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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
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Dames & Moore Group
(Name Of Subject Company)
Dames & Moore Group
(Name Of Person Filing Statement)
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COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title Of Class Of Securities)
235713 10 4
(Cusip Number Of Class Of Securities)
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Arthur C. Darrow
Chairman, Chief Executive Officer and President
Dames & Moore Group
911 Wilshire Boulevard, Suite 700
Los Angeles, California 90017
(213) 996-2200
(Name, Address And Telephone Number Of Person Authorized To
Receive Notice And Communications On Behalf Of Person(s) Filing Statement)
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Copies to:
John M. Newell, Esq.
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
(213) 485-1234
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ITEM 1. Security and Subject Company.
The name of the subject company is Dames & Moore Group, a Delaware
corporation (the "Company"), and the address of the principal executive
offices of the Company is 911 Wilshire Boulevard, Suite 700, Los Angeles,
California 90017. The title of the class of equity securities to which this
statement relates is the common stock, par value $.01 per share (the "Common
Stock"), of the Company.
ITEM 2. Tender Offer of the Bidder.
This statement relates to the cash tender offer (the "Offer") disclosed in a
Tender Offer Statement on Schedule 14D-1, dated May 11, 1999 (the "Schedule
14D-1"), of Demeter Acquisition Corporation, a Delaware corporation (the
"Purchaser") and a wholly-owned subsidiary of URS Corporation ("Parent"), to
purchase all of the outstanding shares of Common Stock of the Company (and
together with the associated preferred stock purchase rights, the "Shares") at
a price of $16.00 per Share (the "Offer Price"), net to the seller in cash
(subject to applicable withholding of taxes) without interest thereon, subject
to certain conditions set forth in the Offer to Purchase included in the
Schedule 14D-1. The Offer is being made by the Purchaser pursuant to the
Agreement and Plan of Merger, dated as of May 5, 1999 (the "Merger
Agreement"), by and among the Company, Parent and the Purchaser, a copy of
which is filed as Exhibit 1 hereto and incorporated herein by reference.
Subject to certain terms and conditions of the Merger Agreement, the Purchaser
will be merged with and into the Company (the "Merger") as soon as practicable
after the consummation of the Offer, with the Company being the surviving
corporation in the Merger (the "Surviving Corporation") and becoming a wholly-
owned subsidiary of Parent. The Schedule 14D-1 states that the address of the
principal executive offices of Parent and the Purchaser is 100 California
Street, Suite 500, San Francisco, California 94111. A copy of the joint press
release issued by the Company and Parent on May 5, 1999 announcing the
execution of the Merger Agreement is filed as Exhibit 2 hereto and
incorporated herein by reference.
ITEM 3. Identity and Background.
(a) The name and business address of the Company, which is the entity filing
this statement, are set forth in Item 1 above.
(b) Except as described or referred to below, there exists on the date
hereof no material contract, agreement, arrangement or understanding and no
actual or potential conflict of interest between the Company or its affiliates
and (i) the Company or its executive officers, directors or affiliates or (ii)
Parent, the Purchaser or their executive officers, directors or affiliates.
Arrangements with Directors, Executive Officers or Affiliates of the Company
Certain contracts, agreements, arrangements and understandings between the
Company and certain of its directors, executive officers and affiliates are
described in the Company's Information Statement in the sections entitled
"Directors Compensation," "Certain Relationships, Transactions and
Arrangements," "Compensation Committee Interlocks and Insider Participation,"
"Employment Agreements and Change-in-Control Arrangements," "Executive Officer
Compensation," and "Chief Executive Officer Compensation." The Information
Statement is attached hereto as Annex A and incorporated herein by reference.
In connection with the transactions contemplated by the Merger, the
following agreements were entered into: the Merger Agreement and the
Confidentiality Agreement dated as of April 14, 1999 between the Company and
Parent (the "Confidentiality Agreement"). A copy of the Confidentiality
Agreement is filed as Exhibit 3 hereto and is incorporated herein by
reference.
The Merger Agreement
The following summary is qualified in its entirety by reference to the
complete text of the Merger Agreement which is incorporated herein by
reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated May
7, 1999. Capitalized terms used but not defined herein shall have the meanings
set forth in the Merger Agreement.
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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
after the initial public announcement of the execution of the Merger
Agreement.
The Merger Agreement provides that the obligation of the Purchaser to, and
of Parent to cause the Purchaser to, consummate the Offer and accept for
payment, and pay for, any Shares tendered and not withdrawn pursuant to the
Offer is subject only to the conditions set forth below under "--Certain
Conditions of the Offer" (the "Offer Conditions") (any of which may be waived
in whole or in part by the Purchaser in its sole discretion, provided,
however, that the Purchaser shall not waive the Minimum Condition (as defined
below under "--Certain Conditions of the Offer") without the prior written
consent of the Company). The Purchaser expressly reserved in the Merger
Agreement the right, subject to compliance with the Securities Exchange Act of
1934, as amended ("Exchange Act"), to modify the terms of the Offer, except
that, without the express written consent of the Company, neither Parent nor
the Purchaser shall (i) reduce the number of Shares subject to the Offer, (ii)
reduce the Offer Price, (iii) add to or modify the conditions set forth below
under "--Certain Conditions of the Offer" (the "Offer Conditions"), (iv)
except as provided in the next paragraph, change the expiration date of the
Offer, (v) change the form of consideration payable in the Offer or (vi)
amend, alter, add or waive any term of the Offer in any manner adverse to the
holders of the Shares.
Notwithstanding the foregoing, if on any scheduled expiration date of the
Offer, all Offer Conditions have not been satisfied or waived, the Merger
Agreement provides that the Purchaser may, and at the request of the Company
shall, from time to time, extend the expiration date of the Offer for up to
ten additional business days, and the Purchaser may, without the consent of
Company, (A) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
"Commission") or the Commission staff applicable to the Offer and (B) extend
the Offer for up to ten business days if there have been validly tendered and
not withdrawn prior to the expiration of the Offer such number of Shares that
would constitute at least 75% but less than 90% of the issued and outstanding
Shares as of the date of determination. The Merger Agreement provides that
subject only to the conditions set forth below under "--Certain Conditions of
the Offer", the Purchaser shall, and Parent shall cause the Purchaser to, as
soon as practicable after the expiration of the Offer, accept for payment, and
pay for, all Shares validly tendered and not withdrawn that the Purchaser
becomes obligated to accept for payment pursuant to the Offer.
Directors. The Merger Agreement provides that promptly upon the acceptance
for payment of, and payment for, not less than a majority of the outstanding
Shares pursuant to the Offer, the Purchaser shall be entitled to designate
such number of directors on the Board as will give the Purchaser, subject to
compliance with Section 14(f) of the Exchange Act, a majority of such
directors, and the Company shall, at such time, cause the Purchaser's
designees to be so elected by the existing Board; provided, however, that in
the event that the Purchaser's designees are elected to the Board, until the
Effective Time (as defined below under "--The Merger") such Board shall have
at least three directors who were directors of the Company on the date of the
Merger Agreement (the "Continuing Directors") and; provided further that, in
such event, if the number of Continuing Directors shall be reduced below three
for any reason whatsoever, the remaining Continuing Director(s) shall
designate a person to fill such vacancy who shall be deemed to be a Continuing
Director for purposes of the Merger Agreement or, if no Continuing Directors
then remain, the other directors of the Company on the date of the Merger
Agreement shall designate three persons to fill such vacancies who shall not
be officers or affiliates of the Company or any of its subsidiaries, or
officers or affiliates of Parent or any of its subsidiaries, and such persons
shall be deemed to be Continuing Directors for purposes of the Merger
Agreement. The Merger Agreement provides that subject to applicable law, the
Company shall take all action requested by Parent necessary to effect any such
election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder (the "Information Statement"), and the
Company agreed to make such mailing with the mailing of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 ("Schedule 14D-9")
(provided that the Purchaser provides to the Company on a timely basis in
writing all information required to be included in the Information Statement
with respect to the Purchaser's designees). In connection with the foregoing,
the
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Company agreed in the Merger Agreement to promptly, at the option of Parent,
either increase the size of the Board or use its best efforts to obtain the
resignation of such number of its current directors as is necessary to enable
the Purchaser's designees to be elected or appointed to, and to constitute a
majority of, the Board.
The Merger. The Merger Agreement provides that upon the terms and subject to
the conditions set forth in such agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), the Purchaser shall be merged
with and into the Company at the time the Merger becomes effective (the
"Effective Time"). Following the Effective Time, the separate corporate
existence of the Purchaser shall cease and the Company shall continue as the
Surviving Corporation and shall succeed to and assume all the rights and
obligations of the Purchaser in accordance with the DGCL.
Subject to the provisions of the Merger Agreement, as soon as practicable on
or after the satisfaction or waiver of the conditions set forth in "--
Conditions to the Merger" (the "Merger Conditions"), the parties shall file
(i) a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, or (ii) in the event the Purchaser shall
have acquired 90% or more of the outstanding shares of each class of capital
stock of Company, file a certificate of ownership and merger (the "Certificate
of Ownership") with the Secretary of State of the State of Delaware, in each
case in such form as required by and executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL and other applicable law. The Merger shall become effective at
such time as the Certificate of Merger or the Certificate of Ownership, as
applicable, is duly filed with the Secretary of State of the State of
Delaware, or at such other time specified in the Certificate of Merger or the
Certificate of Ownership as the Purchaser and the Company shall agree.
The Merger Agreement provides that the directors of the Purchaser
immediately prior to the Effective Time will be the initial directors of the
Surviving Corporation and that the officers of both the Purchaser and the
Company immediately prior to the Effective Time will be the initial officers
of the Surviving Corporation. The Merger Agreement also provides that the
certificate of incorporation of the Purchaser as in effect immediately prior
to the Effective Time, and as amended to change the name to "Dames & Moore
Group", shall be the certificate of incorporation of the Surviving
Corporation, and further provides that the By-laws of the Purchaser as in
effect immediately prior to the Effective Time will be the By-laws of the
Surviving Corporation.
Conversion Of Securities. The Merger Agreement provides that as of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any Shares or any shares of capital stock of the Purchaser:
(i) Each issued and outstanding share of capital stock of the Purchaser
shall be converted into and become one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving
Corporation;
(ii) Each Share that is owned by the Company and each Share that is owned by
Parent or the Purchaser shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in
exchange therefor. Each Share that is owned by any direct or indirect
wholly-owned subsidiary of Parent (other than the Purchaser) or of the
Company shall remain outstanding without change; and
(iii) Subject to the rights of stockholders ("Dissenting Stockholders") who
properly exercise their right of appraisal under the DGCL in regard
to their Shares ("Dissenting Shares"), each issued and outstanding
Share (other than Shares to be canceled or to remain outstanding in
accordance with clause (ii) above, and other than Dissenting Shares)
shall be converted into the right to receive from the Surviving
Corporation in cash, without interest, $16.00 per Share (the "Merger
Consideration"). The Merger Agreement provides that as of the
Effective Time, all such Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such Shares shall
cease to have any rights with respect thereto, except the right to
receive the Merger Consideration, without interest.
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Stock Options. The Merger Agreement provides that as soon as practicable
following the date of the Merger Agreement but in no event later than the
consummation of the Offer, the Company (or, if appropriate, the Board or any
committee administering the Stock Option Plans (as defined below)) shall take
actions (which, in the case of the Company's 1995 Stock Option Plan for Non-
Employee Directors, shall be to make reasonable efforts to obtain the consent
of the option holders thereunder to permit actions) such that (including by
adopting resolutions or taking any other actions) each outstanding option to
purchase Shares (a "Company Stock Option") heretofore granted under any stock
option, stock appreciation rights or stock purchase plan, program or
arrangement of the Company (collectively, the "Stock Option Plans") that is
outstanding immediately prior to the consummation of the Offer, whether or not
then exercisable, shall be canceled immediately prior to the Effective Time in
exchange for an amount in cash, payable at the time of such cancellation,
equal to the product of (i) the number of Shares subject to such Company Stock
Option immediately prior to the Effective Time and (ii) the excess, if any, of
the Offer Price over the per Share exercise price of such Company Stock
Option. The Merger Agreement provides that the Company (or, if appropriate,
the Board or any committee administering the Stock Option Plans) shall take
actions such that immediately prior to the Effective Time the outstanding
Company Stock Options are canceled as set forth above. The Merger Agreement
provides that the Company shall not make, or agree to make, any payment of any
kind to any holder of a Company Stock Option (except for the payment described
above) without the consent of Parent.
Subject to the prior paragraph, the Merger Agreement requires that all Stock
Option Plans shall terminate as of the Effective Time and the provisions in
any other Company benefit plan providing for the issuance, transfer or grant
of any capital stock of Company or any interest in respect of any capital
stock of Company shall be deleted as of the Effective Time. The Company agreed
in the Merger Agreement to use its reasonable best efforts to ensure that
following the Effective Time, no holder of a Company Stock Option or any
participant in any Stock Option Plan shall have any right thereunder to
acquire any capital stock of the Company, Parent or the Surviving Corporation.
The Company agreed in the Merger Agreement to take all actions necessary to
provide for the cancellation of all outstanding grants of Shares that are
subject to a vesting requirement (the "Company Restricted Stock") immediately
prior to the Effective Time in exchange for a per share cash payment equal to
the Merger Consideration; provided that the Company shall have the right to
waive any such vesting requirement and accelerate the vesting of any shares of
Company Restricted Stock.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including the
following representations by the Company: organization and authority,
subsidiaries, capital structure, authorization, no conflicts, consents,
Commission filings, financial statements, supplied information, absence of
certain changes or events, compliance with laws, litigation, taxes, absence of
changes in benefit plans, ERISA compliance, excess parachute payments,
insurance, environmental matters, contracts, real and leased real property,
intellectual property, stockholder votes, approvals, brokers, opinion of
financial advisor, Year 2000 compliance, the Company rights agreement and
certain business practices; and the following representation and warranties of
Parent and the Purchaser: organization, authority, consents, approvals, no
violations, information supplied, interim operations of the Purchaser,
brokers, financing and solvency. The representations and warranties of the
Company do not survive the consummation of the Offer.
Conduct of Business. Under the Merger Agreement, the Company has covenanted
and agreed that, during the period from May 5, 1999 to the Effective Time or
termination of the Merger Agreement, except as otherwise contemplated by the
Merger Agreement or to the extent that Parent shall otherwise consent in
writing, the Company shall, and shall cause each of its subsidiaries to, carry
on its business in all material respects in the ordinary course consistent
with past practice and, to the extent consistent therewith, use reasonable
efforts to preserve, in all material respects, intact its business
organization, keep available the services of its officers and employees, in
all material respects, and preserve its relationships with customers,
suppliers, licensors, licensees, distributors and others having significant
business dealings with it. The Merger Agreement provides that without limiting
the generality of the foregoing, during the period from May 5, 1999 to the
Effective Time, the Company
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shall not, and shall not permit any of its subsidiaries to (except as
expressly permitted by the Merger Agreement or as set forth in certain
schedules thereto or to the extent that Parent shall otherwise consent in
writing):
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than (1)
dividends and distributions by a direct or indirect wholly-owned
subsidiary of the Company to its parent, (2) contractually required
distributions to partners in joint ventures, and (3) earn-out payments
in connection with acquisitions consummated prior to May 5, 1999 as set
forth in certain disclosure schedules to the Merger Agreement, (B)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (C) purchase,
redeem or otherwise acquire any shares of its capital stock or any
other securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities (other than
the issuance of Shares upon the exercise of Company Stock Options
outstanding on May 5, 1999 in accordance with their then present
terms);
(iii) amend the certificate of incorporation of the Company or its By-laws
or other comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets or any stock of, or by
any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof
or (B) except as set forth on certain disclosure schedules of the
Merger Agreement, any assets that are material, individually or in the
aggregate, to the Company, except purchases of supplies and inventory
in the ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or subject to any
lien or otherwise dispose of any of its properties or assets, except
sales of inventory or sales or licenses of immaterial assets, in each
case in the ordinary course of business consistent with past practice
and except for sales of assets for consideration that does not exceed,
individually or in the aggregate, $1,000,000;
(vi) (A) incur or suffer to exist any new indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice, or (B) make
any loans, advances (other than to employees of the Company in the
ordinary course of business) or capital contributions to, or
investments in, any other person, except as permitted by certain
schedules to the Merger Agreement;
(vii) except as set forth on certain disclosure schedules to the Merger
Agreement, make or agree to make any capital expenditure or
expenditures with respect to property, plant or equipment except in the
ordinary course of business and except for any capital expenditure
that, individually, is in excess of $200,000 or, in the aggregate for
the Company and such subsidiaries with respect to all capital
expenditures after May 5, 1999, are in excess of $1,500,000;
(viii) make any material tax election or settle or compromise any material
income tax liability or make any change in accounting methods,
principles or practices;
(ix) pay, discharge, settle or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), (other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
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statements (or the notes thereto) of the Company included in the
periodic filings with the Commission required under the Exchange Act or
incurred thereafter in the ordinary course of business consistent with
past practice and other than settlements or compromises of claims,
liabilities or obligations not involving any obligation of the Company
other than the payment of money where the amount paid or to be paid in
settlement or compromise does not exceed $500,000, provided that the
aggregate amount paid in connection with the settlement or compromise
of all such matters shall not exceed $1,000,000), or waive any material
benefits of, or agree to modify in any material respect, any
confidentiality, standstill or similar agreements to which the Company
or any of its subsidiaries is a party;
(x) except in the ordinary course of business, modify, amend or terminate
any material contract or agreement to which the Company or any of its
subsidiaries is a party, or waive, release or assign any material
rights or claims;
(xi) enter into any material contracts or agreements relating to the
distribution, sale or marketing by third parties of the services or
products of, or the services or products licensed by, the Company or
any of its subsidiaries;
(xii) except as required to comply with applicable law or agreements, plans
or arrangements existing on May 5, 1999 or as set forth in certain
schedules to the Merger Agreement, (A) adopt, enter into, terminate or
amend any employment agreement or Company benefit plan or other
arrangement for the benefit or welfare of any director, officer or
current or former employee, (B) increase in any manner the compensation
or fringe benefits of, or pay any bonus to, any director, officer or
key employee except with respect to new hires and promotions, in the
ordinary course of business, consistent with past practice, (C) pay any
benefit not provided for under any Company benefit plan, (D) grant any
awards under any bonus, incentive, performance or other compensation
plan or arrangement or Company benefit plan (including the grant of
stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of
existing restrictions in any Company benefit plans or agreement or
awards made thereunder), or (E) take any action other than in the
ordinary course of business to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Company benefit plan;
(xiii) obligate itself to pay fees and expenses for the services of
Prudential Securities Incorporated ("Prudential Securities") in
regard to its services to the Company in connection with the
transactions contemplated in the Merger Agreement in excess of the
amounts set forth in certain disclosure schedules to the Merger
Agreement; or
(xiv) authorize any of, or commit or agree to take any of, the foregoing
actions.
