all necessary filings
under the HSR Act and (iii) having vacated, dismissed or withdrawn any order,
stay, decree, judgment or injunction of any Governmental Authority which
temporarily, preliminarily or permanently prohibits or prevents the transactions
contemplated by this Agreement. Upon the terms and subject to the conditions
hereof, Parent agrees to use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the other conditions of the closing set forth herein. Notwithstanding
any other provision hereof, in no event will Parent, Merger Sub or any of their
affiliates (collectively, the "Parent Group") be required to take or fail to
take any action in order to obtain or make a Consent arising out of any
contractual or legal obligation of or applicable to the Company or the Company
Subsidiaries, other than obligations such as those under the HSR Act which apply
to both the Company and the Parent Group and then only to the extent applicable
to the Parent Group, and in no event will any member of the Parent Group be
required to enter into or offer to enter into any divestiture, hold-separate,
business limitation or similar agreement or undertaking in connection with this
Agreement or the transactions contemplated hereby.
5.2. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Parent shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Offer or the Merger or the transactions contemplated hereby without the consent
of the Company, except for such of the foregoing as to which Parent determines
that such release or announcement is required by applicable Law or pursuant to
any applicable listing agreement with, or rules or regulations of, any stock
exchange on which shares the Parent's capital stock are listed or the NASD, in
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which case Parent, prior to making such announcement, will, if practicable in
the circumstances, consult with the Company regarding the same.
5.3. COMPLIANCE. In consummating the transactions contemplated
hereby, Parent shall comply in all material respects with the provisions of the
Securities Exchange Act and the Securities Act and shall comply, and/or cause
its subsidiaries to comply or to be in compliance, in all material respects,
with all other applicable Laws.
5.4. EMPLOYEE BENEFIT PLANS. As of the Effective Time or the
consummation of the Offer, as applicable, Parent shall cause the Surviving
Corporation to take such actions with respect to the Company Benefit Plans and
the Key Employees as are set forth in Section 5.4 of the Company Disclosure
Letter.
5.5. INDEMNIFICATION, EXCULPATION AND INSURANCE (a) All rights to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time existing in favor of the current or former
directors, officers or employees of the Company as provided in the Company's
certificate of incorporation or bylaws will be assumed by the Surviving
Corporation and Parent will cause the Surviving Corporation to honor such
obligations in accordance with the terms thereof, without further action, as of
the Effective Time, and such rights will continue in full force and effort in
accordance with their respective terms. Such rights, and the Surviving
Corporation's and Parent's concomitant obligations, shall apply in all respects
to the current or former directors, officers and employees of each of the
Company Subsidiaries as though such directors, officers and employees were
entitled to indemnification rights pursuant to the Company's certificate of
incorporation or bylaws as in effect on the date hereof. In addition, from and
after the Effective Time, directors and officers of the Company who become or
remain directors or officers of Parent will be entitled to the same indemnity
rights and protections (including those provided by directors' and officers'
liability insurance) as are afforded to other directors and officers of Parent.
Notwithstanding any other provision hereof, the provisions of this Section 5.5
(i) are intended to be for the benefit of, and will be enforceable by, each
indemnified party, his or her heirs and his or her representatives and (ii) are
in addition to, and not in substitution for, any other rights to indemnification
or contribution that any such person may have by contract or otherwise.
(b) Parent will, and will cause the Surviving Corporation to,
maintain in effect for not less than six years after the Effective Time policies
of directors' and officers' liability insurance equivalent in all material
respects to those maintained by or on behalf of the Company and the Company
Subsidiaries on the date hereof (and having coverage and containing terms and
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conditions which in the aggregate are not less advantageous to the persons
currently covered by such policies as insured) with respect to claims arising
from any actual or alleged wrongful act or omission occurring prior to the
Effective Time for which a claim has not been made against any director or
officer of the Company and/or any director or officer of the Company
Subsidiaries prior to the Effective Time; provided, however, that if the
aggregate annual premiums for such insurance at any time during such period
exceed 150% of the per annum rate of premium currently paid by the Company and
the Company Subsidiaries for such insurance on the date of this Agreement, then
Parent will cause the Surviving Corporation to, and the Surviving Corporation
will, provide the maximum coverage that will then be available at an annual
premium equal to 150% of such rate.
ARTICLE VI.
MERGER CONDITIONS
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment or waiver at or prior to the Effective Time of the
following conditions, provided that the obligation of each party to effect the
Merger shall not be relieved by the failure of any such conditions if such
failure is the proximate result of any breach by such party of any of its
material obligations under this Agreement:
6.1. OFFER. Merger Sub shall have accepted for payment all Shares
validly tendered in the Offer and not withdrawn; provided, however, that neither
Parent nor Merger Sub may invoke this condition if Parent shall have failed to
purchase Shares so tendered and not withdrawn in violation of the terms of this
Agreement or the Offer.
6.2. STOCKHOLDER APPROVAL. If required, the Company Proposals shall
have been approved at or prior to the Effective Time by the requisite vote of
the stockholders of the Company in accordance with the Delaware Code and the
Company Certificate of Incorporation, which the Company has represented shall be
solely the affirmative vote of a majority of the outstanding Shares.
6.3. NO INJUNCTION OR ACTION. No order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Authority
which temporarily, preliminarily or permanently prohibits or prevents the
consummation of the Merger which has not been vacated, dismissed or withdrawn
prior to the Effective Time.
6.4. OTHER APPROVALS. On or prior to the Closing Date, the waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or
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shall have expired and the Consents specified in Section 6.4 of the Company
Disclosure Letter, if any, shall have been obtained.
6.5. CONDITIONS OF OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of the condition (which may be waived in whole or in part by
Parent) that the Company shall have performed in all material respects all
material obligations required to be performed by it under this Agreement on or
before the earlier of (i) such time as Parent's or Merger Sub's designees shall
constitute at least a majority of the Company's Board of Directors pursuant to
Section 1.3 of this Agreement and (ii) the Closing Date; provided, however, that
no failure by the Company to have so performed any such material obligation
shall constitute a failure of satisfaction of the foregoing condition where the
Company's failure of performance was caused by Parent or occurred, and was
actually known to Parent, at or prior to the time Parent, Merger Sub or any of
their affiliates accepted for payment any Shares pursuant to the Offer.
ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval of the stockholders of the Company and the
stockholders of Parent described herein:
(a) by mutual written consent of Parent and the Company or by the
mutual action of their respective Boards of Directors;
(b) by either Parent or the Company if any Governmental Authority
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement or, for the benefit of Parent
only, the Stockholders Agreement, and such order, decree or ruling or other
action shall have become final and nonappealable;
(c) by Parent if the Company shall have breached in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement which breach or failure to perform is incapable of
being cured or has not been cured within one business day prior to the then
scheduled Expiration Date;
(d) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified
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in a manner adverse to Parent its approval or recommendation of the Offer or any
of the Company Proposals, or failed to reconfirm its recommendation within five
business days after a written request to do so, or approved or recommended any
Takeover Proposal or (ii) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions;
(e) by the Parent if the Offer shall have expired or been
terminated or withdrawn in accordance with this Agreement without any Shares
being purchased thereunder by Parent or any of the events set forth in Annex I
hereto shall have occurred and be continuing at the time of termination;
(f) by the Company or the Parent if the Offer shall not have been
consummated on or before the 120th calendar day after the date hereof, provided
that the Company's failure to perform any of its obligations under this
Agreement does not result in the failure of the Offer to be so consummated by
such time;
(g) by the Company if Parent shall have breached in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within one business day prior to the
Expiration Date;
(h) by the Company in order to enter into a definitive agreement
providing for a Superior Proposal entered into in accordance with Section 4.8,
provided that prior thereto the Company has paid the Termination Fee in
accordance with Section 7.2; or
(i) by Parent, if the Company, any of its officers or directors or
financial or legal advisors shall take any of the actions that would be
proscribed by Section 4.8 hereof but for the exceptions therein allowing certain
actions to be taken pursuant to the proviso in the second sentence of Section
4.8(a) hereof or pursuant to the second sentence of Section 4.8(b) hereof.
The party desiring to terminate this Agreement pursuant to the
preceding paragraphs shall give written notice of such termination to the other
party in accordance with Section 8.5 hereof.
7.2. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of
termination of this Agreement and the abandonment of the Offer or the Merger
pursuant to this Article VII, this Agreement (other than Sections 7.2, 8.1, 8.3,
8.5, 8.6, 8.7, 8.8, 8.11, 8.12, 8.13, 8.14 and 8.15 hereof) shall become void
and of no effect with no liability on the part of any party hereto (or
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of any of its directors, officers, employees, agents, legal or financial
advisors or other representatives); provided, however, that no such termination
shall relieve any party hereto from any liability for any breach of this
Agreement prior to termination. If this Agreement is terminated as provided
herein, each party shall hold in confidence in accordance with the terms and
conditions of the Confidentiality Agreement all materials obtained from, or
based on or otherwise reflecting or generated in whole or in part from
information obtained from, any other party hereto in connection with the
transactions contemplated by this Agreement, and shall not use any such
materials for the purpose of competing with the businesses of the other parties
hereto, whether obtained before or after the execution hereof.
(b) In the event that (A) a Takeover Proposal shall have been made
known to the Company or has been made directly to its stockholders generally or
any person shall have publicly announced an intention (whether or not
conditional) to make a Takeover Proposal and thereafter this Agreement is
terminated by the Company pursuant to Section 7.1(f) hereof or (B) this
Agreement is terminated (x) by the Company pursuant to Section 7.1(h) hereof,
(y) by Parent pursuant to Section 7.1(d) or 7.1(i) hereof or (z) Parent pursuant
to Section 7.1(c) hereof as a result of an intentional breach by the Company
after a Takeover Proposal has been made, then the Company shall promptly, but in
no event later than two business days after the date of such termination, pay
Parent a fee equal to $35,000,000 (the "Termination Fee"), payable by wire
transfer of same day funds; provided, however, that no Termination Fee shall be
payable to Parent pursuant to a termination by the Company pursuant to Section
7.1(f) hereof or by Parent pursuant to Section 7.1(i) hereof unless and until
within 18 months of such termination, the Company or any of the Company
Subsidiaries enters into a definitive agreement providing for any Takeover
Proposal. The Company acknowledges that the agreements contained in this Section
7.2(b) are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, Parent would not enter into this Agreement.
