-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E0BdwYcIRr9OmxsoUqa/d4tFOifGlVgDlVnjZ1hEOWFP1jU/PF3cZH8sJGzQo0X0 oAJV38icE90x6vJi3PcQdg== 0000950152-97-008369.txt : 19971127 0000950152-97-008369.hdr.sgml : 19971127 ACCESSION NUMBER: 0000950152-97-008369 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 18 FILED AS OF DATE: 19971126 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BDM INTERNATIONAL INC /DE CENTRAL INDEX KEY: 0000870763 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 541561881 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-45795 FILM NUMBER: 97729728 BUSINESS ADDRESS: STREET 1: 1501 BDM WAY CITY: MCLEAN STATE: VA ZIP: 22102-3201 BUSINESS PHONE: 7038485000 MAIL ADDRESS: STREET 1: 1501 BDM WAY CITY: MCLEAN STATE: VA ZIP: 22102 FORMER COMPANY: FORMER CONFORMED NAME: BDM HOLDINGS INC DATE OF NAME CHANGE: 19930328 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BDM INTERNATIONAL INC /DE CENTRAL INDEX KEY: 0000870763 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 541561881 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-45795 FILM NUMBER: 97729729 BUSINESS ADDRESS: STREET 1: 1501 BDM WAY CITY: MCLEAN STATE: VA ZIP: 22102-3201 BUSINESS PHONE: 7038485000 MAIL ADDRESS: STREET 1: 1501 BDM WAY CITY: MCLEAN STATE: VA ZIP: 22102 FORMER COMPANY: FORMER CONFORMED NAME: BDM HOLDINGS INC DATE OF NAME CHANGE: 19930328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TRW INC CENTRAL INDEX KEY: 0000100030 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 340575430 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 1900 RICHMOND RD CITY: CLEVELAND STATE: OH ZIP: 44124 BUSINESS PHONE: 2162917000 MAIL ADDRESS: STREET 1: 1900 RICHMOND ROAD CITY: CLEVELAND STATE: OH ZIP: 44124 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TRW INC CENTRAL INDEX KEY: 0000100030 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 340575430 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 1900 RICHMOND RD CITY: CLEVELAND STATE: OH ZIP: 44124 BUSINESS PHONE: 2162917000 MAIL ADDRESS: STREET 1: 1900 RICHMOND ROAD CITY: CLEVELAND STATE: OH ZIP: 44124 SC 14D1 1 TRW/BDM INTERNATIONAL SCHEDULES 14D1 AND 13D 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ BDM INTERNATIONAL, INC. (Name of Subject Company) SYSTEMS ACQUISITION INC. A WHOLLY OWNED SUBSIDIARY OF TRW INC. (Bidders) COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) 05537W-20-9 (Cusip Number of Class of Securities) WILLIAM B. LAWRENCE, ESQ. EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY TRW INC. 1900 RICHMOND ROAD CLEVELAND, OHIO 44124 TELEPHONE: (216) 291-7230 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders) COPY TO: JONES, DAY, REAVIS & POGUE 599 LEXINGTON AVENUE NEW YORK, NEW YORK 10022 (212) 326-3939 ATTENTION: ROBERT A. PROFUSEK, ESQ. NOVEMBER 20, 1997 (Date of Event Which Requires Filing Statement on Schedule 13D)
CALCULATION OF FILING FEE TRANSACTION VALUATION* AMOUNT OF FILING FEE** $925,921,014 $185,184
*This amount assumes the purchase, pursuant to the Offer to Purchase, of all the 29,723,431 outstanding shares of Common Stock ("Shares") of the Subject Company outstanding as of November 19, 1997 and 1,663,722 Shares issuable upon exercise of certain options at $29.50 per Share. **1/50 of 1% of Transaction Valuation. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: None Form or Registration No.: Not applicable Filing Party: Not applicable Date Filed: Not applicable
================================================================================ 2 CUSIP NO. 05537W-20-9 14D-1 1) Names of Reporting Persons; S.S. or I.R.S. Identification Nos. of Above Persons TRW Inc. ("Parent") I.R.S. No. 34-0575430 2) Check the Appropriate Box if a Member of a Group (a) [X] (b) [ ] 3) SEC USE ONLY 4) Source of Funds WC, BK, OO 5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e) or 2(f) [X] 6) Citizenship or Place of Organization Ohio 7) Aggregate Amount Beneficially Owned by Each Reporting Person 7,660,000 8) Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares [ ] 9) Percent of Class Represented by Amount in Row (7) 25.8% of the Shares issued and outstanding as of November 19, 1997. 10) Type of Reporting Person CO, GM
3 CUSIP NO. 05537W-20-9 14D-1 1) Names of Reporting Persons; S.S. or I.R.S. Identification Nos. of Above Persons Systems Acquisition Inc. ("Purchaser") I.R.S. No. Applied for 2) Check the Appropriate Box if a Member of a Group (a) [X] (b) [ ] 3) SEC USE ONLY 4) Source of Funds WC, AF 5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(e) or 2(f) [ ] 6) Citizenship or Place of Organization Delaware 7) Aggregate Amount Beneficially Owned by Each Reporting Person 7,660,000 8) Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares [ ] 9) Percent of Class Represented by Amount in Row (7) 25.8% of the Shares issued and outstanding as of November 19, 1997. 10) Type of Reporting Person CO, GM
4 This Tender Offer Statement on Schedule 14D-1 relates to the offer by Systems Acquisition Inc. ("Purchaser"), a wholly owned subsidiary of TRW Inc. ("Parent"), to purchase all the outstanding shares of Common Stock (the "Shares") of BDM International, Inc. (the "Company"), at a purchase price of $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 the Offer to Purchase, dated November 26, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with the Offer to Purchase, as amended from time to time, constitute the "Offer"). Copies of the Offer to Purchase and the Letter of Transmittal are attached hereto as Exhibits (a)(1) and (a)(2), respectively. Item 1. Security and Subject Company. (a) The name of the subject company is BDM International, Inc., a Delaware corporation. The address of the Company's principal executive offices is 1501 BDM Way, McLean, Virginia 22101-3204. (b) The exact title of the class of equity securities being sought in the Offer is Common Stock, par value $0.01 per share, of the Company. The information set forth in the Introduction of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. Item 2. Identity and Background. (a)-(d) and (g) This Statement is filed on behalf of Parent and Purchaser. The principal offices of Parent and Purchaser are located at 1900 Richmond Road, Cleveland, Ohio 44124. The information set forth in Section 8 ("Certain Information Concerning Parent and Purchaser") of the Offer to Purchase and in Schedule I thereto is incorporated herein by reference. Parent is incorporated under the laws of the State of Ohio and Purchaser is incorporated under the laws of the State of Delaware. (e) During the last five years neither Parent, Purchaser nor, to the best knowledge of Parent and Purchaser, any of the persons listed in Schedule I to the Offer to Purchase has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (f) During the last five years, neither Parent, Purchaser nor, to the best knowledge of Parent and Purchaser, any of the persons listed in Schedule I to the Offer to Purchase was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. Item 3. Past Contacts, Transactions or Negotiations with the Subject Company. (a)-(b) The information set forth in the Introduction, in Section 10 ("Background of the Offer") and Section 11 ("Purpose; Merger Agreement; Stockholders Agreement; Vote Required to Approve the Merger; Appraisal Rights; Plans for the Company; Going Private Transactions") of the Offer to Purchase is incorporated herein by reference. Item 4. Source and Amount of Funds or Other Consideration. (a)-(b) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder. (a)-(g) The information set forth in the Introduction and in Section 10 ("Background of the Offer"), Section 11 ("Purpose; Merger Agreement; Stockholders Agreement; Vote Required to Approve the Merger; Appraisal Rights; Plans for the Company; Going Private Transactions"), Section 13 ("Effect of the Offer on the 2 5 Market for Shares, Nasdaq Listing and Exchange Act Registration") and Section 12 ("Dividends and Distributions") of the Offer to Purchase is incorporated herein by reference. Item 6. Interest in Securities of the Subject Company. (a) and (b) The information set forth in the Introduction, Section 8 ("Certain Information Concerning Parent and Purchaser"), Section 11 ("Purpose; Merger Agreement; Stockholders Agreement; Vote Required to Approve the Merger; Appraisal Rights; Plans for the Company; Going Private Transactions") and Schedule I to the Offer to Purchase is incorporated herein by reference. Item 7. Contracts, Arrangements, Understandings or Relationships with Respect to the Subject Company's Securities. The information set forth in the Introduction, Section 8 ("Certain Information Concerning Parent and Purchaser"), Section 10 ("Background of the Offer") and Section 11 ("Purpose; Merger Agreement; Stockholders Agreement; Vote Required to Approve the Merger; Appraisal Rights; Plans for the Company; Going Private Transactions") of the Offer to Purchase is incorporated herein by reference. Item 8. Persons Retained, Employed or to be Compensated. The information set forth in the Introduction, Section 10 ("Background of the Merger"), Section 16 ("Fees and Expenses") and Section 17 ("Miscellaneous") of the Offer to Purchase is incorporated herein by reference. Item 9. Financial Statements of Certain Bidders. The information set forth in Section 8 ("Certain Information Concerning Parent and Purchaser") of the Offer to Purchase is incorporated herein by reference. The incorporation by reference herein of the above-referenced financial information does not constitute an admission that such information is material to a decision by a stockholder of the Company whether to sell, tender or hold Shares being sought in the Offer. Item 10. Additional Information. (a) The information set forth in the Introduction and in Section 8 ("Certain Information Concerning Parent and Purchaser"), Section 10 ("Background of the Offer") and Section 11 ("Purpose; Merger Agreement; Stockholders Agreement; Vote Required to Approve the Merger; Appraisal Rights; Plans for the Company; Going Private Transactions") of the Offer to Purchase is incorporated herein by reference. (b) and (c) The information set forth in Section 11 ("Purpose; Merger Agreement; Stockholders Agreement; Vote Required to Approve the Merger; Appraisal Rights; Plans for the Company; Going Private Transactions"), Section 13 ("Effect of the Offer on the Market for Shares, Nasdaq Listing and Exchange Act Registration") and Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 13 ("Effect of the Offer on the Market for Shares, Nasdaq Listing and Exchange Act Registration") and Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (e) Not applicable. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference in its entirety. 3 6 Item 11. Material to be Filed as Exhibits. EXHIBIT INDEX
NO. DOCUMENT PG. NO. - ------- ------------------------------------------------------------------------------- ------- (a)(1) Offer to Purchase, dated November 26, 1997..................................... (a)(2) Letter of Transmittal.......................................................... (a)(3) Notice of Guaranteed Delivery.................................................. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees....................................................................... (a)(5) Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees................................................... (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9....................................................................... (a)(7) Text of Press Release issued by Parent, dated November 21, 1997................ (a)(8) Summary Advertisement, dated November 26, 1997................................. (b)(1) Amendment to Multi-Year Revolving Credit Agreement, dated as of May 8, 1996, by and among Parent and various financial institutions............................ (b)(2) Amendment to Multi-Year Revolving Credit Agreement (as amended and restated as of May 8, 1996), dated August 7, 1997, by and among Parent and various financial institutions......................................................... (b)(3) Form of Commitment Letter for 364-Day Revolving Credit Facility................ (b)(4) Form of Revolving Credit Agreement............................................. (c)(1) Agreement and Plan of Merger, dated as of November 20, 1997, by and among the Company, Parent, and Purchaser................................................. (c)(2) Stockholders Agreement, dated as of November 20, 1997, by and among Parent, Purchaser, The Carlyle Partners Leveraged Capital Fund I, L.P., BDM Acquisition Partners, L.P., BDM Acquisition Partners II, L.P., The Carlyle Group, L.P., and TWC Virginia, Inc.............................................................. (c)(3) Confidentiality Agreement, dated as of September 12, 1997, by and among Wasserstein Perella & Co., Inc., acting on behalf of BDM International, Inc., and Parent..................................................................... (c)(4) Exclusivity Agreement, dated November 14, 1997, by BDM International, Inc., The Carlyle Partners Leveraged Capital Fund I, L.P., BDM Acquisition Partners, L.P., BDM Acquisition Partners II, L.P., The Carlyle Group, L.P., and TWC Virginia, Inc.................................................................. (c)(5) Form of Employment Agreement, dated as of November 20, 1997, between Parent and each of Thomas A. Grissen, Helen M. Seltzer, William C. Hoover, Philip A. Odeen, David L. Patterson and Roy V. Woodle....................................
4 7 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. TRW INC. (Parent) By /s/ William B. Lawrence ------------------------------------ William B. Lawrence Executive Vice President, General Counsel and Secretary SYSTEMS ACQUISITION INC. (Purchaser) By /s/ Kathleen A. Weigand ------------------------------------ Kathleen A. Weigand Vice President and Secretary Date: November 26, 1997 5 EX-1.A 2 EXHIBIT (A)(1) 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 HART-SCOTT-RODINO 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, Stearns & Co. Inc. (the "Dealer Manager") or to Georgeson & 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, STEARNS & 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, Stearns & Co. Inc. ("Bear Stearns"), 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 Georgeson & 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. Wasserstein Perella & 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 Jones 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 Jones 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 Braddock, Dunn & McDonald, 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 1501 BDM Way, McLean, Virginia 22102-3204. The telephone number of the Company at such offices is (703) 848-5000. 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 available reports and documents filed by the Company with the Commission and other publicly available information. 10 13 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, Coopers & Lybrand 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 Coopers & Lybrand 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, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for inspection and copying at prescribed rates at the regional offices of the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and other information may also be obtained at the Web site that the Commission maintains at http://www.sec.gov. 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 450 Fifth Street, N.W., 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, 1735 K Street, N.W., Washington, D.C. 20006. 8. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER. General. Parent, with 1996 sales of approximately $10 billion, has its world headquarters at 1900 Richmond Road, Cleveland, Ohio 44124 and has approximately 68,000 employees based in over 26 countries. The telephone number for Parent is (216) 291-7000. 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 Purchaser 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 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. 13 16 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 Parent'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, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for inspection and copying at prescribed rates at the regional offices of the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and other information may also be obtained at the Web site that the Commission maintains at http://www.sec.gov. 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 450 Fifth Street, N.W., Washington, D.C. 20549. Such material is also available for inspection at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. 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 Moody's 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 Parent would be interested in pursuing the possible acquisition of the Company at $28.00 per Share. The representative of WP&Co. expressed the view that the Company Board would not be interested in pursuing a sale of the Company at that price indication. The representative of Parent informed the representative of WP&Co. that Parent would be willing to consider enhancing its indication only if it had a high level of assurance that the transaction would be completed. On November 4, 1997, a representative of WP&Co. suggested that the Company would be unlikely to proceed to enter into exclusive negotiations with Parent unless Parent increased its indicated price. A representative of Parent informed the WP&Co. representative that Parent's willingness to enhance its indication from $28.00 per Share would depend on the specific terms of the transaction, particularly the terms relevant to the likelihood that the transaction would be completed. Accordingly, the Company furnished Parent drafts of the Merger Agreement and the Stockholders Agreement. On November 6, 1997, Mr. Odeen met with, among other representatives of Parent, Joseph T. Gorman, the Chairman and Chief Executive Officer of Parent. Mr. Gorman indicated at the meeting that, if the transaction were to proceed, Parent would require that arrangements be developed to ensure the continuity of management of the Company. On November 10, 1997, a representative of Parent informed a representative of WP&Co. that Parent would be prepared to increase its $28.00 per Share price indication, subject to modifying the terms of draft documentation so as to provide a high level of assurance that the transaction would be completed. These modifications included the receipt of an irrevocable option and agreement to tender by the Carlyle Stockholders, a $35 million break-up fee and a no-shop covenant which specifically defined the types of transactions that would be excepted therefrom. Parent's representative also reiterated Parent's requirement that satisfactory employment arrangements be agreed upon by certain members of senior management of the Company as a part of the transaction. The WP&Co. representative indicated that these terms might be acceptable at a price close to $30.00 per Share. The Parent representative requested that the WP&Co. representative confirm whether these conditions would be acceptable before further price discussions were conducted. Thereafter, a WP&Co. representative informed a Parent representative that Parent's preconditions to further price negotiations were acceptable in principle to the Company, subject to final agreement on price, and, based on a conversation with the Carlyle Stockholders, were similarly acceptable to them. On November 12, 1997, a representative of Parent informed a representative of WP&Co. that, subject to the Company's agreement to the terms outlined on November 10, 1997 and to the Company's willingness to negotiate exclusively with Parent for the period required to reach an agreement on definitive documentation, Parent would be willing to increase its indicated price to $29.50 per Share. A representative of 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 Stearns 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 Parent's intention to consummate the Merger as promptly as practicable, there can be no assurance that the Merger will be consummated or, if consummated, of the timing thereof. The Merger Agreement also provides that the Certificate of Incorporation and the Bylaws of the Surviving Corporation shall be the Certificate of Incorporation and the Bylaws of Purchaser in effect at the Effective Time 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 Philip A. Odeen, the Company's President and Chief Executive Officer, William C. Hoover, an Executive Vice President of the Company, Thomas A. Grissen, President, State and Local Systems, David L. Patterson, President, Integrated Supply Chain, Helen M. Seltzer, Corporate Vice President of the Company, and Roy V. Woodle, President and Chief Executive Officer of Vinnell Corporation, a subsidiary of the Company, will enter into a New Employment Agreement. During the three year term of each New Employment Agreement, the executive will receive (i) an annual base salary of not less than his or her annual base salary in effect immediately prior to the Effective Time, (ii) annual incentive compensation based on incentive target percentages of base salary comparable to such percentages in effect immediately prior to the Effective Time and (iii) a continuation of comparable benefits. If the executive is involuntarily terminated other than for cause, or if the executive voluntarily terminates for certain specified limited reasons, he or she will receive a termination payment determined as follows: (i) if the termination occurs on or prior to the second anniversary of the Effective Time, the termination payment will be three times the sum of the executive's annual salary and target annual incentive compensation in effect immediately prior to the termination, multiplied by a fraction the numerator of which is the number of full months remaining in the employment term and the denominator of which is 36 and (ii) if the termination occurs after the second anniversary of the Effective Time, the termination payment will be the sum of the executive's annual salary and target annual compensation in effect immediately prior to the termination. 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 Carlyle Stockholder is a member of the Company Board, such member may take actions in such capacity to the extent permitted by the Merger Agreement. Representations and Warranties. The Stockholders Agreement contains various customary representations and warranties of the parties thereto including, without limitation, representations and warranties by the Carlyle Stockholders as to organization, power and authority, the absence of any required filings and consents, the absence of conflicts with charter documents and contracts and title to Shares. The Stockholders Agreement also provides that, as of the Effective Time, each Carlyle Stockholder terminates on behalf of itself and its affiliates, any and all contractual rights in favor of such Carlyle Stockholder and its affiliates then in effect between such Carlyle Stockholder or affiliates, on the one hand, and the Company, on the other hand, including without limitation, any monitoring and advisory fees to The Carlyle Group, L.P. 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 Weinberger 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 Weinberger and Rabkin v. Philip A. Hunt 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 Purchaser 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 Jones Average of Industrial Stocks or 20% in the Standard & Poor's 500 Index from the levels thereof as of the last trading day immediately preceding the date of the Merger Agreement or (6) in the case of any of the foregoing existing at the time of the execution of the Merger Agreement, a material acceleration or worsening thereof; (f) it shall have been publicly disclosed or Purchaser shall have otherwise learned that beneficial ownership (determined for the purposes of this paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of more than 25% of the outstanding Shares has been acquired by any person (including the Company, any of the Company Subsidiaries or affiliates thereof) or group (as defined in Section 13 (d) (3) of the Exchange Act), other than Purchaser or any of its affiliates; (g) the Company or any of its officers, directors or financial or legal advisors shall have, directly or indirectly, (1) solicited, initiated, encouraged (including by way of furnishing information) or taken any other action designed or reasonably likely to facilitate, any inquiries or the making of any proposal which constituted, or may reasonably be expected to lead to, any Takeover Proposal or (2) participated in any discussions or negotiations regarding any Takeover Proposal regardless of whether or not any of the foregoing actions are permitted by the Merger Agreement; (h) any of the representations and warranties of the Company set forth in the Merger Agreement that are qualified by reference to materiality or a Company Material Adverse Effect shall not be true and correct, or any such representations and warranties that are not so qualified shall not be true and correct in any respect that is reasonably likely to have a Company Material Adverse Effect, in each case as if such representations and warranties were made at the time of such determination; (i) the Company shall have failed to perform in any material respect any material obligation or to comply in any material respect with any material agreement or covenant of the Company to be performed or complied with by it under the Merger Agreement; or (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 Edgar v. 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. v. McReynolds, 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 v. Butterworth 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, Parent filed with the FTC and the Antitrust Division a Premerger Notification and Report Form in connection with the purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until the expiration of a 15-calendar day waiting period following the filing by Parent, unless both the Antitrust Division and the FTC terminate the waiting period prior thereto. If, within such 15-calendar day waiting period, either the Antitrust Division or the FTC requests additional information or documentary material from Parent, the waiting period would be extended for an additional 10 calendar days following substantial compliance by Parent with such request. Thereafter, the waiting period could be extended only by court order. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the Offer may, but need not, be extended and in any event the purchase of and payment for Shares will be deferred until 10 days after the request is substantially complied with, unless the waiting period is sooner terminated by the FTC and the Antitrust Division. 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 Purchaser 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. Bear Stearns 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 Stearns an advisory fee of $100,000 which will be credited against the payment of the fairness opinion fee. Parent has agreed to pay Bear Stearns a fairness opinion fee of $1,000,000. Parent has also agreed to pay Bear Stearns 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 Stearns for reasonable out-of-pocket expenses, including reasonable attorney's fees, and have also agreed to indemnify Bear Stearns for certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. Purchaser has retained Georgeson 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 1900 Richmond Road, Cleveland, Ohio 44124. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Purchaser. Information for Mr. Lawrence 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 - --------------------------------------------------------------------------------------------- David B. Goldston............. Director, Vice President and Assistant Secretary since 1997. Mr. Goldston 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. Donald G. Kovar............... Director and Vice President since 1997. Dr. Kovar 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. William B. Lawrence........... Director and President since 1997. Jeanne R. Sydenstricker....... Vice President and Treasurer since 1997. Ms. Sydenstricker 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. William A. Warren............. Vice President since 1997. Mr. Warren also serves as Parent's Vice President, Tax, a position he has held since 1989. Kathleen A. Weigand........... Director, Vice President and Secretary since 1997. Mrs. Weigand 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, Mrs. Weigand was General Counsel of Corrpro Companies, Inc. She previously was an Associate with the Cleveland law firm of Thompson, Hine and Flory 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 1900 Richmond Road, Cleveland, Ohio 44124. 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 Dr. Blankenstein is a citizen of Germany and Dr. Hahn 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 - --------------------------------------------------------------------------------------------- Michael H. Armacost........... Director since 1993. Mr. Armacost 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. Mr. Armacost 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 Cargill, Incorporated. Martin Feldstein.............. Director of Parent. Dr. Feldstein 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. Dr. Feldstein 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. Dr. Feldstein also is a director of American International Group, Inc. and J. P. Morgan & Co. Incorporated. Robert M. Gates............... Director since 1994. Dr. Gates 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. Dr. Gates also is a director of The Charles Stark Draper Laboratory, Inc., LucasVarity plc, and NACCO Industries, Inc.; a trustee of Fidelity Investments; a consultant to Koch Industries and Placer Dome Inc.; and a senior advisor to The Mitchell Group. Joseph T. Gorman.............. Director since 1984. Mr. Gorman 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. Mr. Gorman currently is a director of Aluminum Company of America and The Procter & Gamble Company. Carl H. Hahn.................. Director since 1993. Dr. Hahn 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 Perot Systems Corporation. Dr. Hahn 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. George H. Heilmeier........... Director since 1992. Dr. Heilmeier 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. Dr. Heilmeier 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 - --------------------------------------------------------------------------------------------- Peter S. Hellman.............. Director since 1995. Mr. Hellman 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, Mr. Hellman served as Executive Vice President and Chief Financial Officer of Parent from 1991 to 1994. He also is a director of Arkwright Mutual Insurance Company. Karen N. Horn................. Director since 1990. Mrs. Horn 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. Mrs. Horn also is a director of The British Petroleum Company p.1.c., Eli Lilly and Company and Rubbermaid Incorporated. E. Bradley Jones.............. Director since 1982. Mr. Jones 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. William S. Kiser.............. Director since 1985. Dr. Kiser 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. Dr. Kiser also is a director of Positron Corporation and a trustee and an officer of the American Foundation of Urologic Diseases. David B. Lewis................ Director since 1995. Mr. Lewis has been Chairman of the Board of Lewis & Munday, a Detroit law firm, since 1982. He also is a director of Comerica Bank, Consolidated Rail Corporation, M. A. Hanna Company and LG&E Energy Corporation. James T. Lynn................. Director since 1993. Mr. Lynn 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. Lynn M. Martin................ Director since 1995. Ms. Martin 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 Davee chair at the J. L. Kellogg Graduate School of Management, Northwestern University, since 1993. Previously, Ms. Martin 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 & Gamble Company and Ryder System, Inc. John D. Ong................... Director since 1995. Mr. Ong 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, Mr. Ong is a director of Ameritech Corporation, ASARCO, Inc., Cooper Industries, The Geon Company and The Kroger Company. Richard W. Pogue.............. Director since 1994. Mr. Pogue has served as senior advisor to Dix & Eaton, a public relations firm, since 1994. Previously, he was senior partner at the law firm of Jones, Day, Reavis & Pogue from 1993 to 1994 and managing partner of that firm from 1984 to 1992. Mr. Pogue also is a director of Continental Airlines, Inc., Derlan Industries Limited, M. A. Hanna 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 - --------------------------------------------------------------------------------------------- Bernd Blankenstein............ Executive Vice President and General Manager, TRW Steering, Suspension & Engine Group since 1996. He was Managing Director, TRW Deutschland GmbH from 1995 to 1996; Vice President and General Manager, TRW's Global Engine Components business from 1994 to 1996; and Managing Director, TRW Motorkomponenten GmbH & Co. KG from 1991 to 1995. Timothy W. Hannemann.......... 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. Howard V. Knicely............. Executive Vice President, Human Resources and Communications since 1995. He was Executive Vice President, Human Resources, Communications & Information Resources from 1989 to 1994. William B. Lawrence........... Executive Vice President, General Counsel and Secretary since June 1997. He was Executive Vice President, Planning, Development & Government Affairs from 1989 to June 1997. Carl G. Miller................ 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. James S. Remick............... Executive Vice President and General Manager, TRW Occupant Restraint Systems Group since 1996. He was Executive Vice President and General Manager, TRW Steering, Suspension & Engine Group from 1995 to 1996; Vice President and Deputy General Manager, Automotive in 1995; and Vice President and General Manager, TRW Steering & Suspension Systems, North and South America from 1991 to 1995. Peter Staudhammer............. Vice President, Science & Technology since 1993. He was Vice President and Director of the Center for Automotive Technology from 1990 to 1993. John P. Stenbit............... 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. Ronald D. Sugar............... 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) 201-222-4720 or 201-222-4721 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 2569 14 Wall Street -- 8th Floor 55 Water Street Jersey City, NJ 07303-2569 New York, NY 10005 DTC TAD Vietnam Veterans Memorial Plaza New York, NY 10041