Prospectus/Proxy Statement; Registration Statement; Stockholders
Meetings. (a) The Merger Agreement provides that if the Company is required to
obtain approval from its stockholders of the Merger under applicable law
("Company Stockholder Approval"), the Company will, as soon as practicable
following the acceptance for payment of, and payment for, Shares by the
Purchaser pursuant to and subject to the Offer Conditions, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Stockholders
Meeting") for the purpose of obtaining Company Stockholder Approval. The
Company agreed in the Merger Agreement that it will, through its Board,
recommend to its stockholders that Company Stockholder Approval be given. The
Merger Agreement provides that notwithstanding the foregoing, if the Purchaser
or any other subsidiary of Parent shall acquire at least 90% of the
outstanding Shares, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a stockholders
meeting in accordance with Section 253 of the DGCL.
(b) The Merger Agreement provides that if Company Stockholder Approval is
required by law, the Company will, at Parent's request, as soon as practicable
following the expiration of the Offer, prepare and file a preliminary Proxy
Statement with the Commission and will use its best efforts to respond to any
comments of the Commission or its staff and to cause the Proxy Statement to be
mailed to the Company's stockholders as
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promptly as practicable after responding to all such comments to the
satisfaction of the staff. The Company has agreed in the Merger Agreement that
it will notify Parent promptly of the receipt of any comments from the
Commission or its staff and of any request by the Commission or its staff for
amendments or supplements to the Proxy Statement or for additional information
and will supply Parent with copies of all correspondence between the Company
or any of its representatives, on the one hand, and the Commission or its
staff, on the other hand, with respect to the Proxy Statement or the Merger.
If at any time prior to the Stockholders Meeting there shall occur any event
that should be set forth in an amendment or supplement to the Proxy Statement,
the Company will promptly prepare and mail to its stockholders and file with
the Commission such an amendment or supplement.
(c) Parent has agreed in the Merger Agreement to cause all Shares purchased
pursuant to the Offer and all other Shares owned by Parent or any subsidiary
of Parent to be voted in favor of Company Stockholder Approval.
No Solicitation. (a) The Merger Agreement provides that the Company shall
not, and shall not authorize or permit any of its subsidiaries or any of its
or their officers, directors or employees to, and shall use its reasonable
efforts to cause any investment banker, financial advisor, attorney,
accountant or other representative of the Company or of any of its
subsidiaries not to, directly or indirectly, (i) solicit, initiate or
encourage (including by way of furnishing information), or take any other
action to facilitate (including any action intended to neutralize the rights
plan of the Company with respect to), any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal (as defined below) or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; provided, however, that prior to
the acceptance for payment of the Minimum Shares (as defined below under "--
Certain Conditions of the Offer") pursuant to the Offer, the Company may, if
it is determined in good faith by the Board after consultation with its legal
and financial advisors, in response to a Takeover Proposal from any person
that was not solicited by the Company and did not otherwise result from a
breach of the obligations described in this paragraph, that such Takeover
Proposal is likely to result in the acquisition of more than 50% of the
outstanding Shares or of the assets of the Company and its subsidiaries, taken
as a whole and provide greater value to the Company's stockholders than the
transactions provided for in the Merger Agreement (a "Superior Proposal"), (x)
furnish information with respect to the Company to such person pursuant to a
customary confidentiality agreement, and (y) participate in discussions or
negotiations with such person regarding any Takeover Proposal.
For purposes of the Merger Agreement, "Takeover Proposal" means any proposal
or offer from any person relating to any direct or indirect acquisition or
purchase of 20% or more of the assets of the Company and its subsidiaries,
taken as a whole, or 20% or more of any class of outstanding equity securities
of the Company or any of its subsidiaries, any tender offer or exchange offer
that if consummated would result in any person beneficially owning 20% or more
of any class of equity securities of the Company or any of its subsidiaries or
any merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement.
(b) The Merger Agreement provides that neither the Board nor any committee
thereof shall (i) withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board or such committee of the Offer, of
the Merger Agreement or the Merger, (ii) 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 agreement (an
"Acquisition Agreement") with respect to any Takeover Proposal (other than a
confidentiality agreement referred to in paragraph (a) above); provided,
however, that prior to the acceptance for payment of the Minimum Shares
pursuant to the Offer, the Board is permitted to terminate the Merger
Agreement if the Board determines in good faith (based on the advice of the
Company's financial advisor that a Takeover Proposal was a Superior Proposal
and the advice of the Company's counsel) that failure to terminate the Merger
Agreement would constitute a breach of the Board's fiduciary duties under
applicable law (provided that substantially concurrently with such termination
the Company enters into a definitive agreement containing the terms of the
Superior Proposal, and provided further that any termination pursuant to this
paragraph shall not be effective unless the Company shall have fully complied
with the provision set forth below under "--Fees and Expenses").
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(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) above, the Merger Agreement provides that the Company shall
immediately (and in any event within 24 hours) advise Parent orally and in
writing of any Takeover Proposal, any request for information concerning the
Company or its subsidiaries in relation to or any inquiry regarding the making
of a Takeover Proposal, the material terms and conditions of such Takeover
Proposal, request for information or inquiry and the identity of the person
making such Takeover Proposal, request for information or inquiry. The Company
agreed in the Merger Agreement that it will keep Parent fully informed of the
status and details (including amendments or proposed amendments) of any such
Takeover Proposal, request for information or inquiry.
The Merger Agreement provides that nothing contained in "--No Solicitation"
shall prohibit the Company from taking or disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act if,
in the good faith judgment of the Board, after consultation with outside
counsel, such actions are required under applicable law.
Solvency Matters. The Merger Agreement provides that Parent and the Company
will jointly agree to retain a mutually satisfactory appraisal firm (the
"Appraiser") to provide a letter to the Board and the Board of Directors of
the Parent (the "Solvency Letter") to the effect that the financing to be
provided to Parent to effect the Offer and the Merger and the other
transactions contemplated in the Merger Agreement will not cause (i) the fair
salable value of the Surviving Corporation's assets to be less than the total
amount of its existing liabilities, (ii) the fair salable value of the assets
of the Surviving Corporation to be less than the amount that will be required
to pay its probable liabilities on its existing debts as they mature, (iii)
the Surviving Corporation not to be able to pay its existing debts as they
mature or (iv) the Surviving Corporation to have an unreasonably small capital
with which to engage in its business.
The Merger Agreement further provides that the Appraiser will be requested
to deliver a Solvency Letter as promptly as practicable. If the Appraiser is
unable to deliver the Solvency Letter or the Solvency Letter is not reasonably
acceptable to the Board, Parent and the Purchaser covenanted and agreed in the
Merger Agreement that, notwithstanding anything to the contrary in the Merger
Agreement, the Purchaser will not accept for payment, or pay for, Shares
pursuant to the Offer.
Company Benefit Plans. Until October 31, 1999, Parent shall cause the
Surviving Corporation to continue to provide to employees of the Company and
its subsidiaries (excluding employees covered by collective bargaining
agreements), as a whole, Employee Benefits (as defined below) which, in the
aggregate, are not materially less favorable to such employees than the
Employee Benefits provided to such employees as of the date of the Merger
Agreement. For all Employee Benefits including, without limitation, Employee
Plans (as defined below) and other programs of Parent and its affiliates after
the Effective Time), Parent will, to the extent permitted under the relevant
Employee Plan, cause all service with the Company or any of its subsidiaries
prior to the Effective Time of employees (excluding employees covered by
collective bargaining agreements) to be treated as service with Parent and its
affiliates for eligibility, vesting and benefit accrual purposes to the same
extent that such service is taken into account by the Company and its
subsidiaries as of the date of the Merger Agreement, except to the extent such
treatment will result in duplication of benefits. From and after the Effective
Time, Parent shall, to the extent permitted under the relevant Employee Plan,
(i) cause any pre-existing condition or limitation and any eligibility waiting
periods (to the extent such limitations or waiting periods did not apply to
the employees of the Company under the Employee Plans in existence as of the
date of the Merger Agreement) under any group health plans of Parent or any of
its Subsidiaries to be waived with respect to employees of the Company and
their eligible dependents and (ii) give each employee of the Company credit
for the plan year in which the Effective Time occurs toward applicable
deductions and annual out-of-pocket limits for expenses incurred prior to the
Effective Time (or such later date on which participation commences) during
the applicable plan year. "Employee Benefits" shall mean benefits provided
under any of the following "Employee Plans": medical, health, dental, life
insurance, long-term disability, severance, pension, retirement or savings
plan, policy or arrangement, including those such plans for which coverage is
generally limited to officers or a select group of highly compensated
employees of the Company or any of its subsidiaries. Nothing herein shall
require the continued employment of any person or prevent the Company and/or
the Surviving Corporation from taking any
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action or refraining from taking any action which the Company could take or
refrain from taking prior to or after the Effective Time, including, without
limitation, any action the Company or the Surviving Corporation could take to
terminate, or change or reduce the benefits available under, any plan under
its terms as in effect as of the date of the Merger Agreement.
Indemnification. (a) In the Merger Agreement, Parent agreed that all rights
to indemnification and exculpation (including the advancement of expenses)
from liabilities for acts or omissions occurring at or prior to the Effective
Time (including with respect to the transactions contemplated by the Merger
Agreement) existing as of May 5, 1999 or at the Effective Time in favor of the
then current or former directors or officers of the Company as provided in the
Company's certificate of incorporation, the Company's By-laws or any
indemnification agreements (each as in effect on May 5, 1999) shall be assumed
by the Surviving Corporation in the Merger, without further action, as of the
Effective Time and shall survive the Merger and shall continue in full force
and effect without amendment, modification or repeal in accordance with their
terms; provided, however, that if any claims are asserted or made during the
continuance of such terms, all rights to indemnification (and to advancement
of expenses) under the Merger Agreement in respect of any such claims shall
continue, without diminution, until disposition of any and all such claims.
(b) The Merger Agreement provides that in the event that Parent, the
Surviving Corporation or any of their successors or assigns (i) consolidates
with or merges into any other person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision will be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, shall expressly assume the obligations set forth under "--
Indemnification". In the event the Surviving Corporation transfers any
material portion of its assets, in a single transaction or in a series of
transactions, Parent has agreed in the Merger Agreement that it will either
guarantee the indemnification obligations referred to in paragraph (a) above
or take such other action to insure that the ability of the Surviving
Corporation, legal and financial, to satisfy such indemnification obligations
will not be diminished in any material respect.
(c) The Merger Agreement provides that the Surviving Corporation shall (i)
maintain for a period of not less than six years from the Effective Time the
Company's current directors' and officers' insurance and indemnification
policy to the extent that it provides coverage for events occurring prior to
the Effective Time (the "D&O Insurance"), for all persons who are directors or
officers of the Company on May 5, 1999 (the "Insured Parties") or (ii) cause
to be provided coverage no less advantageous to the Insured Parties than the
D&O Insurance, in each case so long as the annual premium therefor would not
be in excess of 125% of the last annual premium paid for the D&O Insurance
prior to the date of this Agreement (such 125% amount, the "Maximum Premium").
If the existing D&O Insurance expires, is terminated or canceled during such
six-year period, the Merger Agreement provides that the Surviving Corporation
will use all reasonable efforts to cause to be obtained as much D&O Insurance
as can be obtained for the remainder of such period for an annualized premium
not in excess of the Maximum Premium.
Conditions to the Merger. The Merger Agreement provides that the respective
obligation of each party to effect the Merger shall be subject to the
satisfaction or waiver prior to the closing date of the Merger (the "Closing
Date") of the following conditions (i) if required by applicable law, Company
Stockholder Approval shall have been obtained, (ii) no statute, rule,
decision, regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other governmental entity preventing the
consummation of the Merger shall be in effect; provided, however, that the
party seeking to invoke such condition shall have performed its obligations
under the Merger Agreement to cooperate and use reasonable efforts to
consummate the transactions contemplated by the Merger Agreement, (iii) the
Purchaser shall have (A) commenced the Offer and (B) purchased, pursuant to
the terms and conditions of such Offer, all Shares duly tendered and not
withdrawn; provided, however, that neither Parent nor the Purchaser shall be
entitled to rely on the condition in clause (B) above if either of them shall
have failed to purchase Shares pursuant to the Offer in breach of their
obligations under the Merger Agreement.
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The Merger Agreement also provides that the obligation of the Purchaser and
Parent to effect the Merger shall be subject to the satisfaction or waiver
prior to the Closing Date of the condition that the Company has performed in
all material respects its obligations under the Merger Agreement required to
be performed by it at or prior to the Effective Time.
The Merger Agreement further provides that the obligation of the Company to
effect the Merger shall be subject to the satisfaction or waiver prior to the
Closing Date of the conditions that Parent and the Purchaser have performed in
all material respects each of their respective obligations under the Merger
Agreement required to be performed by it at or prior to the Effective Time.
Termination. The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the terms of it by the
stockholders of the Company:
(a) By mutual written consent of Parent and the Company.
(b) By either Parent or the Company:
(i) if the Offer terminates or expires on account of the failure of any
condition specified below under "--Certain Conditions to the Offer"
without the Purchaser having purchased any Shares thereunder;
provided, however, that the right to terminate the Merger Agreement
pursuant to this paragraph (b)(i) shall not be available to any party
whose failure to perform any of its obligations under the Merger
Agreement results in the failure of any Offer Condition;
(ii) if any Governmental Entity (as defined below under "--Certain
Conditions to the Offer") shall have issued an order, decree or ruling
or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for,
Shares pursuant to the Offer or the Merger and such order, decree or
ruling or other action shall have become final and nonappealable;
provided, however, that the party seeking to terminate the Merger
pursuant to this paragraph (b)(ii) shall have performed its
obligations to cooperate and use reasonable efforts to consummate the
transactions contemplated by the Merger Agreement; or
(iii) if the Offer Conditions shall have not been satisfied or waived
on or before September 30, 1999, or if the Effective Time shall
not have occurred on or before November 30, 1999, provided that
the right to terminate the Merger Agreement pursuant to this
paragraph (b)(iii) shall not be available to any party whose
failure to perform any of its obligations under the Merger
Agreement results in the failure of the Effective Time to occur.
(c) By Parent or the Purchaser, prior to the acceptance for payment of the
Minimum Shares pursuant to the Offer, in the event of a breach by the
Company of any representation, warranty, covenant or other agreement
contained in the Merger Agreement that (i) would give rise to the
failure of a condition set forth in paragraph (c) or (d) of "--Certain
Conditions to the Offer" and (ii) cannot be or has not been cured
within 20 days after the giving of written notice to the Company.
(d) By the Company, if the Purchaser or Parent shall have (A) failed to
commence the Offer within five business days of the public announcement
by Parent and the Company of the execution of the Merger Agreement, (B)
failed to pay for Shares pursuant to the Offer in accordance with the
Merger Agreement or (C) breached in any material respect any of their
respective representations, warranties, covenants or other agreements
contained in the Merger Agreement, which breach or failure to perform
in respect of clause (C) is incapable of being cured or has not been
cured within 20 days after the giving of written notice to Parent or
the Purchaser, as applicable, except, in any case under clause (C),
such breaches and failures which individually or in the aggregate are
not reasonably likely to affect adversely Parent's or the Purchaser's
ability to complete the Offer or the Merger subject to the terms and
conditions of this Agreement.
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(e) By the Company, in accordance with the terms of described in "--No
Solicitation", provided that any termination pursuant to this paragraph
(e) shall not be effective unless the Company shall have complied with
the provisions described in "--Fees and Expenses".
(f) By Parent or the Purchaser, if the Board or any committee thereof shall
(i) withdraw or modify, in any manner adverse to Parent or the
Purchaser, the approval or recommendation by such Board or such
committee of the Offer, the Merger Agreement, or the Merger, (ii)
approve or recommend any Takeover Proposal, or (iii) cause the Company
to enter into any Acquisition Agreement with respect to any Takeover
Proposal.
In the event of a termination of this Agreement by either the Company or
Parent as provided under "--Termination", the Merger Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Parent, the Purchaser or the Company or their respective officers or
directors, except (A) that Parent and the Purchaser will, upon request,
promptly deliver to the Company any stockholder lists or labels obtained in
connection with the Offer or the Merger, (B) that Parent and the Purchaser
will keep in confidence all information received from the Company or its
subsidiaries in confidence according to the terms of the Confidentiality
Agreement dated April 14, 1999 between the Company and Parent, (C) that each
party will, subject to its obligations as described in "--Fees and Expenses",
pay all fees and expenses incurred by such party in connection with the Offer,
the Merger, the Merger Agreement and the transactions contemplated by the
Merger Agreement, (D) for the terms of this paragraph, (E) for the obligations
of the parties set forth in "--Fees and Expenses" and (F) for certain
miscellaneous provisions as set out in Article X of the Merger Agreement;
provided, however, that nothing in this paragraph shall relieve any party for
liability for any willful and intentional breach of any provision of the
Merger Agreement.