In the event the Termination Fee becomes payable pursuant to this Section
7.2(b), the Company shall promptly pay upon Parent's request, all reasonable
out-of-pocket charges and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby in an amount not to exceed
$5,000,000, which payments shall be in addition to the Termination Fee.
Notwithstanding the foregoing, the fee or expense reimbursement contemplated
hereby shall be paid pursuant to this Section 7.2(b) regardless of any alleged
breach by Parent of its obligations hereunder, provided that no payment by the
Company made pursuant to this Section 7.2(b) shall operate or be construed as a
waiver by the Company of any breach of this Agreement by Parent or Merger Sub or
of any rights of the Company in respect thereof.
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ARTICLE VIII.
MISCELLANEOUS
8.1. CONFIDENTIALITY. Each of Parent, Merger Sub and the Company
will hold, and will cause its respective officers, employees, accountants,
counsel, financial advisors and other representatives to hold, any nonpublic
information in accordance with the terms of the Confidentiality Agreement dated
September 12, 1997, between Parent and the Company (the "Confidentiality
Agreement"). Notwithstanding the foregoing, paragraphs 2, 4, 5, 6 and 11 of the
Confidentiality Agreement are hereby terminated as of the date hereof, provided,
however, that if this Agreement shall be terminated prior to the Effective Time,
paragraphs 5 and 6 shall be reinstated as of the date of such termination. As of
the Effective Time, all of Parent's restrictions and obligations under the
Confidentiality Agreement shall terminate.
8.2. AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company, Parent
and Merger Sub.
8.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company on
the one hand, or Parent and Merger Sub on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 8.3.
8.4. SURVIVAL. The respective representations, warranties,
covenants and agreements of the Company and Parent contained herein or in any
certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time, except for those contained in Sections 1.7,
1.8, 1.9, 1.14, 5.4, 5.5 and 8.1 hereof, which shall survive beyond the
Effective Time.
8.5. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt
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requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(i) if to the Company, to:
BDM International, Inc.
1501 BDM Way
McLean, Virginia 22102
Attention: John F. McCabe
Telecopy: 703-848-6457
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: William J. Grant, Jr., Esq.
Telecopy: 212-821-8111
and
(ii) if to Parent or Merger Sub, to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
Attention: Secretary
Telecopy: (216) 291-7563
with copies to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
Attention: Treasurer
Telecopy: (216) 291-7831
and
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Telecopy: (212) 755-7306
8.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned or delegated by any of the parties hereto prior to the Effective
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Time without the prior written consent of the other party hereto except that
Parent and Merger Sub may assign or delegate all or any of their respective
rights and obligations hereunder to a direct or indirect wholly-owned subsidiary
or subsidiaries of Parent, provided, however, that no such assignment or
delegation shall relieve the assigning or delegating party of its duties
hereunder.
8.7. EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses, subject to the rights of Parent under
Section 7.2(b) hereof.
8.8. GOVERNING LAW. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of Delaware.
8.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10. INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity, (ii)
unless otherwise specified herein, the term "affiliate," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person and (iii) the term "subsidiary" of any specified
person shall mean any corporation 50 percent or more of the outstanding voting
power of which, or any partnership, joint venture, limited liability company or
other entity 50 percent or more of the total equity interest of which, is
directly or indirectly owned by such specified person.
8.11. ENTIRE AGREEMENT. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the Disclosure Letters referred to herein, which Annex(es)
and Disclosure Letters are incorporated herein by reference, the Confidentiality
Agreement and the Stockholders Agreement embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants, or undertakings, other than those expressly set forth or referred to
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herein. This Agreement supersedes all prior agreements and the understandings
between the parties with respect to such subject matter.
8.12. SEVERABILITY. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable in a jurisdiction, such provision
shall be modified or deleted, as to the jurisdiction involved, only to the
extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
8.13. SPECIFIC PERFORMANCE. The parties hereto 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. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
8.14. THIRD PARTIES. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the transactions
contemplated hereby shall create any rights in, or be deemed to have been
executed for the benefit of, any person that is not a party hereto or thereto or
a successor or permitted assign of such a party; provided however, that the
parties hereto specifically acknowledge that the provisions of Sections 1.9, 5.4
and 5.5 hereof are intended to be for the benefit of, and shall be enforceable
by, the current or former employees, officers and directors of the Company
and/or the Company Subsidiaries affected thereby and their heirs and
representatives and the provisions of Section 1.8(b) are intended to be for the
benefit of, and shall be enforceable by, stockholders of the Company affected
thereby and their heirs and representatives.
8.15. DISCLOSURE LETTERS. The Company and Parent acknowledge that
the Company Disclosure Letter and the Parent Disclosure Letter (i) relate to
certain matters concerning the disclosures required and transactions
contemplated by this Agreement, (ii) are qualified in their entirety by
reference to specific provisions of this Agreement, (iii) are not intended to
constitute and shall not be construed as indicating that such matter is required
to be disclosed, nor shall such disclosure be construed as an admission that
such information is material with respect to the Company or Parent, as the case
may be, except to the extent required by this Agreement, and (iv) disclosure of
the
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information contained in one Section of the Company Disclosure Letter or Parent
Disclosure Letter shall be deemed proper disclosure for the Section to which
specific reference is made.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed and delivered by their respective duly authorized
officers as of the date first above written.
TRW INC.
By: /s/ William B. Lawrence
----------------------------------------
Name: William B. Lawrence
Title: Executive Vice President
and General Counsel
SYSTEMS ACQUISITION INC.
By: /s/ Kathleen A. Weigand
----------------------------------------
Name: Kathleen A. Weigand
Title: Vice President and Secretary
BDM INTERNATIONAL, INC.
By: /s/ Philip A. Odeen
----------------------------------------
Name: Philip A. Odeen
Title: President and Chief
Executive Officer
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ANNEX I
Conditions to the Offer. Notwithstanding any other provision of the
Offer, Merger Sub shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Securities Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer (whether or
not any Shares have been theretofore purchased or paid for pursuant to the
Offer) (A) unless the following conditions shall have been satisfied: (i) there
shall be validly tendered and not withdrawn prior to the expiration of the Offer
a number of Shares which represents a majority of the total voting power of the
outstanding securities of the Company entitled to vote in the election of
directors or in a merger ("Voting Securities") on a fully-diluted basis (the
"Minimum Condition") ("on a fully-diluted basis" having the following meaning as
of any date: the number of Voting Securities outstanding, together with Voting
Securities issuable pursuant to obligations outstanding at that date under
employee stock option or other benefit plans or otherwise) and (ii) any
applicable waiting period under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer and the required approval of the
German anticompetition authorities shall have been obtained or (B) if at any
time after the date of this Agreement and before the time of payment for any
such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer,) any of the following events shall
occur and be continuing:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction or a
Law shall have been promulgated, enacted, taken or threatened by a Governmental
Authority of competent jurisdiction which in any such case (i) restrains or
prohibits the making or consummation of the Offer, the consummation of the
Merger or the transactions contemplated by the Stockholders Agreement, (ii)
prohibits or restricts the ownership or operation by Parent (or any of its
affiliates or subsidiaries) of any portion of its or the Company's business or
assets which is material to the business of all such entities taken as a whole,
or compels Parent (or any of its affiliates or subsidiaries) to dispose of or
hold separate any portion of its or the Company's business or assets which is
material to the business of all such entities taken as a whole, (iii) imposes
material limitations on the ability of Merger Sub effectively to acquire or to
hold or to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by Merger Sub on all matters
properly presented to the stockholders of the Company, or (iv) imposes any
material
A-1
<PAGE> 54
limitations on the ability of Parent or any of its affiliates or subsidiaries
effectively to control in any material respect the business and operations of
the Company;
(b) any Governmental Authority shall have instituted any action,
suit or proceeding seeking any relief or remedy referred to in paragraph (a) or
material damages as a result of any of this Agreement, the Stockholders
Agreement or any transactions contemplated thereby;
(c) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms or any event shall have occurred which gives
Parent or Merger Sub the right to terminate the Agreement or not to consummate
the Merger;
(d) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely in
the future to have a Company Material Adverse Effect;
(e) there shall have occurred (i) any general suspension of, or
limitation on prices (other than suspensions or limitations triggered on the New
York Stock Exchange by price fluctuations on a trading day) for, trading in
securities on any national securities exchange or the over-the-counter market,
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any material limitation (whether or
not mandatory) by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, on, the extension of credit by banks
or other lending institutions, (iv) a commencement of a war or armed hostilities
or other national calamity directly involving the United States and Parent shall
have determined that there is a reasonable likelihood that such event may be of
material adverse significance to it or the Company, (v) any decline of at least
20% in the Dow Jones Average of Industrial Stocks or 20% in the Standard &
Poor's 500 Index from the levels thereof as of the last trading day immediately
preceding the dated of this Agreement or (vi) in the case of any of the
foregoing existing at the time of the execution of this Agreement, a material
acceleration or worsening thereof;
(f) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Securities Exchange
Act) of more than 25% of the outstanding Shares has been acquired by any person
(including the Company, any of the Company Subsidiaries or affiliates thereof)
or group (as defined in Section 13(d)(3) of the Securities Exchange Act), other
than Purchaser or any of its affiliates;
(g) the Company or any of its officers, directors or financial or
legal advisors shall have, directly or indirectly,
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<PAGE> 55
(i) solicited, initiated, encouraged (including by way of furnishing
information) or taken any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constituted, or
may reasonably be expected to lead to, any Takeover Proposal or (ii)
participated in any discussions or negotiations regarding any Takeover Proposal
regardless of whether or not any of the foregoing actions is permitted by this
Agreement;
(h) any of the representations and warranties of the Company set
forth in this Agreement that are qualified by reference to materiality or a
Company Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be true and
correct in any respect that is reasonably likely to have a Company Material
Adverse Effect, in each case as if such representations and warranties were made
at the time of such determination;
(i) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied with
by it under this Agreement; or
(j) Parent and the Company shall have agreed that Parent shall
amend the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto;
which, in the judgment of Parent with respect to each and every matter referred
to above and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent and may
be asserted by Parent regardless of the circumstances giving rise to any such
condition (except for any action or inaction by Parent or any of its affiliates
constituting a breach of this Agreement) or (other than the Minimum Condition)
may be waived by Parent in whole or in part at any time and from time to time in
its sole discretion (subject to the terms of this Agreement). The failure by
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 other 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.