To Confirm Receipt of Notice of Guaranteed Delivery: 201-222-4707 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: (212) 440-9800 All others call toll free: (800) 223-2064 The Dealer Manager for the Offer is: BEAR, STEARNS & CO. INC. 245 Park Avenue New York, New York 10167 Call toll free: (888) 285-3977 EX-2.A 3 EXHIBIT (A)(2) 1 Exhibit (a)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF BDM INTERNATIONAL, INC. PURSUANT TO THE OFFER TO PURCHASE DATED NOVEMBER 26, 1997 BY SYSTEMS ACQUISITION INC. A WHOLLY OWNED SUBSIDIARY OF TRW INC. 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 DEPOSITARY FOR THE OFFER IS: FIRST CHICAGO TRUST COMPANY OF NEW YORK BY HAND: BY MAIL: BY OVERNIGHT COURIER: TENDERS & EXCHANGES TENDERS & EXCHANGES TENDERS & EXCHANGES C/O THE DEPOSITORY TRUST COMPANY SUITE 4660 -- BDM SUITE 4680 -- BDM 55 WATER STREET P.O. BOX 2569 14 WALL STREET -- 8TH FLOOR DTC TAD JERSEY CITY, NJ 07303-2569 NEW YORK, NY 10005 VIETNAM VETERANS MEMORIAL PLAZA NEW YORK, NY 10041 - ------------------------------------------------------------------------------------------------------------------------ DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------------------ Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank, exactly as Name(s) Stock Certificate(s) Tendered appear(s) on Stock Certificate(s)) (Attach additional list if necessary) - ------------------------------------------------------------------------------------------------------------------------ Total Number of Shares Stock Evidenced Number Certificate by Stock of Shares Number(s)* Certificate(s)* Tendered** ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- Total Shares - ------------------------------------------------------------------------------------------------------------------------ * Need not be completed by Stockholders tendering Shares by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by any Stock Certificates delivered to the Depositary are being tendered. See Instruction 4. - ------------------------------------------------------------------------------------------------------------------------
2 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by Stockholders either if certificates evidencing Shares (as defined below) are to be forwarded herewith or if delivery of Shares is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company ("DTC") or The Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry transfer procedure described in Section 3 of the Offer to Purchase (as defined below). Delivery of documents to a Book-Entry Transfer Facility does not constitute delivery to the Depositary. Holders of Shares ("Stockholders") (i) whose certificates evidencing Shares ("Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in Section l of the Offer to Purchase) or (ii) who cannot complete the procedure for delivery by book-entry transfer on a timely basis and who wish to tender their Shares, must do so pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. See Instruction 2. [ ] CHECK HERE IF SHARES ARE BEING [ ] CHECK HERE IF SHARES ARE BEING TENDERED DELIVERED BY BOOK-ENTRY TRANSFER TO THE PURSUANT TO A NOTICE OF GUARANTEED DEPOSITARY'S ACCOUNT AT ONE OF THE DELIVERY PREVIOUSLY SENT TO THE BOOK-ENTRY TRANSFER FACILITIES AND DEPOSITARY AND COMPLETE THE FOLLOWING: COMPLETE THE FOLLOWING: Name(s) of Tendering Institution: Name(s) of Registered Holder(s): - --------------------------------------------- --------------------------------------------- Check Box of Applicable Book-Entry Transfer Window Ticket Number (if any): Facility: (CHECK ONE) [ ] DTC [ ] PDTC --------------------------------------------- Account Number: Date of Execution of Notice of Guaranteed Delivery: - --------------------------------- Transaction Code Number: --------------------------------------------- Name of Institution which Guaranteed - ------------------------- Delivery: --------------------------------------------- If Delivered by Book-Entry Transfer, Check Box of Book-Entry Transfer Facility: (CHECK ONE) [ ] DTC [ ] PDTC Account Number: ---------------------------------- Transaction Code Number: -------------------------
3 NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY. LADIES AND GENTLEMEN: The undersigned hereby tenders to Systems Acquisition Inc. ("Purchaser"), a wholly owned subsidiary of TRW Inc. ("Parent"), the above-described shares of Common Stock ("Shares"), of BDM International, Inc. (the "Company"), pursuant to Purchaser's offer to purchase all outstanding Shares, 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 the Offer to Purchase, dated November 26, 1997, receipt of which is hereby acknowledged, and in this Letter of Transmittal (the Offer to Purchase and the Letter of Transmittal which, as amended or supplemented from time to time, together constitute the "Offer"). The undersigned understands that Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of all Shares tendered pursuant to the Offer. Subject to, and effective upon, acceptance for payment of Shares tendered herewith, in accordance with the terms of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all Shares that are being tendered hereby and all dividends, distributions (including, without limitation, distributions of additional Shares) and rights declared, paid or distributed in respect of such Shares on or after November 26, 1997 (collectively, "Distributions"), and irrevocably appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver Share Certificates evidencing such Shares and all Distributions, or transfer ownership of such Shares and all Distributions on the account books maintained by a Book-Entry Transfer Facility, together, in either case, with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser, (ii) present such Shares and all Distributions for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms of the Offer. The undersigned hereby 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. 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 voting at any meeting of Stockholders. 4 The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer Shares tendered hereby and all Distributions, and that when such Shares are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances (other than those resulting from action of Purchaser, Parent or any of its subsidiaries), and that none of such Shares and Distributions will be subject to any adverse claim (other than those resulting from action of Purchaser, Parent or any of its subsidiaries). The undersigned, upon request, shall execute and deliver all additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of Shares tendered hereby and all Distributions. In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of Purchaser, all Distributions in respect of Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of Shares tendered hereby or deduct from such purchase price the amount or value of such Distribution as determined by Purchaser in its sole discretion. No authority herein conferred or agreed to be conferred shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned. All obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as otherwise stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer. Purchaser's acceptance of such Shares for payment will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer, including, without limitation, the undersigned's representation and warranty that the undersigned owns all Shares being tendered. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please issue the check for the purchase price of all Shares purchased, and return all Share Certificates evidencing Shares not tendered or not purchased, in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail the check for the purchase price of all Shares purchased and all Share Certificates evidencing Shares not tendered or not purchased (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and return all Stock Certificates evidencing Shares not purchased or not tendered in the name(s) of, and mail such check and Share Certificates to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please credit any Shares tendered hereby and delivered by book-entry transfer, but which are not purchased, by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name of the registered holder(s) thereof if Purchaser does not purchase any of the Shares tendered hereby. 5 SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for To be completed ONLY if the check for the the purchase price of Shares purchased or purchase price of Shares purchased or Share Share Certificates evidencing Shares not Certificates evidencing Shares not tendered tendered or not purchased are to be issued in or not purchased are to be mailed to someone the name of someone other than the other than the undersigned, or to the undersigned. undersigned at an address other than that shown under "Description of Shares Tendered." Issue [ ] check [ ] Share Certificate(s) to: Name: Issue [ ] check [ ] Share Certificate(s) to: Name: - --------------------------------------------- (PRINT) --------------------------------------------- (PRINT) Address: Address: - --------------------------------------------- -------------------------------------------- - --------------------------------------------- --------------------------------------------- (INCLUDE ZIP CODE) (INCLUDE ZIP CODE) - --------------------------------------------- (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER) (SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
6 IMPORTANT GUARANTEE OF SIGNATURE(S) STOCKHOLDERS: (IF REQUIRED -- SEE INSTRUCTIONS SIGN HERE (ALSO, PLEASE COMPLETE 1 AND 5) SUBSTITUTE FORM W-9 INCLUDED FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE HEREIN) MEDALLION GUARANTEE IN SPACE BELOW. - --------------------------------------------- Authorized Signature: - --------------------------------------------- --------------------------------------------- SIGNATURE(S) OF HOLDER(S) Name: Date: --------------------- ,199 -- --------------------------------------------- (PLEASE PRINT) (Must be signed by registered holder(s) exactly as name(s) appear(s) on Share Name of Firm: Certificates or on a security position listing or by a person(s) authorized to --------------------------------------------- become registered holder(s) by certificates and documents transmitted herewith. If Address: signature is by a trustee, executor, administrator, guardian, attorney- in-fact, --------------------------------------------- officer of a corporation or other person (INCLUDE ZIP CODE) acting in a fiduciary or representative capacity, please pro- Area Code and Telephone Number: vide the following information. See Instruction 5.) --------------------------------------------- Name(s): Date: ---------------------,199 -- - ------------------------------------------ (PLEASE PRINT) Capacity (full title): - ------------------------------------------ Address: - ------------------------------------------ - ------------------------------------------ (INCLUDE ZIP CODE) Area Code and Telephone Number: - ------------------------------------------ Tax Identification or Social Security Number: - ------------------------------------------ (SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loans associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each an "Eligible Institution"). No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) of Shares tendered herewith, unless such holder(s) has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions," or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of Transmittal is to be used either if Share Certificates are to be forwarded herewith or if Shares are to be delivered by book-entry transfer pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing all physically tendered Shares, or a confirmation of a book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility of all Shares delivered by book-entry transfer, as well as, in each case, a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message, as defined below) and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date (as defined in Section l of the Offer to Purchase). If Share Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. Stockholders whose Share Certificates are not immediately available, who cannot deliver their Share Certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the Share Certificates evidencing all physically delivered Shares in proper form for transfer, or a confirmation of a book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility of all Shares delivered by book-entry transfer, in each case together with a Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq National Market System trading days after the date of execution of such Notice of Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase. 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 the Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of this Letter of Transmittal and that Purchaser may enforce such agreement against the participant. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES 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. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. By execution of this Letter of Transmittal (or a facsimile hereof), all tendering Stockholders waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein under "Description of Shares Tendered" is inadequate, the Share Certificate numbers, the number of Shares evidenced by such Share Certificates and the number of Shares tendered should be listed on a separate schedule and attached hereto. 4. PARTIAL TENDERS. (Not applicable to Stockholders who tender by book-entry transfer.) If fewer than all the Shares evidenced by any Share Certificate delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such cases, new Share Certificate(s) evidencing the remainder of the Shares that were evidenced by the Share Certificates delivered to the Depositary herewith will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions", as soon as practicable after the expiration or termination of the Offer. All Shares evidenced by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 8 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificates evidencing such Shares without alteration, enlargement or any other change whatsoever. If any Share tendered hereby is owned of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in the names of different holders, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of such Shares. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of Share Certificates or separate stock powers are required, unless payment is to be made to, or Share Certificates evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any Share Certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Purchaser of such person's authority so to act must be submitted. 6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6, Purchaser will pay all stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or Share Certificate(s) evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased, unless evidence satisfactory to Purchaser of the payment of such taxes, or exemption therefrom, is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES EVIDENCING THE SHARES TENDERED HEREBY. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase price of any Shares tendered hereby is to be issued, or Share Certificate(s) evidencing Shares not tendered or not purchased are to be issued, in the name of a person other than the person(s) signing this Letter of Transmittal or if such check or any such Share Certificate is to be sent to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal but at an address other than that shown in the box entitled "Description of Shares Tendered", the appropriate boxes on this Letter of Transmittal must be completed. With respect to Stockholders delivering Shares tendered hereby by book-entry transfer, all Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facility designated in this Letter of Transmittal as the account from which such Shares were delivered. 8. WAIVER OF CONDITIONS. Except as described in the Offer to Purchase, the conditions to the Offer may be waived by Purchaser, in whole or in part, at any time and from time to time, in Purchaser's sole discretion. 9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses or telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the Information Agent or the Dealer Manager or from brokers, dealers, commercial banks or trust companies. 10. SUBSTITUTE FORM W-9. Each tendering Stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided under "Important Tax Information" below, and to certify, under penalties of perjury, that such number is correct and that such Stockholder is not subject to backup withholding of federal income tax. If a tendering Stockholder has been notified by the Internal Revenue Service that such Stockholder is subject to backup withholding, such Stockholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such Stockholder has since been notified by the Internal Revenue Service that such Stockholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering Stockholder to 31% federal income tax withholding on the payment of the purchase price of all Shares purchased from such Stockholder. If the tendering Stockholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such Stockholder should write "Applied For" in the space provided for the TIN in Part I of the Substitute Form W-9, sign and date the Substitute Form W-9 and complete the Certificate of Awaiting Taxpayer Identification Number below. Notwithstanding that "Applied For" is written in Part I and the Certificate of Awaiting Taxpayer 9 Identification Number is completed, the Depositary will withhold 31% of all payments of the purchase price to such Stockholder until a TIN is provided to the Depositary. Such amounts will be refunded to such Stockholder if a TIN is provided to the Depositary within 60 days. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificate(s) representing Shares has been lost, destroyed or stolen, the tendering Stockholder should promptly notify the Company's Transfer Agent, First Chicago Trust Company of New York at (800) 446-2617. The tendering Stockholder will then be instructed as to the steps that must be taken in order to replace the Share Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE). 10 IMPORTANT TAX INFORMATION Under the federal income tax law, a Stockholder whose tendered Shares are accepted for payment is required by law to provide the Depositary (as payer) with such Stockholder's correct TIN on Substitute Form W-9 below. If such Stockholder is an individual, the TIN is such Stockholder's social security number. If the Depositary is not provided with the correct TIN, the Stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding at a rate of 31%. Certain Stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such individual must submit a statement, signed under penalties of perjury, attesting to such individual's exempt status. Forms of such statements can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the Stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a Stockholder with respect to Shares purchased pursuant to the Offer, the Stockholder is required to notify the Depositary of such Stockholder's correct TIN by completing the form below certifying (i) that the TIN provided on Substitute Form W-9 is correct (or that such Stockholder is awaiting a TIN), and (ii) that such Stockholder is not subject to backup withholding because (a) such Stockholder has not been notified by the Internal Revenue Service that such Stockholder is subject to backup withholding as a result of a failure to report all interest or dividends, (b) the Internal Revenue Service has notified such Stockholder that such Stockholder is no longer subject to backup withholding, or (c) such Stockholder is exempt from backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The Stockholder is required to give the Depositary the social security number or employer identification number of the record holder of the Shares tendered hereby. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering Stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the Stockholder should write "Applied For" in the space provided for the TIN in Part I, sign and date the Substitute Form W-9 and complete the Certificate of Awaiting Taxpayer Identification Number below. Notwithstanding that "Applied For" is written in Part I and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% of all payments of the purchase price to such Stockholder until a TIN is provided to the Depositary. Such amounts will be refunded to such surrendering Stockholder if a TIN is provided to the Depositary within 60 days. 11 - -------------------------------------------------------------------------------------------------------- PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK - -------------------------------------------------------------------------------------------------------- SUBSTITUTE PART I -- Taxpayer Identification Number -- ------------------------------------ FORM W-9 For all accounts, enter taxpayer Social Security Number identification number in the box at right. OR (For most individuals this is your social ----------------------------------- security number. If you do not have a Employer Identification Number number, see Obtaining a Number in the (If awaiting TIN, write "Applied enclosed Guidelines.) Certify by signing and For") dating below. Note: If the account is in more than one name, see the chart in the enclosed Guidelines to determine which number to give the Payer. --------------------------------------------------------------------------------- PART II -- For Payees Exempt From Backup Withholding, see the enclosed Guidelines and complete as instructed therein. CERTIFICATION--Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or a Taxpayer Identification Number has not been issued to me and either (a) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center ("IRS") or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that, notwithstanding that I have written "Applied For" in Part I and have completed the Certificate of Awaiting Taxpayer Identification Number, 31% of all reportable payments made to me thereafter will DEPARTMENT OF THE be withheld until I provide a correct Taxpayer Identification Number); and TREASURY (2) I am not subject to backup withholding either because (a) I am exempt from INTERNAL REVENUE backup withholding, (b) I have not been notified by the IRS that I am subject to SERVICE backup withholding as a result of failure to report all interest or dividends, PAYER'S REQUEST or (c) the IRS has notified me that I am no longer subject to backup FOR TAXPAYER withholding. IDENTIFICATION CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been NUMBER (TIN) notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) --------------------------------------------------------------------------------- SIGNATURE ---------------------------------------- DATE -------------------------------, 199--- - --------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN THE BOX IN PART I OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that, notwithstanding that I have written "Applied For" in Part I and have completed the Certificate of Awaiting Taxpayer Identification Number, 31% of all reportable payments made to me prior to the time I provide a properly certified Taxpayer Identification Number will be withheld. SIGNATURE ----------------------------------------------------- DATE -------------------------------------------- 199----- 12 Any questions or requests for assistance may be directed to the Dealer Manager or the Information Agent 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 be obtained from the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below. You may also contact your broker, dealer, commercial bank, trust company or nominee 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: (212) 440-9800 All others call toll free: (800) 223-2064 The Dealer Manager for the Offer is: BEAR, STEARNS & CO. INC. 245 Park Avenue New York, New York 10167 Call toll free: (888) 285-3977 EX-3.A 4 EXHIBIT (A)(3) 1 Exhibit (a)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF BDM INTERNATIONAL, INC. (NOT TO BE USED FOR SIGNATURE GUARANTEES) This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (as defined below) (i) if certificates ("Share Certificates") evidencing shares of Common Stock (the "Shares"), of BDM International, Inc., a Delaware corporation (the "Company"), are not immediately available; (ii) if Share Certificates and all other required documents cannot be delivered to First Chicago Trust Company of New York, as depositary (the "Depositary"), on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase); or (iii) if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand, or transmitted by telegram, telex, or facsimile transmission, or mail to the Depositary and must include a guarantee by an Eligible Institution (as defined in Section 3 of the Offer to Purchase) and a representation that the Stockholder owns Shares tendered within the meaning of, and that the tender of Shares effected hereby complies with, Rule 14e-4 under the Securities Exchange Act of 1934, as amended. See Section 3 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Facsimile Transmission: (FOR ELIGIBLE INSTITUTIONS ONLY) 201-222-4720 OR 201-222-4721 By Hand: By Mail: By Overnight Courier: TENDERS & EXCHANGES TENDERS & EXCHANGES TENDERS & EXCHANGES C/O THE DEPOSITORY TRUST COMPANY SUITE 4660 -- BDM SUITE 4680 -- BDM 55 WATER STREET P. O. BOX 2569 14 WALL STREET -- 8TH FLOOR DTC TAD JERSEY CITY, NJ NEW YORK, NY 10005 VIETNAM VETERANS MEMORIAL PLAZA 07303-2569 NEW YORK, NY 10041
To Confirm Receipt of Notice of Guaranteed Delivery: 201-222-4707 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. 2 Ladies and Gentlemen: The undersigned hereby tenders to Systems Acquisition Inc., a wholly owned subsidiary of TRW Inc., upon the terms and subject to the conditions set forth in the Offer to Purchase, dated November 26, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares specified below pursuant to the guaranteed delivery procedures described in Section 3 of the Offer to Purchase. - --------------------------------------------------------------------------------------------- Number of Shares: Please Type or Print Name(s) of Record ------------------------------------------ Holder(s) Below: Certificate Nos. (if available): -------------------------------------------- --------------------- -------------------------------------------- ------------------------------------------ Please Type or Print Address(es) Below: Account Number: -------------------------------------------- --------------------------------- -------------------------------------------- Check one box if Shares will be tendered -------------------------------------------- by book-entry transfer: -------------------------------------------- [ ] The Depository Trust Company -------------------------------------------- [ ] Philadelphia Depository Trust Company -------------------------------------------- Date: , 199 -------------------------------------------- ---------------------------- --- Please Type or Print Telephone Number(s) Below: -------------------------------------------- -------------------------------------------- Sign Below: -------------------------------------------- -------------------------------------------- Signature(s) - ---------------------------------------------------------------------------------------------