Fees and Expenses. (a) The Merger Agreement provides that in addition to any
other amounts that may be payable or become payable pursuant to any provision
of the Merger Agreement, if the Merger Agreement is terminated pursuant to
paragraph (c) under "--Termination", then the Company shall promptly reimburse
Parent for all expenses and costs incurred by Parent in connection with the
transactions contemplated by the Merger Agreement up to a maximum of $2.5
million; provided further, that if the Merger Agreement shall have been
terminated pursuant to paragraph (c) under "--Termination" as the result of a
willful and intentional breach by the Company of any representation, warranty,
covenant or other agreement contained in the Merger Agreement that (i) would
give rise to the failure of a condition set forth in paragraph (c) or (d) of
"--Certain Conditions of the Offer" and (ii) cannot be or has not been cured
within 20 days after the giving of written notice to the Company, then the
Company shall promptly reimburse Parent for all expenses and costs incurred by
Parent in connection with the transactions contemplated by the Merger
Agreement in an additional amount up to a maximum of $2.0 million (for an
aggregate of $4.5 million). Parent shall provide the Company with notice of
the relevant amounts and include copies of any related bill or receipts.
(b) The Merger Agreement further provides that in addition to any other
amounts that may be payable or become payable pursuant to any provision of the
Merger Agreement, if the Merger Agreement is terminated pursuant to paragraph
(d) under "--Termination"), then Parent shall promptly reimburse the Company
for all expenses and costs incurred by the Company in connection with the
transactions contemplated by the Merger Agreement up to a maximum of $2.5
million. The Company shall provide Parent with notice of the relevant amounts
and include copies of any related bill or receipts.
(c) The Merger Agreement provides that the Company shall pay to Parent the
Termination Fee (as defined below) if (i) the Merger Agreement is terminated
pursuant to the provisions set forth in "--No Solicitation", or pursuant to
paragraphs (e) or (f) under "--Termination"; or (ii)(A) any person makes a
Takeover Proposal at any time on or after May 5, 1999 and prior to the
acceptance for payment of the Minimum Shares pursuant to the Offer, (B)
thereafter the Merger Agreement is terminated pursuant to either paragraph (c)
or (b)(i) under "--Termination" (due, in the case of paragraph (b)(i), solely
to a failure of the Minimum Condition), and (C) within 12 months of such
termination the Company enters into an agreement (other than a customary
confidentiality agreement) with respect to, or consummates, a Takeover
Proposal.
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The term "Termination Fee" shall mean $15 million less the aggregate amount
of any expense reimbursements paid or payable under paragraph (a) above. The
Termination Fee shall be liquidated damages and not a penalty. The parties
agreed in the Merger Agreement that such amount is a reasonable estimate of
the costs and expenses that would be incurred and the value of services
consumed by and on behalf of Parent and the Purchaser if the transactions
contemplated thereunder were not to go forward as a result of such a
termination.
Extension; Waiver. Except as set forth under "--Procedure for Termination,
Amendment, Extension or Waiver", the Merger Agreement provides that at any
time prior to the Effective Time, the parties to the Merger Agreement, by
action taken or authorized by their respective Boards of Directors, may, to
the extent legally allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other parties to the Merger Agreement,
(ii) waive any inaccuracies in the representations and warranties of the other
parties to the Merger Agreement contained in the Merger Agreement or in any
document delivered pursuant thereto or (iii) except as set forth in "--
Amendment", waive compliance with any of the agreements or conditions of the
other parties to the Merger Agreement contained in the Merger Agreement. Any
agreement on the part of a party to the Merger Agreement to any such extension
or waiver shall be valid only if set forth in a written instrument signed on
behalf of such party. The failure of any party to the Merger Agreement to
assert any of its rights under the Merger Agreement or otherwise shall not
constitute a waiver of those rights.
Amendment. Except as set forth under "--Procedure for Termination,
Amendment, Extension or Waiver", the Merger Agreement provides that it may be
amended by the parties thereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after obtaining Company
Stockholder Approval (if required by law), but, after any such approval, no
amendment shall be made that by law requires further approval by such
stockholders without obtaining such further approval. The Merger Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties thereto.
Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that a termination of the Merger Agreement pursuant to "--
Termination", an amendment of the Merger Agreement pursuant to "--Amendment"
or an extension or waiver pursuant to "--Extension; Waiver" shall, in order to
be effective, require in the case of Parent, the Purchaser or the Company,
action by its Board of Directors or the duly authorized designee of its Board
of Directors; provided, however, that in the event that the Purchaser's
designees are appointed or elected to the Board as provided in "--Directors",
after the acceptance for payment and payment of Shares pursuant to and subject
to the Offer Conditions of the Offer and prior to the Effective Time, the
affirmative vote of a majority of the Continuing Directors shall be required
by the Company to (i) amend or terminate the Merger Agreement by 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 and the
Purchaser's respective obligations under the Merger Agreement or (iv) take any
action to amend or otherwise modify the Company's certificate of incorporation
or the Company's By-laws.
Certain Conditions of the Offer. Notwithstanding any other term of the
Offer, the 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) under the Exchange Act (relating to the Purchaser's obligation to pay for
or return tendered Shares after the termination or withdrawal of the Offer),
to pay for any Shares tendered pursuant to the Offer unless: (i) the number of
Shares tendered and not withdrawn shall equal more than 50% (the "Minimum
Shares") of the Fully Diluted Shares (defined below) (the "Minimum Condition")
prior to the date which is 20 business days following the commencement of the
Offer in accordance with the terms of the Merger Agreement or such later date
as the Offer may be extended by an amendment to the Merger Agreement in
accordance with the provisions described above under "--Amendment" or as
described above under "--The Offer"; (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired
or been terminated; and (iii) the Funding Conditions (as defined below) shall
have been satisfied or waived. "Fully Diluted Shares" means all outstanding
securities entitled generally to vote in the election of directors of the
Company on a fully diluted basis, after giving effect to the exercise or
conversion of all options, rights and securities exercisable or convertible
into such voting securities. "Funding Conditions" means the conditions
expressly specified in the securities purchase agreement, dated as of May 5,
1999, by and between RCBA and
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Parent (the "RCBA Commitment") for the cash equity investment in Parent on the
date on which the Offer is consummated of $100 million (the "Equity
Contribution"), the firm commitment letter dated May 3, 1999 from Morgan
Stanley & Co., Incorporated (the "Bridge Loan Commitment Letter") for the sale
of senior subordinated notes on the date on which the Offer is consummated in
the aggregate amount of $200 million (the "Bridge Notes"), and the firm
commitment letter dated May 3, 1999 (the "Senior Bank Financing Commitment
Letter") in which Wells Fargo Bank, National Association, agreed to provide
loans in an aggregate amount of $550 million, comprised of $450 million in
term loans and $100 million in a revolving credit facility (the "Senior Bank
Financing"). The Merger Agreement also provides that, notwithstanding any
other term of the Offer, the Purchaser shall not be required to accept for
payment or, subject as aforesaid, to pay for any Shares not theretofore
accepted for payment or paid for, and may terminate the Offer, subject to the
terms and conditions of the Merger Agreement and the Purchaser's obligation to
extend the Offer as described in "--The Offer," if, at any time on or after
the date of the Merger Agreement and before the acceptance of such Shares for
payment or the payment therefor, any of the following conditions exists:
(a) a Governmental Entity (as defined below) shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
injunction or other order which is in effect and has the effect of
making the acquisition of Shares by the Purchaser illegal or prohibits
or imposes material limitations on the ability of the Purchaser to
acquire Shares or otherwise prohibiting (directly or indirectly)
consummation of the transactions contemplated by the Merger Agreement
or prohibits or imposes material limitations on the ability of Parent
to own or operate all or a material portion of the Company's and its
subsidiaries' businesses or assets, taken as a whole, subject to
Parent's and the Purchaser's obligations to extend the Offer as
described in "--The Offer," their obligations under the Merger
Agreement to use reasonable efforts to consummate the Offer and
Parent's agreement not to terminate the Offer as long as any such
injunction or order has not become final and non-appealable;
(b) there shall have occurred any Material Adverse Change (as defined
below) with respect to the Company;
(c) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to materiality 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 material respect,
in each case at the date of the Merger Agreement and at the scheduled
or extended expiration of the Offer (unless a representation speaks as
of an earlier date, in which case it shall be deemed to have been made
as of such earlier date), which breaches have not been cured within ten
business days after the giving of written notice to the Company;
(d) 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 material covenant of the Company to be performed
or complied with by it under the Merger Agreement, which breaches have
not been cured within ten business days after the giving of written
notice to the Company; or
(e) the Merger Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Parent or the Purchaser in any such case,
and regardless of the circumstances (including any action or omission by
Parent or the Purchaser) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payments therefor.
For the purposes of the Merger Agreement, "Governmental Entity" means any
Federal, state, local or foreign government or any court, administrative
agency, tribunal or commission or other governmental authority or
instrumentality, domestic, foreign or international; and "Material Adverse
Change" means any effect that is materially adverse to the business, financial
condition or results of operations of such person and its subsidiaries, taken
as a whole, or would prevent or materially impede with, hinder or delay the
consummation of the Offer, the Merger or any other transaction contemplated in
the Merger Agreement.
The foregoing conditions in paragraphs (a) through (e) are for the sole
benefit of the Purchaser and Parent and may, subject to the terms of the
Merger Agreement and except for the Minimum Condition, be waived by
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the Purchaser and Parent in whole or in part at any time and from time to time
in their sole discretion. The failure by Parent or the Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
Confidentiality Agreement
The following summary is qualified in its entirety by reference to the
complete text of the Confidentiality Agreement which is filed as Exhibit 1
hereto and incorporated herein by reference. Capitalized terms used but not
defined herein shall have the meanings set forth in the Confidentiality
Agreement.
Pursuant to a Confidentiality Agreement, URS agreed to keep confidential
certain information received from the Company. The Confidentiality Agreement
also contains a one-year standstill provision and a provision providing for an
exclusive negotiating period with Parent until May 7, 1999 (subject to
extension until May 31 in the event that the parties were continuing to
negotiate). The provisions of the Confidentiality Agreement shall remain
binding and in full force and effect and the parties shall comply with, and
shall cause their respective agents and representatives to comply with, all of
their respective obligations under the Confidentiality Agreement until the
Purchaser purchases a majority of the outstanding Shares pursuant to the
Offer.
ITEM 4. The Solicitation or Recommendation.
(a) Recommendation. The Board of Directors of the Company (the "Board"), at
a special meeting held on May 5, 1999, unanimously (i) determined that the
Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, are fair to and in the best interests of the
stockholders of the Company, (ii) approved and declared advisable the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger and (iii) recommended that the stockholders of the Company accept
the Offer and tender their Shares thereunder. A copy of the Company's letter
to stockholders, dated as of May 11, 1999, is filed hereto as Exhibit 4 and
incorporated herein by reference.
(b) Background; Reasons for the Board's Conclusions.
Background. In March and June 1998, at regularly scheduled meetings of the
Board, senior management of the Company and the Board reviewed the Company's
stock price performance in recent years and the prospects for improvement, in
light of, among other things, the market sectors that the Company operated in,
the relatively high leverage of the Company, the relatively low liquidity
available in the Company's stock due to relatively thin trading, and the
general lack of investor interest in small capitalization stocks at the
current time. Senior management and the Board determined that it should take
action to consider the Company's available strategic alternatives in the event
that, in the following few months, the Company's stock price did not respond
appreciably to strategic initiatives undertaken to date, including the
Company's pending acquisition of Radian International, LLC.
In the Fall of 1998, management of the Company began to explore the
possibility of pursuing a leveraged buy-out transaction with a financial
investor. Management made preliminary contacts with approximately eight
financial investors to explore strategic options for the Company. Of the eight
entities contacted by the Company, six received some information about the
Company prepared by management and four executed confidentiality agreements
with the Company. Of these financial investors, two parties ("Financial
Investor A" and "Financial Investor B") expressed significant interest in
sponsoring a leveraged buy-out of the Company, in transactions which would
have required a significant equity investment by the management of the
Company.
In November 1998, at a regularly scheduled meeting of the Board, management
informed the Board that Financial Investor A was interested in making a
proposal to the Board for a leveraged buy-out transaction with significant
management investment, provided that the Company was willing to negotiate with
Financial Investor
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A on an exclusive basis. The Board formed a Special Committee of the Board,
composed of independent directors, in order to evaluate Financial Investor A's
proposal. Subsequent thereto, the Special Committee retained independent legal
counsel and Prudential Securities as financial advisor to the Special
Committee. The Special Committee agreed to exclusive negotiations with
Financial Investor A, in part because of the belief that an active
solicitation of indications of interest from third parties, including
competitors, could have a destabilizing effect on the Company and its
employees which could jeopardize any transaction and the Company's on-going
business.
In December 1998, Financial Investor A and its legal counsel and financial
advisor commenced business and legal due diligence on the Company, which
continued through January 1999. In late January and early February 1999, the
parties began discussions regarding a draft merger agreement which had been
proposed by Financial Investor A. On or about February 10, 1999, the parties
terminated further discussions.
On or about March 1, 1999, Financial Investor A, the Special Committee and
management of the Company reinitiated discussions regarding the proposed
leveraged buy-out, and, in mid-March, Financial Investor A presented a non-
binding proposal to acquire the Company. Over the course of the next three
weeks, the parties engaged in intensive, substantive negotiations regarding
the financial terms of the proposed transaction, the structure of the
transaction, financing for the transaction, and the terms of management's
participation in the transaction. During the course of these negotiations, the
Special Committee held several meetings with its legal counsel and financial
advisor (which included advice from Prudential Securities regarding the
fairness of the proposed transaction to the stockholders of the Company). On
April 1, 1999, the Board of Directors of the Company held a meeting to
consider the proposed transaction with Financial Investor A, and approved the
proposed transaction, subject to certain terms and conditions. On April 2,
1999, Financial Investor A terminated further discussions with the Company.
Following termination of discussions with Financial Investor A, on April 5,
1999, management of the Company commenced discussions with Financial Investor
B regarding an alternative leveraged buy-out transaction in which both
Financial Investor A and Financial Investor B would jointly participate. The
terms under discussion with Financial Investor B were similar to those that
had previously been discussed with Financial Investor A.
On April 8, 1999, Martin M. Koffel, Chairman and Chief Executive Officer of
Parent, contacted Arthur C. Darrow, Chairman, Chief Executive Officer and
President of the Company, and requested a meeting.
Messrs. Koffel and Darrow met on April 12 in Santa Barbara, California. At
this meeting, Mr. Koffel presented Mr. Darrow with a letter containing an
offer, approved by the Board of Directors of Parent, to acquire all
outstanding common stock of the Company for a price of $16.00 per share in
cash. The purchase offer was subject to customary due diligence, approval of
the Board of Directors of the Company, execution of a definitive agreement,
certain standard regulatory filings, and stockholder approvals. The offer
letter stated that financial partners working with Parent to analyze the
potential transaction had confirmed that debt and equity financing would be
made available to Parent to finance the purchase price and refinance the
credit facilities of the combined enterprise. The offer letter requested that
the Company respond as soon as possible, and in any event, no later than the
close of business on April 14, 1999. Mr. Koffel told Mr. Darrow that Parent
wished to proceed quickly with negotiations with the Company on an exclusive
basis. Mr. Koffel told Mr. Darrow that Parent's offer was a full price offer
that was intended to be preemptive, and that the offer price was not subject
to negotiation. Mr. Darrow indicated to Mr. Koffel that Parent's offer
appeared to present a very attractive strategic alternative to the Company and
its stockholders, and that he would present it to the Board promptly.
On April 14, the Board held a special telephonic meeting, at which all
members of the Board were present, as well as legal counsel to the Company,
Latham & Watkins. At this meeting, Mr. Darrow presented the details of
Parent's proposal to the Board, as well as background of Parent, its record of
other acquisitions of public and private businesses, the strategic reasons for
the combination of Parent and the Company, and the proposed financing for the
offer. The Board also discussed the status of negotiations between the Company
and Financial
15
<PAGE>
Investor B. The Board noted that the Parent's proposal was at a price that was
in excess of the range of prices that had been discussed with both Financial
Investor A and Financial Investor B. The Board authorized management to pursue
negotiations with Parent on an expedited basis. The Board authorized
management to agree to a limited period of exclusive negotiations with Parent,
but requested that management obtain a standstill agreement from Parent for at
least a one year period.
The Company then negotiated and entered into the Confidentiality Agreement
with Parent, which provided for an exclusive negotiating period with Parent
until May 7, 1999 (subject to extension until May 31, 1999 in the event that
the parties were continuing to negotiate). The Confidentiality Agreement also
contained a one year standstill agreement by Parent. The Company then
immediately terminated negotiations with Financial Investor B.
On April 16, 1999, representatives of Parent, Parent's legal counsel, Cooley
Godward LLP, and the Parent's financial advisor, Morgan Stanley & Co.,
Incorporated, held an organizational meeting in Los Angeles, California with
representatives of the Company and its legal counsel. At this meeting, the
parties discussed several proposed alternative transaction structures,
including a merger, or a tender offer followed by a merger. The Company
expressed a strong preference for a structure that would include a cash tender
offer because it would expedite the delivery of cash to the stockholders of
the Company, and the expedited closing would be less disruptive to the
Company's employees. Parent indicated it was seriously considering the
feasibility of the tender offer structure. The parties also discussed the
proposed financing for the transaction, including both debt and equity
financing. The Company indicated that, in connection with the execution of any
definitive agreement, Parent must provide the Company with firm financing
commitments in a form acceptable to the Company. In addition, at this meeting,
representatives of Parent and its advisors commenced legal and business due
diligence on the Company.