A-3
<PAGE> 1
Exhibit 2
STOCKHOLDERS AGREEMENT
This Stockholders Agreement, dated as of November 20, 1997 (this
"Agreement"), is made and entered into among TRW Inc., an Ohio corporation
("Parent"), Systems Acquisition Inc., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and each other party listed on the
signature pages hereof (each, a "Stockholder").
WHEREAS, as of the date hereof, each Stockholder owns (beneficially
and of record) the number of shares of common stock, par value $.01 per share,
of BDM International, Inc., a Delaware corporation (the "Company"), set forth
opposite such Stockholder's name on Exhibit A hereto (all such shares so owned
and which may hereafter be acquired by the Stockholders prior to the termination
of this Agreement, whether upon the exercise of Company Options or by means of
purchase, dividend, distribution or otherwise, being referred to herein as the
"Shares");
WHEREAS, immediately prior to the execution and delivery of this
Agreement, Parent, Merger Sub and the Company have entered into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which
provides, upon the terms and subject to the conditions set forth therein, for
the merger of Merger Sub with and into the Company (the "Merger"); and
WHEREAS, as a condition to the willingness of Parent and Merger Sub
to enter into the Merger Agreement, Parent and Merger Sub have required that the
Stockholders agree, and in order to induce Parent and Merger Sub to enter into
the Merger Agreement, each Stockholder has agreed, severally and not jointly, to
enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto hereby agree as follows:
ARTICLE I.
TRANSFER AND VOTING OF SHARES
1.1. VOTING OF SHARES. Each Stockholder hereby agrees that from the
date hereof until the termination of this Agreement pursuant to Section 6.2
hereof ("the Term"), at any meeting of the stockholders of the Company, however
called, and in any action by consent of the stockholders of the Company, such
Stockholder shall vote its Shares (i) in favor of the Merger and the Merger
Agreement (as amended from time to time), (ii) against any Takeover Proposal and
against any proposal for action or
<PAGE> 2
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or which is reasonably likely to result in any of the conditions of
the Company's obligations under the Merger Agreement not being fulfilled, any
change in the directors of the Company, any change in the present capitalization
of the Company or any amendment to the Company's certificate of incorporation or
bylaws, any other material change in the Company's corporate structure or
business, or any other action which in the case of each of the matters referred
to in this clause (ii) could reasonably be expected to impede, interfere with,
delay, postpone or materially adversely affect the transactions contemplated by
the Merger Agreement or the likelihood of such transactions being consummated
and (iii) in favor of any other matter necessary for consummation of the
transactions contemplated by the Merger Agreement which is considered at any
such meeting of shareholders or in such consent, and in connection therewith to
execute any documents which are necessary or appropriate in order to effectuate
the foregoing, including the ability for Merger Sub or its nominees to vote the
Shares directly.
1.2. DISPOSITION OR ENCUMBRANCE OF SHARES. Each Stockholder hereby
agrees that, during the Term, it shall not, and shall not offer or agree to,
sell, transfer, tender, assign, pledge, hypothecate or otherwise dispose of, or
create or permit to exist any Encumbrance (as hereinafter defined) on any of
such Stockholder's Shares.
1.3. PROXY. Each Stockholder hereby revokes any and all prior
proxies or powers of attorney in respect of any Shares and constitutes and
appoints Merger Sub and Parent, or any nominee of Merger Sub and Parent, with
full power of substitution and resubstitution, at any time during the Term, as
its true and lawful attorney and proxy (its "Proxy"), for and in its name, place
and stead, to demand that the Secretary of the Company call a special meeting of
the stockholders of the Company for the purpose of considering any matter
referred to in Section 1.1 and to vote each of such Shares as its Proxy, at
every annual, special, adjourned or postponed meeting of the stockholders of the
Company, including the right to sign its name (as stockholder) to any consent,
certificate or other document relating to the Company that the law of the State
of Delaware may permit or require as provided in Section 1.1.
THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED WITH AN
INTEREST THROUGHOUT THE TERM.
1.4. NO SOLICITATION. Each Stockholder covenants and agrees that,
during the Term, it shall not, directly or indirectly through any officer,
director, agent or other representative, solicit, initiate or encourage, or take
any other action designed or reasonably likely to facilitate, any inquiries
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<PAGE> 3
or the making of any proposal from any person (other than Parent, Merger Sub and
any of their affiliates) relating to (i) any acquisition of all or any of the
such Stockholder's Shares or (ii) any transaction that constitutes a Takeover
Proposal, or participate in any negotiations regarding, or furnish to any person
any information with respect to, or otherwise cooperate in any way with, or
assist or participate in or facilitate or encourage, any effort or attempt by
any person to do or seek any of the foregoing. Each Stockholder immediately
shall cease and cause to be terminated all existing discussions or negotiations
of such Stockholder and its officers, directors, agents or other representatives
with any person conducted heretofore with respect to any of the foregoing. Each
Stockholder shall notify Parent and Merger Sub promptly if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made
and shall, in any such notice to Parent and Merger Sub, indicate in reasonable
detail the identity of the person making such proposal, offer, inquiry or
contact and the terms and conditions of such proposal, offer, inquiry or
contact. Notwithstanding any provision of this Section 1.4 to the contrary, if
any Stockholder or any officer, director, agent or representative of such
Stockholder is a member of the Board of Directors of the Company, such member of
the Board of Directors of the Company may take actions in such capacity to the
extent permitted by Section 4.8 of the Merger Agreement.
ARTICLE II.
TENDER OF SHARES
2.1. TENDER. Each Stockholder hereby agrees to validly tender (or
cause the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Securities Exchange Act, its
Shares. Each Stockholder hereby acknowledges and agrees that Parent's and Merger
Sub's obligation to accept for payment and pay for the Shares in the Offer,
including the Shares owned by such Stockholder, is subject to the terms and
conditions of the Offer. For all its Shares validly tendered in the Offer and
not withdrawn, each Stockholder will be entitled to receive the highest price
paid by Parent pursuant to the Offer.
2.2. CERTAIN WARRANTIES. Without limiting the generality or effect
of any other term or condition of the Offer, the transfer by each Stockholder of
the Shares to Merger Sub in the Offer shall pass to and unconditionally vest in
Merger Sub good and valid title to the Shares, free and clear of all liens,
claims, restrictions, security interests, pledges, limitations and encumbrances
whatsoever.
3
<PAGE> 4
2.3. DISCLOSURE. Each Stockholder hereby authorizes Parent and
Merger Sub to publish and disclose in the Offer Documents and, if approval of
the Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC), its identity and
ownership of the Company Common Stock and the nature of its commitments,
arrangements and understandings under this Agreement.
ARTICLE III.
OPTION
3.1. OPTION SHARES. In order to induce Parent and Merger Sub to
enter into the Merger Agreement, each Stockholder hereby grants to Merger Sub an
irrevocable option (the "Stock Option") to purchase the number of Shares set
forth opposite each Stockholder's name on Exhibit A hereto (the "Option Shares")
at a purchase price per share equal to $29.50. If (a) the Company shall become
obligated, pursuant to Section 7.2(b) of the Merger Agreement by reason of
termination of the Merger Agreement pursuant to any of Section 7.1(c), 7.1(d) or
7.1(h), to pay the Termination Fee, (b) the Offer is consummated but (due to
failure by any Stockholder to validly tender and not withdraw) Merger Sub has
not accepted for payment or paid for the aggregate number of Shares set forth
opposite such Stockholder's name on Exhibit A hereto (in which case the price
per share for the Option Shares will be equal to the highest price paid in the
Offer) or (c) the Merger Agreement is terminated in accordance with its terms
for reasons other than the failure of Parent or Merger Sub to fulfill any
obligation under the Merger Agreement, the Stock Option (i) shall become
exercisable, in whole but not in part, on the date on which the first event
referred to in this sentence shall occur or, if later, the date on which (x) all
waiting periods under the HSR Act or similar German Law required for the
purchase of the Option Shares upon such exercise shall have expired or been
waived and (y) there shall not be in effect any preliminary or final injunction
or other order issued by any court or governmental, administrative or regulatory
agency or authority prohibiting the exercise of the Stock Option pursuant to
this Agreement, and (ii) shall remain exercisable until the date which is 30
days following the first such date on which the Stock Option becomes exercisable
pursuant to clause (i) of this sentence. In the event that Parent wishes to
exercise the Stock Option, Parent, prior to the expiration thereof, shall send a
written notice (the "Notice") to each Stockholder identifying the place for the
closing of such purchase at least three business days prior to such closing.
ARTICLE IV.
