1
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BDM INTERNATIONAL, INC.
BY
SYSTEMS ACQUISITION INC.
A WHOLLY OWNED SUBSIDIARY OF
TRW INC.
AT
$29.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, DECEMBER 24, 1997, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF BDM INTERNATIONAL, INC. HAS UNANIMOUSLY APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT,
INCLUDING THE OFFER, THE MERGER AND THE STOCKHOLDERS AGREEMENT (AS SUCH TERMS
ARE DEFINED HEREIN), HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS AND RECOMMENDS THAT THE
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN)
PURSUANT TO THE OFFER. IN CONNECTION WITH THE EXECUTION OF THE MERGER AGREEMENT,
CERTAIN AFFILIATES OF THE CARLYLE GROUP, L.P., WHICH BENEFICIALLY OWN
APPROXIMATELY 25.8% OF THE OUTSTANDING SHARES, HAVE AGREED, AMONG OTHER THINGS,
TO TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE, A NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE TOTAL VOTING POWER OF
SECURITIES OF THE COMPANY ENTITLED TO VOTE IN THE ELECTION OF DIRECTORS OR IN A
MERGER, CALCULATED ON A FULLY DILUTED BASIS, AND (ii) ANY APPLICABLE WAITING
PERIOD UNDER THE XXXX-XXXXX-XXXXXX ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT"), HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO
SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 14.
------------------------
Stockholders desiring to tender all or any portion of their Shares should
either (1) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) representing tendered Shares and any
other required documents to the Depositary (as defined herein) or tender such
Shares pursuant to the procedure for book-entry transfer set forth in Section 3
or (2) request such Stockholder's broker, dealer, commercial bank, trust company
or other nominee to effect such transaction on the Stockholder's behalf. If
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee, Stockholders must contact such broker, dealer,
commercial bank, trust company or other nominee if they desire to tender the
Shares so registered. A Stockholder who desires to tender Shares and whose
certificates representing such Shares are not immediately available, or who
cannot comply with the procedure for book-entry transfer on a timely basis, may
tender such Shares by following the procedures for guaranteed delivery set forth
in Section 3.
Questions and requests for assistance may be directed to Bear, Xxxxxxx &
Co. Inc. (the "Dealer Manager") or to Xxxxxxxxx & Company Inc. (the "Information
Agent") at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent or the Dealer Manager, or from
brokers, dealers, commercial banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
BEAR, XXXXXXX & CO. INC.
November 26, 1997
2
TABLE OF CONTENTS
PAGE
----
INTRODUCTION.......................................................................... 1
THE TENDER OFFER...................................................................... 2
1. Terms of the Offer; Expiration Date.............................................. 2
2. Acceptance for Payment and Payment for Shares.................................... 4
3. Procedures for Tendering......................................................... 5
4. Withdrawal Rights................................................................ 8
5. Certain Federal Income Tax Consequences.......................................... 8
6. Price Range of Shares; Dividends................................................. 9
7. Certain Information Concerning the Company....................................... 9
8. Certain Information Concerning Parent and Purchaser.............................. 13
9. Source and Amount of Funds....................................................... 15
10. Background of the Offer.......................................................... 16
11. Purpose; Merger Agreement; Stockholders Agreement;
Vote Required to Approve the Merger; Appraisal Rights;
Plans for the Company; Going Private Transactions................................ 17
12. Dividends and Distributions...................................................... 31
13. Effect of the Offer on the Market for Shares,
Nasdaq Listing and Exchange Act Registration..................................... 32
14. Certain Conditions of the Offer.................................................. 33
15. Certain Legal Matters and Regulatory Approvals................................... 34
16. Fees and Expenses................................................................ 37
17. Miscellaneous.................................................................... 38
SCHEDULE I
Certain Information Regarding the Directors and
Executive Officers of Parent and Purchaser....................................... I-1
3
TO THE STOCKHOLDERS OF BDM INTERNATIONAL, INC.:
INTRODUCTION
Systems Acquisition Inc. ("Purchaser"), a wholly owned subsidiary of TRW
Inc., an Ohio corporation ("Parent"), hereby offers to purchase all the
outstanding shares of Common Stock (the "Shares") of BDM International, Inc., a
Delaware corporation (the "Company"), at $29.50 per Share, net to the seller in
cash without interest thereon (the "Per Share Amount"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE TOTAL VOTING POWER OF
SECURITIES OF THE COMPANY ENTITLED TO VOTE IN THE ELECTION OF DIRECTORS OR IN A
MERGER, CALCULATED ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"), AND (ii)
ANY APPLICABLE WAITING PERIOD UNDER THE HSR ACT HAVING EXPIRED OR BEEN
TERMINATED. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION
14.
Tendering Stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares pursuant to the Offer.
Purchaser will pay all fees and expenses of Bear, Xxxxxxx & Co. Inc. ("Bear
Xxxxxxx"), which is acting as dealer manager for the Offer (in such capacity,
the "Dealer Manager"), First Chicago Trust Company of New York ("First
Chicago"), which is acting as the depositary (in such capacity, the
"Depositary"), and Xxxxxxxxx & Company Inc. ("Georgeson"), which is acting as
the information agent (in such capacity, the "Information Agent"), incurred in
connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT, INCLUDING THE OFFER, THE MERGER AND THE STOCKHOLDERS AGREEMENT (AS
DEFINED HEREIN), HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND
IN THE BEST INTERESTS OF, THE STOCKHOLDERS AND RECOMMENDS THAT THE STOCKHOLDERS
OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Xxxxxxxxxxx Xxxxxxx & Co., Inc., the Company's financial advisor ("WP&Co."), has
delivered to the Company Board its written opinion to the effect that, as of
November 20, 1997, the date of such opinion, the cash consideration to be
received by Stockholders pursuant to the Offer and the Merger is fair to
Stockholders from a financial point of view. Such opinion is set forth in full
as an exhibit to the Company's Schedule 14D-9. The Company has filed with the
Securities and Exchange Commission (the "Commission") a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which is being mailed to Stockholders simultaneously with the Offer to Purchase.
In connection with the execution of the Merger Agreement, Parent and
certain affiliates of The Carlyle Group, L.P., which beneficially own 25.8% of
the outstanding Shares, entered into a Stockholders Agreement (the "Stockholders
Agreement") pursuant to which those Stockholders (the "Carlyle Stockholders")
agreed, among other things, to tender their Shares pursuant to the Offer. See
Section 11.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 20, 1997 (the "Merger Agreement"), among the Company, Parent and
Purchaser. The Merger Agreement provides, among other things, that as soon as
practicable after the satisfaction or waiver of the conditions to the merger set
forth in the Merger Agreement, on the terms and subject to the conditions of the
Merger Agreement and in accordance with the Delaware General Corporation Law
(the "Delaware Code"), Purchaser will be merged with and into the Company (the
"Merger"), with the Company continuing as the surviving corporation in the
Merger (the "Surviving Corporation") and as a wholly owned subsidiary of Parent.
At the effective time of the Merger (the "Effective Time"), subject to certain
exceptions, each issued and outstanding Share will be converted into the right
to receive the Per Share Amount or such higher price as may be paid in the Offer
(the "Merger Consideration"), less any required withholding taxes. The Merger
Agreement is more fully described in Section 11.
4
The Merger Agreement provides that promptly upon purchase by Purchaser of
any Shares pursuant to the Offer (assuming the Minimum Condition has been
satisfied), and from time to time thereafter as Shares are acquired by
Purchaser, Purchaser will be entitled to designate such number of members,
rounded up to the next whole number, of the Company Board as will give Purchaser
representation on the Company Board equal to at least that number of directors
which is the product of (i) the total number of directors on the Company Board
(giving effect to the directors appointed or elected pursuant to this sentence
and including current directors serving as officers of the Company) multiplied
by (ii) the percentage that (a) the aggregate number of such Shares beneficially
owned by Purchaser or any affiliate of Parent bears to (b) the number of Shares
outstanding. Notwithstanding the foregoing, Parent and Purchaser have agreed
that, until the Effective Time, the Company Board will have at least one member
who was a director on the date of the Merger Agreement and who is neither an
officer of the Company nor a designee, stockholder, affiliate or associate
(within the meaning of the federal securities laws) of Parent (one or more of
such directors, the "Independent Directors"), provided that, if no Independent
Directors remain, the Merger Agreement requires the other members of the Company
Board to designate one person to fill one of the vacancies who shall not be
either an officer of the Company or a designee, shareholder, affiliate or
associate of Parent, and such person will be deemed to be an Independent
Director for purposes of the Merger Agreement. The Company has agreed to
increase the size of the Company Board as is necessary to enable Purchaser's
designees to be elected or appointed to the Company Board. Purchaser is
similarly entitled to proportionate representation on committees of the Company
Board. The information required by Section 14(f) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and Rule 14f-1 promulgated thereunder
relating to Purchaser's designees to the Company Board is included as Schedule
II to the Company's Schedule 14D-9.
Under the Delaware Code, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then-outstanding Shares, Purchaser will be able
to adopt the Merger Agreement and the transactions contemplated thereby,
including the Merger, without a vote of the Stockholders. In such event, Parent,
Purchaser and the Company have agreed to take, at the request of Purchaser, all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition. If, however, the Purchaser does not
acquire at least 90% of the then-outstanding Shares pursuant to the Offer or
otherwise, a vote of Stockholders will be required to adopt the Merger Agreement
under the Delaware Code and a significantly longer period of time may be
required to effect the Merger. See Section 11. If the Minimum Condition has been
satisfied in connection with the Offer, however, Purchaser will have sufficient
voting power to adopt the Merger Agreement without the vote in favor of the
adoption of the Merger Agreement by any other Stockholder.
According to the Company, as of the close of business on November 19, 1997,
29,723,431 Shares were issued and outstanding. For purposes of the Offer, in
determining the number of Shares outstanding calculated on a "fully diluted
basis," there will be included the number of outstanding securities of the
Company entitled to vote in the election of directors or in a merger ("Voting
Securities") together with Voting Securities issuable pursuant to obligations
outstanding at that date under the Company's employee stock option or other
benefit plans or otherwise. Based upon the foregoing, the Minimum Condition
would be satisfied if at least 14,861,717 Shares were validly tendered in the
Offer and not properly withdrawn.
As of the date of this Offer to Purchase, neither Parent nor Purchaser
beneficially owns any Shares. Pursuant to the Stockholders Agreement, Purchaser
has an option exercisable upon the occurrence of certain future events to
acquire the 7,660,000 Shares (25.8% of the outstanding Shares) beneficially
owned by the Carlyle Stockholders. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares
2
5
validly tendered on or prior to the Expiration Date of the Offer and not
properly withdrawn as permitted and described in Section 4 herein. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Wednesday,
December 24, 1997, unless and until Purchaser, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), shall have
extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION AND CERTAIN OTHER CONDITIONS (THE "OFFER CONDITIONS"). SEE
SECTION 14, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER. SUBJECT TO THE
PROVISIONS OF THE MERGER AGREEMENT AND THE APPLICABLE RULES AND REGULATIONS OF
THE COMMISSION, PURCHASER RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO WAIVE
ANY OR ALL CONDITIONS TO THE OFFER (OTHER THAN THE MINIMUM CONDITION) AND TO
MAKE ANY OTHER CHANGES IN THE TERMS AND CONDITIONS OF THE OFFER. SUBJECT TO THE
PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THOSE PROVISIONS DESCRIBED IN THE
NEXT PARAGRAPH, AND THE APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, IF,
BY THE EXPIRATION DATE, ANY OR ALL OF SUCH CONDITIONS TO THE OFFER HAVE NOT BEEN
SATISFIED, PURCHASER RESERVES THE RIGHT (BUT SHALL NOT BE OBLIGATED) TO (i)
DECLINE TO PURCHASE ANY OF THE SHARES TENDERED IN THE OFFER AND TERMINATE THE
OFFER AND RETURN ALL TENDERED SHARES TO TENDERING STOCKHOLDERS, (ii) WAIVE SUCH
UNSATISFIED CONDITIONS TO THE EXTENT PERMITTED BY LAW AND THE MERGER AGREEMENT
AND PURCHASE ALL SHARES VALIDLY TENDERED, (iii) EXTEND THE OFFER AND, SUBJECT TO
THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF STOCKHOLDERS TO WITHDRAW THEIR
SHARES), RETAIN THE SHARES WHICH HAVE BEEN TENDERED, UNTIL THE TERMINATION OF
THE OFFER, AS EXTENDED, OR (iv) AMEND THE OFFER. THE RIGHTS RESERVED BY
PURCHASER IN THIS AND THE FOLLOWING PARAGRAPH ARE IN ADDITION TO PURCHASER'S
RIGHTS TO TERMINATE THE OFFER AS DESCRIBED IN SECTION 14.
The Merger Agreement provides, however, that, subject to the applicable
rules and regulations of the Commission, Purchaser expressly reserves the right,
in its sole discretion, at any time or from time to time, subject to the terms
of the Merger Agreement and regardless of whether or not any of the events set
forth in Section 14 shall have occurred or shall have been determined by the
Purchaser to have occurred (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Shares, by giving oral or written notice of such extension to the
Depositary, and (ii) to amend the Offer in any respect by giving oral or written
notice of such amendment to the Depositary. The rights reserved by the Purchaser
in this paragraph are in addition to Purchaser's rights to terminate the Offer
pursuant to Section 14. Parent and Purchaser will not terminate or withdraw the
Offer or extend the Expiration Date, unless at the Expiration Date, the Offer
Conditions shall not have been satisfied or earlier waived. Notwithstanding the
foregoing, Purchaser may (i) extend the Expiration Date (including as it may be
extended) for up to ten business days in connection with an increase in the
consideration to be paid pursuant to the Offer so as to comply with applicable
rules and regulations of the Commission, (ii) in its sole discretion, extend the
initial Expiration Date for up to ten business days after the initial Expiration
Date, and (iii) extend the initial Expiration Date (including as it may be
extended) for up to ten business days, notwithstanding that on such Expiration
Date the Offer Conditions shall have been satisfied or waived, if the number of
Shares that have been validly tendered and not properly withdrawn represent more
than 50% but less than 90% of the voting power of the then issued and
outstanding Shares; provided, however, that, in the case of clause (iii) of this
sentence, Parent and Purchaser expressly and irrevocably waive any Offer
Condition that subsequently may not be satisfied during such extension of the
Offer. During any such extension, all Shares previously tendered and not
properly withdrawn will remain subject to the Offer, subject to the right of a
tendering Stockholder to withdraw such Stockholder's Shares. Under the terms of
the Merger Agreement, however, unless previously approved by the Company in
writing, Parent shall not permit Purchaser to (i) decrease the Per Share Amount
or change the form of consideration payable in the Offer, (ii) decrease the
number of Shares sought in the Offer, (iii) amend or waive satisfaction of the
Minimum Condition, or (iv) impose additional conditions to the Offer or amend
any other terms of the Offer in any manner adverse to the Stockholders,
provided, however, that nothing in the Merger Agreement will prohibit any waiver
of any condition or term of the Offer (other than the Minimum Condition) or any
other action permitted thereby. Purchaser shall have no obligation to pay
interest on the purchase price of tendered Shares, whether or not it exercises
its rights to extend the Offer.
3
6
Any extension, delay, termination, waiver or amendment of the Offer will be
followed as promptly as practicable by public announcement thereof. In the case
of an extension, such announcement will be made in accordance with Rules
14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act no later than 9:00 A.M.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Without limiting the manner in which Purchaser may choose to
make any public announcement, except as provided by applicable law (including
Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act which require that
material changes be promptly disseminated to holders of Shares), Purchaser
currently intends to make any such public announcements by issuing a release to
the Dow Xxxxx News Service.
If Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, Purchaser will disseminate additional
tender offer material and extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer, other than a change in price or a change in the percentage of securities
sought, will depend upon the facts and circumstances, including the materiality,
of the changes. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought, a minimum ten
business day period from the day of such change is generally required to allow
for adequate dissemination to stockholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday, or federal holiday,
and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time.
The Company has provided Purchaser with a list of its Stockholders and
security position listings for the purpose of disseminating the Offer to
Stockholders. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by Purchaser to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and, as soon as permitted after
the Expiration Date, purchase all Shares validly tendered and not properly
withdrawn on or prior to the Expiration Date. In addition, subject to applicable
rules of the Commission, Purchaser expressly reserves the right to delay
acceptance for payment of or payment for Shares until any applicable waiting
period under the HSR Act and similar German laws shall have expired or been
terminated prior to the Expiration Date. Any such delays will be effected in
compliance with Rule 14e-1(c) under the Exchange Act.