On April 19, the parties met in San Francisco, California. At this meeting,
certain members of senior management of the Company and the managers of each
of the Company's key operating divisions made presentations to representatives
of Parent and its financial advisors, legal counsel, bank lenders, and RCBA
Strategic Partners, L.P. ("RCBA").
On April 20, counsel for Parent delivered to counsel for the Company a
proposed draft of a merger agreement, which proposed a cash tender offer
followed by a cash merger.
From April 21 through April 23, representatives of Parent and Parent's
financial advisors met in Los Angeles with representatives of the Company.
During this period, the Company continued to provide Parent with financial and
legal due diligence regarding the Company.
On April 24, counsel for the Company delivered to counsel for Parent
comments on the proposed draft of the merger agreement. Comments on the draft
merger agreement included, among other things, a prohibition on the Purchaser
waiving the Minimum Condition, and revisions to the termination provisions,
conditions to the Offer, the non-solicitation covenant, and fees and expenses
payable upon termination. On April 27, counsel for Parent and counsel for the
Company held a telephone call during which they negotiated and resolved a
number of the comments on the draft merger agreement that had been raised by
the Company and its counsel.
On April 28, representatives of Parent and the Company met in Austin, Texas.
During this meeting, the Parent's representatives toured the facilities of
Radian and met with certain senior officers of Radian.
From April 29 to 30, representatives of RCBA, Wells Fargo Bank, N.A., and
Arthur Andersen & Co., RCBA's accountants, met with representatives of the
Company in Los Angeles, continuing the financial, operational and legal due
diligence.
On April 30, representatives of Parent and the Company and their respective
legal counsel held a telephonic conference call, at which substantially all
remaining outstanding issues in the merger agreement were discussed and
resolved. That evening, Parent provided the Company and its counsel with
drafts of the agreement for the Equity Contribution and the commitment letters
relating to the sale of the Bridge Notes and the Senior Bank
16
<PAGE>
Financing. On May 1 and 2, the Company and its counsel provided Parent with
comments on such agreement and commitment letters, which then were finalized
and executed by the financing sources on May 3. A special meeting of the Board
was then scheduled for May 5.
The Company has been advised by Parent that on May 3 and again on May 5,
members of the Parent Board met to consider the final terms of the proposed
transaction and its financing. On May 3, an authorized officer of Parent and
the Purchaser executed and delivered to the Company the Merger Agreement, to
be held in escrow pending consideration of the proposed transaction by the
Board. The Parent Board on May 5 formally confirmed and ratified its earlier
determination that the transaction and the related financing was in the best
interests of the stockholders of Parent and (i) approved the Offer and the
Merger, (ii) approved the Merger Agreement and declared its advisability, and
(iii) approved and declared advisable the financing for the Offer and the
Merger.
On May 5, the Board held a special meeting at which all directors were
present in person or by telephone. At this meeting, the Board considered the
final terms of the Offer, the Merger, and the Merger Agreement. The terms were
reviewed with the Company's management, the Company's legal counsel, and
representatives of Prudential Securities. The Board heard and participated in
presentations by its legal counsel with respect to the terms of the proposed
transaction and a summary of the fiduciary obligations of the Board in
considering such a transaction. The Board also heard and participated in a
presentation by Prudential Securities with respect to the financial terms of
the proposed transaction.
At the conclusion of its presentation, representatives of Prudential
Securities delivered the oral opinion of Prudential Securities to the Board
(subsequently confirmed in writing) to the effect that, as of such date, the
consideration to be received by the holders of the Company's stock pursuant to
the Offer and the Merger is fair to such stockholders from a financial point
of view.
Based upon such discussions, presentations and opinion, the Board
unanimously (i) approved and declared advisable the Offer and the Merger and
the execution of the Merger Agreement in substantially the form presented to
it, and the transactions contemplated thereby, and (ii) determined to
recommend that the Company's stockholders accept the Offer, tender their
Shares pursuant to the Offer, and approve the Merger.
Following such approval by the Company's Board, an authorized officer of the
Company executed the Merger Agreement and delivered it to Parent. The Offer
and the Merger were publicly announced after U.S. financial markets closed on
May 5, 1999.
Reasons for the Board's Conclusions. In reaching the determination described
in paragraph (a) above, the Board considered a number of factors, including
without limitation, the following:
(i) The financial condition, results of operations, business and strategic
objectives of the Company, as well as the risks involved in achieving those
objectives;
(ii) Current conditions and trends in the engineering and environmental
services industry, and the effect of those trends and conditions on the
Company;
(iii) The leveraged capital structure of the Company, the significant
competition in and consolidation of the industry in which the Company
operates, the relative size of the other participants in the industry and the
available capital and resources of such other participants as compared to the
available capital and resources of the Company;
(iv) The current prospects for appreciation of the Company's valuation given
the Company's small market capitalization;
(v) A review of the possible alternatives to the transactions contemplated
by the Merger Agreement, including the possibilities of continuing to operate
the Company as an independent entity, a strategic acquisition of another
company, a strategic merger with another company in the same industry, various
financing alternatives involving a recapitalization of the Company, a
leveraged buy-out or similar going private transaction, and a sale or partial
sale of the Company through a merger or by other means; and, in respect of
each alternative, the timing and the likelihood of actually accomplishing such
alternative;
17
<PAGE>
(vi) The results of efforts undertaken by the management of the Company to
solicit indications of interest in the possible acquisition of the Company
from third parties, other than Parent;
(vii) The financial and valuation analyses presented to the Board by
Prudential Securities, including market prices and financial data relating to
other companies engaged in businesses considered comparable to the Company and
the prices and premiums paid in recent selected acquisitions of companies
engaged in businesses considered comparable to those of the Company;
(viii) The oral opinion of Prudential Securities which was later confirmed
in a written opinion, dated May 5, 1999, to the effect that, as of the date of
the opinion, the consideration to be received by the Company's stockholders
pursuant to the Offer and the Merger is fair from a financial point of view to
such stockholders. The full text of Prudential Securities' written opinion,
which sets forth the procedures followed, the limitations of the review
undertaken and the assumptions made by Prudential Securities is attached
hereto and filed as Exhibit 6 hereto and incorporated herein by reference.
Stockholders are urged to read the opinion carefully and in its entirety;
(ix) The terms and conditions of the Merger Agreement, including, without
limitation, that the terms of the Merger Agreement will not prevent other
third parties from making proposals subsequent to execution of the Merger
Agreement, will not prevent the Company's Board from providing information to
and engaging in negotiations with third parties that make proposals that are
determined in good faith by the Board to likely result in a transaction
providing greater value to the Company's stockholders than the Offer and the
Merger, and will permit the Company, subject to the non-solicitation
provisions and the payment of the termination fee discussed above under "Item
3. Identity and Background--The Merger Agreement--Fees and Expenses," to enter
into a transaction with a third party that would be more favorable to the
Company's stockholders than the Offer and the Merger, if the Board of
Directors determines in good faith that failure to terminate the Merger
Agreement would constitute a breach of the Board's fiduciary duties;
(x) The likelihood that the Merger would be consummated, including the
experience, reputation and financial condition of Parent and the risks to the
Company if the acquisition were not consummated;
(xi) The fact that Parent and the Purchaser had obtained firm commitments to
finance the Offer and the Merger;
(xii) The structure of the transaction, which is designed, among other
things, to result in the holders of Shares receiving, at the earliest
practicable time, the consideration to be paid in the Offer and the fact that
the consideration to be paid in the Offer and the Merger is the same;
(xiii) The relationship of the Offer price to historical market prices for
the Shares and to the Company's per share book value; and
(xiv) The availability of dissenters' rights in the Merger under applicable
law.
In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to
the specific factors considered in reaching its respective determinations.
ITEM 5. Persons Retained, Employed or to be Compensated.
The Company has retained Prudential Securities to act as its financial
advisor in connection with the Offer and the Merger. Pursuant to the terms of
their engagement, the Company has agreed to pay Prudential Securities a fee of
$4,600,000, payable upon consummation of the Offer. The Company has also
agreed to reimburse Prudential Securities for reasonable expenses and to
indemnify Prudential Securities and related parties against certain
liabilities, including liabilities under the federal securities laws, arising
out of their engagement. In the ordinary course of business, Prudential
Securities and its affiliates may actively trade or hold the securities of the
Company and affiliates of the Parent for their own accounts or for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
18
<PAGE>
Neither the Company nor any person acting on its behalf has employed,
retained or compensated 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) 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, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, all of its executive officers,
directors, affiliates or subsidiaries currently intend to tender all Shares
which are held of record or beneficially owned by such persons pursuant to the
Offer, other than Shares, if any, held by such persons which, if tendered,
could cause such person to incur liability under the provisions of Section
16(b) of the Securities Exchange Act of 1934, as amended.
ITEM 7. Certain Negotiations and Transactions by the Subject Company.
(a) Prior to entering into the Merger Agreement, the Company had contacts
and negotiations with other entities that had expressed interest in the
Company. Upon execution of the Confidentiality Agreement, the Company ceased
contacts with such other entities. No discussions are underway or are being
undertaken by the Company in response to the Offer that relate to or would
result in (1) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any of its subsidiaries; (2) a
purchase, sale or transfer of a material amount of assets by the Company or
any of its subsidiaries; (3) a tender offer for or other acquisition of
securities by or of the Company; or (4) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described above, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that
relates to or would result in (1) an extraordinary transaction, such as a
merger or reorganization, involving the Company or any of its subsidiaries;
(2) a purchase, sale or transfer of a material amount of assets by the Company
or any of its subsidiaries; (3) a tender offer for or other acquisition of
securities by or of the Company; or (4) any material change in the present
capitalization or dividend policy of the Company.
ITEM 8. Additional Information to be Furnished.
(a) The Information Statement attached as Annex A hereto is being furnished
in connection with the possible designation by the Purchaser, pursuant to the
Merger Agreement, of certain persons to be appointed to the Company's Board
other than at a meeting of the Company's stockholders.
(b) As a Delaware corporation, the Company is subject to Section 203
("Section 203") of the DGCL. Under Section 203, certain "business
combinations" between a Delaware corporation whose stock is publicly traded or
held of record by more than 2,000 stockholders and an "interested stockholder"
are prohibited for a three-year period following the date that such a
stockholder became an interested stockholder, unless, among other possible
exemptions, 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 such other party to the business combination became
an interested stockholder. The term "business combination" is defined
generally to include mergers or consolidations between a Delaware corporation
and an interested stockholder, transactions with an interested stockholder
involving the assets or stock of the corporation or its majority-owned
subsidiaries and transactions which increase an interested stockholder's
percentage ownership of stock. The term "interested stockholder" is defined
generally as a stockholder who, together with affiliates and associates, owns
(or, within three years prior, did own) 15% or more of a Delaware
corporation's voting stock. An owner includes a person who has the right to
acquire such stock, including upon the exercise of an option.
In accordance with the Merger Agreement and Section 203, at its meeting on
May 5, 1999, the Board unanimously approved the Offer and the Merger and
determined to make the restrictions of Section 203 inapplicable to the
Purchaser's acquisition of Shares pursuant to the Offer and the Merger and,
therefore, Section 203 is inapplicable to the Offer and the Merger.
19
<PAGE>
(c) Pursuant to the Merger Agreement, the Company and the Board have
authorized all necessary action to amend, and the Company has amended, the
Company Rights Agreement dated as of March 28, 1997, between the Company and
ChaseMellon Shareholder Services LLC and the documents relating thereto
(collectively, the "Rights Plan"), without redeeming the rights issued
pursuant to the Rights Plan (the "Company Rights"), so that (a) neither the
Offer nor the Merger will cause any Company Rights to become exercisable or to
separate from the stock certificates to which they are attached, (b) neither
URS nor any of its subsidiaries, affiliates or associates shall be an
Acquiring Person (as such terms are defined in the Rights Plan) and (c) no
other provision of the Rights Plan will be triggered or affected by the Offer
or the Merger, including provisions relating to the occurrence of a
Distribution Date (as such term is defined in the Rights Plan).
(d) Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the purchase of Shares pursuant to the Offer cannot
be made until the expiration of a 15-calendar day waiting period following the
required filing of a Premerger Notification and Report Form by the ultimate
parent entity of the Purchaser, which the Company understands was submitted on
May 7, 1999. Accordingly, the waiting period under the HSR Act will expire at
11:59 p.m., New York City time, on May 22, 1999, unless early termination of
the waiting period is granted by the Federal Trade Commission ("FTC") and the
Department of Justice, Antitrust Division (the "Antitrust Division"), or the
ultimate parent entity of the Purchaser receives a request for additional
information or documentary material prior thereto. If either the FTC or the
Antitrust Division issues a request for additional information or documentary
material prior to the expiration of the 15-day waiting period, the waiting
period will be extended and will expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by the
ultimate parent entity of the Purchaser with such request unless terminated
earlier by the FTC and the Antitrust Division. If such a request is issued,
the purchase of and payment for Shares pursuant to the Offer will be deferred
until the additional waiting period expires or is terminated. Only one
extension of such waiting period pursuant to a request for additional
information or documentary material is authorized by the rules promulgated
under the HSR Act. Thereafter, the waiting period can be extended only by
court order or by consent of the ultimate parent entity of the Purchaser.
Pursuant to the HSR Act, RCBA has filed Premerger Notification and Report
Forms (the "RCBA Filing") with the Antitrust Division and the FTC in
connection with a cash equity investment in URS on the date on which the Offer
is consummated of $100 million (the "Equity Contribution"). Under the
provisions of the HSR Act applicable to the Offer, URS may not consummate the
Equity Contribution until the expiration of a 30-calendar waiting period
following the RCBA Filing, which period will expire at 11:59 p.m., New York
City time, on June 6, 1999. Pursuant to the HSR Act, URS requested early
termination of the waiting period applicable to the Equity Contribution
Filing. There can be no assurance, however, that the 30-day HSR Act waiting
period in connection with the Equity Contribution Filing will be terminated
early. If either the FTC or the Antitrust Division were to request additional
information or documentary material from URS with respect to the RCBA Filing,
the waiting period with respect to the Offer would expire at 11:59 p.m., New
York City time, on the twentieth calendar day after the date of substantial
compliance by URS 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 be extended
and, in any event, the purchase of and payment for Shares will be deferred
until twenty days after the request is substantially complied with, unless the
extended period expires on or before the date when the initial 30-day period
of the Equity Contribution Filing would otherwise have expired, or unless the
waiting periods are sooner terminated by the FTC or the Antitrust Division.
20
<PAGE>
ITEM 9. Material to be Filed as Exhibits.
Exhibit 1. Agreement and Plan of Merger, dated as of May 5, 1999, by and among
Parent, the Purchaser and the Company. (Incorporated by reference
to Exhibit 2.1 to the Company's Current Report on Form 8-K dated
May 7, 1999).
Exhibit 2. Press Release issued by the Company and Parent on May 5, 1999.
(Incorporated by reference to Exhibit 99.1 to the Company's Current
Report on Form 8-K dated May 7, 1999).
Exhibit 3. Confidentiality Agreement, dated April 14, 1999, between Parent and
the Company.
Exhibit 4. Letter to Stockholders dated as of May 11, 1999.*
Exhibit 5. Letter to Dames & Moore Capital Accumulation Plan Participants
dated as of May 11, 1999.
Exhibit 6. Opinion of Prudential Securities Incorporated dated as of May 5,
1999.*
- --------
* Included in materials being distributed to stockholders of the Company.
21
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: May 11, 1999
DAMES & MOORE GROUP
By: /s/ Mark A. Snell
-------------------------------
Mark A. Snell
Executive Vice President and
Chief Financial Officer
22
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ANNEX A
DAMES & MOORE GROUP
911 WILSHIRE BOULEVARD, SUITE 700
LOS ANGELES, CALIFORNIA 90017
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about May 11, 1999, as part
of the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"). Capitalized terms used and not otherwise defined herein
shall have the meaning ascribed to them in the Schedule 14D-9. You are
receiving this Information Statement in connection with the possible election
of persons designated by the Purchaser to a majority of the seats on the Board
of Directors of the Company (the "Board"). The Merger Agreement requires the
Company, after the purchase by the Purchaser pursuant to the Offer of such
number of shares representing not less than a majority of the outstanding
shares of Common Stock on a fully diluted basis, to cause the Purchaser's
designees (the "Designees") to be elected to a majority of the seats on the
Board as set forth below. This Information Statement is required by Section
14(f) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule
14f-1 thereunder. You are urged to read this Information Statement carefully.
However, you are not required to take any action.
Pursuant to the Merger Agreement, on May 11, 1999, Parent and the Purchaser
commenced the Offer. The Offer is scheduled to expire on June 8, 1999, unless
the Offer is extended.
The information contained in this Information Statement (including
information listed in Schedule I attached hereto) concerning Parent, the
Purchaser and the Designees has been furnished to the Company by Parent and
the Purchaser, and the Company assumes no responsibility for the accuracy or
completeness of such information.
The Common Stock, par value $.01 per share (the "Common Stock"), is the only
class of voting securities of the Company outstanding. Each share of Common
Stock has one vote. As of April 30, 1999, there were 18,595,311 shares of
Common Stock outstanding.
BOARD OF DIRECTORS
General
The Board is currently comprised of nine members. Pursuant to the Company's
Bylaws (the "Bylaws"), directors are elected annually. All directors of the
Company hold office until the election and qualification of their successors.
Designees
Pursuant to the Merger Agreement, promptly upon the acceptance for payment
of, and payment by the Purchaser in accordance with the Offer for, Shares
representing not less than a majority of the outstanding Shares on a fully
diluted basis pursuant to the Offer, the Purchaser is entitled to designate
such number of members of the Board as will give Purchaser a majority of such
Directors; provided, however, that until the Effective Time, there shall be at
least three directors of the Company who are directors of the Company as of
the date hereof. Upon the request of the Purchaser, the Company shall promptly
(i) either increase the size of the Board or use its best efforts to secure
the resignation of such number of its incumbent directors as is necessary to
enable the Designees to be so elected to the Board and (ii) cause the
Designees to be so elected.