4
<PAGE> 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and
warrants to Parent and Merger Sub as follows:
4.1. DUE ORGANIZATION, AUTHORIZATION, ETC. Such Stockholder (if it
is a corporation, partnership or other legal entity) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Such Stockholder has all requisite power and authority to execute,
deliver and perform this Agreement, to appoint Merger Sub and Parent as its
Proxy and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement, the appointment of Merger Sub as
such Stockholders' Proxy and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of such
Stockholder. This Agreement has been duly executed and delivered by or on behalf
of such Stockholder and, assuming its due authorization, execution and delivery
by Parent and Merger Sub, constitutes a legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with its
terms. There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which a Stockholder is trustee whose consent is
required for the execution and delivery of this Agreement of the consummation by
such Stockholder of the transactions contemplated hereby.
4.2. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS. (a) The execution
and delivery of this Agreement by such Stockholder do not, and the performance
of this Agreement by such Stockholder will not, (i) conflict with or violate the
trust agreement, Certificate of Incorporation or Bylaws or other similar
organizational documents of such Stockholder (in the case of a Stockholder that
is a trust, corporation, partnership or other legal entity), (ii) conflict with
or violate any Law applicable to such Stockholder or by which such Stockholder
or any of such Stockholder's properties is bound or affected or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, acceleration or cancellation of, or result in the creation of a
lien or encumbrance on any assets of such Stockholder or (if such Stockholder is
a corporation, partnership or other legal entity) any of its subsidiaries,
including, without limitation, the Shares, pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such Stockholder is a party or by which
such Stockholder or any of such Stockholder's assets is bound or affected,
except, in the case of clauses (ii) and (iii), for any such breaches, defaults
or other occurrences that would
5
<PAGE> 6
not prevent or delay the performance by such Stockholder of such Stockholder's
obligations under this Agreement.
(b) The execution and delivery of this Agreement by such Stockholder
do not, and the performance of this Agreement by such Stockholder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority (other than the
necessary filing under the HSR Act or the Securities Exchange Act), domestic or
foreign, except where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay the performance by the Stockholder of such Stockholder's
obligations under this Agreement.
4.3. TITLE TO SHARES. Such Stockholder is the sole record and
beneficial owner of the Shares set forth opposite such Stockholder's name on
Exhibit A hereto, free and clear of any pledge, lien, security interest,
mortgage, charge, claim, equity, option, proxy, voting restriction, voting trust
or agreement, understanding, arrangement, right of first refusal, limitation on
disposition, adverse claim of ownership or use or encumbrance of any kind
("Encumbrances"), other than restrictions imposed by the securities laws or
pursuant to this Agreement and the Merger Agreement.
4.4. NO INCONSISTENT ARRANGEMENTS. Each Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Stockholder's Shares, Company Options or any
interest therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such shares, Company
Options or any interest therein, (iii) grant any proxy, power-of-attorney or
other authorization in or with respect to such Shares or Company Options, (iv)
deposit such Shares or Company Options into a voting trust or enter into a
voting agreement or arrangement with respect to such Shares or Company Options,
or (v) 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 or by the Merger Agreement.
4.5. NO FINDER'S FEES. Other than may be payable pursuant to the
engagement letter between the Company and Wasserstein Perella & Co., Inc.
referenced in Section 2.19 of the Merger Agreement, no broker, investment
banker, financial adviser 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 hereby based upon arrangements made by or on behalf of
a Stockholder.
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<PAGE> 7
4.6. AFFILIATE AGREEMENTS. As of the Effective Time, each
Stockholder, on behalf of itself and its affiliates, hereby terminates any and
all contractual rights in favor of such Stockholder and its affiliates then in
effect between such Stockholder or affiliates, on the one hand, and the Company,
on the other hand, including without limitation, any monitoring and advisory
fees to The Carlyle Group, L.P., and each Stockholder, on behalf of itself and
its affiliates, hereby acknowledges that it is not entitled to receive any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated hereby or by the Merger Agreement.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF
MERGER SUB AND PURCHASER
Parent and Merger Sub hereby, jointly and severally, represent and
warrant to each Stockholder as follows:
5.1. DUE ORGANIZATION, AUTHORIZATION, ETC. Merger Sub and Parent
are corporations duly organized, validly existing and in good standing under the
laws of the States of Delaware and Ohio, respectively. Merger Sub and Parent
have all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by each of Merger Sub and Parent have been duly authorized
by all necessary corporate action on the part of Merger Sub and Parent,
respectively. This Agreement has been duly executed and delivered by each of
Merger Sub and Parent and, assuming its due authorization, execution and
delivery by each Stockholder, constitutes a legal, valid and binding obligation
of each of Merger Sub and Parent, enforceable against Merger Sub and Parent in
accordance with its terms, subject to the Enforceability Exceptions.
5.2. INVESTMENT REPRESENTATIONS. (a) Merger Sub is acquiring
the Stock Option and the Option Shares (collectively, the "Securities") for
its own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Securities in violation of the
Securities Act.
(b) Merger Sub has had such opportunity as it deems adequate to obtain
from representatives of the Company such information as is necessary to permit
Merger Sub to evaluate the merits and risks of its investment in the Company.
(c) Merger Sub, directly or through its affiliates, has sufficient
experience in business, financial and investment matters to be able to evaluate
the risks involved in the purchase
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<PAGE> 8
of the Securities and to make an informed investment decision with respect to
such purchase.
(d) Merger Sub acknowledges that (A) the Securities have not been
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act and (B) the Securities cannot be
sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration is then
available.
ARTICLE VI.
MISCELLANEOUS
6.1. DEFINITIONS. Terms used but not otherwise defined in this
Agreement, including those defined in Section 8.10 of the Merger Agreement,
have the meanings assigned to such terms in the Merger Agreement.
6.2. TERMINATION. This Agreement shall terminate and be of no
further force and effect (i) by the written mutual consent of the parties
hereto, (ii) by Parent or any Stockholder (with respect to such Stockholder) if
the Offer or the Merger shall not have been consummated on or before 120
calendar days after the date hereof, or (iii) automatically and without any
required action of the parties hereto upon the earlier to occur of (A) the
Effective Time and (B) immediately after the termination of the Merger Agreement
in accordance with its terms; provided, however, that in the event that the
Stock Option shall become exercisable pursuant to Section 3.1 hereof, Articles
III, IV, V and VI of this Agreement shall survive the termination of this
Agreement until the earlier to occur of the closing of the exercise of the Stock
Option and the expiration of the Stock Option. No such termination of this
Agreement shall relieve any party hereto from any liability for any breach of
this Agreement prior to termination.
6.3. EXPENSES. All costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the
party incurring such costs and expenses.
6.4. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
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<PAGE> 9
(a) if to Parent or Merger Sub, to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
Attention: Secretary
Telecopy:
with copies to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
Attention: Treasurer
Telecopy:
and
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Telecopy: (212) 755-7306
(b) If to a Stockholder, to:
The Carlyle Group, L.P.
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, D.C. 20004
Attention: William E. Conway, Jr.
Telecopy: 202-347-9250
6.5. SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
6.6. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the Merger
Agreement, as amended from time to time, constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect thereto. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by any of the
parties hereto (whether by operation of law or otherwise), provided, however,
that Parent or Merger Sub may, in its sole discretion, assign or delegate its
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<PAGE> 10
rights and obligations hereunder to any direct or indirect wholly-owned
subsidiary of Parent.
6.7. PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure solely to the benefit of, and be enforceable by, the parties hereto
and their respective successors and permitted assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person,
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities of any nature
whatsoever under or by reason of this Agreement, provided, however, that the
parties hereto specifically acknowledge that the provisions of Section 4.6
hereof are intended to be for the benefit of, and shall be enforceable by, the
Company.
6.8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger.
6.9. FURTHER ASSURANCE. From time to time, at the other party's
request and without consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transaction contemplated by this Agreement.
6.10. STOP TRANSFER. Each Stockholder agrees with, and covenants
to, Parent and Merger Sub that such Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Article III hereof).
6.11. CERTAIN EVENTS. Each Stockholder agrees that this Agreement
and the obligations 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, without limitation, such Stockholder's heirs, guardians,
administrators, or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under this
Agreement.
6.12. NO WAIVER. The failure of any party hereto to exercise any
right, power, or remedy provided under this agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, any custom or practice of the
parties at variance with the terms hereof shall not constitute a
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waiver by such party of its right to exercise any such or other right, power or
remedy or to demand such compliance.
6.13. SPECIFIC PERFORMANCE. The parties hereto 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. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
6.14. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that state.
6.15. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
6.16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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<PAGE> 12
IN WITNESS WHEREOF, each of Parent and Merger Sub has caused this
Agreement to be executed by its officer thereunto duly authorized and each
Stockholder has caused this Agreement to be executed, or duly executed by an
authorized signatory, as of the date first written above.
TRW INC.
By: /s/ William B. Lawrence
------------------------
Name: William B. Lawrence
Title: Executive Vice President and
General Counsel
SYSTEMS ACQUISITION INC.
By: /s/ Kathleen A. Weigand
------------------------
Name: Kathleen A. Weigand
Title: Vice President and Secretary
STOCKHOLDERS
THE CARLYLE PARTNERS LEVERAGED CAPITAL
FUND I, L.P.
BDM ACQUISITION PARTNERS, L.P.
BDM ACQUISITION PARTNERS II, L.P.
By THE CARLYLE GROUP, L.P.
General Partner of Each
By TWC VIRGINIA, INC.
Its General Partner
By: /s/ William E. Conway, Jr.
--------------------------
Name: William E. Conway, Jr.
Title: Executive Vice President
12
<PAGE> 13
EXHIBIT A
List of Stockholders
Name of Stockholder Number of Shares
The Carlyle Partners Leveraged 6,470,000
Capital Fund I, L.P.