For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including the HSR Act and similar German laws,
see Section 15.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares ("Share Certificates") or timely confirmation of a
book-entry transfer of such Shares (a "Book-Entry Confirmation") into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (each a "Book-Entry Transfer Facility" and,
collectively, the "Book-Entry Transfer Facilities"), pursuant to the procedures
set forth in Section 3; (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined below) in connection with a book-entry transfer;
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering Shares that such participant has received and agrees
to be bound by the terms of the Letter of Transmittal and that Purchaser may
enforce such agreement against such participant.
4
7
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as of the Expiration Date, if, as and when Purchaser gives oral or
written notice to the Depositary of Purchaser's acceptance for payment of such
Shares pursuant to the Offer. Upon the terms and subject to the conditions of
the Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering Stockholders for the purpose of receiving payments
from Purchaser and transmitting such payments to Stockholders whose Shares have
been accepted for payment. Upon the deposit of funds with the Depositary for the
purpose of making payments to tendering Stockholders, Purchaser's obligation to
make such payment shall be satisfied, and tendering Stockholders must thereafter
look solely to the Depositary for payment of amounts owed to them by reason of
the acceptance for payment of Shares pursuant to the Offer. Purchaser will pay
any stock transfer taxes with respect to the transfer and sale to it or its
order pursuant to the Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal, as well as any expenses of the Dealer Manager, the
Depositary and the Information Agent incurred in connection with the Offer.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PER SHARE AMOUNT BE PAID BY
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. If, for any reason whatsoever, acceptance for payment of or payment for
any Shares validly tendered pursuant to the Offer is delayed or Purchaser is
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
then without prejudice to Purchaser's rights set forth herein, the Depositary
may nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares, and such Shares may not be withdrawn
except to the extent that the tendering Stockholder is entitled to and duly
exercises withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned
without expense to the tendering Stockholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will be
credited to the appropriate Stockholder's account maintained at such Book-Entry
Transfer Facility) as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
Parent reserves the right to designate another direct subsidiary of Parent
in lieu of Purchaser as the bidder (within the meaning of Rule 14d-1(c)) in the
Offer, but Parent shall remain responsible for the performance of such bidder
and will in no way prejudice the rights of tendering Stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURES FOR TENDERING.
Valid Tenders. Except as set forth below, in order for Shares to be
validly tendered pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date. In addition, the Depositary must receive either: (i) Share Certificates
evidencing validly tendered Shares or Book-Entry Confirmation of book-entry
transfer of such Shares or (ii) Notice of Guaranteed Delivery of such Shares
prepared and executed as described below, in each case on or prior to the
Expiration Date.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to Shares at the Book-Entry Transfer Facilities for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of any
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
such Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other
documents required by the Letter of Transmittal, must in any case be received
5
8
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedures described below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"), except in cases where Shares are tendered (i) by a
registered Stockholder who has not completed either the box labeled "Special
Payment Instructions" or the box labeled "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates not accepted for payment or not tendered are to be returned, to a
person other than the registered Stockholder, the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name of the registered Stockholder appears on such certificates,
with the signatures on such certificates or stock powers guaranteed as
aforesaid. See Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to
the Offer and such Stockholder's Share Certificates are not immediately
available, or such Stockholder cannot deliver the Share Certificates and all
other required documents in time to reach the Depositary on or prior to the
Expiration Date, or such Stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser with this Offer
to Purchase, is received by the Depositary as provided below on or prior to
the Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation),
representing all tendered Shares in proper form for transfer, together with
the Letter of Transmittal (or a facsimile thereof) properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
Nasdaq National Market trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
Stockholder owns Shares tendered within the meaning of, and that the tender of
Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each
in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
6
9
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering Stockholders at the same
time and will depend upon when Share Certificates or Book-Entry Confirmations of
such Shares are received into the Depositary's account at a Book-Entry Transfer
Facility. Under no circumstances will interest be paid on the purchase price of
the Shares to be paid by Purchaser, regardless of any extension of the Offer or
any delay in making such payment.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser and each of them as such
Stockholder's attorneys-in-fact and proxies, with full power of substitution, in
the manner set forth in the Letter of Transmittal, to the full extent of such
Stockholder's rights with respect to Shares tendered by such Stockholder and
accepted for payment by Purchaser (and with respect to any and all other Shares
or other securities issued or issuable in respect of such Shares on or after the
date hereof). All such powers of attorney and proxies shall be considered
irrevocable and coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, Purchaser
accepts such Shares for payment. Upon such acceptance for payment, all prior
powers of attorney and proxies given by such Stockholder with respect to such
Shares (and such other Shares and securities) will be revoked without further
action, and no subsequent powers of attorney and proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The designees of Purchaser will, with respect to Shares (and
such other Shares and securities) for which such appointment is effective, be
empowered to exercise all voting and other rights of such Stockholder as they,
in their sole discretion, may deem proper at any annual or special meeting of
the Company's Stockholders or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's payment for such Shares, Purchaser must be able to
exercise full voting and other rights with respect to such Shares and other
securities, including rights in respect of voting at any meeting of Stockholders
and acting by such written consent.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may in the opinion of its
counsel be unlawful. Purchaser also reserves the absolute right to waive any of
the conditions of the Offer (other than the Minimum Condition) or any defect or
irregularity in any tender of Shares of any particular Stockholder whether or
not similar defects or irregularities are waived in the case of other
Stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. None of Parent,
Purchaser, any of their affiliates or assigns, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding on all parties.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer. In order to avoid backup withholding, each Stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the payer of such
cash with such Stockholder's correct taxpayer identification number ("TIN") on a
substitute Form W-9 and certify, under penalties of perjury, that such TIN is
correct and that such Stockholder is not subject to backup withholding. If a
Stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such Stockholder, and payment of cash to such Stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All Stockholders
surrendering Shares pursuant to the Offer should complete and sign the
substitute Form W-9 included in the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to the
Depositary). Certain Stockholders (including, among others, all
7
10
corporations and certain foreign individuals and entities) are not subject to
backup withholding. Noncorporate foreign Stockholders should complete and sign a
Form W-8, Certificate of Foreign Status, a copy of which may be obtained from
the Depositary, in order to avoid backup withholding. See Instruction 10 of the
Letter of Transmittal.
Other Requirements. Purchaser's acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering Stockholder and Purchaser, upon the terms and
subject to the conditions of the Offer, including the tendering Stockholder's
representation and warranty that the Stockholder is the holder of Shares within
the meaning of, and that the tender of Shares complies with, Rule 14e-4 under
the Exchange Act.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after January 25, 1998.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares, or is unable to purchase Shares validly tendered pursuant to the Offer
for any reason, then without prejudice to Purchaser's rights under the Offer,
the Depositary may nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
Stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay in acceptance for payment will be accompanied by an extension of
the Offer to the extent required by law. See Section 1.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses or facsimile numbers set forth on the back
cover of this Offer to Purchase. Any notice of withdrawal must specify the name
of the person who tendered Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered Stockholder, if different from that of
the person who tendered such Shares. If Share Certificates to be withdrawn have
been delivered or otherwise identified to the Depositary, then prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary, and the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3, any notice of withdrawal must specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares, in which case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in the first
sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of Parent, Purchaser, any of their affiliates or assigns, the Dealer Manager,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The summary of tax consequences set forth below is for general information
only and is based on the law as currently in effect. The tax treatment of each
Stockholder will depend in part upon such Stockholder's particular situation.
Special tax consequences not described herein may be applicable to particular
classes of taxpayers, such as financial institutions, broker-dealers, persons
who are not citizens or residents of the United States, Stockholders who
acquired their Shares through the exercise of an employee stock option or
otherwise as compensation, and persons who received payments in respect of
options to acquire Shares. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE
8
11
MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE
MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND
CHANGES IN SUCH TAX LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended, and may also be a taxable transaction under applicable state,
local, foreign income or other tax laws. Generally, for federal income tax
purposes, a tendering Stockholder will recognize gain or loss in an amount equal
to the difference between the cash received by the
Stockholder pursuant to the Offer or the Merger and the Stockholder's adjusted
tax basis in Shares tendered by the Stockholder and purchased pursuant to the
Offer or converted into cash in the Merger. Various tax rates apply to capital
gains depending upon the holding period, and there are limitations on the
deductibility of capital losses.
6. PRICE RANGE OF SHARES; DIVIDENDS.
From October 1990 through June 28, 1995, the Company's Shares were not
traded on any national exchange or on the over-the-counter market. Since June
29, 1995, the Company's Shares have been traded on the Nasdaq National Market
(Symbol: BDMI). The following table sets forth the high and low sales prices per
Share for the quarters indicated on the Nasdaq National Market as reported in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996
with respect to periods occurring in 1995 and 1996 and as reported by the Dow
Xxxxx News Service thereafter. The Company has advised Purchaser that it neither
declared nor paid any dividends since June 29, 1995.
HIGH* LOW*
------ ------
Year Ended December 31, 1995:
June 29 and 30, 1995........................................ $10.75 $ 9.94
Third Quarter............................................... $14.25 $10.13
Fourth Quarter.............................................. $15.25 $11.88
Year Ended December 31, 1996:
First Quarter............................................... $20.57 $12.72
Second Quarter.............................................. $24.50 $18.13
Third Quarter............................................... $30.75 $22.50
Fourth Quarter.............................................. $30.00 $22.13
Year Ended December 31, 1997:
First Quarter............................................... $28.63 $20.50
Second Quarter.............................................. $27.63 $19.75
Third Quarter............................................... $27.00 $21.38
Fourth Quarter through November 25, 1997.................... $29.75 $20.00
---------------
* Sales prices for 1995 and 1996 are adjusted for the 2:1 stock split that
became effective March 20, 1997.
On November 20, 1997, the last full trading day prior to the public
announcement of the Merger Agreement and Purchaser's intention to commence the
Offer, the closing sale price per Share reported on the Nasdaq National Market
was $22.50. On November 25, 1997, the last full trading day before commencement
of the Offer, the closing sale price per Share reported on the Nasdaq National
Market was $29.25. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE SHARES.
As outlined in the Company's 1996 Annual Report on Form 10-K, the Company
does not have a policy of paying regular dividends and has no present intention
of paying any dividends. The payment of dividends is subject to the discretion
of the Company Board and will depend on the Company's results of operations,
financial position and capital requirements, general business conditions,
restrictions imposed by financing arrangements, if any, legal restrictions on
the payment of dividends, and other factors, such as continued growth
opportunities in which to invest, which the Company Board deems relevant. In
addition, pursuant to the Company's credit facility, dividends can only be paid
after September 1, 1996, and are not to exceed 20% of the Company's cumulative
net income subsequent to July 1, 1996. The payment of future dividends by the
Company should not be assumed.
Pursuant to the Merger Agreement, the Company has agreed, from the date of
the Merger Agreement until the Effective Time, not to declare, pay or set aside
any dividend or other distribution, other than dividends or
9
12
distributions to the Company or the Company Subsidiaries (as defined in the
Merger Agreement) in the ordinary course of business, without the prior written
consent of Parent.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Section 7 and
elsewhere in this Offer to Purchase, including financial information, has been
taken or derived from information furnished to Parent and Purchaser by the
Company or on file with the Commission and other public sources, including,
among other things, the Company's Annual Reports on Form 10-K for the years
ended December 31, 1996 and December 31, 1995 and the Company's Quarterly
Reports on Form 10-Q for the nine months ended September 30, 1997 and September
30, 1996. Although Parent and Purchaser do not have any knowledge that would
indicate that any statements contained herein are untrue in any material
respect, neither Parent nor Purchaser assumes any responsibility for the
accuracy or completeness of the information contained therein, or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information but which are unknown to
Parent and Purchaser.
General. The Company was formed in 1959 under the name of Xxxxxxxx, Xxxx &
XxXxxxxx, Incorporated and later reorganized under the name of BDM
International, Inc. (the "Predecessor Company"). The Predecessor Company was a
public company from 1980 until 1988, at which time a wholly owned subsidiary of
Ford Motor Company acquired all the outstanding stock of the Predecessor
Company. In October 1990, a group of investors, including the Carlyle
Stockholders, formed the Company and acquired the Predecessor Company.
The Company is a multinational information technology company that operates
in three interrelated markets: systems and software integration, computer and
technical services, and enterprise management and operations. Effective December
31, 1996, the Company reorganized its business operations into five strategic
business units: federal systems, state and local systems, enterprise management
services, integrated supply chain solutions and BDM Europe.
The Company is a Delaware corporation with its principal offices located at
0000 XXX Xxx, XxXxxx, Xxxxxxxx 00000-0000. The telephone number of the Company
at such offices is (000) 000-0000.
Summary Financial Information. Set forth below is a summary of certain
consolidated financial information with respect to the Company taken or derived
from the Company's Annual Reports on Form 10-K for the years ended December 31,
1996 and December 31, 1995 and the Company's Quarterly Reports on Form 10-Q for
the nine months ended September 30, 1997 and September 30, 1996, each as filed
by the Company with the Commission. As set forth in the Company's Quarterly
Report on Form 10-Q for the three months ended March 31, 1997, the amounts have
been restated to give retroactive recognition to the Company's two-for-one stock
split in the form of a stock dividend. The summary information set forth below
is qualified in its entirety by reference to such reports (which may be obtained
and inspected as described below) and should be considered in conjunction with
the more comprehensive financial and other information in such reports and other
publicly
10
13
available reports and documents filed by the Company with the Commission and
other publicly available information.
BDM INTERNATIONAL, INC.
SELECTED SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NINE MONTH ENDED FISCAL YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------- --------------------------------
1997 1996 1996 1995 1994
-------- -------- ---------- -------- --------
INCOME STATEMENT DATA
Revenue........................... $818,316 $723,727 $1,001,559 $889,974 $774,249
Net income........................ 9,140 15,961 17,675 18,392 13,078
BALANCE SHEET DATA
Working capital................... 167,270 137,101 136,905 116,124 94,914
Total assets...................... 497,154 369,712 420,654 363,793 335,551
Total assets less excess cost of
assets acquired over book
value.......................... 431,719 347,099 384,773 354,178 321,737
Total indebtedness................ 314,359 205,559 253,399 248,324 294,446
Stockholder's equity.............. 182,795 164,153 167,255 115,469 41,105
PER SHARE DATA
Net income per share.............. 0.30 0.55 0.61 0.78 0.60
Net income per share on fully
diluted basis.................. 0.30 0.55 0.60 0.77 0.59
Certain Company Projections. The Company has informed Parent that it does
not, as a matter of course, make public forecasts as to its future financial
performance. However, in the course of discussions giving rise to the Merger
Agreement (see Section 10), the Company prepared and furnished Parent with
certain business and financial information that was not publicly available,
including certain projections for 1997 through 2000 prepared for the Company's
internal purposes (the "Projections").
The Projections were prepared solely for the Company's internal purposes
and were not prepared for publication or with a view to complying with the
published guidelines of the Commission regarding projections or with the AICPA
Guide for Prospective Financial Statements, and the Projections are being
included in this Offer to Purchase solely because they were furnished to Parent
in connection with the discussions giving rise to the Merger Agreement. The
independent accountants of the Company, Xxxxxxx & Xxxxxxx L.L.P., have neither
examined nor compiled the Projections and, accordingly, do not express an
opinion or any other form of assurance with respect thereto. The reports of
Xxxxxxx & Xxxxxxx L.L.P. included the Company's Annual Reports on Form 10-K
referred to in this Offer to Purchase relate to the historical financial
information of the Company, do not extend to the Projections and should not be
read to do so.
The Projections set forth below necessarily reflect numerous assumptions
with respect to the general business and economic conditions and other matters,
many of which are inherently uncertain or beyond the Company's, Parent's or
Purchaser's control, and do not take into account any changes in the Company's
operations or capital structure which may result from the Offer and the Merger.
It is not possible to predict whether the assumptions made in preparing the
Projections will be valid and actual results may prove to be materially higher
or lower than those contained in the Projections. The inclusion of the
forward-looking information contained in the Projections should not be regarded
as an indication that the Company, Parent or anyone else who received this
information considered it a reliable prediction of future events, and this
information should not be relied on as such. Neither the Company, Parent or
Purchaser nor any of their representatives assumes any responsibility for the
validity, reasonableness, accuracy or completeness of the
11
14
Projections, and the Company has made no representation to Parent or Purchaser
regarding the Projections. None of the Company, Parent, Purchaser or any other
party intends publicly to update or otherwise publicly revise the Projections
set forth below even if experience or future changes make it clear that the
Projections will not be realized.