The Purchaser has informed the Company that it will choose the Designees
from the executive officers of Parent listed in Schedule I attached hereto.
The Purchaser has informed the Company that each of
A-1
<PAGE>
the executive officers listed in Schedule I has consented to act as a
director, if so designated. The business address of Parent and the Purchaser
is 100 California Street, Suite 500, San Francisco, California 94111.
It is expected that the Designees may assume office at any time following
the purchase by the Purchaser pursuant to the Offer of such number of Shares
representing not less than a majority of the outstanding shares of Common
Stock on a fully diluted basis, which purchase cannot be earlier than June 9,
1999, and that upon assuming office, the Designees will thereafter constitute
at least a majority of the Board. To the extent that the Board will consist of
persons who are not among the Designees, the Board is expected to consist of
persons who are currently directors of the Company who have not resigned.
Directors and Executive Officers of the Company
The names, ages and principal occupation for the past five years and
directorships of the Company's directors and executive officers are as
follows:
Directors
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Ursula M. Burns......... 40 Director
Robert F. Clarke........ 57 Director
Arthur C. Darrow........ 55 Chairman of the Board of Directors, Chief Executive
Officer and President
Gary R. Krieger......... 48 Vice President and Director
George D. Leal.......... 65 Director
A. Ewan Macdonald....... 57 Director
Michael R. Peevey....... 61 Director
Harald Peipers.......... 70 Director
Arthur E. Williams...... 61 Director
</TABLE>
Ursula M. Burns is Senior Vice President of Worldwide Manufacturing of Xerox
Corporation. Prior to her assignment to this position in 1999, Ms. Burns
served as Vice President and General Manager, Departmental Business Unit
within the Office Document Products Group of Xerox Corporation from 1997 to
1999, as Vice President of three other Xerox business units from 1992 to 1997,
as Executive Assistant to the Chairman and Chief Executive Officer of Xerox
Corporation from 1991 to 1992 and in various other positions with Xerox
Corporation from 1982 to 1991. She has served as a director of the Company
since 1997 and is also a director of PQ Corporation, Hunt Corporation and
Lincoln Electric Corporation. Ms. Burns has bachelor's and master's degrees in
mechanical engineering from Polytechnic Institute of New York and Columbia
University, respectively.
Robert F. Clarke is Chairman, President and Chief Executive Officer and a
director of Hawaiian Electric Industries, the parent company of Hawaiian
Electric Company and other non-utility subsidiaries. Prior to his election as
Chairman in 1998, and President and Chief Executive Officer in 1991, he served
as Group Vice President from 1988 to 1990 and as Vice President of Strategic
Planning from 1987 to 1988. He has a bachelor's degree in economics and a
master's degree in business administration from the University of California,
Berkeley. He has served as a director of the Company since 1997.
Arthur C. Darrow has been employed by the Company since 1973. He has served
as a director since 1994, as Chief Executive Officer and President since 1995,
and has served as Chairman of the Board of Directors since 1998. Between 1993
and 1994, he served as President and Chief Operating Officer; between 1991 and
1993, as Senior Vice President--Western North America Division; and between
1988 and 1991, as the Company's Western Region General Manager and Division
Manager--Western North America. Mr. Darrow has bachelor's and master's degrees
in geology from the University of California, Santa Barbara.
A-2
<PAGE>
Gary R. Krieger has been employed by the Company since 1988 as Corporate
Head of Health & Safety and has served as Vice President and Manager of Health
Consulting Services since 1991. He has a bachelor's degree in English
literature and chemistry and a medical degree from the University of North
Carolina, Chapel Hill, and a master's degree in public health from Johns
Hopkins University. Dr. Krieger completed a residency in internal medicine at
the Mayo Clinic.
George D. Leal has served as a consultant to the Company during 1999. He
previously served as Chairman of the Board of Directors from 1981 to 1998, and
served as Chief Executive Officer from 1981 through 1994. He was an employee
of the Company from 1959 through 1998. Mr. Leal has bachelor's and master's
degrees in civil engineering from Santa Clara University and the California
Institute of Technology, respectively, and a master's degree in business
administration from the University of Chicago.
A. Ewan Macdonald retired as Chairman and Chief Executive Officer of Del
Monte Foods, a consumer products company, in 1994. He served as the Chairman
and Chief Executive Officer of Del Monte Foods from 1990 to 1994, as President
and Chief Executive Officer from 1987 to 1990 and as Marketing Director from
1985 to 1987. He has served as a director of the Company since 1997, and is
also a director of Bank of the West. He has a master's degree in economics
from the University of Edinburgh, Scotland.
Michael R. Peevey has served as President of New Energy Ventures, Inc. since
1995. He retired in 1993 as President and a director of Edison International,
Inc. and its subsidiary, Southern California Edison Company, a position he
accepted in 1990. He was an Executive Vice President of these companies from
1985 to 1990. He has served as a director of the Company since 1993, and he is
also a director of Electro Rent Corporation, Amerigon Incorporated and Ocal,
Inc. Mr. Peevey has bachelor's and master's degrees in economics from the
University of California, Berkeley.
Harald Peipers has served as a director of the Company since 1985. Dr.
Peipers is an Attorney-at-Law in Essen, Germany. He served as a member of the
Board of Executive Directors of Hochtief Aktiengesellschaft vorm. Gebr.
Helfmann ("Hochtief AG"), a German corporation engaged in civil engineering
and construction, between 1975 and 1994. He has a doctorate degree in law from
the University of Heidelberg, is a director of Keller Group plc, and is Vice
Chairman of the Board of Directors of Athens International Airport S.A.
Arthur E. Williams retired as Chief of Engineers and Commanding General of
the U.S. Army Corps of Engineers in 1996. He was the National President of the
Society of Military Engineers from 1995 to 1996 and served as President of the
Mississippi River Commission from 1989 to 1991. He has served as a director of
the Company since 1997 and currently serves on the Advisory Board for the
School of Engineering, Rensselaer Polytechnic Institute (RPI). Mr. Williams
has bachelor of science degrees from St. Lawrence University and RPI, a master
of science degree in civil engineering and economic planning from Stanford
University, and an honorary doctorate degree in engineering from RPI. He is
also a graduate of the Naval War College and is a registered professional
engineer.
Executive Officers
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Arthur C. Darrow...... 55 Chairman, Chief Executive Officer and President
Mark A. Snell......... 42 Executive Vice President, Chief Financial Officer
and Corporate Secretary
Glenn M. Martin....... 49 Executive Vice President, Chief Operating Officer
Henry Klehn, Jr. ..... 62 Executive Vice President, Corporate Development
Robert M. Perry....... 67 Executive Vice President, Corporate Affairs
Leslie S. Puget....... 44 Corporate Controller
</TABLE>
Mr. Darrow's biography appears above.
A-3
<PAGE>
Mark A. Snell has served as Executive Vice President and Chief Financial
Officer of the Company since September, 1996. Prior to joining the Company, he
served as Executive Director and Chief Financial Officer at the international
law firm of Latham & Watkins from 1993 to 1996, and as Executive Vice
President and Chief Financial Officer at World Oil Corporation from 1990 to
1993. Mr. Snell, a CPA, holds a bachelor of science degree from San Diego
State University.
Glenn D. Martin has been employed by the Company since 1972. He has served
as Executive Vice President and Chief Operating Officer since 1998. Between
1993 and 1998, Mr. Martin served as Senior Vice President and Manager--Central
U.S. and Latin America Division. From 1985 to 1992, he served as the Chicago
Office Managing-Principal-in-Charge and then as the Company's Mid-Continental
Region General Manager. He has a bachelor's degree in geology from the
University of Cincinnati.
Henry Klehn, Jr. has been employed by the Company since 1960. He has served
as Executive Vice President--Corporate Development since 1993. Between 1983
and 1993, he served as Chief Operating Officer and as an Executive Vice
President since 1991. He has a bachelor's degree in geological engineering and
a master's degree in engineering science from the University of California--
Berkeley.
Robert M. Perry has been employed by the Company since 1955. He has served
as a director from 1981 to 1998, and as an Executive Vice President since
1991. Between 1978 and 1995, he served as Chief Financial Officer. He has a
bachelor of science degree in civil engineering from the University of
Michigan, and is a registered professional engineer.
Leslie S. Puget has served as Corporate Controller of the Company since
1995. Prior to a two-year professional sabbatical, she served as Vice
President of Finance from 1985 to 1993 and as Controller from 1982 to 1985 for
Cushman Realty Corporation. Ms. Puget, a CPA, holds a bachelor of science
degree from the University of Illinois at Urbana--Champaign.
Board Meetings and Committees
The business of the Company is managed by and under the direction of the
Board as provided by the laws of Delaware, the Company's state of
incorporation. During the fiscal year ended March 26, 1999, the Board met five
times. Each current director attended more than 75 percent of the aggregate
number of meetings of the Board held during the period for which he or she was
a director and meetings of the committees of the Board held during the periods
he served on such committees.
The Audit Committee of the Board reviews the scope of the independent public
auditors' examination and related fees, the accounting principles applied by
the Company in financial reporting, the scope of internal auditing procedures
and the adequacy of internal controls. Robert F. Clarke (Chairman), Ursula M.
Burns and Harald Peipers are the members of the Audit Committee. The Audit
Committee met three times during fiscal 1999.
The Compensation Committee administers the Company's Long-Term Incentive
Plan. The Compensation Committee also establishes the salary and bonus of the
Company's Chief Executive Officer and approves the salaries and bonuses of the
Company's other executive officers. The Compensation Committee's report on
Executive Compensation is contained in a subsequent section of this
Information Statement. A. Ewan Macdonald (Chairman), Ursula M. Burns and
Robert F. Clarke are the members of the Compensation Committee. The
Compensation Committee met three times during fiscal 1999.
The Executive Action Committee of the Board is permitted to approve certain
contracts and to take various other specified actions on behalf of the Board
between meetings of the Board. The members of the Executive Action Committee
are George D. Leal, Arthur C. Darrow, Robert M. Perry and Mark A. Snell. The
Executive Action Committee did not hold any meetings during fiscal 1999.
A-4
<PAGE>
The Nominating Committee of the Board evaluates and recommends candidates
for nomination to the Board, recommends directors for membership on Board
committees and reviews the Company's plans for management and succession. The
members of the Nominating Committee are Michael R. Peevey (Chairman), A. Ewan
Macdonald, Gary R. Krieger and Arthur E. Williams. The Nominating Committee
met one time during fiscal 1999.
Directors Compensation
The Company pays each of its non-employee directors an annual retainer fee
of $25,000 plus $1,000 per day for each Board meeting or committee meeting
attended by the director. Each non-employee director who chairs a Board
committee receives an additional annual retainer of $5,000 for each committee
chaired. Retainer fees are paid in arrears at fiscal year-end and may be taken
in cash, applied to the purchase of Company stock, or deferred under the terms
of the Dames & Moore Group Deferred Compensation Plan effective May 2, 1998,
as amended May 5, 1999 (the "Deferred Compensation Plan"). Meeting fees are
payable currently or may be deferred or applied to the purchase of stock. Non-
employee directors also are reimbursed for actual out-of-pocket travel
expenses in connection with attendance at Board or committee meetings.
Under the terms of the Company's 1995 Stock Option Plan for Non-Employee
Directors, each newly elected non-employee director receives an option grant
on the first business day which follows the date of the conclusion of the
annual meeting to purchase 5,000 shares of Common Stock at an exercise price
equal to 100 percent of the fair market value of the stock as of the grant
date. Each continuing non-employee director on subsequent reelection receives
an annual option grant to purchase 1,000 shares of Common Stock on the same
date and at the same exercise price described in the preceding sentence.
Other directors receive no remuneration for serving as directors other than
reimbursement of travel expenses.
A-5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
With respect to each person known by the Company to be the beneficial owner
of more than five percent of its Common Stock, each director of the Company,
each of the Chief Executive Officer and the four other most highly compensated
executive officers of the Company (the "Named Executive Officers") and all
directors and executive officers of the Company as a group, the following
table sets forth the number of shares of Common Stock beneficially owned as of
March 26, 1999 by each such person or group and the percentage of the
outstanding shares of the Company's Common Stock beneficially owned as of
March 26, 1999 by each such person or group. As of March 26, 1999, the Company
had 18,330,254 shares of Common Stock outstanding. Unless otherwise indicated,
each of the following shareholders has, to the Company's knowledge, sole
voting and investment power with respect to the shares beneficially owned,
except to the extent that such authority is shared by spouses under applicable
law.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------------------
Amount and Nature Percentage
Name of Beneficial Owner of Beneficial Ownership(1) Ownership
------------------------ -------------------------- ----------
<S> <C> <C>
State of Wisconsin Investment Board
(2).................................... 1,210,200 6.6%
Wellington Management Company, LLP (3).. 1,412,500 7.7%
Dimensional Fund Advisors Inc. (4)...... 1,027,800 5.6%
Heartland Advisors, Inc. (5)............ 936,400 5.1%
Ursula M. Burns (6)..................... 6,964 *
Robert F. Clarke (7).................... 3,666 *
Gary R. Krieger (8)..................... 21,029 *
George D. Leal (9)...................... 421,276 2.3%
A. Ewan Macdonald (10).................. 3,666 *
Michael Peevey (11)..................... 10,999 *
Arthur E. Williams (12)................. 1,000 *
Harald Peipers (13)..................... 500 *
Arthur C. Darrow (14)................... 294,498 1.6%
Mark A. Snell (15)...................... 8,114 *
Glenn Martin (16)....................... 138,748 *
Henry Klehn, Jr. (17)................... 411,758 2.2%
Leslie Puget (18)....................... 750 *
All executive officers and directors as
a group (13 persons) (19).............. 1,322,968 7.2%
</TABLE>
- --------
*Less than 1%
(1) For purposes of this table, a person is deemed as of any date to have
"beneficial ownership" of any security that such person has a right to
acquire within 60 days after such date. Shares that each identified
stockholder has the right to acquire within 60 days of the date of the
table set forth above are deemed to be outstanding in calculating the
percentage ownership of such stockholder, but are not deemed outstanding
as to any other person.
(2) Information presented for the State of Wisconsin Investment Board is
based solely on a filing on Schedule 13G dated January 16, 1999, in which
it reported sole voting and dispositive power with respect to such
shares. The address of the State of Wisconsin Investment Board is P.O.
Box 7842, Madison, Wisconsin 53707.
(3) Information presented for the Wellington Management Company, LLP is based
solely on a filing on Schedule 13G dated December 31, 1998, in which it
reported sole voting and dispositive power with respect to such shares.
The address of Wellington Management Company, LLP is 75 State Street,
Boston, Massachusetts 02109.
(4) Information presented for the Dimensional Fund Advisors Inc. is based
solely on a filing on Schedule 13G dated February 12, 1999, in which it
reported voting and investment power with respect to such shares. The
address of Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401.
A-6
<PAGE>
(5) Information presented for Heartland Advisors, Inc. is based solely on a
filing on Schedule 13G dated January 13, 1999, in which it reported sole
voting power over 322,400 shares and sole dispositive power over 936,400
shares. The address of Heartland Advisors, Inc. is 790 North Milwaukee
Street, Milwaukee, Wisconsin 53202.
(6) Includes an aggregate of 1,666 options that are exercisable within 60
days of the date hereof and includes 3,159 units of a stock fund that
tracks performance of the Company Common Stock pursuant to the Deferred
Compensation Plan.
(7) Includes an aggregate of 1,666 options that are exercisable within 60
days of the date hereof.
(8) Includes an aggregate of 16,632 options that are exercisable within 60
days of the date hereof and 956 units of a stock fund that tracks
performance of the Company Common Stock pursuant to the Deferred
Compensation Plan.
(9) Information for Mr. Leal includes 19,000 shares owned by the George and
Mary Ann Leal Foundation, a charitable non-profit corporation, and as to
which Mr. Leal may be deemed the beneficial owner. Mr. Leal is President
and Chairman of the Board of the foundation and, subject to the approval
and supervision of the foundation's Board of Directors, is responsible
for directing the voting and disposition of these shares. Mr. Leal has no
pecuniary interest in these shares and disclaims beneficial ownership of
them. Information presented for Mr. Leal also includes an aggregate of
37,000 options that are exercisable within 60 days of the date hereof.
(10) Includes an aggregate of 1,666 options that are exercisable within 60
days of the date hereof.
(11) Includes an aggregate of 5,999 options that are exercisable within 60
days of the date hereof.
(12) Mr. Williams has no options that are exercisable within 60 days of the
date hereof.
(13) Mr. Peipers has no options that are exercisable within 60 days of the
date hereof.
(14) Includes an aggregate of 34,625 options that are exercisable within 60
days of the date hereof plus 6,000 shares of a stock fund that tracks
performance of the Company Common Stock pursuant to the Deferred
Compensation Plan.
(15) Includes an aggregate of 800 options that are exercisable within 60 days
of the date hereof, 2,300 shares of a stock fund that tracks performance
of the Company Common Stock pursuant to the Deferred Compensation Plan,
and 354 shares held in the Dames & Moore Capital Accumulation Plan.
(16) Includes an aggregate of 24,350 options that are exercisable within 60
days of the date hereof.
(17) Includes an aggregate of 28,725 options that are exercisable within 60
days of the date hereof.
(18) Includes an aggregate of 750 options that are exercisable within 60 days
of the date hereof.
(19) Includes an aggregate of 153,879 options that are exercisable within 60
days of the date hereof plus 12,415 shares of a stock fund that tracks
performance of the Company Common Stock pursuant to the Deferred
Compensation Plan, and 354 shares held in the Dames & Moore Capital
Accumulation Plan.