3 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program, or the Stock Exchange Medallion Program, hereby guarantees to deliver to the Depositary either the Share Certificates tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase), of a transfer of such Shares, in any such case together with a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof, with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase), and any other documents required by the Letter of Transmittal within three Nasdaq National Market trading days after the date of execution of this Notice of Guaranteed Delivery. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and Share Certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in financial loss to such Eligible Institution. - --------------------------------------------------------------------------------------------- Name of Firm: -------------------------------------------- ------------------------------------------ (Authorized Signature) ------------------------------------------ Name: Address (including Zip Code): -------------------------------------------- ------------------------------------------ (Please Type or Print) ------------------------------------------ Title: ------------------------------------------ -------------------------------------------- ------------------------------------------ -------------------------------------------- Area Code and Tel. No.: Date: ------------------------------------------ -------------------------------------------- - ---------------------------------------------------------------------------------------------
NOTE: DO NOT SEND SHARE CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-4.A 5 EXHIBIT (A)(4) 1 Exhibit (a)(4) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF BDM INTERNATIONAL, INC. AT $29.50 NET PER SHARE BY SYSTEMS ACQUISITION INC. A WHOLLY OWNED SUBSIDIARY OF TRW INC. 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. To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by Systems Acquisition Inc. ("Purchaser"), a wholly owned subsidiary of TRW Inc., to act as Dealer Manager in connection with Purchaser's offer to purchase all the outstanding shares of Common Stock (the "Shares") of BDM International, Inc. (the "Company"), at a price of $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 the Offer to Purchase, dated November 26, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. 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, Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation in the Merger as a wholly owned subsidiary of Parent. At the effective time of the Merger, subject to certain exceptions, each issued and outstanding Share will be converted into the right to receive the Per Share Amount less any required withholding taxes. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. The Offer is conditioned upon, among other things, (i) there having been validly tendered and not withdrawn prior to the expiration of the Offer 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 Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having expired or been terminated. The Offer is also subject to other conditions. See Section 14. Enclosed for your information and use are copies of the following documents: 1. Offer to Purchase; 2. Letter of Transmittal to be used by holders of Shares in accepting the Offer and tendering Shares; 3. Notice of Guaranteed Delivery to be used to accept the Offer if the Shares and all other required documents are not immediately available or cannot be delivered to First Chicago Trust Company of 2 New York (the "Depositary") by the expiration of the Offer, or if the procedure for book-entry transfer cannot be completed by the expiration of the Offer; 4. A letter to stockholders of the Company from Philip A. Odeen, President and Chief Executive Officer of the Company, together with the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company; 5. A letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 7. Return envelope addressed to the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 24, 1997, UNLESS THE OFFER IS EXTENDED. 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 Share Certificates evidencing such Shares or a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in the Offer to Purchase), a Letter of Transmittal (or facsimile thereof) properly completed and duly executed, or an Agent's Message (as defined in the Offer to Purchase), and any other required documents in accordance with the instructions contained in the Letter of Transmittal. Stockholders who wish to tender Shares but cannot deliver the Share Certificates or other required documents representing the Shares, or cannot comply with the procedures for book-entry transfer, prior to the expiration of the Offer, a tender of Shares may be effected by following the guaranteed delivery procedures described in Section 3 of the Offer to Purchase. Purchaser will not pay any fees or commissions to any broker, dealer, or other person (other than the Dealer Manager or the Information Agent as described in the Offer) in connection with the solicitation of tenders of Shares pursuant to the Offer. However, Purchaser will reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. Purchaser will pay or cause to be paid any stock transfer taxes payable with respect to the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any questions or requests for assistance or additional copies of the enclosed materials may be directed to or obtained from the Information Agent or the Dealer Manager at their respective telephone numbers and addresses set forth on the back cover of the Offer to Purchase. Very truly yours, Bear, Stearns & Co. Inc. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-5.A 6 EXHIBIT (A)(5) 1 Exhibit (a)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF BDM INTERNATIONAL, INC. AT $29.50 NET PER SHARE BY SYSTEMS ACQUISITION INC. A WHOLLY OWNED SUBSIDIARY OF TRW INC. 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. To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated November 26, 1997 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer") in connection with the offer by Systems Acquisition Inc. ("Purchaser"), a wholly owned subsidiary of TRW Inc. ("Parent"), to purchase all the outstanding shares of Common Stock (the "Shares") of BDM International, Inc. (the "Company") at a price of $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 the Offer. Also enclosed is the Letter to Stockholders of the Company from Philip A. Odeen, President and Chief Executive Officer of the Company, together with the Company's Solicitation/Recommendation Statement on Schedule 14D-9. 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, Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation in the Merger as a wholly owned subsidiary of Parent. At the effective time of the Merger, subject to certain exceptions, each issued and outstanding Share will be converted into the right to receive the Per Share Amount less any required withholding taxes. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender, on your behalf, any or all the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer. Your attention is invited to the following: 1. The tender price is $29.50 per Share, net to the seller in cash without interest thereon. 2 2. The Offer is being made for all outstanding Shares. 3. The Company's Board of Directors has unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, has determined that the terms of the Offer and the Merger are fair to and in the best interests of the stockholders of the Company, and recommends that stockholders accept the Offer and tender their Shares pursuant to the Offer. 4. 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. 5. The Offer is conditioned upon, among other things, (i) there having been validly tendered and not withdrawn prior to the expiration of the Offer 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 Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, having expired or been terminated. The Offer is also subject to certain other conditions. See Section 14 of the Offer to Purchase. 6. 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. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing and returning to us the instruction form attached to this letter. A return envelope is enclosed for your use in delivering your instructions to us. If you authorize the tender of your Shares, all such Shares will be tendered, unless otherwise specified in your instructions. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares of the Company. The Offer is not being made to (nor will tenders be accepted from or on behalf of) the holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction 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 by one or more registered brokers or dealers licensed under the laws of such jurisdiction. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF BDM INTERNATIONAL, INC. AT $29.50 NET PER SHARE BY SYSTEMS ACQUISITION INC. A WHOLLY OWNED SUBSIDIARY OF TRW INC. The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to Purchase, dated November 26, 1997, and the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"), in connection with the offer by Systems Acquisition Inc., a wholly owned subsidiary of TRW Inc., to purchase all the outstanding shares of Common Stock (the "Shares") of BDM International, Inc. This will instruct you to instruct your nominee to tender the number of Shares indicated below (or, if no number is indicated below, all Shares) that are held for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. - --------------------------------------------------------------------------------------------- NUMBER OF SHARES TO BE TENDERED* SIGN BELOW: Shares -------------------------------------------- ------------------------------------------ -------------------------------------------- Certificate Nos. (if available): Signature(s) ------------------------------------------ Please Type or Print Name(s) Below: ------------------------------------------ -------------------------------------------- Account Number: -------------------------------------------- ------------------------------------------ Please Type or Print Address(es) Below: Taxpayer Identification or Social Security -------------------------------------------- Number(s): -------------------------------------------- ------------------------------------------ -------------------------------------------- ------------------------------------------ -------------------------------------------- Dated: , 199 -------------------------------------------- --------------------------- ----- -------------------------------------------- Please Type or Print Area Code and Telephone * Unless otherwise indicated, it will be Number(s): assumed that all Shares held by us for -------------------------------------------- your account are to be tendered. -------------------------------------------- - ---------------------------------------------------------------------------------------------
EX-6.A 7 EXHIBIT (A)(6) 1 Exhibit (a)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GUIDE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer. - ------------------------------------------------------ ------------------------------------------------------ FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF-- - ------------------------------------------------------ ------------------------------------------------------ 1. An individual's account The individual 2. Two or more individuals (joint account) The actual owner of the account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint account) The actual owner of the account or, if joint funds, either person(1) 4. Custodian account of a minor (Uniform Gift to The minor(2) Minors Act) 5. Adult and minor (joint account) The adult or, if the minor is the only contributor, the minor(1) 6. Account in the name of guardian or committee for The ward, minor or incompetent person(3) a designated ward, minor or incompetent person 7. (a) The usual revocable savings trust account The grantor-trustee(1) (grantor is also trustee) (b) So-called trust account that is not a legal The actual owner(1) or valid trust under State law 8. Sole proprietorship account The owner(4) - ------------------------------------------------------ ------------------------------------------------------ FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER IDENTIFICATION NUMBER OF-- - ------------------------------------------------------ ------------------------------------------------------ 9. A valid trust, estate or pension trust The legal entity (do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title)(5) 10. Corporate account The corporation 11. Religious, charitable or educational The organization organization account 12. Partnership The partnership 13. Association, club or other tax-exempt The organization organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of Agriculture in The public entity the name of a public entity (such as a State or local government, school district or prison) that receives agricultural program payments
- --------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. You may also enter your business name. You may use your Social Security Number or Employer Identification Number. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on broker transactions include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - An international organization or any agency, or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. Exempt payees described above should file Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-7.A 8 EXHIBIT (A)(7) 1 Exhibit (a)(7) NEWS RELEASE TRW Inc. [TRW LOGO] 1900 Richmond Road Cleveland, OH 44124 For Immediate Release Contact Jay A. McCaffrey, TRW 216.291.7179 Todd A. Stottlemyer, BDM 703.848.5115 Thomas A. Myers, TRW Investor Relations 216.291.7506 TRW TO ACQUIRE BDM INTERNATIONAL, INC. IN MERGER VALUED AT APPROXIMATELY $1 BILLION TRW TO LAUNCH TENDER OFFER AT $29.50 PER SHARE; COMBINATION TO ADD $1 BILLION IN INFORMATION TECHNOLOGY SALES - ------------------------------------------------------------- CLEVELAND, OH and McLEAN, VA, Nov. 21, 1997 -- TRW Inc. (NYSE: TRW) and BDM International, Inc. (Nasdaq: BDMI) announced today that both companies' boards of directors have voted unanimously to approve a definitive agreement under which TRW will acquire BDM in a transaction valued at nearly $1 billion. Under the executed agreement, a wholly owned subsidiary, Systems Acquisition Inc., will commence a cash tender offer within the next five business days for all of the outstanding shares of BDM at $29.50 per share. In connection with the merger agreement, The Carlyle Group and certain of its affiliates owning approximately 26 percent of BDM's stock have agreed to tender their shares pursuant to the tender offer and have also granted an option to TRW to purchase their BDM shares at $29.50 per share. - more - 2 TRW/2 The tender offer is conditioned on the valid tender of BDM's shares representing a majority of the voting power of BDM, and customary regulatory approvals and other closing conditions. TRW has arranged for financing of the transaction. BDM has approximately 33 million shares outstanding on a fully diluted basis. The tender offer is expected to close prior to the end of the year. "The acquisition of BDM is an important strategic move that provides the platform for growth in the rapidly developing information technology markets. Those markets include opportunities in both the government and commercial sectors, here and overseas," said Joseph T. Gorman, chairman and chief executive officer of TRW. "The merger expands the reach and scope of our strong space and defense business. It complements our existing systems integration and information technology businesses. Moreover, it will broaden our services and products to government customers and increase our participation in rapidly growing civil, commercial, and international markets." Prior to potential revenue and cost synergies, the acquisition is expected to be slightly dilutive to TRW shareholders in the first year, neutral in the second, and accretive thereafter. "Everyone who knows BDM and TRW and understands the enormous global potential of information technology will recognize this merger as a win-win combination of talents, resources, and leadership," said Frank C. Carlucci, BDM chairman of the board and chairman of the board and managing director of The Carlyle Group, L.P. - more - 3 TRW/3 "TRW is an outstanding company," said Philip A. Odeen, BDM president and chief executive officer. "It has similar roots as BDM and similar values. It does things that count -- for shareholders, customers, employees, and the community -- and it does them extraordinarily well. Together, I am very confident that we are going to do great things to solve our customers' most difficult problems, boost value for shareholders, and provide new career growth and advancement opportunities for our employees." Gorman said, "BDM's strong presence in Europe and in the Middle East, coupled with TRW's strong European operations, provides an established base for further international growth." "Once the acquisition is completed, TRW's space and defense business will represent more than 40 percent of total annual sales and more than 37 percent of operating income. Since 1992, BDM has achieved 24 percent compound annual growth, accomplished through both internal growth and acquisitions. We expect our acquisition of BDM to enhance sales and earnings growth," Gorman said. "Consistent with our long-term strategy, this acquisition is our most significant action to double the company's sales and market capitalization and build shareholder value," Gorman said. "BDM is an ideal fit with TRW. We will move forward together in new applications of our space, defense, information, and telecommunications technologies. - more - 4 TRW/4 "Additionally, BDM's expertise in integrated supply chain management offers important efficiencies to our own automotive organization and its customers. BDM's Automotive Center of Excellence in Michigan serves the automotive industry by providing global solutions to reduce costs for companies developing world cars and components." Following the transaction, Odeen will continue to lead BDM in his new TRW management role, reporting to Peter S. Hellman, TRW president and chief operating officer. "BDM is recognized worldwide for its expertise in information technology," Hellman said. "The merger brings together two leading companies with similar cultures and backgrounds dating back to the 1950s. Both advanced technology operations were founded by distinguished scientists in the aerospace and defense fields and are now highly respected by their customers. We look forward to the new contributions Phil Odeen and the entire BDM team will provide TRW as we work together to become preeminent in the information technology business." Bear, Stearns & Co. Inc. is financial adviser to TRW and dealer manager for the tender offer. Wasserstein Perella & Co., Inc., is financial adviser to BDM. BDM is a multinational information technology company based in McLean, Va., that provides systems integration and computer services to public sector and commercial customers. Revenue in 1996 totaled approximately $1 billion. The company employs approximately 9,000 people in 110 worldwide locations. Additional information is available on BDM's internet Web site (http://www.bdm.com). - more - 5 TRW/5 TRW provides advanced technology products and services for the automotive and space and defense markets. Systems integration activities involve the development and application of systems engineering, systems integration, information systems, and software development products and services for domestic and international customers in government and commercial markets. TRW's total revenue in 1996 was approximately $10 billion. The company's news releases are available on the internet through TRW's Web site (http://www.trw.com). Statements in this release that are not historical facts are forward-looking statements, which involve risks and uncertainties that could affect the company's actual results. Information regarding the important factors that could cause TRW's actual results to differ materially from the forward-looking statements contained in this release can be found in TRW's reports filed with the Securities and Exchange Commission. ### EX-8.A 9 EXHIBIT (A)(8) 1 Exhibit (a)(8) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated November 26, 1997, and related Letter of Transmittal and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction in which the Offer is required by law to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by Bear, Stearns & Co. Inc. or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock of BDM INTERNATIONAL, INC. at $29.50 Net Per Share by Systems Acquisition Inc. a wholly owned subsidiary of TRW INC. Systems Acquisition Inc. ("Purchaser"), a wholly owned subsidiary of TRW Inc. ("Parent"), is offering to purchase all outstanding shares of Common Stock (the "Shares") of BDM International, Inc. (the "Company") at a price of $29.50 per Share, net to the seller in cash without interest thereon, on the terms and subject to the conditions set forth in the Offer to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal (which, as amended or supplemented from time to time, together constitute the "Offer"). Following the Offer, Purchaser intends to effect the Merger described below. - -------------------------------------------------------------------------------- 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 Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the expiration of the Offer, 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) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Offer is also subject to other terms and conditions. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of November 20, 1997 (the "Merger Agreement"), by and among Parent, Purchaser and the Company. The Merger Agreement provides that, among other things, after the purchase of Shares pursuant to the Offer and the satisfaction or waiver of the other conditions set forth in the Merger Agreement and in accordance with the relevant provisions of the General Corporation Law of the State of Delaware ("Delaware Code"), Purchaser will be merged with and into the Company (the "Merger"). Following consummation of the Merger, the Company will continue as the surviving corporation and will be a wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time") each issued and outstanding Share (subject to certain exceptions including for Shares as to which dissenters' rights are perfected and exercised under the Delaware Code) will be converted into the right to receive $29.50 in cash, without interest thereon. In connection with the Merger Agreement, Parent and Purchaser have entered into a Stockholders Agreement dated as of November 20, 1997 with certain affiliates of The Carlyle Group, L.P. (the "Selling Stockholders"), which beneficially own an aggregate of 7,660,000 Shares, or 25.8% of the issued and outstanding Shares, pursuant to which, among other things, the Selling Stockholders have agreed to tender their Shares in the Offer. The Board of Directors of the Company has unanimously approved the Merger Agreement and the Transactions contemplated thereby, including the Offer, the Merger and the Stockholders Agreement described herein, and has determined that the Offer and the Merger are fair to, and in the best interests of, holders of Shares ("Stockholders"), and recommends that Stockholders accept the Offer and tender their Shares pursuant to the Offer. For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn if, as and when Purchaser gives oral or written notice to First Chicago Trust Company of New York (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 tendering Stockholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price for Shares be paid, regardless of any extension of the Offer or delay in making such payment. 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) the certificates evidencing such Shares or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in Section 2 of the Offer to Purchase) pursuant to the procedures set forth in the Offer to Purchase, (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 in Section 2 of the Offer to Purchase) in connection with a book-entry transfer, and (iii) any other documents required under the Letter of Transmittal. Purchaser expressly reserves the right, in its sole discretion (but subject to the terms of the Merger Agreement), at any time and from time to time, to extend the Offer for any reason, by giving oral or written notice of such extension to the Depositary. Any such extension will be followed as promptly as practicable by public announcement thereof, such announcement to be made no later than 9:00 a.m, New York City time, on the next business day after the previously scheduled expiration date of the Offer. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering Stockholder to withdraw such Shares. 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 of the Merger Agreement), shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" will mean the latest time and date at which the Offer, as so extended by Purchaser, will expire. Tenders of Shares made pursuant to the Offer are irrevocable except that such Shares may be withdrawn at any time 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. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at its address set forth on the back cover page of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such Share certificates, the serial numbers shown on such Share certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer to Purchase), 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 the Offer to Purchase, 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. All questions as to the form and validity (including the time or receipt) of any notice of withdrawal will be determined by Purchaser, in its sole discretion, whose determination will be final and binding. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided Purchaser with the Company's Stockholder list and security position listings for the purpose of disseminating the Offer to Stockholders. The Offer to Purchase and related Letter of Transmittal will be mailed to Stockholders whose names appear of record on the Company's Stockholder list and will be 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. The Offer to Purchase and the Letter of Transmittal contain important information which should be read carefully before any decision is made with respect to the Offer. Questions and requests for assistance may be directed to Bear, Stearns & Co. Inc., the Dealer Manager, or Georgeson & Company Inc., the Information Agent, at their addresses and telephone numbers as set forth below. Additional copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be obtained from the Information Agent as set forth below. No fees or commissions will be paid to brokers, dealers or other persons (other than the Dealer Manager and the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: [Georgeson & Company Inc. Logo] Wall Street Plaza New York, New York 10005 Banks and Brokers call collect: (212) 440-9800 All others call toll free: (800) 223-2064 The Dealer Manager for the Offer is: Bear, Stearns & Co. Inc. 245 Park Avenue New York, New York 10167 Call toll free: (888) 285-3977 November 26, 1997 EX-1.B 10 EXHIBIT (B)(1) 1 Exhibit (b)(1) AMENDMENT TO MULTI-YEAR REVOLVING CREDIT AGREEMENT This Amendment to Multi-Year Revolving Credit Agreement, dated as of May 8, 1996 (this "Amendment"), is among TRW Inc., an Ohio corporation (the "Company") and the financial institutions listed on the signature pages hereof together with their successors or assigns (collectively, the "Banks" and individually, a "Bank"). W I T N E S S E T H: -------------------- WHEREAS, on July 1, 1992, the Company and the Banks entered into the Three-Year Revolving Credit Agreement (as it was then titled), which agreement was amended on June 30, 1993, on March 1, 1994 and on February 28, 1995 (the agreement as amended is known hereinafter as the "Agreement"); and WHEREAS, the Company and the Banks have agreed to make such changes to the Agreement as are reflected in this Amendment; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1 THE AMENDMENTS 1.1 AMENDMENT OF "COMMITMENT". Section 1.1 of the Agreement shall be amended to read in its entirety as set forth below: 1.1 COMMITMENT. Subject to the terms and conditions of this Agreement, each of the Banks, severally and for itself alone, agrees to make loans (collectively, the "Loans" and individually, a "Loan") to the Company and, as provided in Section 1.8, to any Designated Subsidiary on a revolving basis from time to time before the Termination Date, as it may be extended from time to time pursuant to Section 1.2, in such aggregate amounts as the Company or any Designated Subsidiary may from time to time request from such Bank; provided, however, that the aggregate principal amount of Loans that any Bank shall be committed to have outstanding to the Company and the Designated Subsidiaries shall not at any one time exceed the amount set forth opposite such Bank's signature hereto, or any subsequent amendment hereto (except to the extent provided in Section 1.9 hereof). The foregoing commitment of each Bank to make Loans as reduced from time to time in accordance with the terms hereof is herein called such Bank's "Commitment" and the commitments of all Banks are herein sometimes collectively called the "Commitments." -1- 2 1.2 DELETION OF "TERMINATION OF COMMITMENT". Section 1.9 of the Agreement shall be deleted in its entirety. 1.3 RENUMBERING OF "LOANS OUTSTANDING UNDER PRIOR FACILITY". Section 1.10 of the Agreement shall be renumbered to now be Section 1.9. 1.4 AMENDMENT OF "COMMITMENT FEE". Section 4.1 of the Agreement shall be amended to delete references to Section 1.9 of the Agreement and, as amended, shall read in its entirety as set forth below: 4.1 COMMITMENT FEE. The Company agrees to pay to each Bank a commitment fee, for the period from and including the date of this Agreement to the Termination Date on the daily average of the Unused Amount of such Bank's Commitment hereunder equal to the Applicable Commitment Fee in effect from time to time multiplied by the Unused Amount. Such commitment fee shall be payable quarterly in arrears on the tenth day of each April, July, October, and January (the first such payment to be made on October 10, 1992) for the quarterly period ended on the last day of the preceding month and on the Termination Date. The Company may make such payments according to the Electronic Payment Instructions. 1.5 DELETION OF "UTILIZATION FEE". Section 4.2 of the Agreement shall be deleted in its entirety. 1.6 RENUMBERING OF "COMPUTATION OF FEES". Section 4.3 of the Agreement shall be renumbered to now be Section 4.2. 1.7 AMENDMENT OF "MANDATORY PREPAYMENT". Section 5.3 of the Agreement shall be amended to read in its entirety as set forth below: 5.3 MANDATORY PREPAYMENT. On each day on which the aggregate outstanding principal amount of Loans owing to any Bank on such day exceeds (whether as a result of currency fluctuations or otherwise) such Bank's Commitment hereunder, the Company shall pay to such Bank on demand a mandatory prepayment in the amount of such excess. Mandatory prepayments required by this Section 5.3 shall be applied first to Base Rate Loans until paid in full and then, at the Company's election and in the order specified by the Company, to Fixed Rate Loans. 1.8 AMENDMENT OF "NET WORTH". Section 9.2 of the Agreement shall be amended to read in its entirety as set forth below: -2- 3 9.2 NET WORTH. The Company will not permit Consolidated Net Worth to be less than 1,600,000,000 U.S. Dollars less an amount equal to the lesser of (i) the aggregate amount expended by the Company subsequent to December 31, 1995 for the repurchase of its common stock and (ii) 600,000,000 U.S. Dollars. 1.9 AMENDMENT OF "APPLICABLE COMMITMENT FEE" DEFINITION. The definition to "Applicable Commitment Fee" set forth in Section 13 shall be amended to read in its entirety as follows: "APPLICABLE COMMITMENT FEE" means the percentage in effect from time to time as set forth in the following table opposite the highest of the then-current rating assigned to the Company's senior unsecured long-term debt by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"):