The Projections are as follows:
ESTIMATES FOR THE YEAR ENDING DECEMBER 31,
---------------------------------------------
1997* 1998 1999 2000
------ -------- -------- --------
(in millions)
Net sales............................ $960.4 $1,152.0 $1,353.5 $1,586.5
Cost of goods sold................... 800.3 945.1 1,103.2 1,283.6
Net operating profit................. 51.6 84.0 110.9 145.4
Net income........................... 25.7 41.5 56.9 77.6
---------------
* The 1997 Projections exclude the effects of a third quarter pre-tax charge of
$14.7 million relating to a resolution of issues involving a state government
contract.
The Company has informed Parent and Purchaser that principal assumptions
underlying the Projections are as follows:
(i) No acquisitions during the Projection period;
(ii) Sales increases at a compounded annual rate of approximately 18% over
the period 1997 to 2000 (which compares to the Company's compound
annual sales growth rate of 24% over the four years ended December
31, 1996);
(iii) Gross margin percentage improvement from approximately 17% in 1997 to
19% in 2000, assuming the Company's commercial information technology
business becomes a larger portion of its total business;
(iv) Net operating profit percentage improvement from approximately 5% in
1997 to 9% in 2000, assuming research and development expense remains
constant at $4 million per year and other key elements of operating
costs, as a percentage of sales, remain relatively constant;
(v) Income tax rates of 43%, 45%, 42% and 39% for the years 1997, 1998,
1999 and 2000, respectively; and
(vi) Equity method of accounting for the Company's 45% ownership interest
in IABG Holding GmbH as a result of the Company's agreement to
relinquish voting control, although retaining the same interest in
earnings, effective January 1, 1998 (through 1997, this investment
was accounted for on a consolidated basis).
The foregoing Projections were prepared for the Company's internal
purposes, do not reflect or give effect to the Offer or the Merger and
transactions related thereto (including the financing for the Offer) and,
accordingly, are not necessarily indicative of the results of operations of the
Company following the Offer or the Merger.
Available Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements of
the Exchange Act and therefore is obligated to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning the Company's directors and officers, their remuneration, options
granted to them, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company is required
to be disclosed in such proxy statements and distributed to the Stockholders and
filed with the Commission. Such reports, proxy statements and other information
should be available for inspection at the public reference facilities of the
Commission located in Judiciary Plaza, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000, and should also be available for inspection and copying at prescribed
rates at the regional offices of the Commission located at Citicorp Center, 000
Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, and Seven World Trade
Center, Suite 0000, Xxx Xxxx, Xxx Xxxx 00000. Such reports, proxy statements and
other information may also be obtained at the Web site that the Commission
maintains at xxxx://xxx.xxx.xxx. Copies of this material may also be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 000 Xxxxx Xxxxxx, X.X.,
12
15
Washington, D.C. 20549. In addition, such material should also be available for
inspection at the library of the Nasdaq National Market System, 0000 X Xxxxxx,
X.X., Xxxxxxxxxx, X.X. 00000.
8. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
General. Parent, with 1996 sales of approximately $10 billion, has its
world headquarters at 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxx 00000 and has
approximately 68,000 employees based in over 26 countries. The telephone number
for Parent is (000) 000-0000.
Parent is an international manufacturing and service company that provides
advanced technology products and services. The principal businesses of Parent
and its subsidiaries are the design, manufacture and sale of products and the
performance of systems engineering, research and technical services for industry
and the United States Government in two industry segments: automotive and space
& defense. Parent's principal products and services include automotive systems
and components; spacecraft; software and systems engineering support services;
and electronic systems, equipment and services. Parent holds leading positions
in most of its markets.
Purchaser, a Delaware corporation and a wholly owned subsidiary of Parent,
was organized in connection with the Offer and has not carried on any activities
to date other than those incident to its formation and the commencement of the
Offer. The address and telephone number for Purchaser is the same as that of
Parent.
The name, citizenship, business address, principal occupation or employment
and five-year employment history of each of the directors and executive officers
of Parent and Xxxxxxxxx and certain other information are set forth in Schedule
I hereto.
Summary Financial Information. Set forth below is a summary of certain
consolidated financial data with respect to Parent taken or derived from
Parent's Annual Report on Form 10-K for the years ended December 31, 1996 and
December 31, 1995 and Quarterly Report on Form 10-Q for the nine months ended
September 30, 1997, as filed by Parent with the Commission. As set forth in
Parent's Annual Report on Form 10-K for the year ended December 31, 1996, the
amounts have been restated to reflect the sale of Parent's Information Systems
and Services segment and to report it as discontinued operations, and to give
retroactive recognition to Parent's two-for-one stock dividend, each of which
occurred in 1996. More comprehensive financial information is included in such
reports (including management's discussion and analysis of financial condition
and results of operations) and other documents filed by Parent with the
Commission, and the following financial data is qualified in its entirety by
reference to such reports and other documents, including the financial
information and related notes
13
16
contained therein. Such reports and other documents may be examined and copies
thereof may be obtained from the offices of the Commission and the New York
Stock Exchange, Inc. in the manner set forth below.
TRW INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NINE MONTH
ENDED FISCAL YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
--------------- ------------------------
1997 1996 1996 1995 1994
------ ------ ------ ------ ------
INCOME STATEMENT DATA
Sales........................................ $8,033 $7,406 $9,857 $9,568 $8,491
Earnings from continuing operations.......... 362 73 182 395 277
Net earnings................................. 362 353 480 446 333
BALANCE SHEET DATA
Working capital.............................. 114 575 624 317 244
Total assets................................. 6,081 5,938 5,899 5,670 5,435
Long-term debt............................... 531 479 458 539 693
Stockholder's investment..................... 2,225 2,224 2,189 2,172 1,822
PER SHARE OF COMMON STOCK
Fully diluted earnings
Continuing operations..................... 2.82 .53 1.37 2.93 2.09
Net earnings.............................. 2.82 2.63 3.60 3.31 2.50
Primary earnings
Continuing operations..................... 2.85 .54 1.38 2.96 2.10
Net earnings.............................. 2.85 2.66 3.64 3.34 2.52
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and therefore is obligated to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Information, as of
particular dates, concerning Xxxxxx's directors and officers, their
remuneration, options granted to them, the principal holders of Parent's
securities and any material interest of such persons in transactions with Parent
is required to be disclosed in such proxy statements and distributed to Parent's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, and should also be available for inspection and copying
at prescribed rates at the regional offices of the Commission located at
Citicorp Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000,
and Seven World Trade Center, Suite 0000, Xxx Xxxx, Xxx Xxxx 00000. Such
reports, proxy statements and other information may also be obtained at the Web
site that the Commission maintains at xxxx://xxx.xxx.xxx. Copies of this
material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at 000 Xxxxx Xxxxxx,
X.X., Xxxxxxxxxx, X.X. 00000. Such material is also available for inspection at
the offices of the New York Stock Exchange, Inc., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
Beneficial Ownership of the Company Securities; Contacts with the
Company. As of the date of this Offer to Purchase, none of Parent, Purchaser
nor, to the knowledge of Parent and Purchaser, any of the persons listed on
Schedule I hereto or any associate or majority owned subsidiary of Parent,
Purchaser or any of the persons so listed, beneficially owns or has a right to
acquire directly or indirectly any Shares, and none of Parent, Purchaser nor, to
the knowledge of Parent and Purchaser, any of the persons or entities referred
to above, or any of the respective executive officers, directors or subsidiaries
of any of the foregoing, has effected any transactions in Shares during the past
60 days. Pursuant to the Stockholders Agreement, Purchaser has an option
exercisable
14
17
only upon the occurrence of certain future events, to acquire the Shares
beneficially owned by the Carlyle Stockholders. See Section 11.
Except as set forth in Section 10, there have been no contacts,
negotiations or transactions between Parent, Purchaser, or, to the best
knowledge of Parent or Purchaser, any of the persons listed in Schedule I hereto
or any subsidiary of such persons, on the one hand, and the Company or its
executive officers, directors or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors, or a sale or other transfer of a material
amount of assets that would require reporting under the rules of the Commission.
Except as set forth in Section 11, none of Parent, Purchaser, or, to the best
knowledge of Parent or Purchaser, any of the persons listed in Schedule I hereto
or any subsidiary of such persons, has any contract, arrangement, understanding
or relationship with any other person with respect to any securities of the
Company.
9. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by Purchaser to purchase all outstanding
Shares pursuant to the Offer and to pay fees and expenses related to the Offer
and the proposed Merger is estimated to be approximately $930 million.
Purchaser plans to obtain all funds needed for the Offer and the Merger
through a capital contribution and/or a loan which will be made by Parent to
Purchaser. Parent plans to use funds obtained from the issuance of commercial
paper, the issuance of long-term debt in the U.S. capital markets and/or from
borrowing from banks under its lines of credit. If Parent uses funds obtained
from borrowing under its lines of credit with banks, Parent anticipates that
such borrowings would be repaid with internally generated funds (including, if
the Merger is consummated, those of the Company) and from other sources which
may include the proceeds of future refinancings. The plan for repayment will be
based on Parent's review from time to time of the advisability of particular
actions, as well as prevailing interest rates, financial and other economic
conditions and such other factors as Parent may deem appropriate.
Parent maintains a committed revolving credit agreement with 17 banks (the
"Multi-Year Revolver"). The Multi-Year Revolver allows Parent and its borrowing
subsidiaries to borrow up to $750 million through the incurrence of base rate,
domestic CD, Eurocurrency and/or negotiated loans. The commitments under the
Multi-Year Revolver terminate on July 1, 2002, unless extended for one or more
successive one-year periods as provided for by the Multi-Year Revolver.
Parent has requested and obtained commitments from members of its
Multi-Year Revolver bank group to provide a 364-day revolving credit agreement
(the "364-Day Revolver," together with the Multi-Year Revolver the "Revolving
Credit Facilities") to become effective on December 10, 1997. The 364-Day
Revolver will allow Parent and its borrowing subsidiaries to borrow up to an
additional $750 million through the incurrence of base rate, domestic CD,
Eurocurrency and/or negotiated loans. The commitments under the 364-Day Revolver
will terminate on December 8, 1998, unless the Parent elects to extend the
termination as provided by the 364-Day Revolver.
The following is a summary of the principal terms of the Revolving Credit
Facilities based upon the Commitment Letters. This summary is qualified in its
entirety by reference to the Commitment Letters, a form of which is filed as an
exhibit to Parent's and Purchaser's Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1") of which this Offer to Purchase is an exhibit.
The amounts borrowed pursuant to the Revolving Credit Facilities will bear
interest at (i) a negotiated rate, (ii) the banks' prime, base or reference
rate, (iii) a rate based on the banks' cost of funds in the secondary
certificate of deposit market plus an interest rate margin ranging from 0.275%
to 0.600% based on the rating of the senior, unsecured long-term debt of Parent
assigned from time to time by Xxxxx'x Investor Service ("Moody's") and Standard
& Poor's ("S&P"), or (iv) a rate based upon an Interbank Offered Rate plus an
interest rate margin ranging from 0.175% to 0.500% based on the rating of the
senior, unsecured long-term debt of Parent assigned from time to time by Moody's
and S&P. Parent has agreed to pay a quarterly commitment fee
15
18
on the undrawn portion of the Revolving Credit Facilities at rates based on
ratings of the senior unsecured long-term debt of Parent assigned from time to
time by Moody's and S&P.
The commitments provide that each bank will enter into the form of
Revolving Credit Agreement attached to the commitment letters.
The Revolving Credit Agreement will contain conditions precedent,
representations and warranties, covenants (including financial covenants),
events of default and other provisions customary for such financings.
10. BACKGROUND OF THE OFFER.
In September 1997, a representative of WP&Co., the Company's financial
advisor, contacted a representative of Parent to inquire as to whether Parent
would be interested in exploring the possible acquisition of the Company. The
representative of Parent indicated that Parent would be interested in exploring
the possible acquisition of the Company and, on September 29, 1997, Parent
executed a confidentiality/standstill agreement providing for, among other
things, the receipt and treatment of confidential information regarding the
Company.
A meeting between the senior management of the Company and representatives
of Parent was held on October 10, 1997. Representatives of the parties exchanged
information and held a number of conversations over the following two-week
period.
On October 31, 1997, a representative of Parent informed a representative
of WP&Co. that Xxxxxx would be interested in pursuing the possible acquisition
of the Company at $28.00 per Share. The representative of WP&Co. expressed the
view that the Company Board would not be interested in pursuing a sale of the
Company at that price indication. The representative of Parent informed the
representative of WP&Co. that Parent would be willing to consider enhancing its
indication only if it had a high level of assurance that the transaction would
be completed.
On November 4, 1997, a representative of WP&Co. suggested that the Company
would be unlikely to proceed to enter into exclusive negotiations with Parent
unless Parent increased its indicated price. A representative of Parent informed
the WP&Co. representative that Xxxxxx's willingness to enhance its indication
from $28.00 per Share would depend on the specific terms of the transaction,
particularly the terms relevant to the likelihood that the transaction would be
completed. Accordingly, the Company furnished Parent drafts of the Merger
Agreement and the Stockholders Agreement.
On November 6, 1997, Xx. Xxxxx met with, among other representatives of
Parent, Xxxxxx X. Xxxxxx, the Chairman and Chief Executive Officer of Parent.
Xx. Xxxxxx indicated at the meeting that, if the transaction were to proceed,
Parent would require that arrangements be developed to ensure the continuity of
management of the Company.
On November 10, 1997, a representative of Parent informed a representative
of WP&Co. that Parent would be prepared to increase its $28.00 per Share price
indication, subject to modifying the terms of draft documentation so as to
provide a high level of assurance that the transaction would be completed. These
modifications included the receipt of an irrevocable option and agreement to
tender by the Carlyle Stockholders, a $35 million break-up fee and a no-shop
covenant which specifically defined the types of transactions that would be
excepted therefrom. Parent's representative also reiterated Parent's requirement
that satisfactory employment arrangements be agreed upon by certain members of
senior management of the Company as a part of the transaction. The WP&Co.
representative indicated that these terms might be acceptable at a price close
to $30.00 per Share. The Parent representative requested that the WP&Co.
representative confirm whether these conditions would be acceptable before
further price discussions were conducted. Thereafter, a WP&Co. representative
informed a Parent representative that Xxxxxx's preconditions to further price
negotiations were acceptable in principle to the Company, subject to final
agreement on price, and, based on a conversation with the Carlyle Stockholders,
were similarly acceptable to them.
On November 12, 1997, a representative of Parent informed a representative
of WP&Co. that, subject to the Company's agreement to the terms outlined on
November 10, 1997 and to the Company's willingness to negotiate exclusively with
Parent for the period required to reach an agreement on definitive
documentation, Parent would be willing to increase its indicated price to $29.50
per Share. A representative of
16
19
WP&Co., on behalf of the Company, informed a representative of Parent that the
Company would be willing to begin a period of exclusive negotiations based on
the foregoing. On November 14, 1997, the Company and the Carlyle Stockholders
entered into an agreement to negotiate with Parent exclusively, for up to 17
days, regarding a possible acquisition. Over the course of the next week,
representatives of the parties continued to exchange information and meet or
otherwise communicate on a substantially continuous basis to finalize the
documentation relating to the Offer and the Merger.
At a special meeting of the Board of Directors of Parent held on November
20, 1997, Bear Xxxxxxx rendered its opinion to the Board of Directors of Parent
that the $29.50 per Share price to be paid pursuant to the Offer is fair, from a
financial point of view, to the public shareholders of Parent. After receiving
such opinion, the Board of Directors of Parent unanimously approved the Merger
Agreement the Stockholders Agreement and the transactions contemplated thereby.
Later that afternoon, the Company Board unanimously approved the Merger
Agreement, the Stockholders Agreement and the transactions contemplated thereby.
Late in the evening on November 20, 1997, the parties executed the Merger
Agreement and the Stockholders Agreement. At approximately 3:00 a.m., New York
City time, on November 21, 1997, Parent and the Company published a joint press
release announcing the transaction.
11. PURPOSE; MERGER AGREEMENT; STOCKHOLDERS AGREEMENT; VOTE REQUIRED TO APPROVE
THE MERGER; APPRAISAL RIGHTS; PLANS FOR THE COMPANY; GOING PRIVATE
TRANSACTIONS.