BDM Acquisition Partners, L.P. 190,000
BDM Acquisition Partners II, L.P. 1,000,000
<PAGE> 1
Exhibit 3
FORM OF
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November 20, 1997,
but effective as provided herein, is made and entered into by and between TRW,
Inc., an Ohio corporation (the "Company" or "TRW", as the context requires), and
__________________ (the "Executive").
WHEREAS, the Executive has been serving as the President/CEO of BDM
International, Inc. ("Banneker"), a Delaware corporation;
WHEREAS, pursuant to the Agreement and Plan of Merger (the "Merger
Agreement") among the Company, Systems Acquisition Inc., a wholly owned
subsidiary of the Company ("Merger Sub"), and Banneker (the "Merger Agreement"),
as of the effective time of the Merger (the "Effective Time"), Merger Sub will
be merged with and into Banneker, with Banneker as the surviving entity (the
"Merger");
WHEREAS, pursuant to the Merger Agreement it is contemplated that Executive
will execute this Agreement upon the signing of the Merger Agreement and, upon
the date of the consummation of the Offer, as defined in the Merger Agreement
(the "Closing Date"), Executive will serve in the employ of the Company or a
subsidiary of the Company ("Company" as used herein will mean the Company or a
subsidiary of the Company);
WHEREAS, the Company considers it in the best interests of its stockholders
to foster the continuous employment of certain key management personnel of
Banneker;
WHEREAS, the Company wishes to assure itself of both present and future
continuation of management in light of the Merger;
WHEREAS, the Company wishes to employ the Executive and the Executive is
willing to render services, both on the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
<PAGE> 2
1. Employment
1.1 The Company hereby agrees to continue to employ the Executive, and
the Executive hereby agrees to continue employment with the Company, upon the
terms and conditions herein set forth.
1.2 Employment will continue for a term commencing on the Closing Date
and, subject to earlier expiration upon the Executive's termination under
Section 3, expiring on the third anniversary of the Closing Date (the
"Employment Term").
1.3 Duties. During the Employment Term, the Executive will be the
Company's full-time employee in a position requiring the Executive to provide
services of a similar character to those provided by the Executive to Banneker
immediately prior to the date hereof. The Executive will devote all of his
business time and attention to the performance of his duties to the Company.
Notwithstanding the foregoing, the Executive may, (i) subject to the approval of
the Company, serve as a director of a company which is not engaged in
"Competition" (as defined in Section 5.1) with the Company, (ii) serve as an
officer, director or otherwise participate in purely educational, welfare,
social, religious and civic organizations, and (iii) manage personal and family
investments.
2. Compensation and Related Matters.
2.1 Compensation and Benefits.
(i) Annual Base Salary. Executive will receive an annual base salary
of not less than his annual base salary in effect immediately prior to the
Effective Time. In the event that the Executive relocates his location of
principal employment at the request of the Company, the Company will in good
faith consider a cost of living adjustment to annual base salary. Annual base
salary and merit increases to such salary will be payable at the times and in
the manner consistent with Banneker's general policies regarding compensation of
executive employees.
(ii) Annual Incentive Compensation. Executive will be eligible to
receive annual incentive compensation based on incentive target percentages of
base salary comparable to such percentages in effect immediately prior to the
Effective Time. Nothing in this Section 2.1(ii) will guarantee to the Executive
any specific amount of incentive compensation, or prevent the Board from
establishing performance goals and compensation targets applicable to the
Executive.
2
<PAGE> 3
2.2 Executive Benefits. In addition to the compensation described in
Section 2.1, the Executive and his eligible dependents during the Employment
Term will be entitled to participate in employee benefit plans currently offered
by Banneker, including without limitation supplemental retirement plans,
executive life insurance and executive deferred compensation plans, provided
however that the Company reserves the right to provide comparable benefits under
new or substituted benefit plans.
2.3 Expenses. The Company will promptly reimburse the Executive for all
travel and other business expenses the Executive incurs in order to perform his
duties to the Company under this Agreement in a manner commensurate with the
Executive's position and level of responsibility with the Company, and in
accordance with the Company's policy regarding expenses.
3. Termination. Notwithstanding the Employment Term specified in Section
1.2, the termination of the Executive's employment hereunder will be governed by
the following provisions:
3.1 Cause
(i) The Company may terminate the Executive's employment hereunder
for Cause (as defined below). In the event of the Executive's termination for
Cause, the Company will promptly pay to the Executive (or his representative)
the unpaid annual base salary to which he is entitled, pursuant to Section 2.1,
through the date the Executive is terminated and the Executive will be entitled
to no other compensation, except as otherwise due to him under applicable law.
(ii) For purposes of this Agreement, the term "Cause" means either
(a) that the Executive shall have committed: (1) an intentional act of fraud,
embezzlement or theft in connection with his duties or in the course of his
employment with the Company; (2) intentional wrongful damage to property of the
Company, (3) intentional misconduct that is materially injurious to the Company,
monetarily or otherwise; (4) an intentional breach of the Executive's
obligations set forth in Section 5, and any such act shall have been materially
harmful to the Company; or (b) the failure by the Executive to comply with the
policies and procedures then applicable to employees of the Company who have
positions comparable to the Executive; provided, however, that the Executive
shall not be terminated for Cause pursuant to this Section 3.1(ii)(b) unless he
shall have received a written report setting forth in reasonable detail the
manner in which he has failed to meet such policies and procedures and
3
<PAGE> 4
within 30 calendar days after receiving such report, the Board (or Chief
Executive Officer and/or President of the Company) shall have determined in good
faith that the Executive shall have failed to make substantial progress in
meeting the Company's policies and procedures. For purposes of this Agreement,
an act or failure to act on the part of the Executive shall be deemed
"intentional" only if done or omitted to be done by the Executive not in good
faith and without reasonable belief that his action or omission was in the best
interest of the Company.
3.2 Termination.
(i) Involuntary Termination. The Executive's employment hereunder
may be terminated by the Company for any reason by written notice as provided in
Section 8.4. The Executive will be treated for purposes of this Agreement as
having been involuntarily terminated by the Company other than for Cause if the
Executive terminates his employment with the Company for any of the following
reasons: (a) the Company requests that the Executive provide services that are
not of a similar character to those provided by the Executive to Banneker
immediately prior to the date hereof; (b) the Company has breached any material
provision of this Agreement and within 30 days after notice thereof from the
Executive, the Company fails to cure such breach; or (c) the Company requires
the Executive to relocate his principal place of employment to any location
outside a fifty mile radius from the location of the Executive's principal place
of employment immediately prior to the date hereof.
(ii) Voluntary Termination. The Executive may voluntarily terminate
the Agreement at any time by notice to the Company as provided in Section 8.4.
3.3 Termination Payments and Benefits
(i) Form and Amount. Upon the Executive's involuntary termination
other than for Cause during the Employment Term, the Company will pay an amount
to the Executive as follows: (a) if the termination occurs on or prior to the
second anniversary of the Closing Date, an amount equal to three times the sum
of the Executive's annual salary and target annual incentive compensation in
effect immediately prior to the termination, multiplied by a fraction the
numerator of which is the number of full months remaining in the Employment Term
and the denominator of which is 36; and (b) if the termination occurs after the
second anniversary of the Closing Date, an amount equal to the sum of the
Executive's annual salary and target annual incentive compensation in effect
immediately prior to the termination. Any amount due pursuant to this Section
3.3 will be
4
<PAGE> 5
payable in a lump sum less applicable taxes within 30 days following
termination.
(ii) Maintenance of Benefits. During the period set forth below, the
Company will use its best efforts to maintain in full force and effect for the
continued benefit of the Executive, and his or her eligible dependents, all
health and welfare benefits which the Executive was entitled to receive
immediately prior to his termination or will arrange to make available to the
Executive benefits substantially similar to those that the Executive would
otherwise have been entitled to receive if his employment had not been
terminated. Such benefits will be provided to the Executive on the same terms
and conditions (including employee contributions toward the premium payments)
under which the Executive was entitled to participate immediately prior to his
termination. The term of continued benefits will be as follows: (a) if the
termination occurs on or prior to the second anniversary of the Closing Date,
the term will be the remainder of the Employment Term if there had been no
termination and (b) if the termination occurs after the second anniversary of
the Closing Date, the term will be 12 months.
(iii) Release. No amount or benefit will be paid or made available
under this Section 3 unless (a) the Executive executes a release in a form
satisfactory to the Company, and (b) to the extent such payment or benefit is
subject to the seven-day revocation period prescribed by the Age Discrimination
in Employment Act of 1967, as amended, or to any similar revocation period in
effect on the date of termination of Executive's employment, such revocation
period has expired.
4. Mitigation and Offset. The Executive is under no obligation to mitigate
damages or the amount of any payment provided for hereunder by seeking other
employment or otherwise; provided, however, that the Executive's coverage under
the Company's health and welfare plans will be reduced to the extent that the
Executive becomes covered under any comparable employee benefit plan made
available by another employer and covering the same type of benefits. The
Executive will report to the Company any such benefits actually received by him.
5. Competition; Confidentiality, Nonsolicitation
5.1. The Executive hereby covenants and agrees that during the
Employment Term and for the applicable period following the Employment Term
specified in Section 3.3(ii)(a) or (b), whichever would be applicable if Section
3.3(ii) applied (regardless of whether the Executive's termination of employment
was for cause or otherwise), he will not, without the prior written consent of
the Company, engage in Competition (as defined
5
<PAGE> 6
below) with the Company. Notwithstanding the foregoing, in the event that the
Executive voluntarily terminates his employment with the Company, the
Non-Competition period provided for herein will end on the later of (a) the
second anniversary of the Closing Date and (b) the six month anniversary of the
termination date. For purposes of this Agreement, "Competition" means
participating in the management of any business enterprise if such enterprise
engages in substantial and direct competition with the Company and such
enterprise's sales of any product or service competitive with any product or
service of the Company amounted to 25% of such enterprise's net sales for its
most recently completed fiscal year and if the Company's net sales of said
product or service amounted to 25% of the Company's net sales for its most
recently completed fiscal year. "Competition" will not include (i) the mere
ownership of securities in any enterprise and exercise of rights appurtenant
thereto or (ii) participation in management of any enterprise or business
operation thereof other than in connection with the competitive operation of
such enterprise.