Rating Applicable (Moody's/S&P) Commitment Fee ------------- -------------- higher than A1/A+ 0.060% A1/A+ 0.070% A2/A 0.080% A3/A- 0.090% Baa1/BBB+ 0.100% Baa2/BBB 0.125% Baa3/BBB- 0.150% lower than Baa3/BBB- 0.175%
1.10 AMENDMENT OF "APPLICABLE MARGIN" DEFINITION. The definition to "Applicable Margin" set forth in Section 13 shall be amended to read in its entirety as follows: "APPLICABLE MARGIN" means, at any time, the percentage set forth in the following table opposite the highest of the then-current rating assigned to the Company's senior unsecured long-term debt by Moody's or S&P:
Applicable Applicable Margin for Margin for Rating Domestic CD Eurocurrency (Moody's/S&P) Loans Loans - -------------------------------------------------------------------------------- higher than A1/A+ 0.275% 0.175% A1/A+ 0.300% 0.200% A2/A 0.325% 0.225% A3/A- 0.350% 0.250% Baa1/BBB+ 0.400% 0.300% Baa2/BBB 0.475% 0.375%
-3- 4
Baa3/BBB- 0.550% 0.450% lower than Baa3/BBB- 0.600% 0.500%
1.11 REPLACEMENT OF "CONSOLIDATED TANGIBLE NET WORTH" DEFINITION. The definition of "Consolidated Tangible Net Worth" set forth in Section 13 shall be deleted and replaced by the defined term "Consolidated Net Worth" which shall read in its entirety as follows: "CONSOLIDATED NET WORTH" means at any date the sum of the consolidated shareholders' investment and minority interests of the Company and its Consolidated Subsidiaries determined as of such date. Consolidated shareholders' investment and minority interests shall be as included in the annual and quarterly financial statements of the Company, as applicable. 1.12 AMENDMENT OF "ELECTRONIC PAYMENT INSTRUCTIONS" DEFINITION. The definition of "Electronic Payment Instructions" set forth in Section 13 shall be amended to read in its entirety as follows: "ELECTRONIC PAYMENT INSTRUCTIONS" means the Bank Routing and account number information identifying the account of each Bank to receive the ACH payment of Commitment Fees. Such Electronic Payment Instructions for each Bank are set forth below the signature block of such Bank to the Amendment dated as of May 8, 1996 to the Agreement and may be changed at any time by written notice by such Bank to the Company. 1.13 AMENDMENT OF "INTEREST PERIOD" DEFINITION. The definition of "Interest Period" set forth in Section 13 shall be amended to read in its entirety as follows: "INTEREST PERIOD" means, with respect to any Fixed Rate Loan, the period commencing on the date such Loan was made, or on the date such Loan was Converted from a Loan of a different type, or on the date of expiration of the immediately preceding Interest Period for such Loan, and (i) ending 30, 60, 90, 120, 150, 180 days, or, if available, more than 180 days up to and including 360 days, thereafter in the case of a Domestic CD Loan, or (ii) ending one, two, three, or six months, or, if available, more than six months up to and including twelve months, thereafter in the case of a Eurocurrency Loan, all as the Company or any Designated Subsidiary may specify pursuant to Section 1.4, 1.5, or 3.3; the Interest Period for any Negotiated Loan or any Local Currency Loan shall be as agreed by the Company or any Designated Subsidiary and the Relevant Bank pursuant to Section 1.6 or 1.7 . Each Interest Period for a Fixed Rate Loan that would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day (unless such next succeeding Business Day is the first Business Day of a calendar month, in which case with respect to a Eurocurrency Loan such Interest Period shall end on the next preceding Business Day). -4- 5 1.14 DELETION OF "NET WORTH" DEFINITION. The definition of "Net Worth" set forth in Section 13 shall be deleted in its entirety. 1.15 AMENDMENT OF "PERCENTAGE" DEFINITION. The definition of "Percentage" set forth in Section 13 shall be amended to read in its entirety as follows: "PERCENTAGE" means as to any Bank the percentage of such Bank's share of the total Commitments of all Banks. 1.16 AMENDMENT OF "TERMINATION DATE" DEFINITION. The definition of "Termination Date" set forth in Section 13 shall be amended to read in its entirety as follows: "TERMINATION DATE" means the earlier to occur of (a) July 1, 2001, subject to extension for one or more successive one-year periods as to any Bank or Banks pursuant to Section 1.2, or (b) such other date on which the Commitments shall terminate pursuant to Section 11.2. 1.17 AMENDMENT OF "COMPUTATIONS". Section 14.4 of the Agreement shall be amended to delete references to certain calculations and, as amended, shall read in its entirety as set forth below: 14.4 COMPUTATIONS. Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with the Company's then current method of accounting, which method must be in accordance with GAAP; provided, however, if any changes in accounting principles from those used in the preparation of the financial statements referred to in Section 8.4 hereafter occasioned by the promulgation of rules, regulations, pronouncements, and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) result in a change in the method of calculation of the financial covenants, standards, or terms found in Section 9.2 hereof, the parties hereto agree to enter into negotiations to amend such provisions so as equitably to reflect such changes with the desired result that the criteria for evaluating the Company's financial condition shall be the same after such changes as if such changes had not been made. -5- 6 SECTION 2 GENERAL. 2.1 RESTATEMENT OF AGREEMENT. The Three-Year Revolving Credit Agreement dated as of July 1, 1992 has been restated to incorporate all changes contained in this and all prior Amendments and is attached as Exhibit I. 2.2 REISSUANCE OF NOTES. In connection with the effectiveness of this Amendment, the Company shall issue to each of the Banks a Note in the principal amounts set forth next to such Bank's name in the signature blocks below. Contemporaneously with the issuance of such Notes, the Notes dated February 28, 1995 currently pertaining to the Agreement shall be deemed null and void and each Bank shall cancel and return to the Company such Note pertaining to the Agreement currently in such Bank's possession. 2.3 EFFECTIVENESS OF FEE CHANGES. All fee and interest rate changes set forth in this Amendment shall be effective only on a prospective basis from the date hereof. 2.4 OTHER TERMS AND CONDITIONS. Unless amended hereby, all other terms and conditions of the Agreement shall remain in full force and effect without change and are hereby ratified and confirmed in all respects. 2.5 GOVERNING LAW. This Amendment and each Note issued pursuant hereto shall be a contract made under and governed by the internal laws of the State of Ohio. Wherever possible each provision of this Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment. All obligations of the Company and rights of the Banks and any other holders of the Notes expressed herein or in the Notes shall be in addition to and not in limitation of those provided by applicable law. 2.6 COUNTERPARTS. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. When counterparts executed by all the parties shall have been lodged with the Company (or, in the case of any Bank as to which an executed counterpart shall not have been so lodged, the Company shall have received telegraphic, telex, or other written confirmation from such Bank of execution of a counterpart hereof by such Bank), this Amendment shall become effective as of the date hereof. -6- 7 2.7 CAPTIONS. Section captions used in this Amendment are for convenience only, and shall not affect the construction of this Amendment. Delivered at Cleveland, Ohio, as of the day and year first above written. TRW INC. By /s/ W.C. Seeger, Jr. ---------------------------- William C. Seeger, Jr. Vice President and Treasurer 1900 Richmond Road Cleveland, Ohio 44124 Telephone 216/291-7540 Facsimile: 216/291-7831 -7- 8 BANKS: Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Bank of America National Trust ----- and Savings Association By: /s/ Deborah Graziano ----------------------- Name: Deborah Graziano Title: Vice President DOMESTIC OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7485 --------------- Facsimile: (510) 675-7531 --------------- Attention: Selina Button EUROCURRENCY OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7485 --------------- Facsimile: (510) 675-7531 --------------- Attention: Selina Button ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Bank of America --------------- ABA Routing No.: 121000358 --------------- Account No.: 12331-83980 --------------- Account Name: Incoming Money Transfer ----------------------- Reference No.: TRW Commitment Fee ------------------ -8- 9 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Barclays Bank PLC ----- By: /s/ L. Peter Yetman ----------------------- Name: L. Peter Yetman Title: Associate Director DOMESTIC OFFICE Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: (212) 412-1196 ----------------- Facsimile: (212) 412-1099 ----------------- EUROCURRENCY OFFICE Barclays Nassau, Bahamas Branch c/o Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: (212) 412-1196 ----------------- Facsimile: (212) 412-1099 ----------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Barclays Bank PLC - New York ---------------------------- ABA Routing No.: 026-002--574 --------------- Account No.: 050-019-104 ---------------------- Account Name: TRW ---------------------- Reference No.: TRW Commitment Fee; N. Sangle ------------------------------ -9- 10 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % The Chase Manhattan Bank, N.A. ----- By: /s/ Joan F. Garvin ----------------------- Name: Joan F. Garvin Title: Vice President DOMESTIC OFFICE The Chase Manhattan Bank, N.A. One Chase Manhattan Plaza Fifth Floor New York, New York 10081 Telephone: (212) 552-2722 -------------- Facsimile: (212) 552-1372 -------------- EUROCURRENCY OFFICE The Chase Manhattan Bank, N.A. One Chase Manhattan Plaza Fifth Floor New York, New York 10081 Telephone: ------------- Facsimile: ------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan Bank ---------------------- ABA Routing No.: 021-000021 ---------------------- Account No.: 900-9-000036 ---------------------- Account Name: Commercial Loan Opns. ---------------------- Reference No.: TRW Commitment Fee ---------------------- -10- 11 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Citibank, N.A. ----- By: /s/ Marjorie Futornick ----------------------- Name: Marjorie Futornick Title: Vice President DOMESTIC OFFICE Citibank, N.A. c/o Citicorp N.A., Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 EUROCURRENCY OFFICE Citibank, N.A. c/o Citicorp N.A., Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Citibank, N.A., New York ABA Routing No.: 021000089 Account No.: 38483095 Account Name: Chicago NEO Loan Acct. ------------------------- Reference No.: TRW Commitment Fee -11- 12 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Morgan Guaranty Trust Company --- of New York By: /s/ J.M. Mikolay -------------------------- Name: John M. Mikolay Title: Vice President DOMESTIC OFFICE Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260-0060 Telephone: (302) 634-1800 -------------- Facsimile: (302) 634-1094 -------------- EUROCURRENCY OFFICE Morgan Guaranty Trust Company of New York Nassau, Bahamas Office c/o J.P. Morgan Services Inc. Euro-Loan Servicing Unit 902 Market Street Wilmington, Delaware 19801 Telephone: (302) 634-1800 -------------- Facsimile: (302) 634-1094 -------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Morgan Guaranty Trust --------------------- ABA Routing No.: 021000238 --------------------- Account No.: 999-99-090 --------------------- Account Name: Loan Department --------------------- Reference No.: TRW Com. Fee --------------------- Corp. Proc. Module 30 -12- 13 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % National City Bank ----- By: /s/ Davis R. Bonner ------------------------- Name: Davis R. Bonner Title: Vice President DOMESTIC OFFICE National City Bank National City Center P.O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: (216) 575-3285 -------------- Facsimile: (216) 575-9396 -------------- EUROCURRENCY OFFICE National City Bank National City Center P.O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: (216) 575-3285 -------------- Facsimile: (216) 575-9396 -------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: National City Bank ------------------ ABA Routing No.: 041000124 ------------------ Account No.: 2537557 ------------------ Account Name: ------------------ Reference No.: TRW Commitment Fee ------------------ -13- 14 Amount of Percentage of Commitment Commitments $60,000,000 8 % The Sumitomo Bank, Limited ----- By: /s/ H. Iwami ---------------------------- Name: Hiroyuki Iwami Title: Joint General Manager DOMESTIC OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 876-6431 -------------- Facsimile: (312) 876-6436 -------------- EUROCURRENCY OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 876-6431 -------------- Facsimile: (312) 876-6436 -------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ------------------ ABA Routing No.: 071000013 ------------------ Account No.: 15-01208 ------------------ Account Name: Sumitomo Bank Ltd., Chicago Branch ------------------ Reference No.: TRW Commitment Fee ------------------ -14- 15 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % Banque Nationale De Paris ----- By: /s/ ------------------------- Name: Title: DOMESTIC OFFICE Banque Nationale De Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2200 ------------------- Facsimile: (312) 977-1380 ------------------- EUROCURRENCY OFFICE Banque Nationale De Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2200 ------------------- Facsimile: (312) 977-1380 ------------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Banque Nationale de Paris, New York Branch ------------------- ABA Routing No.: 026007689 ------------------- Account No.: 14119400189 ------------------- Account Name: BNP, Chicago Branch ------------------- Reference No.: TRW Commitment Fee ------------------- -15- 16 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % Dresdner Bank AG ----- By: /s/ D. Slusarczyk ----------------------------- Name: Deborah Slusarczyk Title: Vice President By: /s/ Robert Grella ----------------------------- Name: Robert Grella Title: Vice President DOMESTIC OFFICE Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 ----------------------- Facsimile: (212) 429-2524 ----------------------- EUROCURRENCY OFFICE Dresdner Bank AG Grand Cayman Branch c/o Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 ----------------------- Facsimile: (212) 429-2524 ----------------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan (NY,NY) ----------------------- ABA Routing No.: 021-000-021 ----------------------- Account No.: 920-1-059-079 ----------------------- Account Name: Dresdner Bank AG, New York Branch ----------------------- Reference No.: TRW Commitment Fee ----------------------- -16- 17 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % NBD Bank ------ By: /s/ Andrew W. Strait --------------------------- Name: Andrew W. Strait Title: Vice President DOMESTIC OFFICE NBD Bank Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3300 -------------------- Facsimile: (313) 225-3269 -------------------- EUROCURRENCY OFFICE NBD Bank, N.A. Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3300 -------------------- Facsimile: (313) 225-3269 -------------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: NBD Bank -------------------- ABA Routing No.: 072000326 -------------------- Account No.: 1424183 -------------------- Account Name: Commercial Loans -------------------- Reference No.: TRW Commitment Fee -------------------- -17- 18 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % Royal Bank of Canada ----- By: /s/ P. Shields ---------------------------- Name: Patrick Shields Title: Manager, Corporate Banking DOMESTIC OFFICE Royal Bank of Canada New York Branch c/o Financial Square, 23rd Floor New York, New York 10005 Telephone: (212) 428-6323 --------------------- Facsimile: (212) 428-2372 --------------------- EUROCURRENCY OFFICE Royal Band of Canada New York Branch c/o Financial Square, 23rd Floor New York, New York 10005 Telephone: (212) 428-6323 --------------------- Facsimile: (212) 428-2372 --------------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan, NY -------------------- ABA Routing No.: 021000021 -------------------- Account No.: 9201033363 -------------------- Account Name: Royal Bank -------------------- Reference No.: TRW Commitment Fee -------------------- -18- 19 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % The Sakura Bank, Limited ----- By: /s/ Hajime Miyagi ------------------------- Name: Hajime Miyagi Title: Joint General Manager DOMESTIC OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 --------------------- Facsimile: (312) 332-5345 --------------------- EUROCURRENCY OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 --------------------- Facsimile: (312) 332-5345 --------------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago --------------------- ABA Routing No.: 071000013 --------------------- Account No.: 1512951 --------------------- Account Name: Sakura Bank Chicago --------------------- Reference No.: TRW Commitment Fee --------------------- -19- 20 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % Society National Bank ----- By: /s/ Marianne Meil -------------------------- Name: Marianne Meil Title: Assistant Vice President DOMESTIC OFFICE Society National Bank 127 Public Square Cleveland, Ohio 44114 Telephone: (216) 689-4450 --------------------- Facsimile: (216) 689-4981 --------------------- EUROCURRENCY OFFICE Society National Bank 127 Public Square Cleveland, Ohio 44114 Telephone: (216) 689-4450 --------------------- Facsimile: (216) 689-4981 --------------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Society National Bank --------------------- ABA Routing No.: 041001039 --------------------- Account No.: 00100-39140 --------------------- Account Name: Commercial Loan Opns --------------------- Reference No.: TRW Commitment Fee --------------------- -20- 21 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % The Tokai Bank, Limited ----- By: /s/ Tatsuo Ito ----------------------------- Name: Tatsuo Ito Title: Joint General Manager DOMESTIC OFFICE The Tokai Bank, Limited Chicago Branch Attention: Corporate Finance 181 West Madison Street, Suite 3600 Chicago, Illinois 60602 Telephone: (312) 456-3427 ---------------------- Facsimile: (312) 977-0003 ---------------------- EUROCURRENCY OFFICE The Tokai Bank, Limited Chicago Branch Attention: Corporate Finance 181 West Madison Street, Suite 3600 Chicago, Illinois 60602 Telephone: ---------------------- Facsimile: ---------------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ---------------------- ABA Routing No.: 071000013 ---------------------- Account No.: 15-08997 ---------------------- Account Name: Tokai Bank, Chicago Branch ---------------------- Reference No.: TRW Commitment Fee ---------------------- Loan Administration -21- 22 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % Union Bank of Switzerland ----- By: /s/ S. M. Dadmun /s/ E. P. Weinheimer -------------------------------------- Name: Steven M. Dadmun/ Eric P. Weinheimer Title: Vice President/ Lending Officer DOMESTIC OFFICE Union Bank of Switzerland Chicago Branch 30 South Wacker Drive, Suite 40 Chicago, Illinois 60606 Telephone: (312) 993-5471 ----------------------- Facsimile: (312) 993-5530 ----------------------- EUROCURRENCY OFFICE Union Bank of Switzerland Chicago Branch 30 South Wacker Drive, Suite 40 Chicago, Illinois 60606 Telephone: (312) 993-5471 ----------------------- Facsimile: (312) 993-5530 ----------------------- ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ----------------------- ABA Routing No.: 071000013 ----------------------- Account No.: 15-12188 ----------------------- Account Name: UBS, Chicago Branch ----------------------- Reference No.: TRW Commitment Fee ----------------------- -22- 23 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % Wells Fargo Bank, N.A. ----- By: /s/ Peter G. Olson ------------------------- Name: Peter G. Olson Title: SVP By: /s/ Lancy Gin ------------------------- Name: Lancy Gin Title: AVP DOMESTIC OFFICE Wells Fargo Bank, N.A. Special Loan Processing 18700 NW Walker Road, Bldg. 92 Beaverton, OR 97006 Telephone: (503) 614-6436 Facsimile: (503) 614-5878 EUROCURRENCY OFFICE Wells Fargo Bank, N.A. Special Loan Processing 18700 NW Walker Road, Bldg. 92 Beaverton, OR 97006 Telephone: (503) 614-6436 Facsimile: (503) 614-5878 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: First Interstate Bank of California ABA Routing No.: 122000218 Account No.: 3030-98989 Account Name: Special Loan Processing Reference No.: TRW - ------------ ---- $750,000,000 100% Total -23- 24 Exhibit I - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MULTI-YEAR REVOLVING CREDIT AGREEMENT AS AMENDED AND RESTATED as of May 8, 1996 among TRW INC. and THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 25 TABLE OF CONTENTS
Page ---- PREAMBLE......................................................................................... 1 SECTION 1 COMMITMENT OF THE BANKS; TYPES OF LOANS; PROCEDURES FOR BORROWING OR CONVERTING................................................................ 1 1.1 Commitment................................................................... 1 1.2 Extension of Commitment...................................................... 1 1.3 Various Types of Loans....................................................... 2 1.4 Notice of Borrowing, Continuation, or Conversion.............................................................. 2 1.5 Conversion and Continuation Procedures....................................... 3 1.6 Negotiated Loans............................................................. 3 1.7 Local Currency Loans......................................................... 3 1.8 Loans to Designated Subsidiaries............................................. 4 1.9 Loans Outstanding Under Prior Facility....................................... 4 SECTION 2 REPAYMENT OF LOANS; NOTES EVIDENCING LOANS................................... 4 2.1 Repayment of Loans........................................................... 4 2.2 Notes........................................................................ 4 2.3 Other Provisions of the Notes................................................ 4 2.4 Recordkeeping................................................................ 5 SECTION 3 INTEREST..................................................................... 5 3.1 Interest Rates............................................................... 5 3.2 Interest Payment Dates....................................................... 5 3.3 Interest Periods for Fixed Rate Loans........................................ 6 3.4 Setting and Notice of Rates.................................................. 6 3.5 Computation of Interest...................................................... 6 SECTION 4 FEES ........................................................................ 6 4.1 Commitment Fee............................................................... 6 4.2 Computation of Fees.......................................................... 7 SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENT................................................. 7 5.1 Reduction or Termination of the Commitments.................................. 7
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Page ---- 5.2 Optional Prepayment.......................................................... 7 5.3 Mandatory Prepayment......................................................... 7 SECTION 6 MAKING AND APPLICATION OF PAYMENTS........................................... 7 6.1 Making of Payments........................................................... 7 6.2 Application of Certain Payments.............................................. 7 6.3 Due Date Extension........................................................... 8 SECTION 7 INCREASED COSTS AND TAXES.................................................... 8 7.1 Increased Capital............................................................ 8 7.2 Increased Costs.............................................................. 9 7.3 Basis for Determining Interest Rate Inadequate............................... 9 7.4 Changes in Law Rendering Certain Loans Unlawful.............................. 10 7.5 Funding Losses............................................................... 10 7.6 Currency Indemnity........................................................... 10 7.7 Increased Tax Costs.......................................................... 11 SECTION 8 WARRANTIES................................................................... 12 8.1 Corporate Organization....................................................... 12 8.2 Authorization; No Conflict................................................... 12 8.3 Validity and Binding Nature.................................................. 12 8.4 Financial Statements......................................................... 12 8.5 Litigation................................................................... 12 8.6 Compliance with ERISA........................................................ 13 8.7 Environmental Matters........................................................ 13 8.8 Taxes........................................................................ 13 8.9 Government Regulation........................................................ 13 SECTION 9 COVENANTS.................................................................... 14 9.1 Reports, Certificates and Other Information.................................. 14 9.1.1 Audit Report.......................................................... 14 9.1.2 Quarterly Reports..................................................... 14 9.1.3 Compliance Certificates............................................... 14 9.1.4 Current Reports....................................................... 14 9.1.5 Other Information..................................................... 14 9.2 Net Worth .................................................................. 14 9.3 Liens........................................................................ 15 9.4 Sale and Leaseback........................................................... 16 9.5 Mergers, Consolidations, Sales............................................... 17 SECTION 10 CONDITIONS OF LENDING........................................................ 17 10.1 Initial Loan to the Company.................................................. 17 10.1.1 Note.............................................................. 17
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Page ---- 10.1.2 Resolutions....................................................... 17 10.1.3 Incumbency and Signatures......................................... 18 10.1.4 Opinion of Counsel................................................ 18 10.2 Loans to Designated Subsidiaries............................................. 18 10.2.1 Resolutions....................................................... 18 10.2.2 Acceptance of this Agreement...................................... 18 10.2.3 Incumbency and Signatures......................................... 18 10.3 All Loans .................................................................. 18 10.4 Conversions.................................................................. 19 SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT........................................... 19 11.1 Events of Default............................................................ 19 11.1.1 Nonpayment of Notes or Fees....................................... 19 11.1.2 Nonpayment of Other Indebtedness for Borrowed Money.................................................. 19 11.1.3 Bankruptcy or Insolvency.......................................... 19 11.1.4 Noncompliance with Other Provisions............................... 19 11.1.5 Warranties........................................................ 20 11.1.6 Judgments......................................................... 20 11.2 Effect of Event of Default................................................... 20 SECTION 12 GUARANTY .................................................................. 21 SECTION 13 CERTAIN DEFINITIONS.......................................................... 21 SECTION 14 GENERAL .................................................................. 30 14.1 Waiver; Amendments........................................................... 30 14.2 Confirmations................................................................ 31 14.3 Notices .................................................................. 31 14.4 Computations................................................................. 32 14.5 Confidentiality.............................................................. 32 14.6 Assignments and Participations............................................... 33 14.6.1 Assignments....................................................... 33 14.6.2 Participations.................................................... 33 14.6.3 Disclosure of Information......................................... 33 14.7 Securities Laws.............................................................. 34 14.8 Costs and Expenses........................................................... 34 14.9 Governing Law................................................................ 34 14.10 Counterparts................................................................. 34 14.11 Captions .................................................................. 34 14.12 Successors and Assigns....................................................... 34 14.13 Entire Agreement............................................................. 35 14.14 Appointment of Administrator................................................. 35 14.15 Non-U.S. Bank Tax Information................................................ 35 14.16 Regulation U................................................................. 35