PURPOSE
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. The Offer, as the first step in the acquisition of the
Company, is intended to facilitate the acquisition of all the Shares. The
purpose of the Merger is to acquire all Shares not purchased pursuant to the
Offer or otherwise.
MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement
which, together with summaries of Merger Agreement provisions described
elsewhere in this Offer to Purchase, constitutes a summary of all of the
material provisions of the Merger Agreement. The summary of Merger Agreement
provisions in this Offer to Purchase is qualified in its entirety by reference
to the Merger Agreement. A copy of the Merger Agreement has been filed with the
Commission as an exhibit to the Schedule 14D-1 and is incorporated herein by
reference. The Merger Agreement may be examined and copies may be obtained at
the places and in the manner set forth in Section 8.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable, but in no event later than five business days
following public announcement of the Merger Agreement. The obligation of Parent
to cause Purchaser to accept for payment any Shares tendered shall be subject to
the satisfaction of only the Offer Conditions described in Section 14. Under the
Merger Agreement, unless previously approved by the Company in writing, Parent
shall not permit Purchaser to (i) decrease the Per Share Amount or change the
form of consideration payable in the Offer, (ii) decrease the number of Shares
sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition,
or (iv) impose additional conditions to the Offer or amend any other term of the
Offer in any manner adverse to the Stockholders, provided that nothing in the
Merger Agreement will prohibit any waiver of any condition or term of the Offer
(other than the Minimum Condition) or any other action permitted thereby. Upon
the terms and subject to the conditions of the Offer, Parent will cause
Purchaser to accept for payment and purchase, as soon as practicable after the
Expiration Date, all Shares validly tendered and not properly withdrawn prior to
the Expiration Date.
Directors. The Merger Agreement provides that, promptly upon the purchase
by Purchaser of any Shares pursuant to the Offer (and assuming that the Minimum
Condition has been satisfied), and from time to time thereafter as Shares are
acquired by Purchaser, Purchaser shall be entitled to designate such number of
directors,
17
20
rounded up to the next whole number, on the Company Board as will give
Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Company Board equal to at least that number of directors
which equals the product of the total number of members of the Company Board
(giving effect to the directors appointed or elected pursuant to this sentence
and including current directors serving as officers of the Company) multiplied
by the percentage that the aggregate number of Shares beneficially owned by
Purchaser or any affiliate of Parent (including for purposes of such
calculations such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company) bears to the number of Shares outstanding.
At such times, if requested by Parent, the Company will also cause each
committee of the Company Board and the Board of Directors of each Company
Subsidiary (as defined in the Merger Agreement) to include persons designated by
Parent constituting the same percentage of each such committee and the Board of
Directors of each Company Subsidiary as Purchaser's designees are of the Company
Board. The Company shall, upon request of Parent, promptly increase the size of
the Company Board by whatever number of directors as is necessary to enable
Purchaser's designees to be elected to the Company Board in accordance with the
terms of the Merger Agreement and shall cause Purchaser's designees to be so
elected.
The Merger Agreement further provides that in the event that Purchaser's
designees are appointed or elected to the Company Board, until the Effective
Time, the Company Board shall have at least one member who is a director of the
Company on the date of the Merger Agreement and who is neither an officer of the
Company nor a designee, stockholder, affiliate or associate (within the meaning
of the federal securities laws) of Parent (one or more of such directors being
referred to herein as the "Independent Directors"). If no Independent Directors
remain, the other members of the Company Board shall designate one person to
fill one of the vacancies who shall not be either an officer of the Company or a
designee, shareholder, affiliate or associate of Parent, and such person shall
be deemed to be an Independent Director for purposes of the Merger Agreement.
Following the election or appointment of Purchaser's designees pursuant to the
Merger Agreement and prior to the Effective Time, any (i) amendment or
termination of the Merger Agreement on behalf of the Company, (ii) exercise or
waiver of any of the Company's rights or remedies under the Merger Agreement,
(iii) extension of the time for performance of Parent's obligations under the
Merger Agreement or (iv) other action required to be taken by the Company Board
in connection with the Merger Agreement will require the affirmative vote of a
majority of the Independent Directors then in office.
The Merger. The Merger Agreement provides that as soon as practicable
after the satisfaction or waiver of the conditions to the Merger set forth in
the Merger Agreement, on the terms and subject to the conditions of the Merger
Agreement and in accordance with the Delaware Code, Purchaser shall be merged
with and into the Company, and the Company, as the Surviving Corporation in the
Merger shall continue its corporate existence under the laws of the State of
Delaware as a subsidiary of Parent. At Parent's election, any direct or indirect
subsidiary of Parent other than Purchaser may be merged with and into the
Company instead of Purchaser. In the event of such an election, the parties
agree to execute an appropriate amendment to the Merger Agreement to reflect
such election. The parties will prepare and execute a certificate of merger in
order to comply in all respects with the requirements of the Delaware Code and
with the provisions of the Merger Agreement or, if applicable, a certificate of
ownership and merger (each, a "Certificate of Merger"). The Merger will become
effective at the time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with the Delaware Code
or at such later time as is specified in the Certificate of Merger.
Pursuant to the Merger Agreement, in the Merger each then outstanding Share
(other than shares held in the treasury of the Company or owned by Parent or any
direct or indirect wholly owned subsidiary of Parent (other than Shares held by
TRW Investment Management Company, its advisors or Parent's employee benefit
plans) or Dissenting Shares, as defined below) will be canceled and extinguished
and converted into the right to receive an amount in cash equal to the Per Share
Amount or such higher price as is paid by Purchaser pursuant to the Offer,
without interest thereon (the "Merger Consideration"). Although it is Xxxxxx's
intention to consummate the Merger as promptly as practicable, there can be no
assurance that the Merger will be consummated or, if consummated, of the timing
thereof.
The Merger Agreement also provides that the Certificate of Incorporation
and the Bylaws of the Surviving Corporation shall be the Certificate of
Incorporation and the Bylaws of Purchaser in effect at the Effective Time
18
21
(subject to any subsequent amendments) and that the directors of Purchaser
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, in each case until
their successors are duly elected or appointed and qualified.
Stockholders Meeting and Approval. Pursuant to the Merger Agreement, as
soon as practicable after the consummation of the Offer and if required by
applicable law, the Company will take all steps necessary to duly call, give
notice of, convene and hold a meeting of its Stockholders for the purpose of
voting upon the approval and adoption of the Merger Agreement and the
transactions contemplated thereby (the "Company Proposals"). The Merger
Agreement provides that (i) the Company shall prepare and file with the
Commission, and promptly thereafter shall mail to Stockholders, a proxy
statement in connection with a meeting of the Stockholders to consider the
Merger, or an information statement, as appropriate (such proxy statement or
information statement, as amended or supplemented, is referred to as the "Proxy
Statement"), (ii) the Proxy Statement will include the unanimous recommendation
of the Company Board that the Stockholders of the Company vote in favor of the
adoption of the Merger Agreement and the transactions contemplated thereby and
the written fairness opinion of WP&Co. that the consideration to be received by
the Stockholders of the Company pursuant to the Offer and the Merger is fair
from a financial point of view and (iii) the Company will use its reasonable
best efforts to obtain any necessary approval by the Stockholders of the Company
Proposals.
The Merger Agreement provides that, notwithstanding the foregoing, in the
event that Purchaser shall acquire at least 90% of the outstanding Shares, the
Company will, at the request of Purchaser, subject to the satisfaction of the
conditions to the Merger set forth in the Merger Agreement, take all necessary
and appropriate action to cause the Merger to become effective as soon as
reasonably practicable after such acquisition, without a meeting of the
Company's Stockholders, in accordance with the "short form" merger provisions of
Section 253 of the Delaware Code.
Conversion of Shares. At the Effective Time, by virtue of the Merger and
without any action on the part of Purchaser, the Company or the holder of any of
the following securities:
(i) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled as described in clause
(ii) below and any Dissenting Shares) shall be canceled and extinguished
and be converted into the right to receive the Merger Consideration
promptly upon surrender of the certificate representing such Share or
appropriate proof of lost certificates, in accordance with the Merger
Agreement and from and after the Effective Time, the holders of
certificates evidencing ownership of any such Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided for in the Merger
Agreement or by applicable law;
(ii) each Share held in the treasury of the Company and each Share
owned by Parent or any direct or indirect wholly owned subsidiary of Parent
(other than Shares held by TRW Investment Management Company, its advisors,
or Parent's employee benefit plans) immediately before the Effective Time
shall be canceled and extinguished and no payment or other consideration
shall be made with respect thereto; and
(iii) the shares of Purchaser common stock outstanding immediately
prior to the Merger shall be converted into one validly issued, fully paid
and non-assessable share of the common stock of the Surviving Corporation,
which such share shall constitute all of the issued and outstanding capital
stock of the Surviving Corporation and shall be owned by Parent.
The Merger Agreement further provides that, notwithstanding any provision
of the Merger Agreement to the contrary, any Shares issued and outstanding
immediately prior to the Effective Time and held by a Stockholder who has
demanded and perfected his demand for appraisal of his Shares in accordance with
the Delaware Code (including, but not limited to Section 262 thereof) and as of
the Effective Time has neither effectively withdrawn nor lost his right to such
appraisal ("Dissenting Shares") shall not be converted into or represent a right
to receive the Merger Consideration, but the holder thereof shall be entitled to
only such rights as are granted by the Delaware Code. If any Stockholder who
demands appraisal of his Shares under the Delaware Code shall effectively
withdraw or lose (through failure to perfect or otherwise) his right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever occurs later, such Stockholder's Shares shall automatically be
19
22
converted into and represent only the right to receive the Merger Consideration,
without interest thereon, upon surrender of the Share Certificate(s).
Termination of the Merger Agreement. The Merger Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after adoption of the Merger Agreement by the
Stockholders:
(i) by mutual written consent of the Company and Parent or by the
mutual action of their respective Boards of Directors;
(ii) by either Parent or the Company if any nation or government, any
state or other political subdivision thereof, any entity, authority or body
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, domestic or foreign (each a
"Governmental Authority") shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the consummation of the transactions contemplated by the Merger
Agreement or, for the benefit of Parent only, the Stockholders Agreement,
and such order, decree or ruling or other action shall have become final
and nonappealable;
(iii) by Parent if the Company shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements in the Merger Agreement and such breach is incapable of being
cured or has not been cured within one business day prior to the then
scheduled Expiration Date;
(iv) by Parent if (a) the Company Board or any committee thereof shall
have withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Offer or the approval or adoption of any of the
Company Proposals, or failed to reconfirm its recommendation within five
business days after a written request to do so, or approved or recommended
any Takeover Proposal (as defined below) or (b) the Company Board or any
committee thereof shall have resolved to take any of the foregoing actions;
(v) by Parent if the Offer shall have expired or been terminated or
withdrawn in accordance with the Merger Agreement without any Shares being
purchased under the Offer by Purchaser or any of the events that are Offer
Conditions shall have occurred and be continuing at the time of
termination;
(vi) by the Company or Parent if the Offer shall not have been
consummated on or before March 20, 1998, provided that the Company's
failure to perform any of its obligations under the Merger Agreement does
not result in the failure of the Offer to be so consummated by such time;
(vii) by the Company if Parent shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in the Merger Agreement, which breach or failure to
perform is incapable of being cured or has not been cured within one
business day prior to the Expiration Date;
(viii) by the Company in order to enter into a definitive agreement
providing for a Superior Proposal (as defined below) entered into in
accordance with the exceptions to the non-solicitation covenants described
below, provided that prior thereto the Company has paid the Termination Fee
(as defined below) in accordance with the Merger Agreement; or
(ix) by Parent if the Company, any of its officers or directors or
financial or legal advisors shall take any of the actions that would be
proscribed by the non-solicitation covenants described below but for the
exceptions thereto described below.
Non-Solicitation Covenants. The Merger Agreement provides that the Company
may not, nor permit any of the Company Subsidiaries to, nor authorize or permit
any of its officers, directors or employees, or any investment banker, attorney,
accountant or other representative retained by it or any of the Company
Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
or reasonably likely to facilitate, any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any Takeover
Proposal or (ii) participate in any discussions or negotiations regarding any
Takeover Proposal. In addition, pursuant to the Merger Agreement, neither the
Company Board nor any committee thereof may (a) withdraw or modify, or propose
publicly to withdraw or
20
23
modify, in a manner adverse to Parent, the approval or recommendation by the
Company Board or such committee of the Offer, the Stockholders Agreement or the
Company Proposals, (b) approve or recommend, or propose to approve or recommend,
any Takeover Proposal, or (c) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or similar agreement
related to any Takeover Proposal.
The foregoing restrictions contain exceptions so that if, at any time prior
to the Expiration Date and following the receipt of a Superior Proposal, the
Company Board determines in good faith, based upon the advice of outside
counsel, that such action is necessary for the Company Board to comply with its
fiduciary duties to the Stockholders under applicable law, in response to a
Superior Proposal that was made in circumstances not otherwise involving a
breach of the Merger Agreement, and subject to compliance with the covenants
described in the second succeeding paragraph, (i) the Company may (a) furnish
information with respect to the Company to any person pursuant to a
confidentiality agreement having terms substantially the same as the
Confidentiality Agreement, provided that (1) such confidentiality agreement may
not include any provision calling for an exclusive right to negotiate with the
Company and (2) the Company advises Parent of all such nonpublic information
delivered to such person concurrently with its delivery to the requesting party,
and (b) participate in negotiations regarding such Superior Proposal and (ii)
the Company Board may (a) withdraw or modify its approval or recommendation of
the Offer or the Company Proposals or (b) approve or recommend a Superior
Proposal, provided, however, that any actions described in the preceding clauses
(a) and (b) of this clause (ii) may be taken only at a time that is after the
fifth business day following Parent's receipt of written notice (a "Board Action
Notice") advising Parent that the Company Board has received a Superior
Proposal, specifying the material terms and conditions of such Superior
Proposal, identifying the person making such Superior Proposal and providing
notice of the determination of the Company Board of what action referred to
above that the Company Board has determined to take (provided further that the
foregoing proviso shall not prevent the Company Board from taking any actions
described in clause (ii)(a) above within five business days of the Expiration
Date so long as the Board Action Notice is received by Parent prior to 12:00
Noon, New York City time, on the then-scheduled Expiration Date.
Under the Merger Agreement (i) the term "Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 15% or more of the assets of the Company and the
Company Subsidiaries or 15% or more of any class of equity securities of the
Company or any Company Subsidiary, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any Company Subsidiary, any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any
Company Subsidiary, other than the transactions contemplated by the Merger
Agreement and (ii) the term "Superior Proposal" means a bona fide written
Takeover Proposal which the majority of the disinterested members of the Company
Board determines, in their good faith judgment (based on the opinion of
independent financial advisors) that the value of the consideration provided for
in such proposal exceeds 110% of the Per Share Amount then provided in the
Offer, and, considering all relevant factors, is as or more favorable to the
Company and the Stockholders than the Offer and the Merger and for which
financing, to the extent required, is fully committed or which, in the good
faith judgment of a majority of the disinterested members of the Company Board
(based on the advice of independent financial advisors), is reasonably capable
of being financed by such third party.
The Merger Agreement requires the Company to promptly advise Parent orally
and in writing of any request for information or of any Takeover Proposal, the
material terms and conditions of such request or Takeover Proposal and the
identity of the person making such request or Takeover Proposal and to promptly
advise Parent of all significant developments which could reasonably be expected
to culminate in the Company Board withdrawing, modifying or amending its
recommendation of the Offer, the Merger and the transactions contemplated by the
Merger Agreement.
The Merger Agreement does not prohibit the Company from (i) taking and
disclosing to the Stockholders a position contemplated by Rule 14e-2(a) under
the Exchange Act or (ii) from making any disclosure to the Stockholders,
provided, however, that neither the Company nor the Company Board nor any
committee thereof shall, except in accordance with the covenants in the Merger
Agreement described above, withdraw or modify, or
21
24
propose publicly to withdraw or modify, its position with respect to the Offer
or the Company Proposals or approve or recommend, or propose publicly to approve
or recommend, a Takeover Proposal.