5.2 During the Employment Term, the Company agrees that it will disclose
to Executive its confidential or proprietary information (as defined in this
Section 5.2) to the extent necessary for Executive to carry out his obligations
under this Agreement. The Executive hereby covenants and agrees that he will
not, without the prior written consent of the Company, during the Employment
Term or thereafter disclose to any person not employed by the Company, or use in
connection with engaging in Competition with the Company, any confidential or
proprietary information of the Company. For purposes of this Agreement, the term
"confidential or proprietary information" will include all information of any
nature and in any form that is owned by the Company and that is not publicly
available or generally known to persons engaged in businesses similar or related
to those of the Company. Confidential information will include, without
limitation, the Company's financial matters, customers, employees, industry
contracts, and all other secrets and all other information of a confidential or
proprietary nature. Confidential information shall not include information that
comes into the possession of the Executive following termination from a source
not under a duty to the Company to refrain from disclosing such information. The
foregoing obligations imposed by this Section 5.2 will cease if such
confidential or proprietary information will have become, through no fault of
the Executive, generally known to the public or the Executive is required by law
to make disclosure (after giving the Company notice and an opportunity to
contest such requirement).
5.3 The Executive hereby covenants and agrees that during the Employment
Term and for one year following the
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<PAGE> 7
Employment Term he will not attempt to influence, persuade or induce, or assist
any other person in so persuading or inducing, any employee of the Company to
give up, or to not commence, employment or a business relationship with the
Company.
5.4 For purposes of this Section 5, the term the "Company" means the
Company and its subsidiaries, collectively.
6. Post-termination Assistance. The Executive agrees that after his
employment with the Company has terminated he will provide, upon reasonable
notice, such information and assistance to the Company as may reasonably be
requested by the Company in connection with any litigation, investigation, audit
or similar matter in which it or any of its affiliates is or may become a party;
provided, however, that the Company agrees to reimburse the Executive for any
related out-of-pocket expenses, including travel expenses.
7. Survival. The expiration or termination of the Employment Term will not
impair the rights or obligations of any party hereto that accrue hereunder prior
to such expiration or termination, except to the extent specifically stated
herein. In addition to the foregoing, the Executive's covenants contained in
Sections 5.1, 5.2, 5.3 and 6 and the Company's obligations under Section 3 will
survive the expiration or termination of Executive's employment.
8. Miscellaneous Provisions
8.1 Binding on Successors This Agreement will be binding upon and inure
to the benefit of the Company, the Executive and each of their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees and legatees, as applicable.
8.2 Governing Law. This Agreement will be governed, construed,
interpreted and enforced in accordance with the substantive laws or the State of
Ohio, without regard to conflict of law principles.
8.3 Severability. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is
7
<PAGE> 8
reduced only to the minimum extent necessary to render the modified covenant
valid, legal and enforceable.
8.4 Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder must be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service such as Federal Express, UPS or
Purolator, addressed as follows, or to such other address as any party may have
furnished to the other in writing and in accordance herewith, except that
notices of changes of address will be effective only upon receipt.
(i) To the Company. If to the Company, addressed to:
R2
1900 Richmond Road.
Cleveland, Ohio 44124
Attn: Secretary
Telecopy: 216.291.7563
(ii) To the Executive. If to the Executive, to him at _____________
8.5 Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
8.6 Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
Executive's employment by the Company and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement will constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding to vary the terms of this Agreement.
This agreement supersedes any and all prior agreements applicable to the terms
and conditions of Executive's employment with any entity referred to herein.
8
<PAGE> 9
8.7 Amendments: Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, approved by the Company and
signed by the Executive and the Company. Failure on the part of either party to
complain of any action or omission, breach or default on the part of the other
party, no matter how long the same may continue, will never be deemed to be a
waiver of any rights or remedies hereunder, at law or in equity. The Executive
or the Company may waive compliance by the other party with any provision to
this Agreement that such other party was or is obligated to comply with or
perform only through an executed writing; provided, however, that such waiver
will not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure.
8.8 No Inconsistent Actions. The parties will not voluntarily undertake
or fail to undertake any action or course of action that is inconsistent with
the provisions or essential intent of this Agreement. Furthermore, it is the
intent of the parties hereto to act in a fair and reasonable manner with respect
to the interpretation and application of the provisions of this Agreement.
8.9 Headings and Section References. The headings used in this Agreement
are intended for convenience or reference only and will not in any manner
amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.
9. Treatment of Options. Executive agrees that he will not exercise any
options which he currently holds to purchase common stock of Banneker (the
"Options") prior to the Closing Date, and that upon the Closing Date, Executive
will receive cash in exchange for the cancellation of his Options as set forth
in Section 1.9(a) of the Merger Agreement.
10. Effectiveness. This Agreement will become effective upon the Closing
Date, except for the provisions of Section 9, which shall become effective as of
the date hereof. Notwithstanding any other provision of this Agreement, if the
Merger Agreement is terminated prior to the Effective Time, this Agreement will
have no further force or effect.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written, but effective as provided in Section 9.
Name:
--------------------------
TRW, INC.,
an Ohio corporation
By:
----------------------------
DULY AUTHORIZED
10
<PAGE> 1
Exhibit 4
[WASSERSTEIN PERELLA & CO., INC. LETTERHEAD]
September 12, 1997
TRW Inc.
1900 Richmond Way
Cleveland, OH 44124
Dear Gentlemen:
Wasserstein Perella & Co., Inc. ("WP&Co.") is acting on behalf of BDM
International, Inc. (the "Company") to explore the possible sale of the Company
(the "Transaction"). In that connection, you have requested certain information
concerning the Company from officers, directors, employees and/or agents of the
Company, including WP&Co. All such information (whether written or oral)
furnished to you and your Representatives (as defined below), by the Company,
its officers, directors, employees or agents, on or following the date hereof,
which is marked as "confidential" or, if furnished orally, is contemporaneously
identified in writing as being confidential, together with analyses,
compilations, forecasts, studies or other documents or records prepared by you
or your Representatives which contain, are based on or otherwise reflect or are
generated in whole or in part from such information, including that stored on
any computer, word processor or other similar device, are collectively referred
to herein as the "Evaluation Material."
You hereby agree as follows:
(1) You shall use the Evaluation Material solely for the purpose of
evaluating the Transaction and you shall keep the Evaluation Material
confidential, except that you may disclose the Evaluation Material or
portions thereof to those of your directors, officers, employees,
affiliates, representatives (including, without limitation, financial
advisors, attorneys and accountants) and your potential sources of
financing (if any) for the Transaction (collectively, the
"Representatives") (a) who need to know such information for the
purpose of evaluating the Transaction, (b) who are informed by you of
the confidential nature of the Evaluation Material and (c) who agree
to be bound by the terms of this agreement as if they were parties
hereto. You shall be responsible for any breach of this agreement by
your Representatives. In the event that you or any of your
Representatives are requested or required (by deposition,
interrogatory,
<PAGE> 2
request for documents, subpoena, civil investigative demand or similar
process) to disclose any of the Evaluation Material, you shall provide
the Company with prompt prior written notice of such requirement, you
shall furnish only that portion of the Evaluation Material which you
are advised by written opinion of counsel is legally required, and you
shall exercise your best efforts to obtain reliable assurance that
confidential treatment will be accorded such Evaluation Material.
(2) If you determine not to proceed with the Transaction, you will
promptly inform WP&Co. of that decision and, in that case or at any
time upon the request of the Company or WP&Co., you and your
representatives shall promptly either (i) destroy all copies of the
written Evaluation Material in your or their possession or under your
or their custody or control (including that stored in any computer,
word processor or similar device) and confirm such destruction to the
Company in writing or (ii) return to WP&Co. all copies of the
Evaluation Material furnished to you by or on behalf of the Company in
your possession or in the possession of your Representatives. Any oral
Evaluation Material will continue to be held subject to the terms of
this agreement. If requested, you shall provide a certification by an
appropriate officer that all such Evaluation Material has been
returned or destroyed.
(3) The term "Evaluation Material" does not include any information which
(i) is generally available to and known by the public (other than as a
result of a disclosure by you or by any of the Representatives); (ii)
was available to you on a non-confidential basis from a source (other
than the Company or its representatives) that is not and was not
prohibited from disclosing such information to you by a contractual,
legal or fiduciary obligation; or was known to you prior to your
receipt thereof.
(4) The parties hereto both agree that, without the prior written consent
of the other party, neither party nor their representatives shall
disclose to any person (unless required by law) (a) that any
investigations, discussions or negotiations are taking place
concerning the Transaction or any other possible Transaction involving
the Company and you, (b) that you have requested or received any
Evaluation Material or (c) any of the terms, conditions or other facts
with respect to the Transaction involving you or such investigations,
discussions or negotiations, including the status thereof. The term
"person" as used in this agreement shall be broadly interpreted to
include the media and any corporation, partnership, group, individual
or entity.
(5) You agree that (i) all communication regarding the Transaction, (ii)
requests for additional information, facility tours or management
meetings, and (iii) discussions or questions regarding procedures with
respect to the Transaction, will be first submitted or directed to
WP&Co.