(iii) 28 EXHIBITS EXHIBIT A Form of Note EXHIBIT B Form of Compliance Certificate EXHIBIT C Form of Opinion of Counsel to the Company SCHEDULES SCHEDULE 1.10 Prior Facilities Pursuant to Section 1.10 SCHEDULE 8.5 Undisclosed Material Legal Proceedings (iv) 29 MULTI-YEAR REVOLVING CREDIT AGREEMENT This Multi-Year Revolving Credit Agreement, dated as of July 1, 1992, as amended pursuant to Agreements dated as of June 30, 1993, March 1, 1994 and February 28, 1995 and as amended and restated pursuant to an Agreement dated as of May 8, 1996 (this "Agreement"), is among TRW Inc., an Ohio corporation (the "Company") and the financial institutions listed on the signature pages hereof together with their successors or assigns (collectively, the "Banks" and individually, a "Bank"). Certain terms being used in this Agreement are hereinafter defined in Section 13. W I T N E S S E T H: -------------------- WHEREAS, the Company has requested the Banks to make certain unsecured loans to the Company and certain Subsidiaries of the Company designated by the Company for general corporate purposes, including without limitation for working capital, capital expenditures, acquisitions (directly or indirectly) of assets, stock or other ownership interests, and repurchases or redemptions of securities; and WHEREAS, the Banks have agreed to make such loans on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1 COMMITMENT OF THE BANKS; TYPES OF LOANS; PROCEDURES FOR BORROWING OR CONVERTING. 1.1 COMMITMENT. Subject to the terms and conditions of this Agreement, each of the Banks, severally and for itself alone, agrees to make loans (collectively, the "Loans" and individually, a "Loan") to the Company and, as provided in Section 1.8, to any Designated Subsidiary on a revolving basis from time to time before the Termination Date, as it may be extended from time to time pursuant to Section 1.2, in such aggregate amounts as the Company or any Designated Subsidiary may from time to time request from such Bank; provided, however, that the aggregate principal amount of Loans that any Bank shall be committed to have outstanding to the Company and the Designated Subsidiaries shall not at any one time exceed the amount set forth opposite such Bank's signature hereto, or any subsequent amendment hereto (except to the extent provided in Section 1.9 hereof). The foregoing commitment of each Bank to make Loans as reduced from time to time in accordance with the terms hereof is herein called such Bank's "Commitment" and the commitments of all Banks are herein sometimes collectively called the "Commitments." 1.2 EXTENSION OF COMMITMENT. No later than 90 days prior to the Termination Date then in effect, the Company may request, by written notice, that any one or more of the Banks extend the Termination Date as to that Bank's Commitment for a -1- 30 period of one year commencing on the Termination Date then in effect. Each Bank receiving such an extension request from the Company shall notify the Company in writing no later than 45 days prior to the Termination Date then in effect of such Bank's determination to extend or not to extend the Termination Date. A notice given by a Bank to extend the Termination Date pursuant to this Section 1.2 shall be irrevocable (subject to Section 11.2). Any Bank that fails to respond to the Company's request to extend the Termination Date within such time period shall be deemed to have given notice to the Company that such Bank does not desire to extend the Termination Date. 1.3 VARIOUS TYPES OF LOANS. Each Loan shall be either a Base Rate Loan, a Domestic CD Loan, a Eurocurrency Loan, a Local Currency Loan, or a Negotiated Loan (each herein called a "type" of Loan), as the Company shall specify in the related notice of borrowing, Continuation, or Conversion pursuant to Section 1.4 or 1.5. Domestic CD Loans, Eurocurrency Loans, Local Currency Loans, and Negotiated Loans bearing interest at a fixed rate for a fixed period of time are sometimes collectively called "Fixed Rate Loans." Each Loan shall be made in U.S. Dollars or such other currency as is requested by the Company and shall be available at the time and for the period requested by the Company. Each Loan shall bear interest at the rate specified in Section 3.1 and shall mature on and be due and payable in full on the earliest of (i) the Termination Date, (ii) the end of an Interest Period (unless the Loan is Continued or Converted) or (iii) such other date as the Company and the Relevant Bank shall otherwise agree in writing. The Eurocurrency specified in any notice of borrowing, Continuation, or Conversion given by the Company pursuant to Section 1.4 or 1.5 shall be deemed to be available for purposes of this Agreement, unless the Relevant Bank gives the Company notice (which may be by telephone) no later than the earlier of (a) 12:00 noon, Cleveland time, on the second Business Day prior to the proposed date making the Eurocurrency Loan, or (b) one hour after the Relevant Bank has received the notice of borrowing, Continuation, or Conversion, as applicable. The Relevant Bank's determination in good faith that a proposed Eurocurrency is or is not available shall be final. 1.4 NOTICE OF BORROWING. CONTINUATION. OR CONVERSION. The Company, through an Authorized Person, shall give written or telephonic notice to the Relevant Bank of each proposed borrowing from such Bank, or Conversion or Continuation of Loans made by such Bank, by 11:00 a.m., Cleveland time, (a) on the proposed date of such borrowing, Conversion, or Continuation if such borrowing, Conversion, or Continuation is comprised of Base Rate Loans, Domestic CD Loans, or Negotiated Loans, (b) at least two Business Days prior to the proposed date of such borrowing, Conversion, or Continuation if such borrowing, Conversion, or Continuation is comprised of Eurocurrency Loans (provided that at least one Business Day prior to such written or telephonic notice of proposed nondollar denominated Eurocurrency Loan borrowing, Continuation or Conversion, the Company, through an Authorized Person, shall give written or telephonic notice to the Relevant Bank of the Company's intention to request a Eurocurrency Loan), and (c) with respect to Local Currency Loans, at least two Business Days prior to the proposed date of such borrowing, Conversion, or -2- 31 Continuation or such other period of time as is customary for the particular Local Currency. Each such notice shall be effective upon receipt by the Relevant Bank and shall specify the date, amount, currency, and type of borrowing and, in the case of a borrowing comprising Fixed Rate Loans, the initial Interest Period for such borrowing. Each notice of a Conversion or Continuation of Loans shall specify the date and amount of such Conversion or Continuation, the Loans to be so Converted or Continued, the type and currency of Loans to be Converted into or Continued, and, in the case of a Conversion into or Continuation of Fixed Rate Loans, the initial or succeeding Interest Period, as the case may be. Each borrowing shall be on a Business Day and shall be in an aggregate amount of not less than 1,000,000 U.S. Dollars for Base Rate Loans and not less than 5,000,000 U.S. Dollars (or the Eurocurrency Equivalent Amount) for any other type of Loan, other than Local Currency Loans (which shall be as agreed between the Company and the Relevant Bank). 1.5 CONVERSION AND CONTINUATION PROCEDURES. The Company may convert all or part of any outstanding Loans to Loans of a different type, or may elect to continue any Fixed Rate Loans for an additional Interest Period, by giving notice to the Relevant Bank of such Conversion or Continuation within the time periods specified in Section 1.4. If, with respect to any Fixed Rate Loan, the Company shall not either repay the Loan in full by 2:00 p.m., Cleveland time, on the last day of the Interest Period applicable thereto or give notice of its intention to Convert or Continue such Fixed Rate Loan within the time periods specified in Section 1.4, then the Company shall be deemed to have requested that such Loan automatically be converted into a Base Rate Loan at the end of such Interest Period (and such Loan shall automatically so Convert into a Base Rate Loan at the end of such Interest Period). Except as provided in Section 7.4, no Fixed Rate Loans shall be Converted on any day other than the last day of the current Interest Period relating to such Loans. 1.6 NEGOTIATED LOANS. From time to time, the Company may request, through an Authorized Person, and a Bank may, but shall not be obligated to, agree to make, a Loan in U.S. Dollars bearing interest at a rate per annum, and for a fixed period, agreed to by the Relevant Bank and the Company (each, a "Negotiated Loan" and collectively, the "Negotiated Loans"). 1.7 LOCAL CURRENCY LOANS. From time to time, the Company may request, through an Authorized Person, and a Bank may, but shall not be obligated to, agree to make a Loan in a Local Currency specified by the Company bearing interest at a rate per annum agreed to by the Bank and the Company (each, a "Local Currency Loan" and collectively, the "Local Currency Loans"). Repayments of principal of and interest on Local Currency Loans shall be made in the currency borrowed and shall be paid to the local office of the Relevant Bank which made the Loan. The local office may request additional documentation of the indebtedness if customary at the place of business of the branch; provided, however, that the terms and conditions of that documentation shall be consistent with those set forth in this Agreement unless unlawful or ineffective under local law. -3- 32 1.8 LOANS TO DESIGNATED SUBSIDIARIES. Each Designated Subsidiary may request, through an Authorized Person, Local Currency Loans or Eurocurrency Loans and Convert or Continue such Loans, and shall repay the principal of and accrued interest on such Loans, all as though the Designated Subsidiaries were parties to this Agreement and references to the "Company" in Sections 1.3, 1.4, 1.5, 1.7, 2.1, 3.1, 3.4, 3.5, 5.2 and 6.1 shall mean and include the Designated Subsidiaries. The Relevant Bank may request additional documentation of the indebtedness if customary at the place of business of the Relevant Bank; provided, however, that the terms and conditions of that documentation shall be consistent with those set forth in this Agreement unless unlawful or ineffective under local law. 1.9 LOANS OUTSTANDING UNDER PRIOR FACILITY. Effective as of the date on which the conditions of lending set forth in Section 10.1 and 10.3 are satisfied, (i) the facility under this Agreement shall replace the facilities under the credit agreements set forth on Schedule 1.10 (the "Prior Facilities'), (ii) all loans outstanding under the Prior Facilities shall be and shall be deemed to be outstanding under this Agreement (with all such loans retaining the interest rate, maturity, interest period and similar terms as existed immediately prior to the termination of the Prior Facilities; provided, however, that if any such loan under the Prior Facilities exceeds the Bank's Commitment hereunder and if such Bank's commitment under the Prior Facilities exceeds such Bank's Commitment hereunder, then such Bank's commitment under the Prior Facilities will be deemed such Bank's Commitment hereunder until such loan that previously existed under the Prior Facilities has been repaid according to its original terms) and (iii) the obligations of the banks under the Prior Facilities shall terminate and be discharged. SECTION 2 REPAYMENT OF LOANS; NOTES EVIDENCING LOANS. 2.1 REPAYMENT OF LOANS. The Company hereby promises to pay to each Bank the aggregate unpaid principal amount of such Bank's Loans on the earliest of (i) the Termination Date, (ii) the end of the applicable Interest Period for such Loan (unless the Loan is Continued or Converted) or (iii) such other date as the Company and the Relevant Bank may agree in writing. Repayment of any Eurocurrency Loan shall be in the same currency in which such Loan was advanced. 2.2 NOTES. The Loans of each Bank shall be evidenced by a promissory note (individually, a "Note", and collectively for all Banks, the "Notes") substantially in the form set forth in Exhibit A, with appropriate insertions, dated the date of the initial Loan (or such earlier date as shall be satisfactory to the Relevant Bank), payable to the order of such Bank in the principal amount of such Bank's Commitment (or, if less, in the aggregate unpaid principal amount of all of such Bank's Loans hereunder). 2.3 OTHER PROVISIONS OF THE NOTES. Each Note shall provide for the payment of interest as provided in Section 3. -4- 33 2.4 RECORDKEEPING. Each Bank shall record in its records, or at its option on the schedule attached to its Note, the date, amount, and type of each Loan made by such Bank, each repayment, Continuation, or Conversion thereof, and the dates on which each Interest Period for each Fixed Rate Loan shall begin and end. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Note. The failure so to record any such amount or any error in so recording any such amount, however, shall not limit or otherwise affect the obligations of the Company hereunder or under any Note to repay the principal amount of the Loans, together with all interest accruing thereon. SECTION 3 INTEREST. 3.1 INTEREST RATES. With respect to each Loan, the Company hereby promises to pay interest on the unpaid principal amount thereof for the period commencing on the date of such Loan until such Loan is paid in full, as follows: (a) At all times while such Loan is a Base Rate Loan, at a rate per annum equal to the Base Rate from time to time in effect; (b) At all times while such Loan is a Domestic CD Loan, during each Interest Period, at a rate per annum equal to the Domestic CD Rate (Adjusted) applicable to such Interest Period, plus the Applicable Margin; (c) At all times while such Loan is a Eurocurrency Loan, during each Interest Period, at a rate per annum equal to the Eurocurrency Rate (Reserve Adjusted) applicable to such Interest Period, plus the Applicable Margin; and (d) At all times while such Loan is a Negotiated Loan or a Local Currency Loan, at the rate per annum agreed to by the Company and the Relevant Bank pursuant to Section 1.6 or 1.7, as applicable. Notwithstanding the provisions of the preceding clauses (a), (b), (c) or (d) and subject to Section 1.5, in the event that any principal of any Loan is not paid when due (whether by acceleration or otherwise), after the due date of such principal until such principal is paid, the unpaid principal amount of, and accrued but unpaid interest on, Revolving Loan shall bear interest at a rate per annum equal to the higher of the rate borne by such Loan or the Relevant Bank's Base Rate from time to time in effect, plus 1% per annum, subject to the maximum applicable legal rate. 3.2 INTEREST PAYMENT DATES. Accrued interest on each Base Rate Loan outstanding for 45 days or more shall be payable (i) quarterly in arrears on the tenth day of each April, July, October, and January for the quarterly period ended on the last day of the preceding month, and (ii) at maturity, commencing with the earlier of such dates to occur after the date hereof. Accrued interest on each Base Rate Loan outstanding for less than 45 days shall be payable in full on the date -5- 34 such Base Rate Loan is paid in full. Except as otherwise agreed by the Relevant Bank, accrued interest on each Fixed Rate Loan shall be payable on the last day of the Interest Period of each such Loan (or, in the case of a Domestic CD Loan or Negotiated Rate Loan with an Interest Period of 90 days or longer or a Eurocurrency Loan with an Interest Period of three months or longer, accrued interest shall be payable quarterly in arrears on the tenth day of each April, July, October and January and on the last day of each such Interest Period). After maturity, accrued interest on all Loans shall be payable on demand. Interest on any Eurocurrency Loan shall be paid in the same currency in which such Loan was advanced. 3.3 INTEREST PERIODS FOR FIXED RATE LOANS. Prior to each borrowing, Continuation, or Conversion of Fixed Rate Loans, the Company shall specify, in the related notice of borrowing, Continuation, or Conversion pursuant to Sections 1.4 or 1.5, the duration of the Interest Period for such Fixed Rate Loans. Each notice to the Relevant Bank of an Interest Period shall be in writing or by telephone and shall be given by an Authorized Person. 3.4 SETTING AND NOTICE OF RATES. For each Loan made hereunder, the applicable interest rate for each Interest Period or other period shall be the rate quoted by the Relevant Bank to the Company for that particular type of Loan. The Relevant Bank shall, upon written request of the Company, deliver to the Company a statement showing the calculation of (i) any applicable Domestic CD Rate (Adjusted), (ii) any applicable Eurocurrency Rate (Reserve Adjusted) or (iii) the rate of interest per annum applicable to Negotiated Loans or Local Currency Loans hereunder. 3.5 COMPUTATION OF INTEREST. Interest shall be computed for the actual number of days elapsed (with interest accruing on the first day, but not the last day, of such Loan) on the basis of (a) with respect to Domestic CD Loans and Eurocurrency Loans, a 360 day year, (b) with respect to Base Rate Loans, a 365 or 366 day year, as the case may be, (c) with respect to Negotiated Loans, a 365 or 366 day year, as the case may be, or such other basis as is agreed to by the Company and the Relevant Bank, and (d) with respect to Local Currency Loans, on a basis consistent with local customs that is agreed to by the Relevant Bank and the Company. SECTION 4 FEES. 4.1 COMMITMENT FEE. The Company agrees to pay to each Bank a commitment fee, for the period from and including the date of this Agreement to the Termination Date, on the daily average of the Unused Amount of such Bank's Commitment hereunder equal to the Applicable Commitment Fee in effect from time to time times the Unused Amount. Such commitment fee shall be payable quarterly in arrears on the tenth day of each April, July, October, and January (the first such payment to be made on October 10, 1992) for the quarterly period ended on the last day of the preceding month and on the Termination Date. The -6- 35 Company may make such payments according to the Electronic Payment Instructions. 4.2 COMPUTATION OF FEES. Fees shall be computed for the actual number of days elapsed on the basis of a 365 or 366 day year, as the case may be. SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENT. 5.1 REDUCTION OR TERMINATION OF THE COMMITMENTS. The Company may from time to time prior to the Termination Date on at least three Business Days' prior written notice given by an Authorized Person to any Bank permanently reduce the amount of such Bank's Commitment to an amount not less than the aggregate unpaid principal amount of the Loans made by such Bank then outstanding. Any such reduction shall be in an aggregate amount of not less than 1,000,000 U.S. Dollars, or such lesser amount of such Bank's Unused Amount then remaining. 5.2 OPTIONAL PREPAYMENT. The Company may from time to time prepay the Loans in whole or in part, provided that (a) an Authorized Person shall give the Relevant Bank not less than three Business Days' prior notice thereof, specifying the Loans to be prepaid, and the date and amount of prepayment and (b) each partial prepayment shall be in the principal amount of 1,000,000 U.S. Dollars (or the Eurocurrency or Local Equivalent Amount thereof) or such lesser amount as is then outstanding on the Loan being prepaid. 5.3 MANDATORY PREPAYMENT. On each day on which the aggregate outstanding principal amount of Loans owing to any Bank on such day exceeds (whether as a result of currency fluctuations or otherwise) such Bank's Commitment hereunder, the Company shall pay to such Bank on demand a mandatory prepayment in the amount of such excess. Mandatory prepayments required by this Section 5.3 shall be applied first to Base Rate Loans until paid in full and then, at the Company's election and in the order specified by the Company, to Fixed Rate Loans. SECTION 6 MAKING AND APPLICATION OF PAYMENTS. 6.1 MAKING OF PAYMENTS. Except as otherwise provided in Section 11.2 hereof, all payments (including those made pursuant to Section 5) of principal of, or interest on, the Loans shall be made by the Company to the Relevant Bank in immediately available funds in the Obligation Currency. 6.2 APPLICATION OF CERTAIN PAYMENTS. Each payment of principal on any Loan shall be applied first to Base Rate Loans and then to such of the other Loans as the Company shall direct by written or telephonic notice given by an Authorized Person to the Relevant Bank on or before the date of such payment, or in the absence of such notice, as the Relevant Bank shall determine in its discretion. -7- 36 6.3 DUE DATE EXTENSION. If any payment of principal or interest with respect to any of the Loans or Notes falls due on a Saturday, Sunday, or other day which is not a Business Day, then such due date shall be extended to the next following Business Day (except as provided in the last sentence of the definition of Interest Period), and additional interest shall accrue and be payable for the period of such extension. SECTION 7 INCREASED COSTS AND TAXES. 7.1 Increased Capital. ----------------- (a) If, after the date of this Agreement, the adoption of any applicable law, rule, or regulation regarding capital adequacy, or any change therein, or change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or comparable agency, has the effect of reducing the rate of return on such Bank's capital as a consequence of its obligations hereunder to a level below that which such Bank would have achieved but for such adoption, change, or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time within 15 days after demand by such Bank, the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such reduction; provided, that, no Bank shall request, and the Company shall not be obligated to pay, any amounts in excess of the amounts charged by such Bank to similarly situated borrowers of such Bank under revolving credit facilities similar to the one provided herein. Notwithstanding the foregoing, a Bank shall not be entitled to compensation from the Company for any such additional amounts incurred more than 30 days before the date on which the Bank notifies the Company of any event which would entitle the Bank to compensation pursuant to this Section 7.1. (b) Each Bank will promptly notify the Company of any event of which it has knowledge that will entitle such Bank to compensation pursuant to this Section 7.1, together with a certificate signed by an authorized officer of the Bank setting forth the basis of such demand and certifying that the amounts demanded hereunder are not in excess of the amounts charged by such Bank to similarly situated borrowers of such Bank under revolving credit facilities similar to the one provided herein. The Bank will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank or contrary to its stated policies. The Bank's certification of the additional -8- 37 amount or amounts to be paid to it hereunder shall be conclusive in the absence of demonstrable error. In determining such amount, such Bank may use reasonable averaging and attribution methods. 7.2 INCREASED COSTS. If, after the date hereof, the adoption of any applicable law, rule, or regulation or any change therein, or any change in the interpretation or administration thereof, or compliance by any Bank with any request, or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency, (a) shall subject any Bank to any tax, duty, or other charge with respect to its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans, or shall change the basis of taxation of payments to any Bank of the principal of or interest on its Fixed Rate Loans or any other amounts due under this Agreement in respect of its Fixed Rate Loans or its obligation to make Fixed Rate Loans (except for the imposition of any tax or changes in the rate of tax imposed on the overall income of such Bank); or (b) shall impose, modify, or deem applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of interest rates pursuant to Section 3), special deposit, or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank; and as a result of any of the foregoing the cost to such Bank of making or maintaining any Fixed Rate Loan is increased (or a cost is imposed on such Bank), or the amount of any sum received or receivable by such Bank under this Agreement or under its Notes with respect thereto is reduced, then within 15 days after demand by such Bank (which demand shall be accompanied by a statement setting forth the basis of such demand), the Company shall pay directly to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or such reduction. Notwithstanding the foregoing, a Bank shall not be entitled to any compensation from the Company for any such increased cost or such reduction attributable to any period that is more than 30 days before the date on which the Bank notifies the Company of any event which would entitle the Bank to compensation pursuant to this Section 7.2. No Bank is entitled to reimbursement for any amounts paid as a result of taxes currently imposed on such Bank. 7.3 BASIS FOR DETERMINING INTEREST RATE INADEQUATE. If with respect to any Interest Period: (a) a Bank reasonably determines that deposits in a requested Eurocurrency (in the applicable amounts) are not being offered to the Bank in the relevant market for such Interest Period requested by the Company, or a Bank otherwise reasonably determines (which determination shall be binding and conclusive on all parties) that by reason of circumstances affecting the interbank eurocurrency market adequate and reasonable -9- 38 means do not exist for ascertaining the applicable Eurocurrency Rate (Reserve Adjusted); or (b) a Bank advises the Company that the making or funding of Eurocurrency Loans has become impracticable as a result of an event occurring after the date of this Agreement which in the opinion of such Bank materially affects Eurocurrency Loans, then: (i) the affected Bank shall promptly notify the Company of such circumstance, (ii) so long as such circumstances shall continue the affected Bank shall not be under any obligation to make, Continue, or Convert Loans into Eurocurrency Loans, and (iii) on the last day of the then current Interest Period for Eurocurrency Loans, such Eurocurrency Loans shall, unless then repaid in full or Converted into a Loan of a different type pursuant to Section 1.5, automatically Convert to Base Rate Loans. 7.4 CHANGES IN LAW RENDERING CERTAIN LOANS UNLAWFUL. In the event that there occurs after the date hereof any change in applicable laws or regulations (including the adoption of any new laws), or any change in the interpretation of applicable laws or regulations by any governmental or other regulatory body charged with the administration thereof, that makes it unlawful for a Bank to make, maintain, or fund a type of Fixed Rate Loans, then (a) such Bank shall promptly notify the Company of such circumstance, (b) the obligation of such Bank to make, Continue, or Convert Loans into the type of Fixed Rate Loans made unlawful for that Bank shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness, and (c) on the last day of the current Interest Period for Fixed Rate Loans of such type (or, in any event, if the Bank affected by such change so requests, on such earlier date as may be required by the relevant law, regulation, or interpretation), the Fixed Rate Loans of such type made by such Bank shall, unless then repaid in full or Converted into a Loan of a different type pursuant to Section 1.5, automatically Convert to Base Rate Loans. 7.5 FUNDING LOSSES. The Company hereby agrees that upon demand by any Bank (which demand shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed), the Company will indemnify such Bank against any net loss or expense which such Bank sustains or incurs (including, without limitation, any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund or maintain Fixed Rate Loans), as reasonably determined by such Bank, as a result of (a) any payment or prepayment or Conversion of any Fixed Rate Loan of such Bank on a date other than the last day of an Interest Period for such Loan, or (b) any failure of the Company to borrow, Continue, or Convert any Loans on a date specified therefor in a notice of borrowing (which shall not include the Company's notice of intention to request a Eurocurrency Loan), Continuation, or Conversion pursuant to this Agreement. 7.6 CURRENCY INDEMNITY. -10- 39 (a) The obligation of the Company under this Agreement and the Notes to make payments in Dollars or in any Eurocurrency or Local Currency in which the Loans or any portion thereof are outstanding (the "Obligation Currency") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent to which such tender or recovery shall result in the effective receipt by the Banks of the full amount of the Obligation Currency expressed to be payable under this Agreement or the Notes. If, for the purpose of obtaining or enforcing judgment against the Company in any court or in any jurisdiction, it becomes necessary to convert into any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "Judgment Currency") an amount due in the Obligation Currency under the Notes, the conversion shall be made, at the option of the Relevant Bank, at the rate of exchange prevailing on the Business Day immediately preceding the day on which the judgment is given (such Business Day as the case may be, being hereinafter in this Section 7.6 referred to as the "Judgment Currency Conversion Date"). (b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Company agrees to pay such additional amounts as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date. (c) Any amount due from the Company under the foregoing subparagraph will be due as a separate debt and shall not be affected by judgment being obtained for any other sums due otherwise hereunder. 