Termination Fee. The Merger Agreement provides that the Company shall pay
to Parent a fee of $35,000,000 (the "Termination Fee") in the event that:
(i) a Takeover Proposal has been made known to the Company or has been
made directly to the Stockholders generally or any person or entity has
publicly announced an intention (whether or not conditional) to make a
Takeover Proposal and thereafter the Merger Agreement has been terminated
by the Company because the Offer has not been consummated on or before
March 20, 1998 (provided the Company's failure to perform any of its
obligations under the Merger Agreement does not result in the failure of
the Offer to be consummated by such time);
(ii) the Company terminates the Merger Agreement in order to enter
into a definitive agreement providing for a Superior Proposal entered into
in accordance with the non-solicitation provisions of the Merger Agreement;
(iii) Parent terminates the Merger Agreement after the Company Board
or any committee thereof has withdrawn or modified in a manner adverse to
Parent its approval or recommendation of the Offer or any of the Company
Proposals, or failed to reconfirm its recommendation within five business
days after a written request to do so, or approved or recommended any
Takeover Proposal or the Company Board or any committee thereof has
resolved to take any of the foregoing actions;
(iv) Parent terminates the Merger Agreement after the Company or any
of its officers or directors or financial or legal advisors takes any
action that would be proscribed by the non-solicitation provisions of the
Merger Agreement, but for the exceptions contained therein; or
(v) Parent terminates the Merger Agreement after a Takeover Proposal
has been made and the Company has intentionally breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in the Merger Agreement which breach or failure to
perform is incapable of being cured and has not been cured within one
business day prior to the then scheduled Expiration Date;
provided that the Termination Fee will not become payable under clauses (i) or
(v) above unless and until, within 18 months of such termination, the Company or
any of the Company Subsidiaries enters into a definitive agreement providing for
any Takeover Proposal.
In the event a Termination Fee becomes payable pursuant to the Merger
Agreement, in addition to the Termination Fee, the Company is obligated to pay
up to $5,000,000 of Parent's reasonable out-of-pocket charges and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby. Such charges and expenses and the Termination Fee must be
paid by the Company regardless of any alleged breach by Parent of its
obligations under the Merger Agreement, provided that no payment of such amounts
by the Company will operate or be construed as a waiver by the Company of any
breach of the Merger Agreement by Parent or Purchaser or of any rights of the
Company in respect thereof.
Except as described above, each party will bear its own expenses in
connection with the Merger Agreement and the transactions contemplated thereby.
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date thereof to the Effective Time, the Company is obligated to, and to
cause its accountants and legal counsel to, give Parent and its respective
authorized representatives (including, without limitation, its financial
advisors, accountants and legal counsel), at all reasonable times, access as
reasonably requested to all personnel, offices and other facilities and to all
contracts, agreements, commitments, books and records of or pertaining to the
Company and the Company Subsidiaries. The Company will also permit the foregoing
to make such reasonable inspections as they may require and will cause its
officers promptly to furnish Parent with (i) such financial and operating data
and other information with respect to the business and properties of the Company
and the Company Subsidiaries as Parent may from time to time reasonably request,
and (ii) a copy of each report, schedule and other document filed or
22
25
received by the Company or any of the Company Subsidiaries pursuant to the
requirements of applicable securities laws or the National Association of
Securities Dealers ("NASD").
The parties to the Merger Agreement will continue to be bound by the terms
of the Confidentiality Agreement, dated as of September 12, 1997, between Parent
and the Company (the "Confidentiality Agreement") except that the
non-solicitation of Company employees, standstill and certain other provisions
of the Confidentiality Agreement are terminated as of the date of the Merger
Agreement and all of Parent's obligations under the Confidentiality Agreement
will be extinguished as of the Effective Time. In the event of a termination of
the Merger Agreement in accordance with its terms, Parent's covenants regarding
non-solicitation of Company employees, the standstill provisions and certain
other provisions in the Confidentiality Agreement will be reinstated as of the
date of such termination.
The Merger Agreement further provides that each of Parent and Purchaser
will hold and will cause its respective officers, employees, accountants,
counsel, financial advisors and other representatives to hold, any nonpublic
information in accordance with the terms of the Confidentiality Agreement. A
copy of such Confidentiality Agreement is filed as an Exhibit to the Schedule
14D-1.
Efforts to Consummate. On the terms and subject to the conditions of the
Merger Agreement, each of the parties has agreed to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by the Merger
Agreement, including, but not limited to, (i) obtaining all consents, approvals,
waivers or authorizations of, notices to or declarations or filings ("Consents")
with Governmental Authorities and each party's respective other third parties
required for the consummation of the Offer and the Merger and the transactions
contemplated thereby, (ii) timely making all necessary filings under the HSR Act
and German anticompetition laws and (iii) having vacated, dismissed or withdrawn
any order, stay, decree, judgment or injunction of any Governmental Authority
which temporarily, preliminarily or permanently prohibits or prevents the
transactions contemplated by the Merger Agreement. Upon the terms and subject to
the conditions of the Merger Agreement, each party has committed to use their
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary to satisfy the other conditions to the
closing of the transactions contemplated by the Merger Agreement.
Notwithstanding any other provision contained in the Merger Agreement, in
no event will Parent, Purchaser or any of their affiliates be required to take
or fail to take any action in order to obtain or make a Consent arising out of
any contractual or legal obligation of or applicable to the Company or the
Company Subsidiaries, other than obligations such as those under the HSR Act
which apply to both the Company and Parent, Purchaser and any of their
affiliates, and in no event will Parent, Purchaser or any of their affiliates be
required to enter into or offer to enter into any divestiture, hold-separate,
business limitation or similar agreement or undertaking in connection with the
Merger Agreement or the transactions contemplated thereby.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
the Company has covenanted and agreed that, except for certain limited
exceptions set forth in the Company Disclosure Letter dated November 20, 1997,
during the period from the date of the Merger Agreement to the Effective Time,
the Company shall conduct, and shall cause the Company Subsidiaries to conduct,
its or their businesses in the ordinary course and consistent with past
practice, and the Company shall, and shall cause the Company Subsidiaries to,
use its or their reasonable commercial efforts to preserve intact its business
organization, to keep available the services of its officers and employees and
preserve intact the present commercial relationships of the Company and the
Company Subsidiaries with all persons with whom it does business. Without
limiting the generality of or effect of the foregoing, the Company has agreed
that neither it nor any of the Company Subsidiaries will:
(i) amend or propose to amend its certificate of incorporation or
bylaws (or comparable governing instruments);
(ii) authorize for issuance, issue, deliver, grant, sell, pledge,
dispose of or propose to issue, deliver, grant, sell, pledge or dispose of
any shares of, or any rights of any kind to acquire or sell any shares of,
the capital stock or other securities of the Company or any of the Company
Subsidiaries, except for (a) the
23
26
issuance of up to 3,327,445 Shares pursuant to the exercise of either
incentive or non-qualified stock options outstanding on November 19, 1997
in accordance with their present terms and (b) shares issued under the
Company's 1996 Employee Stock Purchase Plan that are issuable on or prior
to the date of the Merger Agreement;
(iii) split, combine or reclassify any shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, other than dividends or distributions to the Company or a
Company Subsidiary in the ordinary course of business, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire,
directly or indirectly, any shares of its capital stock or other
securities;
(iv) (a) other than in the ordinary course of business consistent with
past practice, (1) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for
the obligations of any person or (2) make any loans, advances or capital
contributions to, or investments in, any other person (other than to a
Company Subsidiary and customary travel, relocation or business advances to
employees); (b) acquire the stock or assets of, or merge or consolidate
with, any other person; (c) voluntarily incur any material liability or
obligation (absolute, accrued, contingent or otherwise) other than in the
ordinary course of business consistent with past practice; (d) sell,
transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree
to sell, transfer, mortgage, pledge or otherwise dispose of or encumber,
any assets or properties, real, personal or mixed material to the Company
and the Company Subsidiaries other than sales of products in the ordinary
course of business and in a manner consistent with past practice; (e) incur
any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any other person (other than in the
ordinary course of business, consistent with past practice); (f) enter into
any contract or agreement other than in the ordinary course of business
consistent with past practice; or (g) authorize any single capital
expenditure which is in excess of $1,400,000 or capital expenditures
(during any two month period) which are, in the aggregate, in excess of
$4,000,000 for the Company and the Company Subsidiaries taken as a whole;
(v) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health
or other welfare, stock option or other equity, pension, retirement,
vacation, severance, deferred compensation or other compensation or benefit
plan, policy, agreement, trust, fund or arrangement with, for or in respect
of, any Stockholder, officer, director, other employee, agent, consultant
or affiliate other than (a) as required pursuant to the terms of agreements
in effect on the date of the Merger Agreement and specifically disclosed to
Parent (b) increases in salaries of employees who are not directors or
officers or Key Employees ("Key Employees" being all employees entitled to
severance and retention bonuses under arrangements established pursuant to
the Merger Agreement) made in the ordinary course of business consistent
with past practice, or (c) increases in salaries of Key Employees (other
than to Key Employees who are officers or are entitled to senior management
severance) with Parent's written consent, which may not be unreasonably
withheld;
(vi) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(vii) make any material tax election, settle or compromise any
material federal, state, local or foreign tax liability, or waive any
statute of limitations for any tax claim or assessment;
(viii) settle or compromise any pending or threatened suit, action or
claim which is material or which relates to the transactions contemplated
thereby;
(ix) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of the Company Subsidiaries not
constituting an inactive subsidiary (other than the Merger);
24
27
(x) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction (a) in the ordinary course of
business consistent with past practice of liabilities reflected or reserved
against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice and (b) of
liabilities required to be paid, discharged or satisfied pursuant to the
terms of any contract in existence on the date hereof (including, without
limitation, benefit plans relating to directors) or entered into in
accordance with the Merger Agreement;
(xi) permit any insurance policy naming the Company or any of the
Company Subsidiaries as a beneficiary or a loss payable payee to be
canceled or terminated without notice to Parent, except in the ordinary
course of business consistent with past practice; or
(xii) take, or offer or propose to take, or agree to take in writing
or otherwise, any of the actions described above or any action which would
make any of the representations or warranties of the Company contained in
the Merger Agreement untrue and incorrect in any material respect as of the
date when made if such action had then been taken, or would result in any
of the Offer Conditions not being satisfied.
The Company also agreed to, and to cause the Company Subsidiaries to, use
its or their best efforts to comply in all material respects with all laws
applicable to it or any of its properties, assets or business and maintain in
full force and effect all the permits of the Company necessary for, or otherwise
material to, such business.
Severance And Employee Benefit Arrangements. The Merger Agreement provides
that prior to the Effective Time, the Company will terminate its existing
severance plan, which was adopted as of September 26, 1997 (the "Company
Supplemental Severance Plan"), and that Parent will (i) enter into new
individual employment agreements with certain of the Company's executive
officers which will become effective upon the consummation of the Offer and (ii)
adopt the new severance arrangements described below. The Company Supplemental
Severance Plan provided, among other things, for the payment of severance
amounts and benefits of up to three times salary to the Company's executive
officers and certain other employees, including all those in positions of vice
president and above, upon certain terminations of employment following a change
in control. If the Merger Agreement is terminated prior to the Effective Time,
the new employment agreements and severance arrangements will not be effective,
and the Company Supplemental Severance Plan will continue in effect. The
following is a summary of the material terms of the new employment agreements
(the "New Employment Agreements") (the form of which is filed as an exhibit to
the Schedule 14D-1 and is incorporated herein by reference), severance
arrangements and other employee benefits arrangements made pursuant to the
Merger Agreement.
New Employment Agreements. Each of Xxxxxx X. Xxxxx, the Company's
President and Chief Executive Officer, Xxxxxxx X. Xxxxxx, an Executive Vice
President of the Company, Xxxxxx X. Xxxxxxx, President, State and Local Systems,
Xxxxx X. Xxxxxxxxx, President, Integrated Supply Chain, Xxxxx X. Xxxxxxx,
Corporate Vice President of the Company, and Xxx X. Xxxxxx, President and Chief
Executive Officer of Vinnell Corporation, a subsidiary of the Company, will
enter into a New Employment Agreement. During the three year term of each New
Employment Agreement, the executive will receive (i) an annual base salary of
not less than his or her annual base salary in effect immediately prior to the
Effective Time, (ii) annual incentive compensation based on incentive target
percentages of base salary comparable to such percentages in effect immediately
prior to the Effective Time and (iii) a continuation of comparable benefits. If
the executive is involuntarily terminated other than for cause, or if the
executive voluntarily terminates for certain specified limited reasons, he or
she will receive a termination payment determined as follows: (i) if the
termination occurs on or prior to the second anniversary of the Effective Time,
the termination payment will be three times the sum of the executive's annual
salary and target annual incentive compensation in effect immediately prior to
the termination, multiplied by a fraction the numerator of which is the number
of full months remaining in the employment term and the denominator of which is
36 and (ii) if the termination occurs after the second anniversary of the
Effective Time, the termination payment will be the sum of the executive's
annual salary and target annual compensation in effect immediately prior to the
termination.
25
28
Management Severance. Up to 30 management employees and five senior
management employees who are not parties to a New Employment Agreement, will be
covered by a management severance policy which, among other things, will provide
for a termination payment if the employee is involuntarily terminated, other
than for cause, within two years of the Effective Time. The amount of the
termination payment will vary depending upon the time of their termination
relative to the Effective Time with a maximum termination payment of two times
the sum of the employee's annual salary and target annual incentive compensation
in effect at the time of termination.
Senior Management Severance. Five members of senior management who are not
parties to New Employment Agreements will, in addition to severance the benefits
described in the foregoing paragraph, receive a retention bonus equal to between
two and four months base salary provided they remain employed by the Surviving
Corporation, or another corporation designated by Parent, for a period between
six and twelve months after the Effective Time.
Professional Severance. Up to 85 management employees will be covered by a
professional severance policy which, among other things, will provide for a
termination payment if the employee is involuntarily terminated, other than for
cause, within one year of the Effective Time. The amount of the termination
payment will vary depending upon the time of the termination relative to the
Effective Time with a maximum termination payment of the sum of the employee's
annual salary and target annual incentive compensation in effect at the time of
termination.
Long-Term Incentive Plan; Retention Bonuses. In the Merger Agreement,
Parent and the Company agreed to develop a new long-term incentive plan that is
designed to incentivize and retain key employees of the Company. In addition, in
the Merger Agreement, Parent and the Company agreed to adopt a retention bonus
program to encourage certain employees not covered by the New Employment
Agreements or the new severance policies described above to remain employed by
the Surviving Corporation following the Effective Time. A covered employee will
receive a bonus equal to between two and four months base salary (in addition to
remaining eligible for normal severance benefits), provided such employee
remains employed for a period of between six and 12 months after the Effective
Time. If a covered employee remains employed for a period of at least four
months, but less than six months, after the Effective Time, the employee will
receive a bonus equal to between one and two months base salary (in addition to
remaining eligible for normal severance benefits).
Continuation of Certain Company Employee Benefit Plans. The Merger
Agreement provides that Parent will continue the Company's Supplemental
Executive Retirement Plan for current plan participants and Executive Deferred
Compensation Plan, or, in either case, provide comparable benefits. The Merger
Agreement also provides for the continuation of the Company 401(k) Savings Plan
and the Company-Oklahoma 401(k) Savings Plan, subject to certain amendments made
in connection with the Merger.
Indemnification. Purchaser and Parent have agreed in the Merger Agreement
that all rights to indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time existing in favor of the
current or former directors, officers or employees of the Company as provided in
the Company's certificate of incorporation or by-laws will be assumed by the
Surviving Corporation, and Parent will cause the Surviving Corporation to honor
such obligations in accordance with the terms thereof, without further action,
as of the Effective Time, and such rights will continue in full force and effect
in accordance with their respective terms. Such rights, and the Surviving
Corporation's and Parent's concomitant obligations, shall apply in all respects
to the current or former directors, officers and employees of each of the
Company Subsidiaries as though such directors, officers and employees were
entitled to indemnification rights pursuant to the Company's certificate of
incorporation or bylaws as in effect on the date of the Merger Agreement. In
addition, from and after the Effective Time, directors and officers of the
Company who become or remain directors or officers of Parent will be entitled to
the same indemnity rights and protections (including those provided by
directors' and officers' liability insurance) as are afforded to other directors
and officers of Parent. The Merger Agreement provides further that Parent will,
and will cause the Surviving Corporation to, maintain for a period of not less
than six years from the Effective Time policies of directors' and officers'
liability insurance equivalent in all material respects to those maintained by
or on behalf of the Company and the Company Subsidiaries on the date of the
26
29
Merger Agreement (and having coverage and containing terms and conditions which
in the aggregate are not less advantageous to the persons currently covered by
such policies as insured) with respect to claims arising from any actual or
alleged wrongful act or omission occurring prior to the Effective Time for which
a claim has not been made against any director or officer of the Company and/or
any director or officer of the Company Subsidiaries prior to the Effective Time,
so long as the aggregate annual premium therefor would not be in excess of 150%
of the premium currently paid by the Company and the Company Subsidiaries for
such insurance on the date of the Merger Agreement (such 150% amount, the
"Maximum Premium"). If the annual premium for such insurance exceeds the Maximum
Premium, then Parent will cause the Surviving Corporation to provide the maximum
coverage available for the Maximum Premium.