CERTAIN RELATIONSHIPS, TRANSACTIONS AND ARRANGEMENTS
In fiscal 1999, the Company entered into two joint ventures with New Energy
Ventures, Inc., a company in which Michael R. Peevey indirectly owns
approximately 25% of the outstanding common stock. The Company contributed an
aggregate of $5,000,000 to these two joint ventures while New Energy Ventures,
Inc. contributed the exclusive right to market distributed power units,
manufactured by Allied Signal, Inc., in parts of South America to one joint
venture, and the exclusive right to market the same products in Australia for
the other joint venture. The Company believes these exclusive rights have a
value in excess of $5,000,000. Mr. Peevey's aggregate interest in these joint
ventures is approximately $1,000,000.
A-7
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following table shows aggregate cash and long-term compensation paid or
accrued for each of the last three fiscal years to the Named Executive
Officers, whose total salary and bonus for fiscal 1999 exceeded $100,000 for
services rendered in all capacities of the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation(2)
----------------------------------- ---------------------
Name and Principal Fiscal Cash Restricted Stock Securities Underlying All Other
Position Year Salary Bonus(3) Awards($)(4) Options (# of Shares) Compensation(5)
------------------ ------ -------- -------- ---------------- --------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Arthur C. Darrow........ 1999 $425,000 TBD(3) 74,625 100,000 $25,066
Chairman, Chief
Executive 1998 400,000 $75,000 -- -- 34,679
Officer and President 1997 400,000 -- -- -- 8,724
Mark A. Snell........... 1999 290,000 TBD(3) 28,606 25,000 4,408
Executive Vice
President and 1998 260,000 30,000 20,000 1,600 3,000
Chief Financial Officer 1997 140,000 -- -- 40,000 --
Henry Klehn, Jr......... 1999 245,000 TBD(3) 18,656 -- 4,258
Executive Vice
President 1998 240,000 10,000 -- -- 4,542
1997 240,000 -- -- -- 8,805
Glenn Martin............ 1999 242,693 TBD(3) 18,656 8,000 4,748
Chief Operating Officer 1998 205,000 20,000 -- -- 4,263
1997 205,000 -- -- -- 4,662
Leslie Puget............ 1999 169,731 TBD(3) -- -- 4,408
Corporate Controller 1998 159,220 10,000 -- 1,000 4,578
1997 150,000 -- -- -- 1,513
</TABLE>
- --------
(1) The dollar value of perquisites and other personal benefits, if any, for
each of the named executive officers was less than the reporting
thresholds established by the Securities and Exchange Commission.
(2) No payouts were made to the Named Executive Officers pursuant to long-term
incentive plans in fiscal years 1997 through 1999.
(3) Bonuses with respect to fiscal year 1999 have not yet been determined.
(4) Mr. Darrow was awarded 6,000 shares of restricted stock on June 19, 1998
that are unissued and deferred into the Deferred Compensation Plan. The
value of such restricted stock is $64,500. Mr. Snell was awarded 2,300
shares of restricted stock at no cost on June 19, 1998 that are unissued
and deferred into the Deferred Compensation Plan. Mr. Snell owns 4,660
shares of restricted stock that were awarded on March 29, 1997; dividends
are paid on these shares. The aggregate value of Mr. Snell's shares in
excess of their purchase price is $34,820. Mr. Klehn was awarded 1,500
shares of restricted stock at no cost on June 19, 1998. Dividends will be
paid on these shares. The value of such restricted stock is $16,125. Mr.
Martin was awarded 1,500 shares of restricted stock at no cost on June 19,
1998. Dividends will be paid on such shares. The value of such restricted
stock is $16,125.
(5) Represents Company contributions to the Dames & Moore Capital Accumulation
Plan ("CAP"), a defined contribution retirement plan, and premiums paid on
term-life insurance policies for the benefit of the named executive
officer. With respect to fiscal 1999: (i) the amount reported for Mr.
Darrow represents a $4,016 contribution to the CAP and $21,050 paid by the
Company in premiums for a term-life insurance policy for his benefit; (ii)
the amount reported for Mr. Snell represents a $4,408 contribution to the
CAP; (iii) the amount reported for Mr. Klehn represents a $4,258
contribution to the CAP; (iv) the amount reported for Mr. Martin
represents a $4,748 contribution to the CAP; and (v) the amount reported
for Ms. Puget represents a $4,408 contribution to the CAP.
A-8
<PAGE>
Option/SAR Grants during Fiscal Year 1999
The following table provides information with respect to the grant of stock
options during the fiscal year ended March 26, 1999 by the Company to the
Named Executive Officers. No stock appreciation rights ("SARs") were granted
during the year.
<TABLE>
<CAPTION>
Percent of Total
Number of Option/SARs
Securities Granted to Exercise or
Underlying Employees in Base Price Expiration Grant Date
Name Options/SARs Granted Fiscal Year ($/Sh) Date Present Value (1)
---- -------------------- ---------------- ----------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Arthur C. Darrow........ 100,000 34.96% 12.4375 06/19/08 $488,000
Mark A. Snell........... 25,000 8.74% 12.4375 06/19/08 122,000
Henry Klehn, Jr......... -- -- -- -- --
Glenn Martin............ 8,000 2.80% 12.4375 06/19/08 39,040
Leslie S. Puget......... -- -- -- -- --
</TABLE>
- --------
(1) The Black-Scholes valuation method was used to determine the Grant Date
Present Value. The valuation method assumes an expected volatility of
27.9%, an expected life of 6 years and a risk-free interest rate of 5.52%.
Aggregated Option/SAR Exercises during the 1999 Fiscal Year and Fiscal Year-
End Option/SAR Values
The following table provides information with respect to the exercise of
stock options during the fiscal year ended March 26, 1999 by the Named
Executive Officers and with respect to unexercised "in-the-money" stock
options outstanding as of March 26, 1999. In-the-money stock options are
options for which the exercise price is less than the market price of the
underlying stock on a particular date. No executive officer or any other
employee of the Company held or exercised any SARs at any time during fiscal
1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options/SARs Held at Options/SARs at
Fiscal Year-End (#) Fiscal Year-End ($)(1)
------------------------- -------------------------
Shares Acquired Value Realized
Name on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur C. Darrow........ -- -- 30,625 104,000 $ -- $ --
Mark A. Snell........... -- -- 400 66,200 -- --
Henry Klehn, Jr. ....... -- -- 26,350 2,375 -- --
Glenn Martin............ -- -- 21,850 10,500 -- --
Leslie S. Puget......... -- -- 500 500 -- --
</TABLE>
- --------
(1) These values are based on a price of $10.75 per share, the closing price
of the Common Stock on the New York Stock Exchange on March 26, 1999.
Employment Agreements and Change-in-Control Arrangements
Arthur C. Darrow
On April 1, 1997, the Company and Mr. Darrow entered into an employment
agreement with a term of four years, including automatic extensions, for Mr.
Darrow's employment as Chief Executive Officer and President of the Company.
During this period, Mr. Darrow's annual base salary will not be less than
$400,000, unless he agrees to a reduction, and will be subject to review and
potential adjustment to a higher level no less frequently than annually.
During the term of employment, Mr. Darrow is eligible to receive a cash bonus
based upon the Company's achievement of certain operating and/or financial
goals, and he is eligible to participate in any equity-based incentive
compensation plan or program approved by the Board. The agreement requires the
Company to purchase and maintain term life insurance in the amount of
$3,000,000 on Mr. Darrow's life, with death benefits payable to beneficiaries
designated by him. The agreement also specifies that Mr. Darrow is required to
own directly or through trusts for his benefit a number of shares of the
Company's Common Stock with a fair market value of at least four times his
base salary.
A-9
<PAGE>
The employment agreement provides that, if Mr. Darrow's employment is
terminated by the Company without cause or by Mr. Darrow for good reason
(which includes assignment of any duties inconsistent with his position,
authority or responsibilities or a failure by the Company to comply with any
provisions of the agreement) prior to March 31, 2001, he will receive a
severance benefit equal to two times the sum of his base salary and target
bonus. Mr. Darrow is eligible for the same severance benefit if he voluntarily
terminates his employment during the thirteenth month following a change-in-
control of the Company. Except as set forth below, amounts payable to Mr.
Darrow under his employment agreement will be capped at the limits imposed by
Section 280G and 4999 of the Internal Revenue Code. However, if Mr. Darrow's
employment is terminated prior to March 31, 2001, by the Company without cause
or by Mr. Darrow for good reason, and such termination occurs within two years
after a change-in-control, he will receive a severance benefit equal to three
times the sum of his base salary and target bonus and will be entitled to a
gross-up payment with regard to the excise tax imposed by Section 4999 of the
Internal Revenue Code. Mr. Darrow's salary for the current fiscal year is
$475,000.
Under the terms of the agreement, a change-in-control is deemed to have
occurred if (a) another individual, entity or group becomes the beneficial
owner of thirty percent or more of the combined voting power of the
outstanding securities of the Company entitled to vote in the election of
directors, (b) current members of the Board cease to constitute at least two-
thirds of the Board unless individuals becoming directors were approved by Mr.
Darrow and a majority of the directors comprising the incumbent Board, (c) the
Company's shareholders approve a reorganization, merger or consolidation in
which the individuals and entities that are beneficial owners of the capital
stock and voting securities of the Company will not beneficially own more than
seventy percent of the capital stock and voting securities of the Company
after the transaction, or (d) there is a complete liquidation or dissolution
of the Company or a sale or other disposition of all or substantially all of
the Company's assets, excluding certain transfers of assets to another
corporation that is owned by the Company's shareholders.
Mark A. Snell
On April 1, 1997, the Company and Mr. Snell entered into an agreement
regarding severance payments prior to March 31, 2001. The agreement provides
that, if Mr. Snell's employment is terminated prior to March 31, 2001 by the
Company without cause or by Mr. Snell for good reason (which includes
assignment of any duties inconsistent with his position, authority or
responsibilities or a failure by the Company to comply with any provisions of
the agreement), and such termination occurs within the one year period
following the termination of Arthur C. Darrow as Chief Executive Officer and
President, Mr. Snell will receive a severance benefit equal to the sum of his
base salary and target bonus. If Mr. Snell terminates his employment prior to
March 31, 2001 for any reason other than good reason during the 13th month
following a change-in-control, and Arthur C. Darrow resigned during such one
month period for any reason, Mr. Snell will receive a severance benefit equal
to two times the sum of his base salary and target bonus. Except as set forth
below, amounts payable to Mr. Snell under his employment agreement will be
capped at the limits imposed by Section 280G and 4999 of the Internal Revenue
Code. If Mr. Snell's employment is terminated prior to March 31, 2001 by the
Company other than for cause within two years after a change-in-control or by
him for good reason, he will receive a severance benefit equal to three times
the sum of his base salary and target bonus and will be entitled to a gross-up
payment with regard to the excise tax imposed by Section 4999 of the Internal
Revenue Code. Mr. Snell's salary for the current fiscal year is $330,000.
Under the terms of the agreement, a change-in-control has the meaning stated
above in Mr. Darrow's employment agreement.
A-10
<PAGE>
Executive Severance Plan
On May 5, 1999, the Company's Board of Directors adopted the Executive
Severance Plan (the "Severance Plan"). Approximately fifteen executives of the
Company (each, a "Participant") are currently eligible to participate in the
Severance Plan. Pursuant to the Severance Plan, in the event that a
Participant terminates his or her employment for "good reason" (as defined in
the Severance Plan), or the Company terminates the Participant's employment
for any reason other than "cause" (as defined in the Severance Plan), death,
or disability, the Participant will be entitled to receive his or her annual
base salary and certain welfare benefits for a period of one year following
the date of the Participant's termination of employment (reduced by salary or
benefits paid or provided to the Participant for any period of up to one month
between the date of termination and the date that notice thereof was given).
At its election, the Company may pay the base salary portion of any severance
payment in a lump sum. The term of the Severance Plan will commence on the
date of the closing of the Offer and end on the second anniversary of such
date.
The Company has not entered into other employment agreements, severance
agreements or change-in-control arrangements with any of the executive
officers who are named in the Summary Compensation Table.
Compensation Committee Interlocks and Insider Participation
A. Ewan Macdonald, Ursula M. Burns and Robert F. Clarke are the current
members of the Company's Compensation Committee. Michael R. Peevey also served
as a member of the Compensation Committee during fiscal 1999. None of these
directors is or has been an officer or employee of the Company.
In fiscal 1999, the Company entered into two joint ventures with New Energy
Ventures, Inc., a company in which Michael R. Peevey indirectly owns
approximately 25% of the outstanding common stock. The Company contributed an
aggregate of $5,000,000 to these two joint ventures while New Energy Ventures,
Inc. contributed the exclusive right to market distributed power units,
manufactured by Allied Signal, Inc., in parts of South America to one joint
venture, and the exclusive right to market the same products in Australia for
the other joint venture. The Company believes these exclusive rights have a
value in excess of $5,000,000. Mr. Peevey's aggregate interest in these joint
ventures is approximately $1,000,000.
Report of the Compensation Committee on Executive Compensation
In line with the Company's objective to maximize long-term return to its
shareholders, the Compensation Committee (the "Committee") annually reviews
and adjusts, as required, the compensation of the Company's executive
officers. The Committee believes that maintaining appropriate compensation
policies and programs is an important factor in attracting, motivating and
retaining effective senior executives. A significant portion of each
executive's annual and long-term compensation is linked directly to
performance. Moreover, the Company requires that senior executives and other
officers hold significant stock positions in the Company, thereby making their
long-term interests compatible with those of public shareholders.
The Company and the Committee have historically compensated senior
executives with a combination of salary, annual incentive cash bonuses and
long-term incentive compensation in the form of stock option grants. In fiscal
1999, the Committee reviewed and reaffirmed its existing policy regarding
salary compensation, which generally seeks to set officers' salaries at the
median level in comparison to peer group companies, plus performance-related
incentive compensation paid partly in cash and partly in restricted stock.
Stock options were also awarded to three executive officers during fiscal
1999.
Executive Officer Compensation
In establishing executive officer compensation levels for fiscal 1999, the
Committee examined compensation paid to executives within the engineering
services industry. The Committee recognized that few engineering firms are
comparable overall to the Company in size, scope of operations, and
performance characteristics.
A-11
<PAGE>
Accordingly, several executive compensation surveys were also examined to
obtain corroborating data for firms of comparable size in other industries.
After reviewing these sources of compensation data, the Committee exercised
considerable subjective judgment in establishing executive officer
compensation for fiscal 1999.
The Committee determined that the base salary levels of each of the
Company's executive officers should be adjusted so as to be in line with the
median salaries paid to executives holding positions of comparable
responsibility. Accordingly, the Committee adjusted executive officers'
salaries upward.
For purposes of incentive compensation bonuses for fiscal 1999, which will
be determined and awarded in May of 1999, executive officers' performance will
be judged based on measurement of results achieved against objectives set in
the Company's fiscal 1999 operations plan. The aspects of performance that
will be evaluated include achieving targets for revenue growth, improvement in
quality of services provided to clients, the price of the Company's Common
Stock, increases in market share, human resource development, and
profitability. Of these factors, the most heavily weighted will be those
relating to revenue growth (excluding acquisitions), profit and the price of
the Company's Common Stock. After evaluating performance, the Committee may
determine that each executive officer should receive incentive compensation
bonuses which may include cash or restricted stock. Any such restricted stock,
which would be awarded in June, 1999, will cliff vest in three years, will
accelerate vesting upon a change-in-control, and will not require any cash for
its purchase. Pursuant to the Merger Agreement, no stock options to acquire
the Company's common stock will be granted to the Company's executive officers
for fiscal 1999.
Chief Executive Officer Compensation
At the beginning of fiscal 1999, the Committee reviewed the scope and
complexity of the Chief Executive Officer's responsibilities in relation to
the base salary of $400,000 that had been set for the Chief Executive Officer
during the previous year. The Committee's judgment was that this salary level
was not competitive with median salary compensation offered by firms of
comparable size both within and outside the engineering services industry.
Accordingly, a salary increase of $25,000 was granted to the Chief Executive
Officer.
The Committee set an incentive compensation level of 60 percent of salary as
the Chief Executive Officer's target bonus for fiscal 1999. This bonus would
be awarded if the Chief Executive Officer's performance met agreed-upon
objectives. Among these objectives, the following were considered the most
relevant: (a) execution of the Company's Strategic Plan; (b) meeting planned
revenue and profit objectives for fiscal 1999; (c) meeting personal
performance objectives; and (d) enhancement of shareholder value through stock
price appreciation. After evaluating the performance of the Chief Executive
Officer against these objectives, the Committee may determine in May, 1999
that Mr. Darrow should receive an incentive compensation bonus which may
include cash or restricted stock. Such restricted stock, which would be
awarded in June, 1999, will cliff vest in three years, will accelerate vesting
upon a change-in-control, and will not require any cash for its purchase.
Pursuant to the Merger Agreement, no stock options to acquire the Company's
common stock will be granted to Mr. Darrow for fiscal 1999.
Share Ownership
Upon the conversion from a limited partnership to a publicly held
corporation in March, 1992, the former partners who became officers of the
Company acquired significant holdings of the Company's stock. At that time,
the Board adopted a policy that encouraged all officers to retain a
substantial percentage of the acquired shares as a means of aligning the
interests of the Company's key management and professional personnel with the
interests of the Company's public shareholders.
With the recent recruitment or promotion of key executives who were not
significant shareholders at the time of the 1992 public offering, the Board
and the Committee have concluded that the policy on share retention should be
replaced by a policy which establishes a share ownership objective that is a
function of organizational
A-12
<PAGE>
position and base salary. The policy which was adopted during fiscal 1998
requires that the Chief Executive Officer own company stock valued at four
times base salary, and that Executive Vice Presidents own stock valued at
three times base salary. Non-executive officers have share ownership
requirements at two times and one times salary based on organizational
position. Officers who are not currently in compliance with the policy are
allowed up to five years to achieve compliance.