7.7 INCREASED TAX COSTS. The Company agrees to make all payments or reimbursements under this Agreement free and clear of, and without deduction for, any future taxes (including withholding taxes) imposed (except for any tax or changes in the rate of tax imposed on overall income of any Bank) on payments of principal, interest and fees or charges under the Agreement which are attributable to, or represent, the application of any such tax for any time period after the Company has received notice of such tax from such Bank. Such Bank will use its reasonable efforts to minimize any taxes and will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such tax(es) and will not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank or contrary to its stated policies. In the event that the Company is required to directly pay any such taxes, the Company agrees to furnish such Bank with official tax receipts evidencing payment of such taxes within forty-five (45) days after the due date for each such payment. Each Bank agrees that in the event that any such additional amount paid or reimbursed by the -11- 40 Company to or for such Bank in respect of any taxes be recovered, in whole or in part, by such Bank (by credit, offset, deduction or otherwise), against or in computing any income, franchise or other taxes, such Bank will promptly reimburse the Company the amount of such recovery. A transferee of any interest in the Agreement or the Notes shall not be entitled to the benefits of this Section 7.7 with respect to any taxes which would not have been incurred if there had been no transfer. SECTION 8 WARRANTIES. The Company warrants to the Banks as of the date of this Agreement that: 8.1 CORPORATE ORGANIZATION. The Company is a corporation duly incorporated and in good standing under the laws of the State of Ohio and the Company is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction of the United States where, because of the nature of its activities or properties, such qualification is required and where the failure to be so qualified would materially and adversely affect the consolidated financial condition of the Company and its Consolidated Subsidiaries taken as a whole. 8.2 AUTHORIZATION; NO CONFLICT. The execution, delivery, and performance by the Company of this Agreement and the Notes are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not and will not contravene or conflict with any provision of applicable law in effect on the date hereof or of the Amended Articles of Incorporation or Regulations of the Company or of any agreement for borrowed money or other material agreement binding upon the Company. The Company has duly executed and delivered this Agreement. 8.3 VALIDITY AND BINDING NATURE. This Agreement is, and the Notes when duly executed and delivered will be, legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. 8.4 FINANCIAL STATEMENTS. The Company's audited consolidated financial statements as at December 31, 1991 and its unaudited consolidated financial statements as at March 31, 1992, copies of which have been furnished to each Bank, have been prepared in accordance with GAAP, applied on a basis consistent with that of the preceding fiscal year, and fairly present in all material respects the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries as of the dates and for the periods indicated, as applicable, and since the dates thereof until the date of this Agreement there has been no material adverse change in the consolidated financial condition of the Company and its Consolidated Subsidiaries taken as a whole. 8.5 LITIGATION. Except as set forth in Schedule 8.5, there are no material legal proceedings, other than ordinary routine litigation incidental to the business, to -12- 41 which the Company or any of its Consolidated Subsidiaries is a party or to which any of their respective properties is subject that are required to be disclosed in the Company's periodic reports under the Securities Exchange Act of 1934 and that have not been so disclosed. 8.6 COMPLIANCE WITH ERISA. Each member of the controlled group of corporations (as defined in Section 414(b) of the Internal Revenue Code of 1986), which includes the Company (the "TRW Group"), has (i) fulfilled its obligations under the minimum funding standards of Part 3 of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA") and Section 412 of the Internal Revenue Code of 1986 ("Code") with respect to each defined benefit plan (as defined in Section 3 (35) of ERISA) maintained by a member of the TRW Group ("Plan") and (ii) is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each such Plan. No member of the TRW Group has (x) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Plan, (y) failed to make any contribution or payment required to be made to a Plan or to any multi-employer plan (as defined in Section 3 (37)(A) of ERISA) or made any amendment to any Plan which has resulted or could result in the imposition of a lien or the posting of a bond or other security under ERISA or the Code or (z) incurred any liability under Title IV of ERISA other than the liability to the Pension Benefit Guaranty Corporation for premiums under Section 4007 of ERISA. 8.7 ENVIRONMENTAL MATTERS. The Company has conducted periodic reviews of the effect of compliance with federal, state and local requirements relating to the discharge of materials into the environment, in the course of which it has identified and evaluated potential liabilities and costs. The Company has established accruals for matters that are probable and reasonably estimable as required by FASB Statement No. 5, "Accounting for Contingencies." To the Company's knowledge, any liability that may result from the resolution of known environmental matters in excess of amounts accrued therefor will not have a material adverse effect on the financial position of the Company. 8.8 TAXES. The Company and its Consolidated Subsidiaries have filed all United States federal income tax returns and all other material tax returns which are required to have been filed by them (subject to any available extensions) and have paid all taxes indicated as due on such returns. The Company has made adequate and reasonable provision for all material taxes not yet due and payable, if any, and all material assessments, if any. 8.9 GOVERNMENT REGULATION. Neither the Company nor any of its Consolidated Subsidiaries is registered as a public utility under the Public Utility Holding Company Act of 1935 or as an investment company under the Investment Company Act of 1940. -13- 42 SECTION 9 COVENANTS. Until the later of (i) the expiration or termination of the Commitments and (ii) all obligations of the Company hereunder and under the Notes are paid in full, the Company agrees that, unless at any time the Majority Banks shall otherwise expressly consent in writing: 9.1 REPORTS. CERTIFICATES AND OTHER INFORMATION. 9.1.1 AUDIT REPORT. Within 120 days after each fiscal year of the Company, the Company will provide to each Bank a copy of the Company's Annual Report to Shareholders and its Annual Report on Form 10-K for the year then ended, as filed with the Securities and Exchange Commission and which will include an annual audit report of the Company, prepared on a consolidated basis and in accordance with the Company's then current method of accounting, which methods must be in accordance with GAAP, duly certified by independent certified public accountants of nationally recognized standing selected by the Company. 9.1.2 QUARTERLY REPORTS. Within 60 days after each quarter (except the last quarter) of each fiscal year of the Company, the Company will provide to each Bank a copy of the Company's Quarterly Report on Form 10-Q for the quarter then ended, as filed with the Securities and Exchange Commission. 9.1.3 COMPLIANCE CERTIFICATES. Contemporaneously with the furnishing of a copy of each Annual Report on Form 10-K provided for in Section 9.1.1 and of each Quarterly Report on Form 10-Q provided for in Section 9.1.2, the Company will provide to each Bank a duly completed certificate in the form of Exhibit B with appropriate insertions (each such certificate called a "Compliance Certificate"), dated not more than 10 days prior to the date furnished, signed by an officer of the Company, showing compliance with the Consolidated Net Worth covenant set forth in Section 9.2, and to the effect that no Event of Default or Unmatured Event of Default has occurred and is continuing or, if there is any such an event, describing it and the steps, if any, being taken to cure it. 9.1.4 CURRENT REPORTS. The Company will provide to each Bank copies of each Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission, promptly upon the filing thereof. 9.1.5 OTHER INFORMATION. The Company will provide to a Bank such other information concerning the Company as such Bank may reasonably request from time to time. 9.2 NET WORTH. The Company will not permit Consolidated Net Worth to be less than 1,600,000,000 U.S. Dollars less an amount equal to the lesser of (i) the aggregate amount expended by the Company subsequent to December 31, 1995 for the repurchase of its common stock and (ii) 600,000,000 U.S. Dollars. -14- 43 9.3 LIENS. (a) The Company will not, and will not permit any Domestic Subsidiary to, directly or indirectly, create or assume any mortgage, encumbrance, lien, pledge, charge, or security interest of any kind (collectively and individually, a "mortgage" or "lien") upon or in any of its interests in any Principal Property or upon or in any shares of capital stock or indebtedness of any Domestic Subsidiary, whether such interest, capital stock or indebtedness is now owned or hereafter acquired, if such mortgage secures or is intended to secure, directly or indirectly, the payment of any indebtedness for money borrowed evidenced by notes, bonds, debentures, or other written evidences of indebtedness (such indebtedness for money borrowed being hereafter in Sections 9.3 and 9.4 collectively called "Debt") without making effective provision, and the Company in such case will make or cause to be made effective provision, whereby all of the Loans shall be secured by such mortgage equally and ratably with any other Debt thereby secured; excluding, however, from the operation of this Section 9.3: (i) mortgages on any Principal Property acquired, constructed, or improved by the Company or any Domestic Subsidiary after July 1, 1992 which are created or assumed contemporaneously with, or within 120 days after, such acquisition or completion of such construction or improvement to secure or provide for the payment of any part of the purchase price of such Principal Property or the cost of such construction or improvement incurred after July 1, 1992, or, in addition to mortgages contemplated by clauses (ii) and (iii) below, mortgages on any such Principal Property existing at the time or placed thereon at the time of acquisition or leasing thereof by the Company or any Domestic Subsidiary, or conditional sales agreements or other title retention agreements with respect to any Principal Property now owned or leased or hereafter acquired or leased by the Company or a Domestic Subsidiary; (ii) mortgages on property (including shares of capital stock or indebtedness of a corporation) of a corporation existing at the time such corporation becomes a Domestic Subsidiary or is merged or consolidated with the Company or a Domestic Subsidiary or existing at the time of a sale, lease, or other disposition of the properties of such corporation (or a division thereof) or other Person as an entirety or substantially as an entirety (which includes the sale, lease, or other disposition of all or substantially all the assets thereof) to the Company or a Domestic Subsidiary, provided that no such mortgage shall extend to any other Principal Property of the Company or any Domestic Subsidiary or to any shares of capital stock or any indebtedness of any Domestic Subsidiary; -15- 44 (iii) mortgages created by the Company or a Domestic Subsidiary to secure indebtedness of the Company or a Domestic Subsidiary to the Company or to a Wholly Owned Domestic Subsidiary; (iv) mortgages in favor of the United States of America or any State, territory or possession thereof, or any foreign country or any department, agency, instrumentality, or political subdivision of any of such domestic or foreign jurisdictions to secure partial, progress, advance, or other payments pursuant to any contract or statute or to secure any debt incurred for the purpose of financing all or any part of the purchase price of, or the cost of constructing, the property subject to such mortgages; and (v) mortgages for the sole purpose of extending, renewing, or replacing (or successively extending, renewing, or replacing) in whole or in part any mortgage existing on July 1, 1992 or referred to in the foregoing clauses (i) to (iv) inclusive or of any debt secured thereby; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal, or replacement, and that such extension, renewal, or replacement mortgage shall be limited to all or a part of the property which secured the mortgage so extended, renewed, or replaced (plus improvements on such property). (b) Notwithstanding the provisions of paragraph (a) of this Section 9.3, the Company or any Domestic Subsidiary may, without equally and ratably securing all the Loans, create or assume mortgages which would otherwise be subject to the foregoing restrictions if at the time of such creation or assumption, and after giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated Net Tangible Assets determined as of a date not more than 90 days prior thereto. 9.4 SALE AND LEASEBACK. (a) The Company will not, and will not permit any Domestic Subsidiary to, sell, lease or transfer any Principal Property owned by the Company or a Domestic Subsidiary as an entirety, or any substantial portion thereof, to anyone other than a Wholly Owned Domestic Subsidiary (or the Company or a Wholly Owned Domestic Subsidiary in the case of a Domestic Subsidiary) with the intention of taking back a lease of such property (herein referred to as a "Sale and Leaseback Transaction") except a lease for a period of not more than 36 months by the end of which it is intended that the use of such property by the lessee will be discontinued; provided, that, notwithstanding the foregoing, the Company or any Domestic Subsidiary may sell any such property and lease it back if the net proceeds of such sale are at least equal to the fair value (as determined by resolution adopted by the Board of Directors of the -16- 45 Company) of such property, and (i) the Company or such Domestic Subsidiary would be entitled pursuant to paragraph (a) of Section 9.3 to create Debt secured by a mortgage on the property to be leased in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction without equally and ratably securing all the Loans, or (ii) if such sale or transfer does not come within the exception provided by the preceding clause (i), the net proceeds of such sale shall, and in any such case the Company covenants that they will, within 120 days after such sale, be applied (to the greatest extent possible) either to the repayment of the Loans then outstanding when due (whereupon the Commitments hereunder shall be reduced, on a pro rata basis, to the extent that such net proceeds are so applied) or to the retirement of other Consolidated Funded Debt of the Company ranking at least on a parity with the Loans, or in part to one or more of such alternatives and in part to another. (b) Notwithstanding the provisions of paragraph (a) of this Section 9.4, the Company or any Domestic Subsidiary may enter into Sale and Leaseback Transactions if, at the time of such entering into, and after giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated Net Tangible Assets determined as of a date not more than 90 days prior thereto. 9.5 MERGERS, CONSOLIDATIONS, SALES. The Company shall not consolidate with, or sell or convey all or substantially all its assets to, or merge into, any other Person, unless (a) the Company is the surviving corporation of such transaction; or (b) the Company is the nonsurviving party to a merger or consolidation, the primary purpose of which is to effect a reincorporation of the Company under the laws of another state. SECTION 10 CONDITIONS OF LENDING. The obligation of each Bank to make its Loans is subject to the following conditions precedent: 10.1 INITIAL LOAN TO THE COMPANY. The obligation of each Bank to make its initial Loan to the Company is, in addition to the conditions precedent specified in Section 10.3, subject to the condition precedent that such Bank shall have received all of the following, each duly executed and dated the date of such Loan (or such earlier date as shall be satisfactory to such Bank), in form and substance satisfactory to such Bank: 10.1.1 NOTE. The Note of the Company payable to the order of such Bank, substantially in the form of Exhibit A. 10.1.2 RESOLUTIONS. Certified copies of resolutions of the Board of Directors of the Company authorizing the Company to obtain Loans hereunder. -17- 46 10.1.3 INCUMBENCY AND SIGNATURES. A certificate of the Secretary or an Assistant Secretary of the Company certifying the names of the officer or officers of the Company who have signed or will sign this Agreement, the Notes, and other documents provided for in this Agreement to be executed by the Company, together with a sample of the true signature of each such officer, and a certificate of authorization setting forth each Person who is authorized to effect Loans and other transactions hereunder, together with a sample of the true signature of each such Authorized Person. Each Bank may conclusively rely on such certificates until it shall have received notice to the contrary. 10.1.4 OPINION OF COUNSEL. The opinion of counsel to the Company, substantially in the form of Exhibit C. 10.2 LOANS TO DESIGNATED SUBSIDIARIES. The obligation of each Bank to make any Loans to any Designated Subsidiary is subject to the condition precedent that such Bank shall have received the following: 10.2.1 RESOLUTIONS. A certified copy of the resolutions of the appropriate governing body of the Designated Subsidiary that requested the Loan authorizing it to obtain Loans hereunder or such other evidence of corporate authority as is customary in the country of domicile of the Designated Subsidiary. 10.2.2 ACCEPTANCE OF THIS AGREEMENT. A letter signed by an authorized officer of such Designated Subsidiary evidencing its agreement to be bound by the terms of this Agreement with respect to each Loan made to it hereunder. 10.2.3 INCUMBENCY AND SIGNATURES. A certificate of the Secretary or an Assistant Secretary of the Designated Subsidiary certifying the name and signature of the officer or officers of the Designated Subsidiary who have signed or will sign the letter referenced in Section 10.2.2, together with a sample of the true signature of each such officer, and a certificate of authorization setting forth each Person who is authorized to effect Loans and other transactions hereunder, together with a sample of the true signature of each such Authorized Person. Each Bank may conclusively rely on such certificates until it shall have received notice to the contrary. 10.3 ALL LOANS. The obligation of each Bank to make any Loan hereunder is subject to the further conditions precedent that: (a) No Event of Default or Unmatured Event of Default has occurred and is continuing or will result from the making of such Loan, and (b) the warranties of the Company contained in Sections 8.1, 8.2, and 8.3, are true and correct as of the date of such requested Loan, with the same effect as though made on the date of such Loan. -18- 47 10.4 CONVERSIONS. Except for Section 10.3(a), the conditions set forth in Sections 10.1, 10.2, and 10.3 shall not apply to the Conversion of Loans from one type to another type or Continuation of Loans. SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT. 11.1 EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: 11.1.1 NONPAYMENT OF NOTES OR FEES. Default in the payment when due of any principal of any Note or default in the payment when due of interest on any Note or fees payable by the Company hereunder and continuance of such failure to pay interest or fees for five Business Days after written notice thereof to the Company from the Bank to which such amounts are owed. 11.1.2 NONPAYMENT OF OTHER INDEBTEDNESS FOR BORROWED MONEY. Default in the payment when due at maturity (subject to any applicable grace period) or by acceleration of any other indebtedness for borrowed money having a principal amount in excess of 50,000,000 U.S. Dollars of, or guaranteed by, the Company, or default in the performance or observance of any obligation or condition with respect to any such other indebtedness if such default results in the acceleration of the maturity of any such indebtedness; provided, that, if such default shall subsequently be remedied, cured, or waived prior to either the termination of Commitments or the declaration that all Loans are immediately due and payable, in each case pursuant to Section 11.2 hereof, and as a result the payment of such indebtedness is no longer due, the Event of Default existing hereunder by reason thereof shall likewise be deemed thereupon to be remedied, cured, or waived and no longer in existence, all without any further action by the parties hereto. 11.1.3 BANKRUPTCY OR INSOLVENCY. The Company generally fails to pay, or admits in writing its inability to pay, debts as they become due; or the Company applies for, consents to, or acquiesces in the appointment of, a trustee, receiver, or other custodian for the Company or for a substantial part of the property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver, or other custodian is appointed for the Company or for a substantial part of the property of the Company; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding is commenced in respect of the Company and if such case or proceeding is not commenced by the Company, it is consented to or acquiesced in by the Company or remains for 90 consecutive days undismissed or unstayed; or the Company takes any corporate action to authorize any of the foregoing. 11.1.4 NONCOMPLIANCE WITH OTHER PROVISIONS. Failure by the Company to comply with or to perform in any material respect any other -19- 48 provision of this Agreement (and not constituting an Event of Default under any of the preceding provisions of this Section 11.1) and continuance of such failure for 30 days after written notice thereof to the Company from the Majority Banks. 11.1.5 WARRANTIES. Any warranty made by the Company in Sections 8 or 14.16 of this Agreement is breached or is incorrect when made in any material respect and the Company shall fail to take corrective actions reasonably satisfactory to the Majority Banks within 30 days after written notice thereof to the Company from the Majority Banks, except only in the case of a breach of the warranties contained in Section 8 or 14.16 made on the date of this Agreement, in which case there shall be no opportunity to take corrective actions. 11.1.6 JUDGMENTS. Any final and unappealable judgment or order from a judicial or administrative body (which order or judgment is fully enforceable against the Company or any of its Consolidated Subsidiaries in courts of the United States of America or any state thereof) for the payment of money in excess of 50,000,000 U.S. Dollars (after adjustments to reflect reductions for credits and set-offs asserted in good faith by the Company) shall be rendered against the Company, shall not have been discharged or vacated and shall have been in effect, in its final and unappealable form, for a period of 30 consecutive days. 11.2 EFFECT OF EVENT OF DEFAULT. If any Event of Default described in Section 11.1.3 shall occur, the Commitments (if they have not theretofore terminated) shall immediately terminate and all Loans and Notes shall automatically become immediately due and payable, all without notice of any kind; and, in the case of any other Event of Default, the Majority Banks may declare the Commitments (if they have not theretofore terminated) to be terminated and the Outstanding Majority Banks may declare that all Loans and Notes shall become immediately due and payable. The Majority Banks and the Outstanding Majority Banks shall promptly advise the Company in writing of any such declaration. Following the declaration that all Loans and Notes are immediately due and payable, all payments made by the Company on account of the Loans and Notes shall be made to the Administrator, which shall distribute such payments on a pro rata basis (in relation to the amounts of outstanding Loans) to Banks with outstanding Loans. Following such declaration, if any Bank receives a payment that is not on a pro rata basis, such Bank will remit to the Administrator any amount in excess of its pro rata portion. Upon receipt of any such remittance, the Administrator will distribute such amount to the Banks with outstanding Loans in order that all distributions will be pro rata. The effect as an Event of Default of any event described in Section 11.1.1 or Section 11.1.3 may be waived only by the written concurrence of the holders of 100% of the aggregate unpaid principal amount of the Notes and the Majority Banks, and the effect as an Event of Default of any other event described in this Section 11 may be waived by the written concurrence of the Majority Banks and the Outstanding Majority Banks. -20- 49 SECTION 12 GUARANTY. The Company hereby unconditionally, absolutely and irrevocably guarantees, as primary obligor and not merely as surety, the repayment to each Relevant Bank, when due pursuant to the terms and conditions of this Agreement, of the amount of any Loan made pursuant to this Agreement to a Designated Subsidiary, together with accrued interest on such Loan; provided, however, that before any amount shall be deemed due and payable pursuant to this Section 12, the Relevant Bank must first give notice to the Company of the nonpayment by the Designated Subsidiary, and the Company shall have five Business Days from the receipt of such notice to cure or cause to be cured any and all such nonpayments. The Company's obligations hereunder constitute a guaranty of payment and not of collection merely. The Company hereby waives notice of, and consents to, any extensions of time of payment, renewals, compromises, settlements, releases or other indulgences from time to time granted by the Relevant Bank in respect of Loans made to Designated Subsidiaries. Except as otherwise provided in this Section 12, the Company hereby waives presentment, protest, demand of payment, notice of dishonor and all notices and demands whatsoever. The obligations of the Company hereunder shall not be released, discharged or otherwise affected by (i) any change in the corporate existence or constitution, structure or ownership of any Designated Subsidiary or the Company, (ii) any insolvency, bankruptcy, reorganization or similar proceeding affecting the Designated Subsidiary or its assets or the Company or (iii) the existence of any claim, set-off or other rights which the Company may have at any time against the Relevant Bank or any other person. If at any time any payment of any obligation guaranteed hereunder is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of a Designated Subsidiary or otherwise, the Company's obligations under this Section 12 with respect to such payment shall be reinstated at such time as though such payment had not been made. The Company shall not exercise any of its subrogation rights with respect to amounts paid to a Relevant Bank pursuant to this Section 12 until all amounts guaranteed hereunder payable to such Relevant Bank have been paid in full. Following such payment in full with regard to a Relevant Bank, the Company shall be entitled to subrogation in the Relevant Bank's rights and, upon the reasonable request of the Company, the Relevant Bank agrees to cooperate with the Company in enforcement of the Company's subrogation rights, including the transfer and delivery by the Relevant Bank to the Company of any and all evidence of indebtedness relating to such Loan within the possession or control of the Relevant Bank. SECTION 13 CERTAIN DEFINITIONS. When used herein the following terms shall have the following meaning: "AFFILIATE" means, with respect to a particular Person, any Person which, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, control of a Person shall mean the power to -21- 50 direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "AGREEMENT" means this Agreement, as it may be amended, modified, or supplemented and in effect from time to time. "APPLICABLE COMMITMENT FEE" means the percentage in effect from time to time as set forth in the following table opposite the highest of the then-current rating assigned to the Company's senior unsecured long-term debt by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"):
Rating Applicable (Moody's/S&P) Commitment Fee ------------- -------------- higher than A1/A+ 0.060% A1/A+ 0.070% A2/A 0.080% A3/A- 0.090% Baa1/BBB+ 0.100% Baa2/BBB 0.125% Baa3/BBB- 0.150% lower than Baa3/BBB- 0.175%
"APPLICABLE MARGIN" means, at any time, the percentage set forth in the following table opposite the highest of the then-current rating assigned to the Company's senior unsecured long-term debt by Moody's or S&P:
Applicable Applicable Margin for Margin for Rating Domestic CD Eurocurrency (Moody's/S&P) Loans Loans - ------------------------------------------------------------------------------- higher than A1/A+ 0.275% 0.175% A1/A+ 0.300% 0.200% A2/A 0.325% 0.225% A3/A- 0.350% 0.250% Baa1/BBB+ 0.400% 0.300% Baa2/BBB 0.475% 0.375% Baa3/BBB- 0.550% 0.450% lower than Baa3/BBB- 0.600% 0.500%