Options. In the Merger Agreement, the Company represented and warranted
and Parent and Purchaser acknowledged that all outstanding options to purchase
Shares (the "Company Options") granted under the Company's stock option plans,
each as amended (collectively, the "Company Option Plans"), whether or not then
exercisable or vested, pursuant to the terms of the Company Option Plans, will
be fully exercisable and vested during the ten-day period immediately prior to
the initial Expiration Date, and that, pursuant to the terms of the Company
Option Plans, all Company Options which are outstanding immediately prior to the
consummation of the Offer shall be canceled as of the consummation of the Offer
and the holders of Company Options will be entitled to receive from the Company
(or, at Parent's option, Parent) upon consummation of the Offer, in respect of
each Share subject to such Company Option, an amount in cash equal to the
excess, if any, of the Per Share Amount over the exercise price per share of
such Company Option (such payment to be net of applicable withholding taxes).
With respect to any person subject to Section 16(a) of the Exchange Act, any
such amount shall be paid as soon as practicable after the first date payment
can be made without liability to such person under Section 16(b) of the Exchange
Act. Upon the consummation of the Offer, Parent shall provide the Company with
the funds necessary to satisfy any such obligations under the Merger Agreement.
The Company has agreed to cause the Company Option Plans to terminate as of
the Effective Time and the Company has represented and warranted to Parent that
all Company Option Plans provide, or have been amended to provide, for the
actions described in the preceding paragraph.
The Company has represented and warranted that 3,327,445 Shares are
issuable pursuant to Company Options as of November 19, 1997 (and will therefore
become exercisable and canceled pursuant to the foregoing paragraph), and that
the aggregate exercise price of such options is approximately $49 million.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's capitalization, the absence of any required filings and consents, the
absence of conflicts with charter documents and contracts, Commission filings
and financial statements, the absence of certain changes or events, compliance
with laws, the absence of litigation, employee benefit plans, the filing and
compliance of reports with the requirements of the Commission, environmental
matters, brokers and taxes.
Merger Conditions. Under the Merger Agreement, the obligations of each
party to effect the Merger shall be subject to the fulfillment or waiver at or
prior to the Effective Time of the following conditions, provided that the
obligation of each party to effect the Merger shall not be relieved by the
failure of any such conditions if such failure is the proximate result of any
breach by such party of any of its material obligations under the Merger
Agreement:
(i) Purchaser shall have accepted for payment all Shares validly
tendered in the Offer and not withdrawn; provided, however, that neither
Parent nor Purchaser may invoke this condition if Parent shall have failed
to purchase Shares so tendered and not withdrawn in violation of the terms
of the Merger Agreement or the Offer;
(ii) if required, the Company Proposals shall have been approved at or
prior to the Effective Time by the requisite vote of the Stockholders of
the Company in accordance with the Delaware Code and the Company's
Certificate of Incorporation, which the Company has represented shall be
solely the affirmative vote of a majority of the outstanding Shares;
27
30
(iii) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or other Governmental Authority which
temporarily, preliminarily or permanently prohibits or prevents the
consummation of the Merger which has not been vacated, dismissed or
withdrawn prior to the Effective Time; or
(iv) on or prior to the closing date of the Merger, the waiting period
(and any extensions thereof) applicable to the Merger under the HSR Act and
similar German laws (see Section 15) shall have been terminated or shall
have expired.
Pursuant to the Merger Agreement, the obligations of Parent and Purchaser
to effect the Merger are subject to the satisfaction of the condition (which may
be waived in whole or in part by Parent) that the Company shall have performed
in all material respects all material obligations required to be performed by it
under the Merger Agreement on or before the earlier of (i) such time as Parent's
or Purchaser's designees shall constitute at least a majority of the Company
Board and (ii) the closing date; provided, however, that no failure by the
Company to have so performed any such material obligation shall constitute a
failure of satisfaction of the foregoing condition where the Company's failure
of performance was caused by Parent or occurred, and was actually known to
Parent, at or prior to the time Parent, Purchaser or any of their affiliates
accepted for payment any Shares pursuant to the Offer.
STOCKHOLDERS AGREEMENT
The following summary of the material terms of the Stockholders Agreement
is qualified in its entirety by reference to the copy of the Stockholders
Agreement filed as an exhibit to the Schedule 14D-1 and incorporated herein by
reference.
In connection with the execution of the Merger Agreement, certain
affiliates of The Carlyle Group, L.P. (each, a "Carlyle Stockholder") which
beneficially own 7,660,000 Shares, or approximately 25.8% of the issued and
outstanding Shares (the "Option Shares"), entered into an agreement (the
"Stockholders Agreement") in which they have agreed to tender their Shares
pursuant to the Offer and have granted Purchaser an option (the "Option") to
purchase such Shares at $29.50 per Share if (i) the Company becomes obligated to
pay the Termination Fee by reason of a termination of the Merger Agreement (a)
by Parent because the Company has breached in any material respect any of its
representations, warranties, covenants or other agreements in the Merger
Agreement (subject to opportunity to cure), (b) by Parent because the Company
Board has withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Offer or any of the Company Proposals or failed to
reconfirm its recommendation within five business days after a written request
to do so, or approved or recommended any Takeover Proposal or the Company Board
or any committee thereof has resolved to take any such action, or (c) by the
Company in order to enter into a definitive agreement providing for a Superior
Proposal or (ii) the Merger Agreement is terminated in accordance with its terms
for reasons other than the failure of Parent or Purchaser to fulfill any
obligation under the Merger Agreement. The Option also becomes exercisable if
the Offer is consummated but (due to failure by any Carlyle Stockholder to
validly tender and not properly withdraw) Purchaser has not accepted for payment
or paid for the Option Shares (in which case the price per Option Share will be
equal to the highest price paid in the Offer). The Option will become
exercisable in whole but not in part on the first to occur of the foregoing
events or, if later, the date on which the HSR Act and similar German law
waiting periods have expired or terminated or been waived or there exists no
injunction with respect to exercise of the Option and will remain exercisable
for a period of 30 days after the Option first becomes exercisable.
Voting of Shares. In the Stockholders Agreement, each Carlyle Stockholder
agrees that from the date thereof until the termination of the Stockholders
Agreement, at any meeting of the Stockholders, however called, and in any action
by consent of the Stockholders, such Carlyle Stockholder shall vote its Shares
(i) in favor of the Merger and the Merger Agreement (as amended from time to
time), (ii) against any Takeover Proposal and against any proposal for action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or which is reasonably likely to result in any of the conditions of
the Company's obligations under the Merger Agreement not being fulfilled, any
change in the directors of the Company, any change in the present capitalization
of the
28
31
Company or any amendment to the Company's Certificate of Incorporation or
Bylaws, any other material change in the Company's corporate structure or
business, or any other action which in the case of each of the matters referred
to in this clause (ii) could reasonably be expected to impede, interfere with,
delay, postpone or materially adversely affect the transactions contemplated by
the Merger Agreement or the likelihood of such transactions being consummated
and (iii) in favor of any other matter necessary for consummation of the
transactions contemplated by the Merger Agreement which is considered at any
such meeting of Stockholders or in such consent, and in connection therewith to
execute any documents which are necessary or appropriate in order to effectuate
the foregoing, including the ability for Purchaser or its nominees to vote the
Shares directly.
Agreement not to Dispose or Encumber Shares. Each Carlyle Stockholder
agreed that during the term of the Stockholders Agreement, it will not, and will
not offer or agree to, sell, transfer, tender, assign, pledge, hypothecate or
otherwise dispose of, or create or permit to exist any encumbrance on any of
such Carlyle Stockholder's Shares.
Grant of Proxy. Each Carlyle Stockholder agrees to revoke any and all
prior proxies or powers of attorney in respect of any of their respective Shares
and constituted and appointed Purchaser and Parent, or any nominee of Purchaser
and Parent, with full power of substitution and resubstitution, at any time
during the term of the Stockholders Agreement, as its true and lawful attorney
and proxy (its "Proxy"), for and in its name, place and stead, to demand that
the Secretary of the Company call a special meeting of Stockholders for the
purpose of considering any matter referred to in the above paragraph captioned
"Voting of Shares" and to vote each of such Shares as its Proxy, at every
annual, special, adjourned or postponed meeting of Stockholders, including the
right to sign its name (as stockholder) to any consent, certificate or other
document relating to the Company that the law of the State of Delaware may
permit or require in connection with any such matter.
Agreement to Tender. Each Carlyle Stockholder agreed to validly tender (or
cause the record owner of such Shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer, its Shares. For its Shares
validly tendered in the Offer and not properly withdrawn, each Carlyle
Stockholder will be entitled to receive the highest price paid by Parent
pursuant to the Offer.
No Solicitation. Each Carlyle Stockholder agreed in the Stockholders
Agreement that during the term of the Stockholders Agreement, it will not,
directly or indirectly, through any officer, director, agent or other
representative, solicit, initiate or encourage, or take any other action
designed or reasonably likely to facilitate, any inquiries or the making of any
proposal from any person (other than Parent, Purchaser and any of their
affiliates) relating to (i) any acquisition of all or any of the Carlyle
Stockholder's Shares or (ii) any transaction that constitutes a Takeover
Proposal, or participate in any negotiations regarding, or furnish to any person
any information with respect to, or otherwise cooperate in any way with, or
assist or participate in or facilitate or encourage, any effort or attempt by
any person to do or seek any of the foregoing. Each Carlyle Stockholder agreed
to notify Parent and Purchaser promptly if any such proposal or offer, or any
inquiry or contact with any person with respect thereto, is made and shall, in
any such notice to Parent and Purchaser, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact.
Notwithstanding any provision of this paragraph to the contrary, if any Carlyle
Stockholder or any officer, director, agent or representative of such Xxxxxxx
Xxxxxxxxxxx is a member of the Company Board, such member may take actions in
such capacity to the extent permitted by the Merger Agreement.
Representations and Warranties. The Stockholders Agreement contains
various customary representations and warranties of the parties thereto
including, without limitation, representations and warranties by the Carlyle
Stockholders as to organization, power and authority, the absence of any
required filings and consents, the absence of conflicts with charter documents
and contracts and title to Shares. The Stockholders Agreement also provides
that, as of the Effective Time, each Carlyle Stockholder terminates on behalf of
itself and its affiliates, any and all contractual rights in favor of such
Carlyle Stockholder and its affiliates then in effect between such Carlyle
Stockholder or affiliates, on the one hand, and the Company, on the other hand,
including without limitation, any monitoring and advisory fees to The Carlyle
Group, L.P.
29
32
Termination. The Stockholders Agreement shall terminate and be of no
further force and effect (i) by the written mutual consent of the parties
thereto, (ii) by Parent or any Carlyle Stockholder (with respect to such Carlyle
Stockholder) if the Offer or the Merger shall not have been consummated on or
before March 20, 1998, or (iii) automatically and without any required action of
the parties thereto upon the earlier to occur of (a) the Effective Time of the
Merger and (b) immediately after the termination of the Merger Agreement in
accordance with its terms; provided, however, that in the event that the Stock
Option shall become exercisable, the provisions of the Stockholders Agreement
governing the exercise and exercisability of the Option, the representations,
warranties and covenants (other than covenants with respect to voting, grant of
proxy, agreement to tender, and transfer restrictions) of the Stockholders,
representations and warranties of Parent and Purchaser and other miscellaneous
matters of the Stockholders Agreement shall survive the termination of the
Stockholders Agreement until the earlier to occur of the closing of the exercise
of the Stock Option and the expiration of the Stock Option. No such termination
of the Stockholders Agreement shall relieve any party thereto from any liability
for any breach of the Stockholders Agreement prior to termination.
VOTE REQUIRED TO APPROVE THE MERGER
The Company Board has approved the Merger Agreement in accordance with the
Delaware Code. If required for approval of the Merger, the Company has agreed,
subject to the satisfaction of the conditions to the Merger set forth in the
Merger Agreement, in accordance with and subject to the Delaware Code, to duly
convene a meeting of its Stockholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement. If Stockholder approval is required, the Merger Agreement
must generally be adopted by the vote of the holders of a majority of the
outstanding Shares. As a result, if the Minimum Condition is satisfied,
Purchaser will have the power to adopt the Merger Agreement without the
affirmative vote of any other Stockholder of the Company. If Purchaser acquires
at least 90% of the outstanding Shares, Purchaser intends to take, and the
Company has agreed, at the request of Purchaser, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
Stockholders, in accordance with the "short form" merger provisions of Section
253 of the Delaware Code.
APPRAISAL RIGHTS
Stockholders do not have appraisal or dissenters' rights in connection with
the Offer. However, if the Merger is consummated, Stockholders of the Company at
the time of the Merger who do not vote in favor of the Merger and comply with
all statutory requirements will have the right under the Delaware Code to demand
appraisal of, and receive payment in cash of the fair value of, their Shares
outstanding immediately prior to the effective date of the Merger in accordance
with Section 262 of the Delaware Code.
Under the Delaware Code, Stockholders who properly demand appraisal and
otherwise comply with the applicable statutory procedures will be entitled to
receive a judicial determination of the fair value of their Shares (exclusive of
any element of value arising from the accomplishment or expectation of the
Merger) and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market value of Shares. In Xxxxxxxxxx v. UOP, Inc., the Delaware
Supreme Court stated, among other things, that "proof of value by any techniques
or methods which are generally considered acceptable in the financial community
and otherwise admissible in court" should be considered in an appraisal
proceeding. Stockholders should recognize that the value so determined could be
equal to or higher or lower than the Per Share Amount or the Merger
Consideration.
In addition, several decisions by Delaware courts have held that in certain
circumstances a controlling stockholder of a corporation involved in a merger
has a fiduciary duty to other stockholders that requires that the merger be fair
to other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of the consideration to be received by the stockholders and whether there
was fair dealing among the parties. The Delaware Supreme Court stated in
Xxxxxxxxxx and Xxxxxx v. Xxxxxx X. Xxxx Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or
30
33
injunctive relief may be available if a merger is found to be the product of
unfairness, including fraud, misrepresentation or other misconduct.
THE FOREGOING DESCRIPTION OF THE DELAWARE CODE AND SUMMARY OF THE RIGHTS OF
STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS.
THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO
THE APPLICABLE PROVISIONS OF THE DELAWARE CODE.
PLANS FOR THE COMPANY
If Purchaser obtains control of the Company pursuant to the Offer, Parent
expects to conduct a detailed review of the Company and its businesses, assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and to consider what, if any, changes would be
desirable in light of the circumstances that then exist. Such changes could
include changes in the Company's businesses, corporate structure, certificate of
incorporation, by-laws, capitalization, board of directors, management or
dividend policy.
Except as described in this Offer to Purchase, none of Parent, Purchaser
nor, to the best knowledge of Parent and Purchaser, any of the persons listed on
Schedule I have any present plans or proposals that would relate to or result in
an extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company or any of the Company Subsidiaries or a sale
or other transfer of a material amount of assets of the Company or any of the
Company Subsidiaries, any material change in the capitalization or dividend
policy of the Company or any other material change in the Company's corporate
structure or business or the composition of its Board of Directors or
management.
Parent or Purchaser or an affiliate of Parent may, following the
consummation or termination of the Offer, seek to acquire additional Shares
through open market purchases, privately negotiated transactions, a tender offer
or exchange offer, or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less than the price to be paid pursuant to the
Offer. Parent, Purchaser and Parent's affiliates also reserve the right to
dispose of any or all Shares acquired by them.
GOING PRIVATE TRANSACTIONS
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger. Rule 13e-3 should not be applicable
to the Merger if the Merger is consummated within one year after the expiration
or termination of the Offer and the Merger Consideration is not less than the
Per Share Amount. However, in the event that Purchaser is deemed to have
acquired control of the Company pursuant to the Offer and if the Merger is
consummated more than one year after completion of the Offer or an alternative
acquisition transaction is effected whereby Stockholders receive consideration
less than that paid pursuant to the Offer, in either case at a time when Shares
are still registered under the Exchange Act, Purchaser may be required to comply
with Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require,
among other things, that certain financial information concerning the Company
and certain information relating to the fairness of the Merger or such
alternative transaction and the consideration offered to minority Stockholders
in the Merger or such alternative transaction, be filed with the Commission and
disclosed to Stockholders prior to consummation of the Merger or such
alternative transaction. The purchase of a substantial number of Shares pursuant
to the Offer may result in the Company being able to terminate its Exchange Act
registration prior to consummation of the Merger or such alternative
transaction. See Section 13. If such registration were terminated, Rule 13e-3
would be inapplicable to the Merger or such alternative transaction.