As a means of emphasizing the importance of stock ownership, and of
assisting executive officers and all other officers to attain their share
ownership objectives, the Incentive Compensation Program was modified in
fiscal 1998 to allow awards under the program to be made partially in
restricted stock.
Internal Revenue Code Restrictions
Effective in 1994, Internal Revenue Code Section 162(m) generally precludes
a publicly-held corporation from taking a tax deduction for compensation in
excess of $1,000,000 that is paid to its Chief Executive Officer or any of its
four other highest paid executive officers. Certain performance-based
compensation is not subject to the deduction limit if specified requirements
are satisfied.
It is the policy of the Committee that, under ordinary circumstances, the
Company's compensation programs should be structured in a manner that is
designed to comply with the requirements of Section 162(m) and any regulation
promulgated thereunder in order to ensure the full deductibility of all
compensation paid to the Company's executive officers. The Committee will
reexamine its policy with respect to Section 162(m) on an ongoing basis.
COMPENSATION COMMITTEE
A. Ewan Macdonald, Chairman
Ursula M. Burns
Robert F. Clarke
A-13
<PAGE>
Stock Performance Graph
The following graph sets forth the Company's cumulative total shareholder
return on its Common Stock as compared to the S&P 500 Index, a peer group of
seven environmental companies (Peer Group 1 in the graph) and a peer group of
three engineering and construction companies (Peer Group 2 in the graph) based
upon an assumed initial investment of $100 in each of the Common Stock, the
S&P 500 Index and the two peer groups. The graph covers the period from March
28, 1994 through March 26, 1999 (the last day of the Company's most recent
fiscal year). The stock price performance shown below is not necessarily
indicative of future price performance, and the companies in the peer groups
are not necessarily comparable for any purpose other than the graph.
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
S&P PEER PEER
DAMES & MOORE 500 INDEX GROUP 1 GROUP 2
------------- --------- ------- -------
<S> <C> <C> <C> <C>
1994 $100.00 $100.00 $100.00 $100.00
1995 $ 63.30 $115.57 $ 85.41 $ 89.46
1996 $ 59.23 $152.67 $ 84.72 $113.11
1997 $ 69.85 $182.93 $ 67.62 $111.11
1998 $ 72.18 $270.74 $ 96.49 $145.52
1999 $ 61.18 $320.72 $ 90.33 $132.13
</TABLE>
- -------
(1) In addition to an assumption of an investment of $100 at the opening of
business on March 28, 1994 in each of the Common Stock, the S&P 500 Index
and the two peer groups, the graph assumes the reinvestment of all
dividends. Investment in the peer groups is weighted by relative market
capitalization.
(2) The environmental peer group of publicly held companies (Peer Group 1)
excludes the Company and includes Emcon; Fluor Daniel/GTI; Harding Lawson
Associates, Inc.; ICF Kaiser International, Inc.; International Technology
Corporation; URS Corporation; and Roy F. Weston, Inc. (Class A). The
engineering and construction peer group of publicly held companies (Peer
Group 2) excludes the Company and includes Jacobs Engineering Group, Inc.;
Stone & Webster, Inc.; and Michael Baker Corp.
A-14
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes of ownership with the Commission and each
exchange on which the Company's securities are registered. Officers, directors
and greater than ten percent stockholders are required by Commission
regulations to furnish the Company with copies of all ownership forms they
file.
Based solely on a review of copies of reporting forms furnished to it, or
written representations that no forms were required, to the Company's
knowledge, all filing requirements applicable to its officers, directors and
beneficial owners under Section 16(a) of the Exchange Act were complied with
during fiscal 1999, except that Glenn Martin inadvertently failed to timely
file a Form 3.
A-15
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
As of the date of this Information Statement, the Purchaser has not
determined who will be Designees. However, such Designees will be selected
from the following list of directors and executive officers of Parent upon the
purchase by the Purchaser pursuant to the Offer of Shares representing not
less than a majority of the outstanding shares of Common Stock on a fully
diluted basis. The information contained herein concerning Parent and the
Purchaser and their respective directors and executive officers has been
furnished by Parent and the Purchaser. The Company assumes no responsibility
for the accuracy or completeness of such information.
Set forth in the table below are the name, age, and principal occupation and
business experience of each of the persons who may be designated by the
Purchaser as the Designees. Unless otherwise indicated, the business address
for each individual listed is 100 California Street, Suite 500, San Francisco,
California 94111. Each such person is a citizen of the United States.
<TABLE>
<CAPTION>
Position with Parent; Principal Occupation or
Name and Age of Designee Employment; 5-Year Employment History
- ------------------------ ---------------------------------------------
<S> <C>
Martin M. Koffel (59)............ Chief Executive Officer, President and Director from
May 1989; Chairman of the Board from June 1989.
Kent P. Ainsworth (52)........... Executive Vice President from April 1996, Vice
President and Chief Financial Officer from January
1991; Secretary from May, 1994.
Joseph Masters (42).............. Vice President and General Counsel since July 1997,
Vice President, Legal, from April 1994 to June 1997;
Vice President and Associate General Counsel of URS
Consultants, Inc. from May 1992 to April 1994; outside
counsel to the Company from January 1990 to May 1992.
Irwin L. Rosenstein (62)......... President of URSGWC, Parent's principal operating
division, since November 1998; President of URSG from
November 1997 to October 1998, President of URS
Consultants, Inc., Parent's former principal operating
division, from February 1989 to November 1997; Director
since February 1989; Vice President since 1987.
Jean-Yves Perez (53)............. Director of the Company and Executive Vice President of
URSGWC, Parent's principal operating division, since
November 1998; President of Woodward-Clyde Group, Inc.
("W-C"), a division of Parent from November 1997 to
October 1998; Director since November 1997; President
and Chief Executive Officer of W-C from 1987 to October
1997.
</TABLE>
I-1
<PAGE>
EXHIBIT 3
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT ("Agreement") is made this 14th day of
April, 1999, by and between URS CORPORATION, a Delaware corporation with its
principal office located at 100 California Street, Suite 500, San Francisco,
California 94111 ("URS"), and DAMES & MOORE GROUP, a Delaware corporation with
its principal office located at 911 Wilshire Boulevard, Suite 700, Los Angeles,
California 90017 ("Dames & Moore").
RECITALS
A. URS and Dames & Moore have expressed interest in exploring the
possibility of entering into some form of business combination or similar
transaction between URS and Dames & Moore (a "Transaction").
B. Toward this end, URS desires to investigate and examine the business
operations, accounts, books, records, financial condition and services of Dames
& Moore, and Dames and Moore desires to investigate and examine certain aspects
of the financial resources of URS.
C. The parties are willing to facilitate such investigations and
examinations by providing each other with certain information and other
assistance upon the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing recitals and of the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Dames & Moore shall permit certain authorized officers, employees,
attorneys, financial advisors, accountants and other representatives
("Representatives") of URS, as identified in advance, to examine certain books,
records, accounts, documents and other materials of Dames & Moore, and to
discuss its business and financial affairs with designated Representatives of
Dames and Moore. URS shall permit certain Representatives of Dames & Moore, as
identified in advance, to examine the financing commitments and related
materials obtained by URS relating to the ability of URS to fund and consummate
a Transaction, and to discuss its business and financial affairs with designated
Representatives of URS.
2. The term "Confidential Information," as used in this Agreement, shall
mean information or material relating to one party obtained by or provided to
the other party, directly or indirectly, whether or not in writing, and whether
delivered to one party by the other party, obtained or ascertained as a result
of access to the premises of the other party or any communication with any
officer, director, shareholder, employee, agent or other representative of the
other party, or obtained or ascertained in any other manner. Without limiting
the generality of the foregoing, Confidential Information includes, but is not
limited to, the following types of information: designs, drawings,
specifications, data, diagrams, technical information, flow charts, marketing
techniques and other information related to customers and suppliers, trade
secrets, pricing policies, contracts, financial information, analyses,
forecasts, studies and any other information about the business or operations of
a party designated as Confidential Information. Notwithstanding the foregoing,
Confidential Information does not include information which: (a) was known to a
party without any obligation of confidentiality prior to the
<PAGE>
disclosure by the other party; (b) is or becomes generally available to the
public other than by breach of this Agreement or any other agreement; (c) is
revealed to a party by a third party who to the knowledge of such party has not
breached any obligation of confidentiality; or (d) is independently developed by
a party or its Representatives.
3. URS and Dames & Moore agree to hold, and to cause their respective
Representatives to agree to hold, all Confidential Information of the other
party in confidence, and not to directly or indirectly cause, permit or enable
the disclosure, publication, transfer, misappropriation or revealing to any
person or entity of such Confidential Information, other than to their
Representatives who have a need to know in connection with discussions
concerning a possible Transaction, without the express prior written consent of
a duly authorized Representative of such party, except as required by law. URS
and Dames & Moore also agree, and will cause their respective Representatives to
agree, not to use the Confidential Information of the other party for any
purpose at any time, other than for the sole purpose of considering and
evaluating a possible Transaction. Each of the parties will be responsible for
any breach of this Agreement by its Representatives to the extent that such
party would be responsible therefor under principles of agency law or as a
"controlling person" under Section 21A(b)(a)(A) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and each party shall be entitled to
directly enforce such agreement.
4. In furtherance of the foregoing, each party agrees not to use any
Confidential Information of the other party in any way directly or indirectly
detrimental to the other party. In particular, each party agrees that for a
period of twelve months from the date of this Agreement, without the prior
written consent of the other party, it will not knowingly, as a result of
knowledge or information obtained from the Confidential Information of the other
party, directly or indirectly, (i) solicit for employment or hire any employee
of the other party with whom its Representatives have had contact or who became
known to them in connection with their consideration of a possible Transaction,
or (ii) divert or attempt to divert any business or customer of the other party;
provided that nothing in this Section 4 shall prevent either party from hiring
an employee of the other party who responds to general employment solicitations
in the ordinary course of the hiring party's business (including published
advertisements) not specifically directed to any such employee.
5. Dames & Moore further agrees, that until May 7, 1999, or for such
further period up to May 31, 1999 as the parties are continuing to negotiate
towards a definitive agreement relating to a possible Transaction, or for such
further period as the parties may agree in writing to further extend this
Section 5, Dames & Moore and its directors, officers, affiliates and other
Representatives agree not to, directly or indirectly, solicit, initiate, respond
to, entertain, encourage submission of proposals or offers, provide information
or enter into negotiations or discussions with or in any manner encourage,
discuss, accept or consider any proposal or offer of any person other than URS
relating to the acquisition of all or a substantial portion of the assets,
business or capital stock of Dames & Moore; provided that nothing in this
paragraph shall prevent Dames & Moore or its directors or officers from
responding to and considering unsolicited firm offers for any such transaction
from a person other than URS if and to the extent that, in the written opinion
of Dames & Moore, failure to do so would constitute a violation of applicable
law. Dames & Moore will immediately terminate any and all active discussions or
negotiations with any other party regarding any such possible transaction, and
agrees to immediately inform
2
<PAGE>
URS in writing of the receipt, terms and other details of any unsolicited
inquiry or proposal regarding any such transaction if received by Dames & Moore
or its Representatives.
6. URS agrees, for a period of twelve months from the date of this
Agreement, that, without the prior written consent of Dames & Moore, it will not
(i) acquire, offer to acquire or agree to acquire, directly or indirectly, by
purchase or otherwise, in excess of 5% of the outstanding voting securities of
Dames & Moore or any direct or indirect rights to acquire any voting securities
of Dames & Moore or any subsidiary thereof, (ii) make, or in any way
participate in, directly or indirectly, any "solicitation" of "proxies" (as such
terms are defined in the rules of the Securities Exchange Commission) to vote,
or seek to advise or influence any person or entity with respect to the voting
of, any voting securities of Dames & Moore, (iii) make any public announcement
or reference with respect to, or submit a proposal for, or offer of (with or
without conditions) any extraordinary transaction involving Dames & Moore or its
securities or assets, (iv) participate in any discussions or negotiations with
any third party regarding, or furnish any information to any third party,
regarding any such transaction, (v) form, join or in any way participate in a
"group" as defined in Section 13(d)(3) of the Exchange Act) in connection with
any of the foregoing; or (vi) make any request or proposal to amend or waive any
provision of this Agreement except in a non-public and confidential manner. The
provisions of this Section 5 shall terminate immediately and have no further
binding effect on URS, however, in the event that (a) any third party or "group"
(as defined above) unaffiliated with URS initiates a tender of exchange offer
for in excess of 25% of the outstanding voting securities of Dames & Moore, (b)
Dames & Moore enters into, or announces its intention to enter into, any
agreement to sell or dispose of 50% or more of its asserts to an unaffiliated
party or "group", or (c) Dames & Moore enters into, or announces its intention
to enter into, any agreement providing for a merger, combination or similar
transaction as a result of which either (1) the stockholders of Dames & Moore
immediately preceding such transaction would cease to hold in excess of 50% of
the voting securities of the surviving or resulting entity immediately following
such transaction or (2) the directors of Dames and Moore immediately prior to
such transaction cease to constitute at least a majority of the directors of
Dames & Moore immediately following such transaction. In addition,
notwithstanding the provisions of this Section 5, URS shall not be prohibited at
any time from acquiring, offering to acquire or announcing an intention to
acquire, in good faith, not less than 100% of the outstanding voting securities
of Dames & Moore pursuant to an unsolicited tender offer, for cash, securities
or a combination of cash and securities, with a value per share of Dames & Moore
common stock of not less than 143% of the closing price of such stock on April
14, 1999.
7. In the event that discussions relating to a possible Transaction cease
for any reason, each party shall (a) within ten (10) days return, and cause its
Representatives to return, to the other party all copies of any Confidential
Information received from the other party, (b) destroy all notes, compilations
and analyses with respect to, based upon or derived from such Confidential
Information, and confirm such destruction to the other party in writing, (c) not
make any other use of such Confidential Information, and (d) not provide such
Confidential Information to any other person or entity for any purpose, except
as required by law.
8. Unless and until this Agreement is terminated by mutual agreement, each
party hereto agrees to obtain the approval of the other party hereto prior to
issuing any press release, public statement or announcement regarding a possible
Transaction or the fact that the parties are engaged in discussions or have
exchanged information; provided, however, that notwithstanding anything herein
to the contrary, the provisions of this Section 8 shall not prohibit any party
hereto from making any press release, public statement or announcement if such
party believes, based on the advice of counsel, that it is required to do so
under any applicable law, rule or regulation, in which event such party shall
use its best efforts to provide the other party with at
3
<PAGE>
least 24 hours prior notice of such release, statement or announcement, and
shall promptly provide copies thereof to the other party.
9. In the event that either party or any of its Representatives is
required or becomes legally compelled (by oral questions, interrogatories,
request for information or documents, subpoena, regulatory inquiry, criminal or
civil investigative demand or similar process, or otherwise) to disclose any
Confidential Information of the other party, such party will provide the other
party with prompt written notice so that the other party may seek a protective
order or other appropriate remedy and/or waive compliance with the provisions of
this Agreement. The other party shall promptly advise the first party of the
action it intends to take. In the event no such protective order or other
remedy is obtained, or that the other party waives compliance with the terms of
this Agreement, such party will furnish only that portion of the Confidential
Information which (based on the advice of counsel) is legally required, and will
exercise its best efforts to obtain confidential treatment for such Confidential
Information from the person, regulatory authority or other entity to whom it is
disclosed.
10. Each party acknowledges and agrees that, although each party has and
will endeavor to provide the other party only with such information as it
believes to be reliable, no party is making any representation or warranty as to
the accuracy or completeness of any such information, and no party shall have
any liability resulting from the use of any such information by the other party.
The parties agree that they are not entitled to rely on the accuracy or
completeness of any such information, and they will be entitled to rely solely
on such representations and warranties as may be included in any definitive
agreement they may reach with respect to a Transaction, subject to such
limitations and restrictions as any such definitive agreement may contain. Each
party agrees that unless and until a definitive agreement between URS and Dames
& Moore with respect to a Transaction has been executed and delivered, neither
party will be under any legal obligation of any kind with respect to such a
Transaction by virtue of this Agreement or any other oral expression with
respect to such a Transaction by any of the directors, officers, agents,
employees or other Representatives of either party except for the matters agreed
upon in this Agreement. Each party further agrees that it shall have no
obligation to authorize or pursue with the other party or any other party any
Transaction, and understands that the other party has not, as of the date of
this Agreement, finally authorized any such Transaction.
11. Each party understands and agrees that, because of the unique nature
of the Confidential Information, URS, Dames & Moore or third parties will suffer
immediate, irreparable harm in the event a party fails to comply with any of the
obligations in this Agreement and that monetary damages will be inadequate to
compensate the other party for such breach. Accordingly, each party agrees that
the other party will be entitled, in addition to any other remedies available to
it at law or in equity, to injunctive relief to enforce the terms of this
Agreement.
12. Each party acknowledges that it is aware, and will advise its
Representatives, that United States securities laws restrict, under certain
circumstances, persons who have material, non-public information concerning the
matters which are the subject matter of this Agreement from purchasing or
selling securities of a company to which such information relates or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell any
such securities.