"ASSESSMENT RATE" means, for any Domestic CD Loan (and for the purpose of computing the Domestic CD Rate (Adjusted)), the annual assessment rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) applicable to the Relevant Bank on its insured deposits under the Federal Deposit Insurance Act, determined by annualizing the most recent assessment levied on the Relevant -22- 51 Bank by the Federal Deposit Insurance Corporation (the "FDIC") with respect to such deposits, after giving effect to the most recent rebate granted to the Relevant Bank by the FDIC with respect to deposit insurance as well as the loss to the Relevant Bank (determined in the good faith judgment of the Relevant Bank) of the use of such rebate prior to the date credit is taken by the Relevant Bank with respect to such rebate. "ATTRIBUTABLE DEBT" means, as to any particular lease under which any Person is liable at the time and at any date as of which the amount thereof is to be determined, the lesser of (a) the fair value of the property subject to such lease (as determined by the Directors of the Company) or (b) the total net amount of rent required to be paid by such Person under such lease during the remaining term thereof, discounted from the respective due dates thereof to such date at the actual interest factor included in such rent. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of the rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. "AUTHORIZED PERSON" means, as to the Company, any person designated as such in a certificate signed by the Chief Financial Officer, Treasurer, or Assistant Treasurer of the Company, and, as to any Designated Subsidiary, means any person designated as such in a certificate signed by one or more officers of the Designated Subsidiary, as authorized by resolution of the Designated Subsidiary or otherwise by law. "BANKS" or "BANK" - see Preamble. "BASE RATE" means the higher of (i) the rate of interest per annum publicly announced and in effect from time to time by the Relevant Bank at its Domestic Office identified on the signature pages hereto as its prime, base or reference rate for U.S. Dollar Loans or (ii) the Federal Funds Rate plus the Applicable Margin for Eurocurrency Loans. The Base Rate shall change simultaneously with each change in such announced prime, base or reference rate and Federal Funds Rate, as applicable. The Base Rate may not be the lowest rate charged by the Relevant Bank for commercial or other extensions of credit. "BASE RATE LOAN" means any Loan of U.S. Dollars that bears interest at or by reference to the Relevant Bank' s Base Rate. "BUSINESS DAY" means (i) in the case of a Business Day that relates to a Eurocurrency Loan, any day of the year on which banks are open for business in both New York and, with regard to any such Bank only, the city in which the applicable Eurocurrency Office of such Bank is located and on which dealings are -23- 52 carried on in the interbank eurocurrency market; (ii) in the case of a Business Day that relates to a Base Rate Loan, a Domestic CD Loan, or a Negotiated Loan, any day of the year on which banks are open for business in both New York and, with regard to any such Bank only, the city in which the applicable Domestic Office of such Bank is located; and (iii) in the case of a Business Day that relates to a Local Currency Loan, any day of the year on which the local office of the Relevant Bank in that locality is open for business. "COMMITMENT(S)" means the commitments of the Banks to make Loans hereunder; and Commitment as to any Bank shall mean the commitment of such Bank to make Loans hereunder in an aggregate amount not to exceed the U.S. Dollar amount set forth opposite its signature hereto or any subsequent amendment hereto. "COMPANY" - see Preamble. "COMPLIANCE CERTIFICATE" - see Section 9.1.3 and Exhibit B. "CONSOLIDATED FUNDED DEBT" means the Funded Debt of the Company and its Consolidated Subsidiaries consolidated in accordance with GAAP. "CONSOLIDATED NET TANGIBLE ASSETS" means the total of all assets of the Company and its Consolidated Subsidiaries appearing on a consolidated balance sheet prepared in accordance with GAAP, including the equity in and the net amount of advances to other Subsidiaries, after deducting therefrom (without duplication of deductions) as shown on such balance sheet, the sum of: (i) intangible assets, including goodwill, cost of acquired businesses in excess of recorded net assets at acquisition dates, patents, licenses, trademarks, trade names, copyrights, unamortized debt discount and expense less unamortized debt premium, and corporate organization expense (but excluding deferred charges and prepaid expense); (ii) any write-up of the book value of any assets (other than equity in Subsidiaries which are not Consolidated Subsidiaries and other than as a result of currency revaluations) resulting from the revaluation thereof subsequent to March 31, 1992; (iii) all liabilities of the Company and its Consolidated Subsidiaries other than: Funded Debt; capital stock; surplus; surplus reserves; reserves for deferred Federal income taxes arising from accelerated depreciation, investment and other tax credits, and similar provisions; and contingency reserves not allocated for any particular purpose; (iv) reserves for depreciation and amortization and other reserves (other than the reserves referred to in the preceding clause(iii) ); and -24- 53 (v) any minority interest in the shares of stock and surplus of any Consolidated Subsidiary. "CONSOLIDATED NET WORTH" means at any date the sum of the consolidated shareholders' investment and minority interests of the Company and its Consolidated Subsidiaries determined as of such date. Consolidated shareholders' investment and minority interests of the Company shall be as included in the annual and quarterly financial statements of the Company, as applicable. "CONSOLIDATED SUBSIDIARY" means each Subsidiary other than (a) any Subsidiary the accounts of which (i) are not required by GAAP to be consolidated with those of the Company for financial reporting purposes and (ii) were not consolidated with those of the Company in the Company's then most recent Annual Report to Shareholders and are not intended by the Company to be consolidated with those of the Company in its next Annual Report to Shareholders, or (b) any Subsidiary the primary business of which consists of financing the sale or lease of merchandise, equipment or services by the Company or any Subsidiary or owning, leasing, dealing in or developing real property, or providing services directly related thereto, or which is otherwise primarily engaged in the business of a finance or real estate company. "CONTINUE," "CONTINUATION" AND "CONTINUED" shall refer to a continuation of Loans pursuant to Section 1.5. "CONVERT," "CONVERSION" AND "CONVERTED" shall refer to a conversion of Loans pursuant to Sections 1.5, 3.3, 7.3, or 7.4. "DEBT" - see SECTION 9.3. "DESIGNATED SUBSIDIARY" means any Subsidiary of the Company which (i) the Company from time to time designates in writing signed by the Chief Financial Officer, Treasurer, or Assistant Treasurer of the Company as a Designated Subsidiary entitled to receive Eurocurrency and Local Currency Loans hereunder and (ii) the Relevant Bank has not objected in writing to such designation of a Designated Subsidiary within thirty (30) days of the Relevant Bank's receipt of the Company's designation. Such designation shall contain the address of the Subsidiary which shall be used to give notice to the Subsidiary pursuant to Section 14.3. "DOMESTIC CD LOAN" shall mean any Loan of U. S. Dollars that bears interest at a rate determined by reference to the Relevant Bank's Domestic CD Rate (Adjusted). "DOMESTIC CD RATE" means, with respect to any Interest Period for any Domestic CD Loan, the rate of interest determined by the Relevant Bank to be the average (rounded upward, if necessary, to the nearest 1/100 of 1%) of the rates quoted to the Relevant Bank on the first day of such Interest Period by two certificate of -25- 54 deposit dealers in New York of recognized standing selected by the Relevant Bank for the purchase from the Relevant Bank or major commercial banks at face value of certificates of deposit issued by the Relevant Bank in an amount equal or comparable to the amount of the Domestic CD Loan and having a maturity equal to such Interest Period; provided, that, if such quotations from such dealers are not available to the Relevant Bank, it shall determine a reasonably equivalent rate on the basis of another source or sources selected by it. "DOMESTIC CD RATE (ADJUSTED)" means, with respect to any Interest Period for any Domestic CD Loan, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Domestic CD Domestic CD = Rate + Assessment Rate (Adjusted) --------------- Rate (1 - Reserve Requirement) "DOMESTIC OFFICE" means, with respect to any Bank, the office of such Bank or Affiliate of such Bank, designated as such under such Bank's signature hereto, or such other office of such Bank or Affiliate of such Bank, as such Bank may hereafter from time to time designate as its Domestic Office. "DOMESTIC SUBSIDIARY" means each Consolidated Subsidiary other than: (a) any Consolidated Subsidiary which the Directors of the Company reasonably determine not to be material to the business or financial condition of the Company; (b) any Consolidated Subsidiary the major portion of the assets of which are located, or the major portion of the business of which is carried on, outside the United States of America, its territories and possessions; (c) any Consolidated Subsidiary which, during the 12 most recent calendar months (or such shorter period as shall have elapsed since its organization) derived the major portion of its gross revenues from sources outside the United States of America; (d) any Consolidated Subsidiary the major portion of the assets of which consists of securities or obligations, or both, of one or more corporations (whether or not Consolidated Subsidiaries) of the types described in the preceding clauses (b) and (c); and (e) any Consolidated Subsidiary organized after March 31, 1992 which the Company intends shall be operated in such manner as to come within one or more of the preceding clauses (b), (c) and (d). "ELECTRONIC PAYMENT INSTRUCTIONS" means the Bank Routing and account number information identifying the account of each Bank to receive the ACH payment of Commitment Fees. Such Electronic Payment Instructions for each Bank are set forth below the signature block of such Bank to the Amendment dated as of May 8, 1996 to the Agreement and may be changed at any time by written notice by such Bank to the Company. "EUROCURRENCY" means any freely transferable and convertible currency on deposit outside the country of issuance. -26- 55 "EUROCURRENCY LOAN" means any Loan of a Eurocurrency that bears interest at a rate determined by reference to the Relevant Bank's Eurocurrency Rate (Reserve Adjusted). "EUROCURRENCY OFFICE" means, with respect to any Bank, the office of such Bank or Affiliate of such Bank, designated as such under such Bank's signature hereto, or such other office of such Bank or Affiliate of such Bank, as such Bank may hereafter from time to time designate as its Eurocurrency Office. A Eurocurrency Office may be, at the option of such Bank, either a domestic or foreign office of such Bank or a domestic or foreign office of an affiliate of such Bank. "EUROCURRENCY OR LOCAL CURRENCY EQUIVALENT AMOUNT" means, in the case of a Eurocurrency or Local Currency, on any Business Day, the amount of such currency which would be freely converted into a specified amount of U.S. Dollars, computed at the spot buying rate for dollars of the Relevant Bank at the close of business on such day. "EUROCURRENCY RATE" means, with respect to any Eurocurrency Loan for any Interest Period, the rate per annum equal to the rate per annum at which deposits of the currency of the Loan in immediately available funds are offered by the Eurocurrency Office of the Relevant Bank two Business Days prior to the beginning of such Interest Period to major banks in the interbank eurocurrency market of such Eurocurrency Office for delivery on the first day of such Interest Period and for the number of days comprised therein and in an amount equal or comparable to the amount of the Eurocurrency Loan of the Relevant Bank for such Interest Period. "EUROCURRENCY RATE (RESERVE ADJUSTED)" means, with respect to any Eurocurrency Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurocurrency Rate = Eurocurrency Rate (Reserve Adjusted) ----------------- l-Eurocurrency Reserve Percentage "EUROCURRENCY RESERVE PERCENTAGE" means, with respect to each Interest Period, that percentage (expressed as a decimal) prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining reserve requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable regulation of the Board of Governors that prescribes reserve requirements applicable to "Eurocurrency Liabilities" as presently defined in Regulation D. "EVENT OF DEFAULT" means any of the events described in Section 11.1. "EXEMPTED INDEBTEDNESS" means, as of any particular time, the sum of (i) the aggregate principal amount of all then outstanding indebtedness for borrowed money of the Company and Domestic Subsidiaries incurred after July 1, 1992 and -27- 56 secured by any mortgage, security interest, pledge or lien other than those permitted by paragraph (a) of Section 9.3 and (ii) all Attributable Debt pursuant to Sale and Leaseback Transactions (as defined in Section 9.4) incurred by the Company and Domestic Subsidiaries after July 1, 1992 at such time outstanding other than that which is not prohibited by or is permitted pursuant to paragraph (a) of Section 9.4. "FEDERAL FUNDS RATE" means, for any Interest Period selected by the Company, the average of rates for Federal funds for the Interest Period quoted to the Relevant Bank by two leading brokers of Federal funds transactions in New York City. "FIXED RATE LOAN(S)" - see Section 1.3. "FUNDED DEBT" means all indebtedness for money borrowed having a maturity of more than 12 months from the date such indebtedness was incurred or having a maturity of 12 months or less but by its terms being renewable or extendable beyond 12 months from the date such indebtedness was incurred at the option of the borrower. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "INTEREST PERIOD" means, with respect to any Fixed Rate Loan, the period commencing on the date such Loan was made, or on the date such Loan was Converted from a Loan of a different type, or on the date of expiration of the immediately preceding Interest Period for such Loan, and (i) ending 30, 60, 90, 120, 150, 180 days, or, if available, more than 180 days up to and including 360 days, thereafter in the case of a Domestic CD Loan, or (ii) ending one, two, three, or six months, or, if available, more than six months up to and including twelve months, thereafter in the case of a Eurocurrency Loan, all as the Company or any Designated Subsidiary may specify pursuant to Section 1.4, 1.5, or 3.3; the Interest Period for any Negotiated Loan or any Local Currency Loan shall be as agreed by the Company or any Designated Subsidiary and the Relevant Bank pursuant to Section 1.6 or 1.7. Each Interest Period for a Fixed Rate Loan that would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day (unless such next succeeding Business Day is the first Business Day of a calendar month, in which case with respect to a Eurocurrency Loan such Interest Period shall end on the next preceding Business Day). "JUDGMENT CURRENCY" - see Section 7.6. "JUDGMENT CURRENCY CONVERSION DATE" - see Section 7.6. "LIEN" or "MORTGAGE" - see Section 9.3. "LOCAL CURRENCY" means, with respect to any Local Currency Loan, any legal currency of the nation where the Local Currency Loan is being funded. -28- 57 "LOCAL CURRENCY LOAN(S)" - see Section 1.7. "LOANS" or "LOAN" - see Section 1.1. "MAJORITY BANKS" means Banks having an aggregate Percentage of 66-2/3% or more. "NEGOTIATED LOAN(S)" - see Section 1.6. "NOTE(S)" - see Section 2.2 and Exhibit A. "OBLIGATION CURRENCY" - see Section 7.6. "OUTSTANDING MAJORITY BANKS" means Banks having 66-2/3% or more of the aggregate principal amount of Loans outstanding. "PERCENTAGE" means as to any Bank the percentage of such Bank's share of the total Commitments of all Banks. "PERSON" shall mean an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or any agency or political subdivision thereof), or other entity of any kind. "PRINCIPAL PROPERTY" means any single manufacturing plant, engineering facility or research facility owned or leased by the Company or a Domestic Subsidiary other than any such plant or facility or portion thereof which the Board of Directors reasonably determines not to be of material importance to the Company and its Subsidiaries taken as a whole. "PROPRIETARY INFORMATION" - see Section 14.5. "RELEVANT BANK" means, with respect to any Loan, the Bank that made the Loan, and, prior to the making of such Loan or requested Loan, any Bank that has been requested to make such Loan. "RESERVE REQUIREMENT" means, with respect to each Interest Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the aggregate reserve requirement (including all basic, supplemental, marginal, and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during such Interest Period) specified under Regulation D of the Board of Governors of the Federal Reserve System, or any other regulation of the Board of Governors which prescribes reserve requirements applicable to nonpersonal time deposits as presently defined in Regulation D, as then in effect, as applicable to the class of banks of which the Relevant Bank is a member, on deposits of the type used as a reference in determining the Domestic CD Rate and having a maturity approximately equal to such Interest Period. -29- 58 "SALE AND LEASEBACK TRANSACTION" - see Section 9.4. "SUBSIDIARY" means a corporation of which the Company and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than 50% of the ordinary voting power for the election of directors. "TERMINATION DATE" means the earlier to occur of (a) July 1, 2001, subject to extension for one or more successive one-year periods as to any Bank or Banks pursuant to Section 1.2, or (b) such other date on which the Commitments shall terminate pursuant to Section 11.2. "TYPE OF LOAN OR BORROWING" - see Section 1.3. The various types of Loans or borrowings available under this Agreement are as follows: Base Rate Loans or borrowings and Fixed Rate Loans or borrowings. Fixed Rate Loans or borrowings consist of Domestic CD Loans or borrowings, Eurocurrency Loans or borrowings, Negotiated Loans or borrowings, and Local Currency Loans or borrowings. "U.S. DOLLAR(S)" and the sign "$" shall mean lawful money of the United States of America. "UNMATURED EVENT OF DEFAULT" means any event that if it continues uncured will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default. "UNUSED AMOUNT" means the amount of the Commitment of the Relevant Bank less any outstanding Loans made by such Bank. Loans in an Obligation Currency other than U.S. Dollars will be translated into U.S. Dollars for purposes of this calculation at the spot rate for dollars published in THE WALL STREET JOURNAL on each day in which such Loan is outstanding (provided, that if such day is not a Business Day, the applicable spot rate for such day should be the spot rate on the Business Day immediately prior to such day). "WHOLLY OWNED DOMESTIC SUBSIDIARY" means each Domestic Subsidiary all the outstanding shares of which, other than directors' qualifying shares, shall at the time be owned by the Company, or by the Company and one or more Wholly Owned Domestic Subsidiaries, or by one or more Wholly Owned Domestic Subsidiaries. SECTION 14 GENERAL. 14.1 WAIVER; AMENDMENTS. No delay on the part of any Bank or the holder of any Note in the exercise of any right, power, or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power, or remedy preclude other or further exercise thereof, or the exercise of any other right, power, or remedy. No amendment, modification, or waiver of, or consent with respect to, any provision of this Agreement or the Notes shall in any event be -30- 59 effective unless the same shall be in writing and signed and delivered by Banks having an aggregate Percentage of not less than the aggregate Percentage expressly designated herein with respect thereto (or in the case of the Outstanding Majority Banks, the aggregate principal amount outstanding) or, in the absence of such designation as to any provision of this Agreement or the Notes, by the Majority Banks, and then any such amendment, modification, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment, modification, waiver, or consent (i) shall extend or increase the amount of the Commitments, the maturity of the Notes or reduce the fees hereunder or the rate of interest payable with respect to the Notes or reduce the aggregate Percentage required to effect an amendment, modification, waiver, or consent or eliminate the guaranty set forth in Section 12 hereof without the written consent of all of the Banks or (ii) shall extend the maturity or reduce the principal amount of, or rate of interest on, any Note without the written consent of the holder of such Note. Notwithstanding the foregoing, the Company may add one or more financial institutions as Bank parties to this Agreement, from time to time and without the consent of the then-current Bank parties to this Agreement; provided, that in no event will the aggregate amount of the Commitments of the new financial institutions exceed 125 million U.S. Dollars in excess of the Commitments as of the date hereof. Each such addition of a Bank shall be effective upon such Bank's written agreement to become a Bank party hereto and to be bound by the terms of this Agreement applicable to "Banks." The Company shall give the then-current Bank parties to this Agreement prompt notice of any change to the Bank's respective Percentages and Commitments resulting from the addition of any Bank as a party to, or the reduction of any Bank's Commitment under, this Agreement. 14.2 CONFIRMATIONS. The Company and each holder of a Loan agree from time to time, upon written request received by it from the other, to confirm to the other in writing the aggregate unpaid principal amount of Loans then outstanding to such holder. 14.3 NOTICES. Except as otherwise provided in Sections 1.3, 1.4, 1.5, 3.3, and 6.2, all notices hereunder shall be in writing. Notices given by mail shall be deemed to have been given three days after the date sent if sent by registered or certified mail, postage prepaid, and: (i) if to the Company, addressed to the Company at its address shown below its signature hereto; (ii) if to any Designated Subsidiary, addressed to it at the address given by the Company pursuant to its designation of such Subsidiary as a Designated Subsidiary entitled to receive Loans hereunder; or (iii) if to any Bank, addressed to such Bank at the address shown below its signature as its Domestic Office address; or in the case of each party, such other address as such party may, by written notice to the other parties to this Agreement, have designated as its address for notices. -31- 60 Notices given by facsimile, telegram, or telex shall be deemed to have been given when sent, if properly addressed to the party to whom sent, at its address, as aforesaid. Each Bank shall be entitled to rely upon all telephonic notices given by an Authorized Person pursuant to Sections 1.3, 1.4, 1.5, 3.3, or 6.2, and the Company shall hold each Bank harmless from any loss, cost, or expense ensuing from any such reliance, except for such loss, cost or expenses as a result of the Bank's gross negligence or willful misconduct. All notices, waivers, or consents given to, or any requests made upon, the Company by any Bank or holder of any Note shall be promptly notified to all other parties to this Agreement. Whenever a notice, declaration, or other action is required to be taken, given, or made by the Majority Banks or the Outstanding Majority Banks, such notice, declaration, or action shall be in writing and shall be signed by, as the case may be, Banks having an aggregate Percentage of 66-2/3% or more or Banks having 66-2/3% or more of the aggregate principal amount of Loans outstanding. 14.4 COMPUTATIONS. Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with the Company's then current method of accounting, which method must be in accordance with GAAP; provided, however, if any changes in accounting principles from those used in the preparation of the financial statements referred to in Section 8.4 hereafter occasioned by the promulgation of rules, regulations, pronouncements, and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) result in a change in the method of calculation of the financial covenants, standards, or terms found in Section 9.2 hereof, the parties hereto agree to enter into negotiations to amend such provisions so as equitably to reflect such changes with the desired result that the criteria for evaluating the Company's financial condition shall be the same after such changes as if such changes had not been made. 14.5 CONFIDENTIALITY. Unless the Company otherwise agrees in writing, each Bank hereby agrees to keep all Proprietary Information (as defined below) confidential and not to disclose or reveal any Proprietary Information to any Person other than the Bank's directors, officers, employees, Affiliates, and agents, and then only on a confidential basis; provided, however, that a Bank may disclose Proprietary Information (a) as required by law, rule, regulation, or judicial process, (b) to its attorneys and accountants, (c) as requested or required by any state, federal, or foreign authority or examiner regulating banks or banking, or (d) to actual or potential assignees or participants as permitted by Section 14.6.3. For purposes of this Agreement, the term "Proprietary Information" shall include all information about the Company, any Subsidiary, or any of their respective Affiliates which has been furnished by the Company, any Subsidiary, or any of their respective Affiliates, whether furnished before or after the date hereof, and -32- 61 regardless of the manner furnished; provided, however, that Proprietary Information shall not include information which (x) is or becomes generally available to the public other than as a result of a disclosure by a Bank not permitted by this Agreement, (y) was available to a Bank on a nonconfidential basis prior to its disclosure to such Bank by the Company, any Subsidiary, or any of their respective Affiliates, or (z) becomes available to a Bank on a nonconfidential basis from a Person other than the Company, any Subsidiary, or any of their respective Affiliates who, to the best knowledge of such Bank, is not otherwise bound by a confidentiality agreement with the Company, any Subsidiary, or any of their respective Affiliates, or, to the best knowledge of such Bank, is not otherwise prohibited from transmitting the information to such Bank. 14.6 Assignments and Participations. ------------------------------ 14.6.1 ASSIGNMENTS. Unless the Company otherwise consents in writing, which consent shall not be unreasonably withheld, no holder of any Note (including any Bank) shall assign or transfer such Note or any interest therein to any other Person, except as otherwise permitted under Section 14.6. Except as otherwise expressly agreed in writing by the Company, no Bank shall, by reason of the assignment or transfer of any Note or otherwise, be relieved of any of its obligations hereunder. Each transferee of any Note shall take such Note subject to the provisions of this Agreement and to any request made, waiver or consent given, or other action taken hereunder, prior to such transfer, by each previous holder of such Note; and the Company shall be entitled to conclusively assume that the transferee shall thereafter be vested with all rights and powers under this Agreement of the Bank named as the payee of the Note which is the subject of such transfer. Nothing herein shall prohibit any Bank from pledging or assigning any Note to any Federal Reserve Bank pursuant to applicable law. 14.6.2 PARTICIPATIONS. Any Bank may grant participations in or to all or any part of any Loan or Loans then owing to such Bank and the Notes held by such Bank without the consent of the Company. Except as otherwise expressly agreed in writing by the Company, no grant of a participation shall relieve any Bank of its obligations hereunder, the Company shall be entitled to deal solely with the Banks (and their respective assignees) for all purposes of this Agreement and the Notes, and no holder of a participation in all or any part of the Loans or the Notes shall have any rights under this Agreement, except that the holder of a participation shall be entitled to the benefits of Section 7 hereunder (but the dollar amount of such Section 7 benefits shall not exceed those benefits that the assigning Bank would have otherwise received). 14.6.3 DISCLOSURE OF INFORMATION. The Company hereby consents to the disclosure of any information obtained in connection herewith by any Bank to any Person which is an assignee or potential assignee or a participant or potential participant pursuant to Section 14.6.1 or 14.6.2, it being understood that such Bank shall advise any such actual or potential assignee or participant of its obligation to keep confidential any nonpublic information disclosed to it -33- 62 pursuant to this Section 14.6.3 and, prior to the disclosure of such information, shall cause each such actual or potential assignee or participant to execute a confidentiality agreement containing the confidentiality provisions set forth in Section 14.5. 14.7 SECURITIES LAWS. Each Bank represents that it is the present intention of such Bank to acquire each Note drawn to its order for its own account and not with a view to the distribution or sale thereof, subject, nevertheless, to the necessity that such Bank remain in control at all times of the disposition of the property held by it for its own account, it being understood that the foregoing representation shall not affect the character of the Loans as commercial lending transactions. 14.8 COSTS AND EXPENSES. The Company agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Banks (including the reasonable fees and out-of-pocket expenses of counsel for the Banks and reasonable allocated costs of in-house counsel for the Banks) in connection with the enforcement of this Agreement, the Notes, and any other instruments or documents executed in connection herewith. 14.9 GOVERNING LAW. This Agreement and each Note shall be a contract made under and governed by the internal laws of the State of Ohio. Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. All obligations of the Company and rights of the Banks and any other holders of the Notes expressed herein or in the Notes shall be in addition to and not in limitation of those provided by applicable law. 14.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. When counterparts executed by all the parties shall have been lodged with the Company (or, in the case of any Bank as to which an executed counterpart shall not have been so lodged, the Company shall have received telegraphic, telex, or other written confirmation from such Bank of execution of a counterpart hereof by such Bank), this Agreement shall become effective as of the date hereof. 14.11 CAPTIONS. Section captions used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. 14.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company, each Bank, and their respective successors and assigns, and shall inure to the sole benefit of the Company, each Bank, and their respective successors and assigns. -34- 63 14.13 ENTIRE AGREEMENT. This Agreement supersedes any prior agreement or understanding of the parties hereto, and contains the entire agreement of the parties hereto, with respect to the matters covered hereby. 14.14 APPOINTMENT OF ADMINISTRATOR. TRW hereby appoints National City Bank to serve as administrator (the "Administrator") to coordinate any votes that may be taken under this Agreement and to distribute payments, if any, required to be made to the Banks on a pro rata basis as provided in Section 11.2. In the event that National City Bank is unable or unwilling to act as Administrator, TRW shall appoint a successor, subject to the approval of the Majority Banks, which shall not be unreasonably withheld. Except as otherwise specifically provided herein, borrowing, repayment and fee procedures set forth in this Agreement shall not be affected by the appointment of the Administrator. 14.15 NON-U.S. BANK TAX INFORMATION. Upon the request of the Company, any Bank that is not organized under the laws of the United States of America or any state thereof will (i) deliver to the Company accurate and complete signed copies of Forms 1001 and 4224 (or such additional or successor forms) and any amendments or modifications thereto and (ii) inform the Company if the Company can no longer rely upon such forms. 