12. DIVIDENDS AND DISTRIBUTIONS.
The Company has agreed that, from the date of the Merger Agreement until
the Effective Time, the Company will neither split, combine or reclassify any
Shares of its capital stock nor declare, set aside, or pay any dividends or
other distributions in respect of its capital stock, other than dividends or
distributions to the Company or the Company Subsidiaries in the ordinary course
of business consistent with past practice.
31
34
13. EFFECT OF THE OFFER ON THE MARKET FOR SHARES, NASDAQ LISTING AND EXCHANGE
ACT REGISTRATION.
Market for Shares. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and will reduce
the number of holders of Shares. This could adversely affect the liquidity and
market value of the remaining Shares held by the public. Depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer meet
the requirements of the NASD for continued inclusion in the Nasdaq National
Market, which require that an issuer have at least 200,000 publicly held shares,
held by at least 400 stockholders or 300 holders of round lots, with a market
value of at least $1,000,000 and have net tangible assets of at least
$1,000,000. If the Shares were no longer eligible for inclusion in the Nasdaq
National Market, they may nevertheless continue to be included in the Nasdaq
SmallCap Market unless, among other things, the number of holders of Shares were
to fall below 300, the number of publicly held Shares were to fall below 100,000
or there were not at least two registered and active market makers for Shares,
in which case the NASD's rules provide that the Shares would no longer be
"qualified" for Nasdaq Stock Market reporting and the Nasdaq Stock Market would
cease to provide any quotations. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of Shares are not
considered as being publicly held for this purpose. The Company has informed
Xxxxxxxxx that, as of November 20, 1997, there were approximately 1,245 holders
of record or through nominee or street name accounts with brokers of Shares and
that, as of close of business on such date, 29,723,431 Shares were issued and
outstanding. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock
Market and Shares are no longer included in the Nasdaq National Market or in any
other tier of the Nasdaq Stock Market, as the case may be, the market for Shares
could be adversely affected.
In the event that Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq Stock Market, it is possible that
such Shares would continue to trade on other securities exchanges or in the
over-the-counter market and that price quotations would be reported by such
exchanges or through other sources. However, the extent of the public market for
Shares and the availability of such quotations would depend upon such factors as
the number of Stockholders and/or the aggregate market value of Shares remaining
at such time, the interest in maintaining a market in Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below and other factors. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for or marketability of
Shares.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of Shares pursuant to the Offer may result in Shares
becoming eligible for deregistration under the Exchange Act. Registration of
Shares may be terminated upon application of the Company to the Commission if
the Shares are not listed on a national securities exchange and there are fewer
than 300 record holders. The termination of the registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of the Shares and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement in
connection with Stockholders' meetings and the requirements of Rule 13e-3 under
the Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. Furthermore, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability to
dispose of the securities pursuant to Rule 144 under the Securities Act of 1933.
Parent intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon as practicable
following completion of the Offer as the requirements for such termination are
met. If registration of the Shares is not terminated prior to the Merger, then
the registration of the Shares under the Exchange Act will be terminated
following the consummation of the Merger. The Shares are currently "margin
securities" under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such Shares for the
purpose of buying, carrying, or trading in securities ("purpose loans").
Depending upon factors similar to those described above with respect to listing
and market quotations, it is possible that, following the Offer, the Shares
might no longer constitute "margin securities" for the purposes of the Federal
Reserve
32
35
Board's margin regulations and therefore could no longer be used as collateral
for purposes of loans made by brokers.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and
subject to any such rules or regulations, may delay the acceptance for payment
of any tendered Shares and (except as provided in the Merger Agreement) amend or
terminate the Offer (whether or not any Shares have been theretofore purchased
or paid for pursuant to the Offer) (i) unless the following conditions shall
have been satisfied: (a) there shall be validly tendered and not withdrawn prior
to the Expiration Date a number of Shares which represents at least a majority
of the total voting power of the outstanding securities of the Company entitled
to vote in the election of directors or in a merger ("Voting Securities")
calculated on a fully diluted basis (the "Minimum Condition") ("on a fully
diluted basis" having the following meaning as of any date: the number of Voting
Securities outstanding, together with Voting Securities issuable pursuant to
obligations outstanding at that date under employee stock option or other
benefit plans or otherwise) and (b) any applicable waiting period under the HSR
Act and similar German laws (see Section 15) shall have expired or been
terminated prior to the Expiration Date or (ii) if at any time after the date of
the Merger Agreement and before the time of payment for any such Shares (whether
or not any Shares have theretofore been accepted for payment or paid for
pursuant to the Offer), any of the following events shall occur and be
continuing:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction or
a law shall have been promulgated, enacted, taken or threatened by a
Governmental Authority of competent jurisdiction which in any such case (1)
restrains or prohibits the making or consummation of the Offer, the
consummation of the Merger or the transactions contemplated by the
Stockholders Agreement, (2) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or subsidiaries) of any
portion of its or the Company's business or assets which is material to the
business of all such entities taken as a whole, or compels Parent (or any
of its affiliates or subsidiaries) to dispose of or hold separate any
portion of its or the Company's business or assets which is material to the
business of all such entities taken as a whole, (3) imposes material
limitations on the ability of Purchaser effectively to acquire or to hold
or to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by Purchaser on all
matters properly presented to the Stockholders, or (4) imposes any material
limitations on the ability of Parent or any of its affiliates or
subsidiaries effectively to control in any material respect the business
and operations of the Company;
(b) any Governmental Authority shall have instituted any action, suit
or proceeding seeking any relief or remedy referred to in paragraph (a) or
material damages as a result of any of the Merger Agreement, the
Stockholders Agreement or any transactions contemplated thereby;
(c) the Merger Agreement shall have been terminated by the Company or
Parent in accordance with its terms or any event shall have occurred which
gives Parent or Purchaser the right to terminate the Merger Agreement or
not to consummate the Merger;
(d) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely
in the future to have a material adverse effect on the business, assets,
condition (financial or otherwise), liabilities or results of operations of
the Company and the Company Subsidiaries taken as a whole (a "Company
Material Adverse Effect").
(e) there shall have occurred (1) any general suspension of, or
limitation on prices (other than suspensions or limitations triggered on
the New York Stock Exchange, Inc. by price fluctuations on a trading day)
for, trading in securities on any national securities exchange or the
over-the-counter market, (2) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (3) any
material limitation (whether or not mandatory) by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, on, the extension of credit by banks or other lending
33
36
institutions, (4) a commencement of a war or armed hostilities or other
national calamity directly involving the United States and Parent shall
have determined that there is a reasonable likelihood that such event may
be of material adverse significance to it or the Company, (5) any decline
of at least 20% in the Dow Xxxxx Average of Industrial Stocks or 20% in the
Standard & Poor's 500 Index from the levels thereof as of the last trading
day immediately preceding the date of the Merger Agreement or (6) in the
case of any of the foregoing existing at the time of the execution of the
Merger Agreement, a material acceleration or worsening thereof;
(f) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 25% of the outstanding Shares has been acquired by any
person (including the Company, any of the Company Subsidiaries or
affiliates thereof) or group (as defined in Section 13 (d) (3) of the
Exchange Act), other than Purchaser or any of its affiliates;
(g) the Company or any of its officers, directors or financial or
legal advisors shall have, directly or indirectly, (1) solicited,
initiated, encouraged (including by way of furnishing information) or taken
any other action designed or reasonably likely to facilitate, any inquiries
or the making of any proposal which constituted, or may reasonably be
expected to lead to, any Takeover Proposal or (2) participated in any
discussions or negotiations regarding any Takeover Proposal regardless of
whether or not any of the foregoing actions are permitted by the Merger
Agreement;
(h) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified by reference to materiality or a
Company Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be true
and correct in any respect that is reasonably likely to have a Company
Material Adverse Effect, in each case as if such representations and
warranties were made at the time of such determination;
(i) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under the Merger Agreement; or
(j) Parent and the Company shall have agreed that Parent shall amend
the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto;
which, in the judgment of Parent with respect to each and every matter referred
to above and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances giving rise to any such
condition (except for any action or inaction by Parent or any of its affiliates
constituting a breach of the Merger Agreement) or (other than the Minimum
Condition) may be waived by Parent in whole or in part at any time and from time
to time in its sole discretion (subject to the terms of the Merger Agreement).
The failure by Parent at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right, the waiver of any such right with
respect to particular facts and other circumstances shall not be deemed a waiver
with respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as set forth below, based upon its examination of publicly
available filings by the Company with the Commission and other publicly
available information concerning the Company, neither Parent nor Purchaser is
aware of any licenses or other regulatory permits that appear to be material to
the business of the Company and the Company Subsidiaries, taken as a whole, that
might be adversely affected by Purchaser's acquisition of Shares (and the
indirect acquisition of the stock of the Company Subsidiaries) as contemplated
herein, or of any filings, approvals or other actions by or with any domestic
(federal or state), foreign or supranational governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of Shares (or the indirect acquisition of the stock of the Company
Subsidiaries) by Purchaser pursuant
34
37
to the Offer as contemplated herein. Should any such approval or other action be
required, it is Purchaser's present intention to seek such approval or action.
There can be no assurance that any such approval or other action, if needed,
would be obtained without substantial conditions, that adverse consequences
might not result to the business of the Company, Parent or Purchaser, that
certain parts of the businesses of the Company, Parent or Purchaser might not
have to be disposed of or held separate or other substantial conditions complied
with in order to obtain such approval or other action or in the event that such
approval was not obtained or such other action was not taken, any of which could
cause Purchaser to elect (subject to the terms of the Merger Agreement) to
terminate the Offer without the purchase of the Shares thereunder. Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions, including conditions relating to the legal matters
discussed in this Section 15. See Section 14.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents
an "interested stockholder" (including a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers and certain other
actions) with a Delaware corporation for a period of three years following the
date such person became an interested stockholder unless, among other things,
the "business combination" is approved by the Board of Directors of such
corporation prior to such date. The Company Board has approved the Offer and the
Merger. Accordingly, Section 203 is inapplicable to the Offer and the Merger.
A number of other states have adopted takeover laws and regulations which
purport to varying degrees to be applicable to attempts to acquire securities of
corporations which are incorporated in such states or which have or whose
business operations have substantial economic effects in such states, or which
have substantial assets, security holders, principal executive offices or
principal places of business therein. In 1982, the Supreme Court of the United
States, in Xxxxx x. Mite Corp., invalidated on constitutional grounds the
Illinois Business Takeovers Act, which as a matter of state securities law made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court of the
United States held that the State of Indiana could, as a matter of corporate law
and in particular those aspects of corporate law concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without the prior approval of the remaining
stockholders, provided that such laws were applicable only under certain
conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal
district court in Oklahoma ruled that the Oklahoma statutes were
unconstitutional insofar as they applied to corporations incorporated outside
Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. x. XxXxxxxxxx, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in Grand
Metropolitan PLC x. Xxxxxxxxxxx that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, the Purchaser might be unable to accept
for payment any Shares tendered pursuant to the Offer, or be delayed in
continuing or consummating the Offer and the Merger. In such event, the
Purchaser may not be obligated to accept for payment any Shares tendered. See
Section 14.
Pursuant to the Merger Agreement, the Company and the Company Board will
grant such approvals and take such actions as are necessary so that the
transactions contemplated by the Merger Agreement and the Company
35
38
Proposals may be consummated as promptly as practicable on the terms
contemplated thereby and otherwise act to eliminate or minimize the effects of
any takeover statute on any of the transactions contemplated.
Other Governmental or Foreign Approvals. The Company owns property in a
number of foreign countries and jurisdictions. In connection with the
acquisition of the Shares pursuant to the Offer, the laws of certain of those
foreign countries and jurisdictions may require the filing of information with,
or the obtaining of the approval of, Governmental Authorities in such countries
and jurisdictions. The governments in such countries and jurisdictions might
attempt to impose additional conditions on the Company's operations conducted in
such countries and jurisdictions as a result of the acquisition of the Shares
pursuant to the Offer or the Merger. The Company has represented to Parent that
no consent, approval, waiver or authorization of, notice to or declaration of
filing with, any Governmental Authority on the part of the Company or any of the
Company Subsidiaries is required in connection with the execution, delivery or
performance by the Company of the Merger Agreement or the delivery or
performance by the Company of the transactions contemplated thereby other than
(i) the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the Delaware Code, (ii) filings with the Commission
and the NASD, (iii) filings under the HSR Act and the rules and regulations
promulgated thereunder and similar foreign requirements, (iv) such filings as
may be required in any jurisdiction where the Company is qualified or authorized
to do business as a foreign corporation in order to maintain such qualification
or authorization and (v) those consents that, if they were not obtained or made,
individually or in the aggregate would not be reasonably likely to have a
Company Material Adverse Effect, or prevent or materially delay consummation of
the Offer or the Merger or prevent the Company from performing its obligations
under the Merger Agreement.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer is subject to such
requirements. See Section 2. There may be similar antitrust requirements in
other jurisdictions.
On November 25, 1997, Xxxxxx filed with the FTC and the Antitrust Division
a Premerger Notification and Report Form in connection with the purchase of
Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to
the Offer, the purchase of Shares pursuant to the Offer may not be consummated
until the expiration of a 15-calendar day waiting period following the filing by
Parent, unless both the Antitrust Division and the FTC terminate the waiting
period prior thereto. If, within such 15-calendar day waiting period, either the
Antitrust Division or the FTC requests additional information or documentary
material from Parent, the waiting period would be extended for an additional 10
calendar days following substantial compliance by Parent with such request.
Thereafter, the waiting period could be extended only by court order. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not, be extended and in any event the
purchase of and payment for Shares will be deferred until 10 days after the
request is substantially complied with, unless the waiting period is sooner
terminated by the FTC and the Antitrust Division. See Section 2. Only one
extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order. Any such extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law. See
Section 4.
The November 25, 1997 Premerger Notification and Report Form filing
described above was also applicable to the Option granted to Purchaser pursuant
to the Stockholders Agreement. Under the provisions of the HSR Act applicable to
the Option, the purchase of Shares pursuant to the Option may not be consummated
until the expiration of a 30-calendar day waiting period following the filing by
Parent, unless both the Antitrust Division and the FTC terminate the waiting
period thereto. If, within such 30-calendar day waiting period, either the
Antitrust Division or the FTC requests additional information or documentary
material from Parent, the waiting period would be extended for an additional 20
calendar days following substantial compliance by Parent with such request.
Thereafter, the waiting period could be extended only by court order. Only one
extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order. Pursuant to the Stockholders Agreement, among other
things, if
36
39
the Option becomes exercisable, it would continue to be exercisable until 30
days after the waiting period (including as extended) under the HSR Act has
expired. See Section 11.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase by
Purchaser of Shares pursuant to the Offer, either of the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, its subsidiaries
or the Company. Private parties and state attorneys general may also bring legal
action under federal or state antitrust laws under certain circumstances.
In connection with the acquisition of the Shares pursuant to the Offer or
the Merger, Parent and the Company will be required to file a pre-merger
notification with the German Federal Cartel Office ("FCO"), which is the
governmental authority charged with enforcing German competition laws applicable
to mergers and acquisitions. Parent and the Company intend to make the
appropriate filings with the FCO as promptly as practicable following the
commencement of the Offer. The FCO has one month following the filing to advise
the parties of its intention to investigate the transactions, in which case the
FCO has four months from the date of filing in which to take steps to oppose the
transactions. There can be no assurance that the FCO will not investigate or
oppose the transactions.
Based upon an examination of publicly available information, and
information provided to Parent by the Company, relating to the businesses in
which the Company and the Company Subsidiaries are engaged, Purchaser has
determined that the Company and Parent both provide similar services in certain
geographic areas. Although Xxxxxxxxx believes that the acquisition of Shares
pursuant to the Offer would not violate the antitrust laws, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such challenge is made, what the outcome will be. See Section 14 for
certain conditions to the Offer, including conditions with respect to litigation
and certain government actions.