4
<PAGE>
13. This Agreement sets forth the entire understanding and agreement of
the parties with respect to the subject matter hereof and supersedes all other
oral or written agreements, representations and understandings. In the event
that any provision hereof or any of the parties' obligations if found invalid or
unenforceable pursuant to judicial decree or decision, any such provision or
obligation shall be deemed and construed to extend only to the maximum permitted
by law, and the remainder of the Agreement shall remain valid. The
interpretation and performance of this Agreement shall be governed by the law of
the State of California. This Agreement may only be amended or modified in
writing signed in advance by authorized Representatives of both parties. In the
event of any dispute arising out of this Agreement, the prevailing party shall
recover its attorneys' fees and other court costs incurred in litigating or
otherwise settling or resolving such dispute. No failure or delay by a party in
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof of the exercise of any other right, power and
privilege under this Agreement. Each party shall bear its own costs and
expenses (including the fees and expenses of its own professional advisors and
any broker's or finder's fees) incurred in connection with the matters
contemplated by this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of each of the parties as of the date first above written.
DAMES & MOORE GROUP URS CORPORATION,
a Delaware corporation a Delaware corporation
By: /s/ Arthur C. Darrow By: /s/ Kent P. Ainsworth
------------------------------- -------------------------------
Arthur C. Darrow Kent P. Ainsworth
Chairman of the Board Executive Vice President and
Chief Executive Officer Chief Financial Officer
5
<PAGE>
EXHIBIT 4
[DAMES & MOORE GROUP LOGO]
May 11, 1999
Dear Stockholder:
We are pleased to inform you that on May 5, 1999, Dames & Moore Group (the
"Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with URS Corporation ("URS") and its subsidiary, Demeter
Acquisition Corporation (the "Purchaser"), which provides for the acquisition
of the Company by URS. Under the terms of the Merger Agreement, the Purchaser
today commenced a tender offer (the "Offer") to purchase all of the Company's
outstanding shares of common stock (and together with the associated preferred
stock purchase rights, the "Shares") at a price of $16.00 per share in cash.
Following the successful completion of the Offer, the Purchaser will be
merged with the Company (the "Merger"), and all shares of common stock not
purchased in the Offer will receive in the Merger the same $16.00 per share in
cash. The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn on or prior to the expiration date of the
Offer at least a majority of the Shares then outstanding on a fully diluted
basis. The Offer is also subject to customary closing conditions, including (i)
the expiration or termination of any applicable waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
(ii) conditions to the financing commitments obtained by URS.
The Company's Board of Directors has unanimously approved and found advisable
the Merger Agreement, the Offer, and the Merger and determined that the terms
of the Offer and the Merger are fair to, and in the best interests of, the
Company and its stockholders. Accordingly, the Board of Directors recommends
that you accept the Offer and tender all of your shares of common stock
pursuant to the Offer.
In arriving at its recommendation, the Company's Board of Directors gave
careful consideration to a number of factors which are described in the
enclosed Schedule 14D-9, including the opinion of the Company's financial
advisor, Prudential Securities Incorporated, (a copy of which is included with
the Schedule 14D-9) to the effect that, as of the date of such opinion, the
consideration to be received by the holders of the Company's stock in the Offer
and the Merger is fair to such stockholders from a financial point of view.
Additional information with respect to the Offer and the Merger is contained
in the enclosed Schedule 14D-9, and we urge you to consider this information
carefully.
On behalf of the management and directors of the Company, we thank you for
the support you have given the Company.
Sincerely yours,
/s/ Arthur C. Darrow
Arthur C. Darrow
Chairman, Chief Executive Officer
and President
<PAGE>
EXHIBIT 5
OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
DAMES & MOORE GROUP
at
$16.00 Net Per Share
by
DEMETER ACQUISITION CORPORATION
a wholly owned subsidiary of
URS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JUNE 8, 1999, UNLESS THE OFFER IS EXTENDED.
May 11, 1999
To Dames & Moore Capital Accumulation Plan Participants:
Enclosed for your consideration are an Offer to Purchase, dated May 11, 1999
(the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") in connection with the offer by Demeter Acquisition Corporation,
a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of URS
Corporation, a Delaware corporation ("Parent"), to purchase all outstanding
shares of common stock, par value $0.01 per share (together with the
associated preferred stock purchase rights, the "Shares"), of Dames & Moore
Group, a Delaware corporation (the "Company"), at a price of $16.00 per Share,
net to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer. The Offer is made in connection with the
Agreement and Plan of Merger, dated as of May 5, 1999 (the "Merger
Agreement"), among Parent, the Purchaser and the Company. Holders of Shares
whose certificates evidencing such Shares (the "Share Certificates") are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary (as hereinafter defined) on or
prior to the Expiration Date (as hereinafter defined), or who cannot complete
the procedures for book-entry transfer on a timely basis, must tender their
Shares according to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase.
As the Trustee of the Dames & Moore Capital Accumulation Plan, T. Rowe Price
Trust Company ("T. Rowe Price") (or its nominee) is the holder of record of
Shares held by T. Rowe Price for your account in the Dames & Moore Capital
Accumulation Plan (the "CAP Account"). A tender of such Shares can be made
only by T. Rowe Price as the holder of record and pursuant to your
instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares held by T. Rowe
Price for your CAP Account. If you own Shares of Dames & Moore Group stock
outside the Dames & Moore Capital Accumulation Plan, you will be receiving
separate materials with respect to such Shares. This Letter and the Election
Form contained herewith do not cover such Shares.
Accordingly, we request instructions as to whether you wish to have T. Rowe
Price tender on your behalf any or all of the Shares held by T. Rowe Price for
your CAP Account upon the terms and subject to the conditions set forth in the
Offer.
Please note the following:
1. The tender price is $16.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the terms and conditions
set forth in the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of May 5, 1999 (the "Merger Agreement"), among Parent, the
Purchaser and the Company pursuant to which, following the consummation of
the Offer and
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the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company, with the Company surviving the merger as
a wholly owned subsidiary of Parent (the "Merger"). In the Merger, each
outstanding Share (other than Shares owned by the Company as treasury stock
or by Parent, Purchaser or any other direct or indirect wholly owned
subsidiaries of Parent, or by stockholders, if any, who are entitled to and
who properly exercise dissenters' rights under Delaware law) will be
converted into the right to receive $16.00 per Share, net to the seller in
cash, without interest, as set forth in the Merger Agreement and described
in the Offer to Purchase.
4. The Board of Directors of the Company has approved and found advisable
the Merger Agreement and the transactions contemplated thereby, including
the Offer and the Merger (as defined in the Offer to Purchase), and
determined that the terms of the Offer and the Merger are fair to, and in
the best interests of, the stockholders of the Company and recommends that
stockholders of the Company accept the Offer and tender all their Shares
pursuant to the Offer.
5. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Tuesday, June 8, 1999, unless the Offer is extended (the
"Expiration Date").
6. The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn on or prior to the Expiration Date at
least a majority of the Shares then outstanding on a fully diluted basis.
The Offer is also subject to customary closing conditions, including (i)
the expiration or termination of any applicable waiting periods imposed by
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
(ii) conditions to the financing commitments obtained by Parent. See the
Introduction and Sections 9 and 14 of the Offer to Purchase.
7. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, stock transfer or other similar taxes with respect to the
purchase of Shares by Purchaser pursuant to the Offer.
8. Payment for Shares purchased pursuant to the Offer will in all cases
be made only after timely receipt by ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") of (a) Share Certificates or, in the case of
book-entry delivery of Shares, timely confirmation of the book-entry
transfer of such Shares into the Depositary's account at The Depositary
Trust Company pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (b) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery and (c) any other
documents required by the Letter of Transmittal.
If you wish to have T. Rowe Price tender any or all of the Shares allocated
to your CAP Account, please so instruct T. Rowe Price by completing, executing
and returning to T. Rowe Price the Election Form contained in this letter. An
envelope in which to return your election to T. Rowe Price is enclosed. Your
Election Form should be forwarded to T. Rowe Price in ample time to permit T.
Rowe Price to submit a tender on your behalf prior to the expiration of the
Offer. If you fail to return an Election Form so that it is received by T.
Rowe Price no later than June 4, 1999, you will be deemed to have directed T.
Rowe Price not to tender the Shares allocated to your CAP Account. If you
elect to tender only a portion of your Shares in your CAP Account, please
specify the number of Shares to be tendered (if you fail to specify such
number, none of your Shares will be tendered).
On the effective date of the Merger, each outstanding Share in your CAP
Account which was not tendered in the Offer (other than Shares owned by
stockholders, if any, who are entitled to and who properly exercise
dissenters' rights under Delaware law) will be converted into the right to
receive $16.00 per Share, net to the seller in cash, without interest. Any
cash received from the tendering of Shares or from the conversion of Shares
into a right to receive $16.00 per Share will remain in the Dames & Moore
Capital Accumulation Plan, will be invested in the T. Rowe Price Prime Reserve
Fund and may be subsequently reinvested in other T. Rowe Price funds if you so
request through investment instructions provided in accordance with the rules
of the Dames & Moore Capital Accumulation Plan.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall
be deemed to be made on behalf of Purchaser by Morgan Stanley & Co.
Incorporated, the Dealer Manager, or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
If you have any questions about the current balances of your CAP Account or
the enclosed Election Form, please call T. Rowe Price Trust Company at (800)
922-9945. If you have any other questions about the Offer, please contact D.F.
King & Co., Inc. at (800) 290-6424 or Morgan Stanley & Co. at (650) 234-5757.
DAMES & MOORE GROUP
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ELECTION FORM
With Respect to
Shares of Dames & Moore Group Stock
Held in
the Dames & Moore Capital Accumulation Plan
The undersigned acknowledge(s) receipt of Dames & Moore Group's letter and
the enclosed Offer to Purchase, dated May 11, 1999 (the "Offer to Purchase"),
and the related Letter of Transmittal in connection with the offer by
Demeter Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of URS Corporation, a Delaware corporation, to purchase all
outstanding shares of common stock, par value $0.01 per share (together with
the associated preferred stock purchase rights, the "Shares"), of Dames &
Moore Group, a Delaware corporation, at a price of $16.00 per Share, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase, the related Letter of
Transmittal and any amendments or supplements to such documents (collectively,
the "Offer").
Number of Shares of Dames & Moore Group Stock allocated to your Dames & Moore
Capital Accumulation Plan account (the "CAP Account") as of May 7, 1999:
Your current Share balance and your Share balance as of the date the tender is
made may be greater or lesser than this number. If you would like current
Share balance information, please call the T. Rowe Price Participant Service
Center at (800) 922-9945.
This Election Form gives you three choices: (1) to tender all Shares of
Dames & Moore Group Stock allocated to your CAP Account for $16.00 per Share
(2) to tender a portion of the Shares of the Dames & Moore Stock allocated to
your CAP Account for $16.00 per Share or (3) to not tender any of the Shares
of Dames & Moore Group allocated to your CAP Account for $16.00 per Share. If
you elect to tender all of the Shares of Dames & Moore Group Stock allocated
to your CAP Account, all Shares in such account as of the date the tender is
made will be tendered. If you elect to tender only a specified portion of the
Shares of Dames & Moore Group Stock allocated to your CAP Account, the
remainder of the Shares in your account as of the date the tender is made will
not be tendered. If you elect to tender only a portion of your Shares in your
CAP Account, please specify the number of Shares to be tendered (if you fail
to specify such number, none of your Shares will be tendered). Any cash
received from the tendering of Shares or from the conversion of Shares into a
right to receive $16.00 per Share will remain in the Dames & Moore Capital
Accumulation Plan, will be invested in the T. Rowe Price Prime Reserve Fund
and may be subsequently reinvested in other T. Rowe Price funds if you so
request through instructions provided in accordance with the rules of the
Dames & Moore Capital Accumulation Plan. If you fail to return an Election
Form so that it is received by T. Rowe Price Trust Company ("T. Rowe Price")
no later than June 4, 1999, you will be deemed to have directed T. Rowe Price
not to tender the Shares allocated to your CAP Account. Please read the
enclosed material for further detail on the Offer.
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Check one box only*:
A. [_] Check box A to tender all Shares in my CAP Account for $16.00 per
share upon the terms and subject to the conditions set forth in
the Offer.
B. [_] Check box B to tender Shares in my CAP Account for $16.00 per
share upon the terms and subject to the conditions set forth in
the Offer. If you check box B, but fail to specify the number of
Shares to be tendered, none of your Shares will be tendered.
C. [_] Check box C if you do not wish to tender any of the Shares in your
CAP Account.
AFTER CHECKING ONE BOX, SIGN, DATE AND RETURN THIS FORM IN THE ENCLOSED
ENVELOPE, SO THAT IT IS RECEIVED NO LATER THAN JUNE 4, 1999. YOUR ELECTION
WILL BE CONFIDENTIAL.
Dated , 1999.
SIGN HERE
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Signature(s) of Holder(s)
Name(s) of Holder(s):
-------------------------------------
Please Type or Print
-------------------------------------
Address(es)
-------------------------------------
Zip Code(s)
-------------------------------------
Area Code and Telephone Number(s)
-------------------------------------
Social Security Number(s)
- --------
* If you do not check one box, or if you check more than one box, you will be
deemed to have directed T. Rowe Price not to tender any Shares allocated to
your CAP Account.
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EXHIBIT 6
[LETTERHEAD]
PRIVATE AND CONFIDENTIAL
May 5, 1999
The Board of Directors
Dames & Moore Group
911 Wilshire Boulevard, Suite 700
Los Angeles, California 90017
Members of the Board of Directors:
We understand that Dames & Moore Group, a Delaware corporation (the
"Company"), URS Corporation, a Delaware corporation ("URS"), and Demeter
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary
of URS ("Subsidiary"), propose to enter into an Agreement and Plan of Merger
(the "Agreement") providing, upon the terms and subject to the conditions set
forth therein, for (i) Subsidiary to commence a tender offer (the "Offer") to
purchase all the outstanding shares (the "Shares") of common stock, par value
$0.01 per Share, of the Company (the "Company Common Stock") at a purchase
price of $16.00 per Share, net to the seller in cash (the "Consideration"),
and (ii) the subsequent merger (the "Merger" and, together with the Offer, the
"Transaction") of Subsidiary with and into the Company, pursuant to which each
outstanding Share not previously tendered, other than Shares owned by URS, any
subsidiary of URS, the Company or Shares held by Dissenting Stockholders (as
defined in the Agreement), shall be converted into the right to receive the
Consideration.
You have requested our opinion as to the fairness from a financial point of
view of the Consideration to be received by the holders of Company Common
Stock pursuant to the Transaction.
In conducting our analysis and arriving at the opinion expressed herein, we
have reviewed such materials and considered such financial and other factors
as we deemed relevant under the circumstances, including:
(i) a draft, dated May 2, 1999, of the Agreement;
(ii) certain publicly available historical, financial and operating data for
the Company including, but not limited to, (a) the Annual Report to
shareholders and Annual Report on Form 10-K for the fiscal year ended
March 27, 1998, (b) the Quarterly Report on Form 10-Q for the fiscal
quarter ended December 25, 1998, (c) the Report on Forms 8-K and 8-K/A,
in connection with the Company's acquisition of Radian International
LLC, as filed with the Securities and Exchange Commission on August 14,
1998 and October 9, 1998, respectively, and (d) the Proxy Statement
relating to the annual meeting of shareholders held on June 23, 1998;
(iii) historical stock market prices and trading volumes for the Company
Common Stock;
(iv) certain information relating to the Company, including a draft income
statement and balance sheet for the 1999 fiscal year prepared by the
management of the Company, and projected balance sheet, income statement
and cash flow data for the 2000 fiscal year, prepared by the management
of the Company;
(v) publicly available financial, operating and stock market data concerning
certain companies engaged in businesses that we deemed comparable to the
Company or otherwise relevant to our inquiry;
(vi) the financial terms of certain recent transactions that we deemed
relevant to our inquiry; and
(vii) such other financial studies, analyses and investigations that we deemed
relevant to our inquiry.
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We have assumed, with your consent, that the draft of the Agreement we
reviewed will conform in all material respects to the Agreement when in final
form.
We have met with the senior management of the Company to discuss (i) the
past and current operating and financial condition of the Company, (ii) the
prospects for the Company, (iii) their estimates of the Company's future
financial performance, and (iv) such other matters we deemed relevant.
In connection with our review and analysis and in arriving at our opinion,
we have relied upon the accuracy and completeness of the financial and other
information provided to us by the Company and have not undertaken any
independent verification of such information or any independent valuation or
appraisal of any of the assets or liabilities of the Company nor has any such
valuations or appraisals been provided to us. With respect to certain
financial forecasts provided to us by the Company, we have assumed that such
information (and the assumptions and bases therefor) has been reasonably
prepared and represents the Company's best currently available estimate as to
the future financial performance of the Company. Further, our opinion is
necessarily based on economic, financial and market conditions as they exist
and can only be evaluated as of the date hereof.
In connection with the preparation of this opinion, we have not been
authorized by the Company or its Board of Directors to solicit, nor have we
solicited, third party indications of interest for the acquisition of all or
part of the Company.
Our opinion does not address nor should it be construed to address the
relative merits of the Transaction or alternative business strategies that may
be available to the Company.
As you know, we have been retained by the Board of Directors of the Company
to render this opinion and to serve as the Company's financial advisor in
connection with the Transaction and will receive a fee from the Company for
such services, a portion of which fee is contingent upon consummation of the
Transaction. In the ordinary course of business we may actively trade the
Shares of Company Common Stock 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.
This letter and the opinion expressed herein are for the use and benefit of
the Board of Directors of the Company. This opinion does not constitute a
recommendation to the shareholders of the Company as to whether such
shareholders should tender their Shares in the Offer or how such shareholders
should vote in connection with the Merger or as to any other action such
shareholders should take regarding the Transaction. This opinion may not be
reproduced, summarized, excerpted from or otherwise publicly referred to or
disclosed in any manner without our prior written consent; except that the
Company may include this opinion in its entirety in any materials relating to
the Offer or Merger sent to the Company's shareholders and filed with the
Securities and Exchange Commission.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Consideration to be received by the holders of Company
Common Stock pursuant to the Transaction is fair from a financial point of
view.
Very truly yours,
Prudential Securities Incorporated
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