<PAGE> 3
and not to the Company. Accordingly, you agree that until the
consummation of the Transaction by you or a third party, you will not,
directly or indirectly, contact or communicate with any officer,
director, employee or agent of the Company without the express prior
consent of the Company or WP&Co. Both parties agree that, for a period
of one year from the date of this agreement, neither party will,
directly or indirectly, solicit for employment or hire any employee of
either party with whom the parties have had contact or who became
known to the parties in connection with the parties' consideration of
the Transaction. For purposes of this paragraph, the term "solicit"
shall not include general solicitations of employment by means of
newspaper, periodical or trade publication used in the ordinary course
of business. You acknowledge and agree that (a) WP&Co. and the Company
are free to conduct the process leading up to a possible Transaction
as WP&Co. and the Company, in their sole discretion, may determine
(including, without limitation, by negotiating with any prospective
buyer and entering into a preliminary or definitive agreement without
prior notice to you or any other person), (b) WP&Co. and the Company
reserve the right, in their sole discretion, to change the procedures
relating to your consideration of the Transaction at any time without
prior notice to you or any other person, to reject any and all
proposals made by you or any of your Representatives with regard to
the Transaction, and to terminate discussions and negotiations with
you at any time and for any reason, and (c) unless and until a written
definitive agreement concerning the Transaction has been executed,
neither WP&Co. nor the Company, nor their respective officers,
directors, employees, affiliates, stockholders, agents or controlling
persons will have any legal obligation to you of any kind whatsoever
with respect to the Transaction, whether by virtue of this agreement,
any other written or oral expression with respect to the Transaction
or otherwise. For purposes hereof, the term "definitive agreement"
does not include an executed letter or intent or any other preliminary
written agreement.
(6) You agree that, for a period of two years from the date of this
agreement, unless such shall have been specifically invited in writing
by the Company, neither you nor any of your affiliates (as such term
is defined under the Securities Exchange Act of 1934, as amended (the
"1934 Act")) or Representatives will in any manner, directly or
indirectly, (a) effect or seek, offer or propose (whether publicly or
otherwise) to effect, or cause or participate in or in any way assist
any other person to effect or seek, offer or propose (whether publicly
or otherwise) to effect or participate in, (i) any acquisition of any
securities (or of beneficial ownership thereof) in excess of 5% of the
Company, or assets of the Company or any of its subsidiaries; (ii) any
tender or exchange offer, merger or other business combination
involving the Company or any of its subsidiaries; (iii) any
recapitalization, restructuring, liquidation,
<PAGE> 4
dissolution or other extraordinary Transaction with respect to the
Company or any of its subsidiaries; or (iv) any solicitation of
proxies or consents to vote any voting securities of the Company; (b)
form, join or in any way participate in a "group" (as defined under
the 1934 Act); (c) take any action which might force the Company to
make a public announcement regarding any of the types of matters set
forth in (a) above; or (d) enter into any discussions or arrangements
with any third party with respect to any of the foregoing. This
paragraph shall not apply to TRW Investment Management Co., it's
advisors, or TRW's employee benefit plans.
(7) You acknowledge that you and your Representatives may receive material
non-public information in connection with your evaluation of the
Transaction and you are aware (and you will so advise your
Representatives) that the United States securities laws impose
restrictions on trading in securities when in possession of such
information.
(8) You understand and acknowledge that none of the Company, WP&Co. or any
of their respective officers, directors, employees, affiliates,
stockholders, agents or controlling persons is making any
representation or warranty, express or implied, as to the accuracy or
completeness of the Evaluation Material, and each of the Company,
WP&Co. and such other persons expressly disclaims any and all
liability to you or any other person that may be based upon or relate
to (a) the use of the Evaluation Material by you or any of the
Representatives or (b) any errors therein or omissions therefrom. You
further agree that you are not entitled to rely on the accuracy and
completeness of the Evaluation Material and that you will be entitled
to rely solely on those particular representations and warranties, if
any, that are made to a purchaser in a definitive agreement relating
to the Transaction when, as, and if it is executed, and subject to
such limitations and restrictions as may be specified in such
definitive agreement.
(9) Both parties acknowledge that remedies at law may be inadequate to
protect either party against any actual or threatened breach of this
agreement. Without prejudice to any other rights and remedies
otherwise available to either party, both parties agree that the other
party is entitled to equitable relief in the event of any such breach.
(10) You agree that no failure to delay by the Company in exercising any
right, power or privilege hereunder will operate as a waiver thereof,
nor will any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege hereunder.
<PAGE> 5
(11) This agreement is for the benefit of the parties and their respective
successors and assigns. The rights of the Company under this agreement
may be assigned in whole or in part to any purchaser of the Company
which purchaser shall be entitled to enforce this agreement to the
same extent and in the same manner as the Company is entitled to
enforce this agreement.
(12) This agreement and all controversies arising from or relating to
performance under this agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving
effect to its conflicts of laws principles.
(13) This agreement contains the entire agreement between you and the
Company concerning the subject matter hereof, and no modification of
this agreement or wavier of the terms and conditions hereof will be
binding unless approved in writing by the Company and you.
(14) The obligations of the parties will continue in effect from the date
of this agreement through September 12, 1999.
Please confirm your agreement to the foregoing by signing both copies of
this agreement and returning one to WP&Co., Attn: Paul J. S. Haigney.
Very truly yours,
WASSERSTEIN PERELLA & CO., INC.
As Financial Advisor to, and as
Representative of
BDM International, Inc.
By: /s/ Paul J. S. Haigney
------------------------------------
Paul J. S. Haigney
Managing Director
CONFIRMED AND AGREED AS
OF THE DATE WRITTEN ABOVE:
TRW Inc.
By: /s/ Donald G. Kovar
-----------------------------------
Name: Donald G. Kovar
Title: Vice President
<PAGE> 1
EXHIBIT 5
[LOGO BDM International, Inc.] BDM International, Inc.
1501 BDM Way
McLean, Virginia 22102
November 26, 1997
To Our Stockholders:
We are pleased to inform you that on November 20, 1997, BDM International,
Inc. entered into a Merger Agreement with TRW Inc. and Systems Acquisition
Inc., a wholly owned subsidiary of TRW, pursuant to which that subsidiary has
commenced a tender offer (the "Offer") to purchase all of the outstanding
shares of BDM's common stock for a cash price of $29.50 per share. The Offer is
conditioned upon, among other things, the tender of a majority of the
outstanding shares. The Merger Agreement provides that following consummation of
the Offer, the TRW subsidiary will be merged with and into BDM (the "Merger")
and those BDM shares that are not acquired in the Offer will be converted into
the right to receive $29.50 per share in cash.
Your Board of Directors has unanimously approved the Merger Agreement, the
Offer and the Merger and has determined that the terms of the Offer and the
Merger are fair to, and in the best interests of, BDM and its stockholders, and
unanimously recommends that stockholders accept the Offer and tender their
shares pursuant to the Offer. In arriving at its recommendation, the Board of
Directors considered the factors described in the accompanying Schedule
14D-9, including the opinion of BDM's financial advisor,
Wasserstein Perella & Co., Inc., to the effect that the consideration to be
received by BDM stockholders pursuant to the Offer and the Merger is fair to
such stockholders from a financial point of view. A copy of Wasserstein
Perella's written opinion is attached to the Schedule 14D-9 as
Schedule I.
The accompanying Offer to Purchase sets forth all of the terms of the
Offer. Additionally, the enclosed Schedule 14D-9 sets forth additional
information regarding the Offer and the Merger relevant to making an informed
decision. We urge you to read these materials carefully and in their entirety.
Very truly yours,
/s/ Philip A. Odeen
-------------------
Philip A. Odeen
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 6
NEWS RELEASE TRW INC.
1900 RICHMOND ROAD
CLEVELAND, OH 44124
TRW TO ACQUIRE BDM INTERNATIONAL, INC.
IN MERGER VALUED AT APPROXIMATELY $1 BILLION
TRW TO LAUNCH TENDER OFFER AT $29.50 PER SHARE;
COMBINATION TO ADD $1 BILLION IN INFORMATION TECHNOLOGY SALES
CLEVELAND, OH and McLEAN, VA, Nov. 21, 1997 -- TRW Inc. (NYSE: TRW) and BDM
International, Inc. (Nasdaq: BDMI) announced today that both companies' boards
of directors have voted unanimously to approve a definitive agreement under
which TRW will acquire BDM in a transaction valued at nearly $1 billion. Under
the executed agreement, a wholly owned subsidiary, Systems Acquisition Inc.,
will commence a cash tender offer within the next five business days for all of
the outstanding shares of BDM at $29.50 per share.
In connection with the merger agreement, The Carlyle Group and certain of its
affiliates owning approximately 26 percent of BDM's stock have agreed to tender
their shares pursuant to the tender offer and have also granted an option to TRW
to purchase their BDM shares at $29.50 per share.
The tender offer is conditioned on the valid tender of BDM's shares
representing a majority of the voting power of BDM, and customary regulatory
approvals and other closing conditions.
<PAGE> 2
TRW has arranged for financing of the transaction. BDM has approximately 33
million shares outstanding on a fully diluted basis. The tender offer is
expected to close prior to the end of the year.
"The acquisition of BDM is an important strategic move that provides the
platform for growth in the rapidly developing information technology markets.
Those markets include opportunities in both the government and commercial
sectors, here and overseas," said Joseph T. Gorman, chairman and chief
executive officer of TRW. "The merger expands the reach and scope of our
strong space and defense business. It complements our existing systems
integration and information technology businesses. Moreover, it will broaden
our services and products to government customers and increase our
participation in rapidly growing civil, commercial, and international
markets."
Prior to potential revenue and cost synergies, the acquisition is expected to
be slightly dilutive to TRW shareholders in the first year, neutral in the
second, and accretive thereafter.
"Everyone who knows BDM and TRW and understands the enormous global potential
of information technology will recognize this merger as a win-win combination
of talents, resources, and leadership," said Frank C. Carlucci, BDM chairman
of the board and chairman of the board and managing director of The Carlyle
Group, L.P.
<PAGE> 3
"TRW is an outstanding company," said Philip A. Odeen, BDM president and chief
executive officer. "It has similar roots as BIM and similar values. It does
things that count -- for shareholders, customers, employees, and the community
- -- and it does them extraordinarily well. Together, I am very confident that we
are going to do great things to solve our customers' most difficult problems,
boost value for shareholders, and provide new career growth and advancement
opportunities for our employees.