Margin Credit Regulations. Federal Reserve Board Regulations G, T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock and the maximum loan value thereof is generally 50% of
their current market value. The definition of "indirectly secured" contained in
the Margin Credit Regulations provides that the term does not include an
arrangement with a customer if the lender in good faith has not relied upon
margin stock as collateral in extending or maintaining the particular credit.
16. FEES AND EXPENSES.
Xxxx Xxxxxxx is acting as Dealer Manager in connection with the Offer and
serving as financial advisor to Parent and Purchaser in connection with the
acquisition of the Company. Parent has agreed, pursuant to an engagement letter
dated November 19, 1997, to pay to Bear Xxxxxxx an advisory fee of $100,000
which will be credited against the payment of the fairness opinion fee. Parent
has agreed to pay Bear Xxxxxxx a fairness opinion fee of $1,000,000. Parent has
also agreed to pay Bear Xxxxxxx a fee of $500,000 upon the consummation of the
Offer, an acquisition of 50% or more of the Shares or the consummation of any
other business combination (including a sale of assets) in which the parent
acquires control of the Company. Parent and Purchaser will also reimburse Bear
Xxxxxxx for reasonable out-of-pocket expenses, including reasonable attorney's
fees, and have also agreed to indemnify Bear Xxxxxxx for certain liabilities and
expenses in connection with the Offer, including certain liabilities under the
federal securities laws.
Xxxxxxxxx has retained Xxxxxxxxx to act as the Information Agent and First
Chicago Trust to act as the Depositary in connection with the Offer. The
Information Agent may contact holders of Shares by mail, telephone, telex,
telegraph and personal interview and may request brokers, dealers and other
nominee Stockholders to forward the Offer materials to beneficial owners. The
Information Agent and the Depositary will receive reasonable and customary
compensation for services relating to the Offer and will be reimbursed for
certain out-of-pocket expenses. Parent and Purchaser have also agreed to
indemnify the Information Agent and
37
40
the Depositary against certain liabilities and expenses in connection with the
Offer, including certain liabilities under the federal securities laws.
Purchaser will not pay any fees or commissions to any broker or dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Dealer Manager, the Information Agent and the Depositary). Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all Stockholders. Purchaser is not
aware of any state where the making of the Offer is prohibited by administrative
or judicial action pursuant to any valid state statute. If Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, Purchaser will make a good faith effort
to comply with any such state statute. If after such good faith effort Purchaser
cannot comply with such state statute, the Offer will not be made to, nor will
tenders be accepted from or on behalf of, the Stockholders in such state. 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 the Dealer Manager or one or more registered brokers or
dealers that are licensed under the laws of such jurisdiction.
Parent and Purchaser have filed with the Commission a Schedule 14D-1
(including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained from the offices of the Commission (except that they will not be
available at the regional offices of the Commission) in the manner set forth in
Section 8 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
SYSTEMS ACQUISITION INC.
November 26, 1997
38
41
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
1. Directors and Executive Officers of Purchaser. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employments during the last five years of each director
and executive officer of Purchaser and certain other information are set forth
below. Unless otherwise indicated, the business address of each such director
and executive officer is 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxx 00000. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Purchaser. Information for Xx. Xxxxxxxx is set forth
below under "Directors and Executive Officers of Parent." All directors and
executive officers listed below are citizens of the United States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE
NAME AND BUSINESS ADDRESS LAST FIVE YEARS
---------------------------------------------------------------------------------------------
Xxxxx X. Xxxxxxxx............. Director, Vice President and Assistant Secretary since 1997.
Xx. Xxxxxxxx also serves as a Vice President-Law and Assistant
General Counsel and Assistant Secretary of Parent, a position
he has held since 1995. He previously served as Vice
President-Law and Assistant General Counsel and Assistant
Secretary in the Parent's Steering, Suspension & Engine Group
from 1994 to 1995; as Vice President-Law and Assistant General
Counsel and Assistant Secretary in the Parent's Engine
Components and Steering Systems Groups in 1994; and as
Assigned Group Counsel in the Parent's Engine Components Group
from 1990 to 1994.
Xxxxxx X. Xxxxx............... Director and Vice President since 1997. Xx. Xxxxx also serves
as Vice President of Corporate Development for Parent, a
position he has held since June 1997. He previously served as
Parent's Vice President, Planning & Development from 1993 to
1997 and as Vice President of Planning for the Parent's Space
& Defense Sector from 1989 to 1993.
Xxxxxxx X. Xxxxxxxx........... Director and President since 1997.
Xxxxxx X. Xxxxxxxxxxxxx....... Vice President and Treasurer since 1997. Xx. Xxxxxxxxxxxxx
also serves as Vice President and Treasurer of Parent, a
position she has held since 1996. She previously served as
Vice President, Finance for the Parent's Space & Electronics
Group from 1993 to 1996 and as Deputy Program Manager in the
Parent's Electronic Systems Group from 1986 to 1993.
Xxxxxxx X. Xxxxxx............. Vice President since 1997. Xx. Xxxxxx also serves as Parent's
Vice President, Tax, a position he has held since 1989.
Xxxxxxxx X. Xxxxxxx........... Director, Vice President and Secretary since 1997. Xxx.
Xxxxxxx also serves as Senior Counsel, Securities and Finance
of the Parent, a position she has held since 1997. She also
served as Parent's Counsel, Securities and Finance from 1995
to 1997. Prior to joining Parent for a short time during 1995,
Xxx. Xxxxxxx was General Counsel of Corrpro Companies, Inc.
She previously was an Associate with the Cleveland law firm of
Xxxxxxxx, Xxxx and Xxxxx from 1987 to 1994.
I-1
42
2. Directors and Executive Officers of Parent. The name, business address,
present principal occupation or employment and material occupations, positions,
offices or employments during the last five years of each director and executive
officer of Parent and certain other information are set forth below. Unless
otherwise indicated, the business address of each such director and executive
officer is 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxx 00000. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Parent. All directors and executive officers listed below are
citizens of the United States, except that Xx. Xxxxxxxxxxxx is a citizen of
Germany and Xx. Xxxx is a citizen of Austria.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE
NAME AND BUSINESS ADDRESS LAST FIVE YEARS
---------------------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxxxx........... Director since 1993. Xx. Xxxxxxxx has been President of the
Brookings Institution since October 1995. He served as a
distinguished fellow and visiting professor at the
Asia/Pacific Research Center of Stanford University from 1993
to 1995. Xx. Xxxxxxxx was U.S. Ambassador to Japan from 1989
to 1993. He is also a director of American Family Life
Assurance Company, Applied Materials, Inc. and Xxxxxxx,
Xxxxxxxxxxxx.
Xxxxxx Xxxxxxxxx.............. Director of Parent. Xx. Xxxxxxxxx was elected a Director of
Parent in 1981, resigned his position upon joining the
government in August 1982 and was again elected a Director in
July 1984. Xx. Xxxxxxxxx has been Professor of Economics at
Harvard University since 1967. In addition, he serves as
President and Chief Executive Officer of the National Bureau
of Economic Research, a position he held from 1977 to 1982 and
from July 1984 until the present. Xx. Xxxxxxxxx also is a
director of American International Group, Inc. and X. X.
Xxxxxx & Co. Incorporated.
Xxxxxx X. Xxxxx............... Director since 1994. Xx. Xxxxx is a consultant, author and
lecturer. From 1991 to 1993, he served as Director of Central
Intelligence for the United States. He served as Assistant to
the President of the United States and Deputy National
Security Advisor from 1989 to 1991. Xx. Xxxxx also is a
director of The Xxxxxxx Xxxxx Xxxxxx Laboratory, Inc.,
LucasVarity plc, and NACCO Industries, Inc.; a trustee of
Fidelity Investments; a consultant to Xxxx Industries and
Placer Dome Inc.; and a senior advisor to The Xxxxxxxx Group.
Xxxxxx X. Xxxxxx.............. Director since 1984. Xx. Xxxxxx has been Chairman of the Board
and Chief Executive Officer of Parent since 1988. He also
served as President of Parent from 1985 to 1991 and as Chief
Operating Officer of Parent from 1985 to 1988. Xx. Xxxxxx
currently is a director of Aluminum Company of America and The
Procter & Xxxxxx Company.
Xxxx X. Xxxx.................. Director since 1993. Xx. Xxxx served as Chairman of the Board
of Volkswagen AG from 1981 until his retirement at the end of
1992. He also is a director of PACCAR Inc. and a member of the
supervisory board of Xxxxx Systems Corporation. Xx. Xxxx also
serves as a member of the supervisory boards of a number of
European companies, including DAF Trucks N.V., Thyssen AG and
Volkswagen AG.
Xxxxxx X. Xxxxxxxxx........... Director since 1992. Xx. Xxxxxxxxx is Chairman Emeritus of
Bell Communications Research Inc. (Bellcore). He served as
Chairman and Chief Executive Officer of Bellcore from January
1, 1997 to November 14, 1997. He served as President and Chief
Executive Officer of Bellcore from 1991 to year-end 1996. Xx.
Xxxxxxxxx also is a director of Automatic Data Processing,
Inc. and Compaq Computer Corporation and a trustee of The
MITRE Corporation.
I-2
43
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE
NAME AND BUSINESS ADDRESS LAST FIVE YEARS
---------------------------------------------------------------------------------------------
Xxxxx X. Xxxxxxx.............. Director since 1995. Xx. Xxxxxxx has been President and Chief
Operating Officer of Parent since 1995. He was Executive Vice
President and Assistant President of Parent from 1994 to 1995.
Previously, Xx. Xxxxxxx served as Executive Vice President and
Chief Financial Officer of Parent from 1991 to 1994. He also
is a director of Arkwright Mutual Insurance Company.
Xxxxx X. Xxxx................. Director since 1990. Xxx. Xxxx has served as Senior Managing
Director and Head of International Private Banking of Bankers
Trust New York Corporation since 1996. She was Chairman of
Bank One, Cleveland, N.A. from 1987 to 1996 and also served as
Chief Executive Officer of Bank One from 1987 to 1995. Xxx.
Xxxx also is a director of The British Petroleum Company
p.1.c., Xxx Xxxxx and Company and Rubbermaid Incorporated.
X. Xxxxxxx Xxxxx.............. Director since 1982. Xx. Xxxxx served as Chairman and Chief
Executive Officer of Republic Steel Corporation and its
successor LTV Steel Company from 1982 until his retirement in
1984. He also is a director of Birmingham Steel Corporation,
Consolidated Rail Corporation and RPM, Inc. and a trustee of
Fidelity Investments.
Xxxxxxx X. Xxxxx.............. Director since 1985. Xx. Xxxxx has been Vice Chairman and
Chief Medical Officer of Primary Health Systems, Inc. since
1994. He served as medical director of American Health Care
Management, Inc. from 1992 to 1994. Xx. Xxxxx also is a
director of Positron Corporation and a trustee and an officer
of the American Foundation of Urologic Diseases.
Xxxxx X. Xxxxx................ Director since 1995. Xx. Xxxxx has been Chairman of the Board
of Xxxxx & Xxxxxx, a Detroit law firm, since 1982. He also is
a director of Comerica Bank, Consolidated Rail Corporation, M.
A. Xxxxx Company and LG&E Energy Corporation.
Xxxxx X. Xxxx................. Director since 1993. Xx. Xxxx has been senior advisor to
Lazard Freres & Co. LLC, investment bankers, since November
1992. He served as Chairman of the Board and Chief Executive
Officer of Aetna Life and Casualty Company from 1984 until his
retirement in 1992.
Xxxx X. Xxxxxx................ Director since 1995. Xx. Xxxxxx has chaired Deloitte &
Touche's Council on the Advancement of Women and has served as
an advisor to the firm since 1993. She also has held the Xxxxx
chair at the X. X. Xxxxxxx Graduate School of Management,
Northwestern University, since 1993. Previously, Xx. Xxxxxx
served as U. S. Secretary of Labor from 1991 to 1993. She also
is a director of Ameritech Corporation, Dreyfus Funds,
Harcourt General, Inc., The Procter & Xxxxxx Company and Ryder
System, Inc.
Xxxx X. Xxx................... Director since 1995. Xx. Xxx is Chairman Emeritus of The
BFGoodrich Company. He served as Chairman of the Board of
BFGoodrich from 1979 until his retirement earlier this year.
He was also Chief Executive Officer of BFGoodrich from July
1979 to year-end 1996. Currently, Xx. Xxx is a director of
Ameritech Corporation, ASARCO, Inc., Xxxxxx Industries, The
Geon Company and The Kroger Company.
Xxxxxxx X. Xxxxx.............. Director since 1994. Xx. Xxxxx has served as senior advisor to
Xxx & Xxxxx, a public relations firm, since 1994. Previously,
he was senior partner at the law firm of Xxxxx, Day, Xxxxxx &
Xxxxx from 1993 to 1994 and managing partner of that firm from
1984 to 1992. Xx. Xxxxx also is a director of Continental
Airlines, Inc., Derlan Industries Limited, M. A. Xxxxx
Company, KeyCorp, Lamalie Inc., OHM Corporation and Redland
PLC.
I-3
44
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE
NAME AND BUSINESS ADDRESS LAST FIVE YEARS
---------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxxxxxx............ Executive Vice President and General Manager, XXX Xxxxxxxx,
Suspension & Engine Group since 1996. He was Managing
Director, TRW Deutschland GmbH from 1995 to 1996; Vice
President and General Manager, TRW's Global Engine Components
business from 1994 to 1996; and Managing Director, TRW
Motorkomponenten GmbH & Co. KG from 1991 to 1995.
Xxxxxxx X. Xxxxxxxxx.......... Executive Vice President and General Manager, TRW Space &
Electronics Group since 1993. He was Executive Vice President
and General Manager, TRW Space & Defense Sector from 1991 to
1992.
Xxxxxx X. Xxxxxxx............. Executive Vice President, Human Resources and Communications
since 1995. He was Executive Vice President, Human Resources,
Communications & Information Resources from 1989 to 1994.
Xxxxxxx X. Xxxxxxxx........... Executive Vice President, General Counsel and Secretary since
June 1997. He was Executive Vice President, Planning,
Development & Government Affairs from 1989 to June 1997.
Xxxx X. Xxxxxx................ Executive Vice President and Chief Financial Officer since
1996. He was Executive Vice President, Chief Financial Officer
and Controller in 1996 and Vice President and Controller from
1990 to 1996.
Xxxxx X. Xxxxxx............... Executive Vice President and General Manager, TRW Occupant
Restraint Systems Group since 1996. He was Executive Vice
President and General Manager, XXX Xxxxxxxx, Suspension &
Engine Group from 1995 to 1996; Vice President and Deputy
General Manager, Automotive in 1995; and Vice President and
General Manager, TRW Steering & Suspension Systems, North and
South America from 1991 to 1995.
Xxxxx Xxxxxxxxxxx............. Vice President, Science & Technology since 1993. He was Vice
President and Director of the Center for Automotive Technology
from 1990 to 1993.
Xxxx X. Xxxxxxx............... Executive Vice President and General Manager, TRW Systems
Integration Group since 1994. He was Vice President and
General Manager, TRW Systems Integration Group from 1990 to
1994.
Xxxxxx X. Xxxxx............... Executive Vice President and General Manager, TRW Automotive
Electronics Group since 1996. He was Executive Vice President
and Chief Financial Officer from 1994 to 1996; Vice President,
Group Development, TRW Space & Electronics Group from 1992 to
1994; Vice President, Strategic Business Development, TRW
Space & Defense Sector in 1992; and Vice President and General
Manager, TRW Space Communications Division from 1987 to 1992.
I-4
45
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each Stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Facsimile Transmission:
(For Eligible Institutions
Only)
000-000-0000
or
000-000-0000
By Hand: By Mail: By Overnight Courier:
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
c/o The Depository Trust Suite 4660 -- BDM Suite 4680 -- BDM
Company P.O. Box 0000 00 Xxxx Xxxxxx -- 8th Floor
00 Xxxxx Xxxxxx Xxxxxx Xxxx, XX 00000-0000 Xxx Xxxx, XX 00000
DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
To Confirm Receipt of Notice of Guaranteed Delivery:
000-000-0000
Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and addresses listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained
from the Information Agent or the Dealer Manager. You may also contact your
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
The Information Agent for the Offer is:
(Georgeson & Company Logo)
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect:
(000) 000-0000
All others call toll free:
(000) 000-0000
The Dealer Manager for the Offer is:
BEAR, XXXXXXX & CO. INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Call toll free:
(000) 000-0000