Gorman said, "BDM's strong presence in Europe and in the Middle East, coupled
with TRW's strong European operations, provides an established base for further
international growth."
Once the acquisition is completed, TRW's space and defense business will
represent more than 40 percent of total annual sales and more than 37 percent of
operating income. Since 1992, BDM has achieved 24 percent compound annual
growth, accomplished through both internal growth and acquisitions. We expect
our acquisition of BDM to enhance sales and earnings growth," Gorman said.
"Consistent with our long-term strategy, this acquisition is our most
significant action to double the company's sales and market capitalization and
build shareholder value," Gorman said. BDM is an ideal fit with TRW. We will
move forward together in new applications of our space, defense, information,
and telecommunications technologies.
<PAGE> 4
"Additionally, BDM's expertise in integrated supply chain management offers
important efficiencies to our own automotive organization and its customers.
BDM's Automotive Center of Excellence in Michigan serves the automotive industry
by providing global solutions to reduce costs for companies developing world
cars and components."
Following the transaction, Odeen will continue to lead BDM in his new TRW
management role, reporting to Peter S. Hellman, TRW president and chief
operating officer.
"BDM is recognized worldwide for its expertise in information technology,"
Hellman said. "The merger brings together two leading companies with similar
cultures and backgrounds dating back to the 1950s. Both advanced technology
operations were founded by distinguished scientists in the aerospace and defense
fields and are now highly respected by their customers. We look forward to the
new contributions Phil Odeen and the entire BDM team will provide TRW as we work
together to become preeminent in the information technology business."
Bear, Stearns Co. Inc. is financial adviser to TRW and dealer manager for the
tender offer. Wasserstein Perella & Co., Inc., is financial adviser to BDM.
BDM is a multinational information technology company based in McLean, Va., that
provides systems integration and computer services to public sector and
commercial customers. Revenue in 1996 totaled approximately $1 billion. The
company employs
<PAGE> 5
approximately 9,000 people in 110 worldwide locations. Additional information is
available on BDM's internet Web site (http://www.bdm.com).
TRW provides advanced technology products and services for the automotive and
space and defense markets. Systems integration activities involve the
development and application of systems engineering, systems integration,
information systems, and software development products and services for domestic
and international customers in government and commercial markets. TRW's total
revenue in 1996 was approximately $10 billion. The company's news releases
are available on the internet through TRW's Web site (http://www.trw.com).
Statements in this release that are not historical facts are forward-looking
statements, which involve risks and uncertainties that could affect the
company's actual results. Information regarding the important factors that could
cause TRW's actual results to differ materially from the forward-looking
statements contained in this release can be found in TRW's reports filed with
the Securities and Exchange Commission.
###
<PAGE> 1
EXHIBIT 7
Wasserstein Perella & Co., Inc.
555 California Street, 43rd Floor
San Francisco, CA 94104
November 20, 1997
BDM International, Inc.
1501 BDM Way
McLean, VA 22102-3204
Members of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders of the Shares of common stock, par value
$.01 per share (the "Shares"), of BDM International, Inc. (the "Company") of the
consideration to be received by such holders pursuant to the terms of the
Agreement and Plan of Merger, dated as of November 20, 1997 (the "Merger
Agreement"), among the Company, TRW, Inc. ("Parent"), and Sub ("Sub"). The
Merger Agreement provides for, among other things, a cash tender offer by Sub to
acquire all of the outstanding Shares at a price of $29.50 per Share (the
"Tender Offer"), and for a subsequent merger of Sub with and into the Company
pursuant to which each outstanding Share will be converted into the right to
receive $29.50 in cash (the "Merger" and, together with the Tender Offer, the
"Transaction"). The terms and conditions of the Transaction are set forth in
more detail in the Merger Agreement.
In connection with rendering our opinion, we have reviewed the Merger
Agreement. We have also reviewed and analyzed certain publicly available
business and financial information relating to the Company for recent years and
interim periods to date, as well as certain internal financial and operating
information, including financial forecasts, analyses and projections prepared by
or on behalf of the Company and provided to us for purposes of our analysis, and
we have met with management of the Company to review and discuss such
information and, among other matters, the Company's business operations, assets,
financial condition and future prospects.
We have reviewed and considered certain financial and stock market data
relating to the Company, and we have compared that data with similar data for
certain
<PAGE> 2
BDM International
November 20, 1997
Page 2
other companies, the securities of which are publicly traded, that we believe
may be relevant or comparable in certain respects to the Company or one or more
of its businesses or assets, and we have reviewed and considered the financial
terms of certain recent acquisitions and business combination transactions in
the commercial and government information technology services industry
specifically, and in other industries generally, that we believe to be
reasonably comparable to the Transaction or otherwise relevant to our inquiry.
We have also performed such other financial studies, analyses, and
investigations and reviewed such other information as we considered appropriate
for purposes of this opinion.
In our review and analysis and in formulating our opinion, we have
assumed and relied upon the accuracy and completeness of all the financial and
other information provided to or discussed with us or publicly available, and we
have not assumed any responsibility for independent verification of any of such
information. We have also relied upon the reasonableness and accuracy of the
financial projections, forecasts and analyses provided to us and we have
assumed, with your consent, that such projections, forecasts and analyses were
reasonably prepared in good faith and on bases reflecting the best currently
available judgments and estimates of the Company's management and we express no
opinion with respect to such projections, forecasts and analyses or the
assumptions upon which they are based. In addition, we have not reviewed any of
the books and records of the Company, or assumed any responsibility for
conducting a physical inspection of the properties or facilities of the Company,
or for making or obtaining an independent valuation or appraisal of the assets
or liabilities of the Company, and no such independent valuation or appraisal
was provided to us. We have assumed that the transactions described in the
Merger Agreement will be consummated on the terms set forth therein, without
material waiver or modification. Our opinion is necessarily based on economic
and market conditions and other circumstances as they exist and can be evaluated
by us as of the date hereof.
We are acting as financial advisor to the Company in connection with
the proposed Transaction and will receive a fee for our services upon
consummation of the Transaction.
In the ordinary course of our business we may actively trade the debt
and equity securities of the Company and the Parent for our own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Our opinion addresses only the fairness from a financial point of view
to the stockholders of the Company of the consideration to be received by such
stockholders pursuant to the Transaction, and we do not express any views on any
other terms of the Transaction. Specifically, our opinion does not address the
Company's
<PAGE> 3
BDM International
November 20, 1997
Page 3
underlying business decision to effect the transactions contemplated by the
Merger Agreement.
It is understood that this letter is for the benefit and use of the
Board of Directors of the Company in its consideration of the Transaction and
except for inclusion in its entirety in a proxy statement circulated to
stockholders of the Company relating to the Merger or in a tender offer
recommendation statement on Schedule 14D-9 from the Company to the holders of
Shares relating to the Tender Offer, may not be disseminated, quoted, referred
to or reproduced at any time or in any manner without our prior written consent.
This opinion does not constitute a recommendation to any stockholder with
respect to whether such holder should tender Shares pursuant to the Tender Offer
or as to how such holder should vote with respect to the Merger, and should not
be relied upon by any stockholder as such.
Based upon and subject to the foregoing, including the various
assumptions and limitations set forth herein, it is our opinion that as of the
date hereof, the $29.50 per Share cash consideration to be received by the
stockholders of the Company pursuant to the Transaction is fair to such
stockholders from a financial point of view.
Very truly yours,
/s/ Wasserstein Perella & Co., Inc.
<PAGE> 1
Exhibit (c)(4)
EXCLUSIVITY AGREEMENT
BDM International, Inc. ("BDM"), The Carlyle Partners Leveraged Capital
Fund I, L.P., BDM Acquisition Partners, L.P., BDM Acquisition Partners II, L.P.,
The Carlyle Group, L.P., and TWC Virginia, Inc. (collectively, hereinafter the
"Carlyle Group") hereby severally agree that they will immediately cease all
discussions and negotiations with any party other than TRW Inc. that related to,
or may reasonably be expected to lead to, any merger or consolidation involving
BDM or any sale, lease, or other disposition of assets of BDM or its direct or
indirect subsidiaries representing fifteen percent (15%) or more of the
consolidated assets of BDM and such subsidiaries, or the issuance, sale, or
other disposition (to one or more persons or to any group of persons) of any
such equity interests or of securities representing fifteen percent (15%) or
more of any class of stock of BDM or any such equity interests, or any
recapitalization, restructuring, liquidation, dissolution, or other
extraordinary transaction with respect to BDM or any of its subsidiaries, or any
such equity interests. In addition, BDM and the Carlyle Group severally agree
that until the earlier of (i) the date which is seventeen (17) days following
the execution of this letter by BDM and the Carlyle Group, or (ii) the date on
which definitive agreements which supersede this letter are executed by the
parties hereto, BDM and the Carlyle Group will neither directly or indirectly,
take (nor shall it authorize or permit any of its subsidiaries, officers,
directors, employees, representatives, investment bankers, attorneys,
accountants, or other agents or affiliates, to take) any action to solicit,
encourage, or initiate the submission of any transaction proposal, enter into
any agreement providing for any transaction proposal, or participate in any way
in discussions or negotiations with or furnish any information to any person,
which may reasonably be expected to lead to any transaction proposal or assist
any person in the making of any transaction proposal.
Accepted and Agreed to, as of
November 14, 1997
BDM INTERNATIONAL, INC. THE CARLYLE PARTNERS
LEVERAGED CAPITAL FUND I, L.P.
BDM ACQUISITION PARTNERS, L.P.
BDM ACQUISITION PARTNERS II, L.P.
By: THE CARLYLE GROUP, L.P.
General Partner of Each
By: /s/ Philip A. Odeen By: TWC VIRGINIA, INC.
---------------------------------- Its General Partner
Name: Philip A. Odeen
Title: President
By: /s/ William E. Conway, Jr.
------------------------------------
Name: William E. Conway, Jr.
Title: Executive Vice President