14.16 REGULATION U. The Company hereby represents and warrants that neither the Company nor any of its Consolidated Subsidiaries is principally engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System) and covenants that the Company's use of proceeds of any borrowings under this Agreement will not cause a violation of Regulation U. Each of the Banks hereby represents and warrants to the Company that it is not relying and will not rely on any margin stock (as described above) in determining whether to extend or maintain credit under this Agreement. -35- 64 SIGNATURE PAGES TO MULTI-YEAR REVOLVING CREDIT AGREEMENT, DATED AS OF --------------------------------------------------------------------- JULY 1, 1992, AS AMENDED PURSUANT TO AGREEMENTS DATED AS OF JUNE 30, -------------------------------------------------------------------- 1993, MARCH 1, 1994 AND FEBRUARY 28, 1995 AND AS AMENDED AND RESTATED --------------------------------------------------------------------- AS OF MAY 8, 1996 ----------------- Delivered at Cleveland, Ohio, as of the day and year first above written. TRW INC. /s/ William C. Seeger Jr. By William C. Seeger Jr. Vice President and Treasurer 1900 Richmond Road Cleveland, Ohio 44124 Telephone: 216/291-7540 Facsimile: 216/291-7831 -36- 65 BANKS: Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Bank of America National Trust ----- and Savings Association By Deborah Graziano Title: Vice President DOMESTIC OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7485 Facsimile: (510) 675-7531 Attention: Selina Button EUROCURRENCY OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7485 Facsimile: (510) 675-7531 Attention: Selina Button ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Bank of America ABA Routing No.: 121000358 Account No.: 12331-83980 Account Name: Incoming Money Transfer Reference No.: TRW Commitment Fee -37- 66 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Barclays Bank PLC ----- By DOMESTIC OFFICE Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE Barclays Nassau, Bahamas Branch c/o Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Barclays Bank PLC-New York ABA Routing No.: 026-002-574 Account No.: 050-019-104 Account Name: TRW Reference No.: TRW Commitment Fee; N. SANGLE -38- 67 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % The Chase Manhattan Bank, N.A. ----- By DOMESTIC OFFICE The Chase Manhattan Bank, N.A. One Chase Manhattan Plaza Fifth Floor New York, New York 10081 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE The Chase Manhattan Bank, N.A. One Chase Manhattan Plaza Fifth Floor New York, New York 10081 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan Bank ABA Routing No.: 021-000021 Account No.: 900-9-000036 Account Name: Commercial Loan Opns. Reference No.: TRW Commitment Fee -39- 68 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Citibank, N.A. ----- By DOMESTIC OFFICE Citibank, N.A. c/o Citicorp Securities, Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 EUROCURRENCY OFFICE Citibank, N.A. c/o Citicorp Securities, Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Citibank, N.A., New York ABA Routing No.: 021000089 Account No.: 38483095 Account Name: Chicago NEO Loan Acct. Reference No.: TRW Commitment Fee -40- 69 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Morgan Guaranty Trust Company ----- of New York By DOMESTIC OFFICE Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260-0060 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE Morgan Guaranty Trust Company of New York Nassau, Bahamas Office c/o J.P. Morgan Services Inc. Euro-Loan Servicing Unit 902 Market Street Wilmington, Delaware 19801 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Morgan Guaranty Trust ABA Routing No.: 021000238 Account No.: 999-99-090 Account Name: _____________ Reference No.: TRW Com. Fee Corp. Proc. Module 30 -41- 70 Amount of Percentage of Commitment Commitments $60,000,000 8 % National City Bank ----- By DOMESTIC OFFICE National City Bank National City Center P. O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE National City Bank National City Center P. O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: National City Bank ABA Routing No.: 041000124 Account No.: 2537557 Account Name: _____________ Reference No.: TRW Commitment Fee -42- 71 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % The Sumitomo Bank, Limited ----- By DOMESTIC OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 876-6431 Facsimile: (312) 876-6436 EUROCURRENCY OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 876-6431 Facsimile: (312) 876-6436 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 15-01208 Account Name: Sumitomo Bank Ltd, Chicago Branch Reference No.: TRW Commitment Fee -43- 72 Amount of Percentage of Commitment Commitments - ---------- ------------- $45,000,000 6 % Banque Nationale de Paris ----- By DOMESTIC OFFICE Banque Nationale de Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2200 Facsimile: (312) 977-1380 EUROCURRENCY OFFICE Banque Nationale de Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2200 Facsimile: (312) 977-1380 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Banque Nationale de Paris, New York Branch ABA Routing No.: 026007689 Account No.: 14119400189 Account Name: BNP, Chicago Branch Reference No.: TRW Commitment Fee -44- 73 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % Dresdner Bank AG ----- By By DOMESTIC OFFICE Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 Facsimile: (212) 429-2524 EUROCURRENCY OFFICE Dresdner Bank AG Grand Cayman Branch c/o Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 Facsimile: (212) 429-2524 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan (NY,NY) ABA Routing No.: 021-000-021 Account No.: 920-1-059-079 Account Name: Dresdner Bank AG, New York Branch Reference No.: TRW Commitment Fee -45- 74 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % NBD Bank ----- By Andrew W. Strait Title: Vice President DOMESTIC OFFICE NBD Bank Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3300 Facsimile: (313) 225-3269 EUROCURRENCY OFFICE NBD Bank, N.A. Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3300 Facsimile: (313) 225-3269 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: NBD Bank ABA Routing No.: 072000326 Account No.: 1424183 Account Name: Commercial Loans Reference No.: TRW Commitment Fee -46- 75 Amount of Percentage of Commitment Commitments $45,000,000 6 % Royal Bank of Canada ----- By Patrick Shields Title: Manager, Corporate Banking DOMESTIC OFFICE Royal Bank of Canada New York Branch c/o Financial Square, 23rd Floor New York, New York 10005 Telephone: (212) 428-6323 Facsimile: (212) 428-2372 EUROCURRENCY OFFICE Royal Bank of Canada New York Branch c/o Financial Square, 23rd Floor New York, New York 10005 Telephone: (212) 428-6323 Facsimile: (212) 428-2372 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan, NY ABA Routing No.: 021000021 Account No.: 9201033363 Account Name: Royal Bank Reference No.: TRW Commitment Fee -47- 76 Amount of Percentage of Commitment Commitments $30,000,000 4 % The Sakura Bank, Limited ----- By DOMESTIC OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 Facsimile: (312) 332-5345 EUROCURRENCY OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 Facsimile: (312) 332-5345 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 1512951 Account Name: Sakura Bank, Chicago Reference No.: TRW Commitment Fee -48- 77 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % Society National Bank ----- By DOMESTIC OFFICE Society National Bank 127 Public Square Cleveland, Ohio 44114 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE Society National Bank 127 Public Square Cleveland, Ohio 44114 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Society National Bank ABA Routing No.: 041001039 Account No.: 00100-39140 Account Name: Commercial Loan Opns Reference No.: TRW Commitment Fee -49- 78 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % The Tokai Bank, Limited ----- By DOMESTIC OFFICE The Tokai Bank, Limited Chicago Branch Attention: Corporate Finance 181 West Madison Street, Suite 3600 Chicago, Illinois 60602 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE The Tokai Bank, Limited Chicago Branch Attention: Corporate Finance 181 West Madison Street, Suite 3600 Chicago, Illinois 60602 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 15-08997 Account Name: Tokai Bank, Chicago Branch Reference No.: TRW Commitment Fee Loan Administration -50- 79 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % Union Bank of Switzerland ----- By DOMESTIC OFFICE Union Bank of Switzerland Chicago Branch 30 South Wacker Drive, Suite 40 Chicago, Illinois 60606 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE Union Bank of Switzerland Chicago Branch 30 South Wacker Drive, Suite 40 Chicago, Illinois 60606 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 15-12188 Account Name: UBS, Chicago Branch Reference No.: TRW Commitment Fee -51- 80 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % Wells Fargo Bank, N.A. ----- By By DOMESTIC OFFICE Wells Fargo Bank, N.A. Special Loan Processing 18700 NW Walker Road, Bldg. 92 Beaverton, OR 97006 Telephone: (503) 614-6436 Facsimile: (503) 614-5878 EUROCURRENCY OFFICE Wells Fargo Bank, N.A. Special Loan Processing 18700 NW Walker Road, Bldg. 92 Beaverton, OR 97006 Telephone: (503) 614-6436 Facsimile: (503) 614-5878 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: First Interstate Bank of California ABA Routing No.: 122000218 Account No.: 3030-98989 Account Name: Special Loan Processing Reference No.: TRW - ------------ ---- $750,000,000 100% Total -52- 81 EXHIBIT A to Multi-Year Revolving Credit Agreement REVOLVING NOTE Up to a maximum of $--------------- (or the Eurocurrency or Dated: _____________, 1996 Local Currency equivalent Cleveland, Ohio hereof) FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of ___________________ (the "Bank") for the account of its Domestic or Eurocurrency Office, as applicable (capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement referred to below), the outstanding principal amount of the Loans made by the Bank to the undersigned pursuant to the Credit Agreement. The principal amount of each Loan evidenced hereby shall be payable on the earliest of (i) the Termination Date, (ii) the end of the Interest Period with respect to such Loan (unless such Loan is Continued or Converted) or (iii) such other date as the Company and the Relevant Bank may agree in writing. The undersigned promises to pay interest on the unpaid principal amount of each Loan evidenced hereby from the date such Loan is made until the principal amount of such Loan is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal of, and interest on, any Loan are payable in immediately available funds in the currency of such Loan to the Bank at its Domestic or Eurodollar Office that made the Loan. The Loans made by the Bank to the undersigned, and all payments made on account of principal thereof, shall be recorded by the Bank and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note. This Note is one of the Notes referred to in, and is entitled to the benefits of, the Multi-Year Revolving Credit Agreement dated as of July 1, 1992, as amended and restated as of May 8, 1996, among the undersigned, the Bank, and the other bank parties named therein, as Banks (as the same may be amended, modified, or supplemented and in effect from time to time, the "Credit Agreement"). The Credit Agreement, among other things, (i) provides for the making of Loans by the Bank to the undersigned from time to time in an aggregate principal amount not to exceed at any time the dollar amount first mentioned above and the indebtedness of the undersigned resulting from each such Loan being evidenced by this Note, and (ii) 82 contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for payments on account of the principal hereof prior to the maturity hereof upon the terms and conditions and in accordance with the provisions therein specified. Reference is hereby made to the Credit Agreement for a statement of said terms and provisions. In addition to, and not in limitation of, the foregoing and the provisions of the Credit Agreement hereinabove referred to, the undersigned further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including reasonable attorneys' fees and expenses, incurred by the holder of this Note in seeking to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise. DEMAND, PRESENTMENT, PROTEST, AND NOTICE OF NON-PAYMENT ARE HEREBY WAIVED BY THE UNDERSIGNED. THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF OHIO. TRW INC. By: ----------------------------- William C. Seeger Jr. Vice President and Treasurer 83 Schedule Attached to Revolving Note dated ___________, 1996 of TRW Inc. payable to the order of ____________________________________ BASE RATE BORROWINGS Unpaid Date and Date and Amount Principal Amount of of Repayment Balance of Base Rate of Base Rate Base Rate Notation Borrowing Borrowing Borrowings Made by - --------- --------- ---------- ------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 84 Schedule Attached to Revolving Note dated _______________, 1996 of TRW Inc. payable to the order of _____________________________________________________ FIXED RATE BORROWINGS Date, Amount, Date and Unpaid and Type of Interest Amount of Principal Notation Borrowing Period Repayment Balance Made by - --------- ------ --------- ------- ------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 85 EXHIBlT B to Multi-Year Revolving Credit Agreement COMPLIANCE CERTIFICATE To: Each of the Bank Parties to the Credit Agreement referred to below Reference is made to our Multi-Year Revolving Credit Agreement dated as of July 1, 1992, as amended and restated as of May 8, 1996 (herein as amended, modified or supplemented and in effect from time to time called the "CREDIT AGREEMENT") with you. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. The Company hereby certifies and warrants to you that the following is a true and correct computation as at ______________19__ (the "Computation Date") of Consolidated Net Worth contained in Section 9.2 of the Credit Agreement:
Minimum Consolidated Net Worth - ------------------------------ Required Under Section 3.2 -------------------------- $1,600,000,000 LESS: The lesser of (i) the aggregate amount expended by the Company subsequent to December 31, 1995 for repurchase of its Common Stock and (ii) $600,000,000 $ ------------------- $ ------------- CONSOLIDATED NET WORTH OF THE COMPANY Consolidated shareholders' investment $ ------------------- PLUS: Minority interests $ ------------------- $ --------------
The Company hereby further certifies and warrants to you that no Event of Default or Unmatured Event of Default has occurred and is continuing. IN WITNESS WHEREOF, the Company has caused this Certificate to be executed and delivered by its duly authorized officer this ____day of ______________, 19__. TRW INC. By ---------------------- Its --------------------- 86 EXHIBIT C to Multi-Year Revolving Credit Agreement ___________________, 1992 To: Each of the Banks party to the Credit Agreements referred to below Ladies and Gentlemen: I am General Counsel of TRW Inc., an Ohio corporation (the "Company"), and have acted in such capacity in connection with the Three-Year Revolving Credit Agreement and the 364-Day Revolving Credit Agreement, each dated as of July 1, 1992 (the "Credit Agreements") among the Company and each of the financial institutions listed on the signature pages thereof. Capitalized terms used but not otherwise defined are used herein as defined in the Credit Agreements. In connection with the opinions expressed below, I have examined or caused to be examined by members of the TRW Law Department a copy of the Credit Agreements and the Notes thereunder; and I have also made or caused to be made such other examinations and inquiries as I have deemed necessary to enable me to give the opinions hereinafter expressed. However, as to each of the opinions set forth below which is limited to my knowledge, you should be aware that I have neither made nor caused to be made any independent review for purposes of rendering this opinion, although in the regular course of advising the Company I have reviewed or caused to be reviewed various documents, records and matters of law. Based upon the foregoing, I am of the opinion that: 87 ___________________, 1992 Page 2 1. The Company is a corporation duly incorporated and in good standing under the laws of the State of Ohio. 2. The Company has full power to execute, deliver, and perform each of the Credit Agreements and to borrow moneys thereunder and to execute, deliver, and perform its obligations under the Notes. 3. The execution and delivery of the Credit Agreements and the Notes, the borrowings under the Credit Agreements, and the performance by the Company of its obligations under the Credit Agreements and the Notes, have been duly authorized by all necessary corporate action, and do not and will not contravene or conflict with any material provision of applicable law now in effect or of the Amended Articles of Incorporation or Regulations of the Company or, to my knowledge, of any agreement for borrowed money or other material agreement binding upon the Company. 4. The Credit Agreements and the Notes have been duly executed and delivered by the Company and are the legal, valid, and binding obligations of the Company, enforceable in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium laws or debtor relief proceedings or any similar laws or proceedings affecting creditors' rights generally or by general principles of equity. I am a member of the bar of the State of Ohio and do not purport to be an expert on, generally familiar with or qualified to express legal conclusions based on laws other than the laws of the State of Ohio and the United States of America. This opinion is being delivered to you solely for your benefit as creditor under the Credit Agreements and may be relied upon only by you for such purpose. Very truly yours, Martin A. Coyle General Counsel EX-2.B 11 EXHIBIT (B)(2) 1 Exhibit (b)(2) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AMENDMENT TO MULTI-YEAR REVOLVING CREDIT AGREEMENT (as amended and restated as of May 8, 1996) dated as of August 7, 1997 among TRW INC. and THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 AMENDMENT TO MULTI-YEAR REVOLVING CREDIT AGREEMENT (as amended and restated as of May 8, 1996) This Amendment to Multi-Year Revolving Credit Agreement, dated as of August 7, 1997 (this "Amendment"), is among TRW Inc., an Ohio corporation (the "Company") and the financial institutions listed on the signature pages hereof together with their successors or assigns (collectively, the "Banks" and individually, a "Bank"). W I T N E S S E T H: -------------------- WHEREAS, on July 1, 1992, the Company and the Banks entered into the Three-Year Revolving Credit Agreement (as it was then titled), which agreement was amended on June 30, 1993, March 1, 1994, February 28, 1995, and amended and restated as of May 8, 1996 (such agreement, as amended and restated, is known hereinafter as the "Agreement"); and WHEREAS, the Company and the Banks have agreed to make such changes to the Agreement as are reflected in this Amendment; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1 THE AMENDMENTS 1.1 AMENDMENT TO "TERMINATION DATE" DEFINITION. The definition of "Termination Date" set forth in Section 13 shall be amended to read in its entirety as follows: "TERMINATION DATE" means the earlier to occur of (a) July 1, 2002, subject to extension for one or more successive one-year periods as to any Bank or Banks pursuant to Section 1.2, or (b) such other date on which the Commitments shall terminate pursuant to Section 11.2. 1.2 AMENDMENT OF OTHER INDEBTEDNESS CROSS-DEFAULT. Section 11.1.2 shall be amended to read in its entirety as follows: 11.1.2 NONPAYMENT OF OTHER INDEBTEDNESS FOR BORROWED MONEY. Default in the payment when due at maturity (subject to any applicable grace period) or by acceleration of any other indebtedness for borrowed money having a principal amount in excess of 50,000,000 U.S. Dollars of, or guaranteed by, the Company ("Other Indebtedness"), or default in the performance or observance of any obligation or condition with respect to any such Other Indebtedness if such default results in the -1- 3 acceleration of the maturity of any such Other Indebtedness; provided, that, if such default shall subsequently be remedied, cured, or waived prior to either the termination of Commitments or the declaration that all Loans are immediately due and payable, in each case pursuant to Section 11.2 hereof, and as a result the payment of such Other Indebtedness is no longer due, the Event of Default existing hereunder by reason thereof shall likewise be deemed thereupon to be remedied, cured, or waived and no longer in existence, all without any further action by the parties hereto. SECTION 2 GENERAL 2.1 REISSUANCE OF NOTES. In connection with the effectiveness of this Amendment, the Company shall issue to each of the Banks Notes in the principal amounts set forth next to such Bank's name in the signature blocks below, such Note shall be substantially in the form of Exhibit A to the Agreement with the dates therein changed to reflect this Amendment. Contemporaneously with the issuance of such Notes, the Notes dated May 8, 1996 currently pertaining to the Agreement shall be deemed null and void and each Bank shall cancel and return to the Company each such Note pertaining to the Agreement currently in such Bank's possession. 2.2 OTHER TERMS AND CONDITIONS. Unless amended hereby, all other terms and conditions of the Agreement shall remain in full force and effect without change. 2.3 GOVERNING LAW. This Amendment and each Note issued pursuant hereto shall be a contract made under and governed by the internal laws of the State of Ohio. Wherever possible each provision of this Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment. All obligations of the Company and rights of the Banks and any other holders of the Notes expressed herein or in the Notes shall be in addition to and not in limitation of those provided by applicable law. 2.4 COUNTERPARTS. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. When counterparts executed by all the parties shall have been lodged with the Company (or, in the case of any Bank as to which an executed counterpart shall not have been so lodged, the Company shall have received telegraphic, telex, or other written confirmation from such Bank of execution of a counterpart hereof by such Bank), this Amendment shall become effective as of the date hereof. -2- 4 2.5 CAPTIONS. Section captions used in this Amendment are for convenience only, and shall not affect the construction of this Amendment. Delivered at Cleveland, Ohio, as of the day and year first above written. TRW INC. By: /s/ Jeanne R. Sydenstricker --------------------------- Jeanne R. Sydenstricker Vice President and Treasurer 1900 Richmond Road Cleveland, Ohio 44124 Telephone 216/291-7566 Facsimile: 216/291-7831 -3- 5 BANKS: Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Bank of America National Trust ----- and Savings Association By: /s/ Deborah J. Graziano ----------------------- Name: Deborah J. Graziano Title: Vice President DOMESTIC OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7178 Facsimile: (510) 675-7531 Attention: Mandy Sneary EUROCURRENCY OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7178 Facsimile: (510) 675-7531 Attention: Mandy Sneary ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Bank of America ABA Routing No. 121000358 Account No.: 12331-83980 Account Name: Incoming Money Transfer Reference No.: TRW Commitment Fee -4- 6 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Barclays Bank PLC ----- By: /s/ Gary F. Albanese ----------------------- Name: Gary F. Albanese Title: Associate Director DOMESTIC OFFICE Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: (212) 412-3728 Facsimile: (212) 412-5306 EUROCURRENCY OFFICE Barclays Nassau, Bahamas Branch c/o Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: (212) 412-3728 Facsimile: (212) 412-5306 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Barclays Bank PLC-New York ABA Routing No.: 026-002-574 Account No.: 050-019-104 Account Name: TRW Reference No.: TRW Commitment Fee; C. Tenn Sing Que -5- 7 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % The Chase Manhattan Bank ----- By: /s/ Joan F. Garvin ------------------ Name: Joan F. Garvin Title: Managing Director DOMESTIC OFFICE The Chase Manhattan Bank 270 Park Avenue 10th Floor New York, New York 10017-2070 Telephone: (212) 270-5730 Facsimile: (212) 270-5127 EUROCURRENCY OFFICE The Chase Manhattan Bank One Chase Manhattan Plaza Eighth Floor New York, New York 10081 Telephone: (212) 552-7472 Facsimile: (212) 552-5662 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan Bank ABA Routing No.: 021-000021 Account No.: Account Name: Commercial Loan Opns. Reference No.: TRW Commitment Fee -6- 8 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Citibank, N.A. ----- By: /s/ Mark Stanfield Packard -------------------------- Name: Mark Stanfield Packard Title: Vice President DOMESTIC OFFICE Citibank, N.A. c/o Citicorp Securities, Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 EUROCURRENCY OFFICE Citibank, N.A. c/o Citicorp Securities, Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Citibank, N.A., New York ABA Routing No. 021000089 Account No.: 38483095 Account Name: Chicago NEO Loan Acct. Reference No.: TRW Commitment Fee -7- 9 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % Morgan Guaranty Trust Company ----- of New York By: /s/ Patricia P. Lunka ---------------------- Name: Patricia P. Lunka Title: Vice President DOMESTIC OFFICE Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260-0060 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE Morgan Guaranty Trust Company of New York Nassau, Bahamas Office c/o J.P. Morgan Services Inc. Euro-Loan Servicing Unit 902 Market Street Wilmington, Delaware 19801 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Morgan Guaranty Trust ABA Routing No.:021000238 Account No.: 999-99-090 Account Name: ____________ Reference No.: TRW Com. Fee Corp. Proc. Module 30 -8- 10 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % National City Bank ----- By: /s/ David R. Bonner ---------------------- Name: David R. Bonner Title: Vice President DOMESTIC OFFICE National City Bank National City Center P. O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE National City Bank National City Center P. O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: National City Bank ABA Routing No.: 041000124 Account No.: 2537557 Account Name: _____________ Reference No.: TRW Commitment Fee -9- 11 Amount of Percentage of Commitment Commitments - ---------- ----------- $60,000,000 8 % The Sumitomo Bank, Limited ----- By: /s/ John H. Kemper ------------------ Name: John H. Kemper Title: Senior Vice President DOMESTIC OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 876-6444 Facsimile: (312) 876-6436 EUROCURRENCY OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 879-7668 Facsimile: (312) 876-0523 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No. 071000013 Account No.: 15-01208 Account Name: Sumitomo Bank Ltd, Chicago Branch. Reference No.: TRW Commitment Fee -10- 12 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % Banque Nationale de Paris ----- By: /s/ Arnaud Collin Du Bocage --------------------------- Name: Arnaud Collin du Bocage Title: Executive Vice President and General Manager DOMESTIC OFFICE Banque Nationale de Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2211 Facsimile: (312) 977-1380 EUROCURRENCY OFFICE Banque Nationale de Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2211 Facsimile: (312) 977-1380 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Banque Nationale de Paris, New York Branch ABA Routing No.: 026007689 Account No.: 14119400189 Account Name: BNP, Chicago Branch Reference No.: TRW Commitment Fee -11- 13 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % Dresdner Bank AG ----- By: /s/ D. Slusavczyk ----------------- Name: D. Slusavczyk Title: Vice President By: /s/ A. R. Morris ----------------- Name: A. R. Morris Title: Vice President DOMESTIC OFFICE Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 Facsimile: (212) 429-2524 EUROCURRENCY OFFICE Dresdner Bank AG Grand Cayman Branch c/o Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 Facsimile: (212) 429-2524 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan (NY,NY) ABA Routing No.: 021-000-021 Account No.: 920-1-059-079 Account Name: Dresdner Bank AG, New York Branch Reference No.: TRW Commitment Fee -12- 14 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % NBD Bank ----- By: /s/ William J. McCaffrey ------------------------ Name: William J. McCaffrey Title: Vice President DOMESTIC OFFICE NBD Bank Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3444 Facsimile: (313) 225-3269 EUROCURRENCY OFFICE NBD Bank, N.A. Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3444 Facsimile: (313) 225-3269 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: NBD Bank ABA Routing No.:072000326 Account No.: 1424183 Account Name: Commercial Loans Reference No.: TRW Commitment Fee -13- 15 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6 % Royal Bank of Canada ----- By: /s/ Patrick Shields ------------------------ Name: Patrick Shields Title: Senior Manager DOMESTIC OFFICE Royal Bank of Canada Grand Cayman (North America No. 1) Branch c/o New York Branch 32 Old Slip New York, New York 10005-3531 Telephone: (212) 428-6323 Facsimile: (212) 428-2372 EUROCURRENCY OFFICE Royal Bank of Canada Grand Cayman (North America No. 1) Branch c/o New York Branch 32 Old Slip New York, New York 10005-3531 Telephone: (212) 428-6323 Facsimile: (212) 428-2372 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan, NY ABA Routing No.: 021000021 Account No.: 9201033363 Account Name: Royal Bank Reference No.: TRW Commitment Fee -14- 16 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % KeyBank National Association ----- By: /s/ Marianne Meil ----------------- Name: Marianne Meil Title: Vice President DOMESTIC OFFICE KeyBank National Association 127 Public Square Cleveland, Ohio 44114 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE KeyBank National Association 127 Public Square Cleveland, Ohio 44114 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: KeyBank National Association ABA Routing No.:041001039 Account No.: 00100-39140 Account Name: Commercial Loan Opns Reference No.: TRW Commitment Fee -15- 17 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % The Sakura Bank, Limited ----- By: /s/ Shunji Sakurai ------------------ Name: Shunji Sakurai Title: Joint General Manager DOMESTIC OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 Facsimile: (312) 332-5345 EUROCURRENCY OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 Facsimile: (312) 332-5345 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 1512951 Account Name: Sakura Bank, Chicago Reference No.: TRW Commitment Fee -16- 18 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % The Tokai Bank, Limited ----- By: /s/ Hiroshi Tanaka ------------------ Name: Hiroshi Tanaka Title: General Manager DOMESTIC OFFICE The Tokai Bank, Limited Chicago Branch Attention: Corporate Finance 181 West Madison Street, Suite 3600 Chicago, Illinois 60602 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE The Tokai Bank, Limited Chicago Branch Attention: Corporate Finance 181 West Madison Street, Suite 3600 Chicago, Illinois 60602 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 15-08997 Account Name: Tokai Bank, Chicago Branch Reference No.: TRW Commitment Fee Loan Administration -17- 19 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4 % Union Bank of Switzerland ----- By: /s/ Dieter Hoeppli ------------------ Name: Dieter Hoeppli Title: Vice President By: /s/ Samuel Azizo ------------------ Name: Samuel Azizo Title: Vice President DOMESTIC OFFICE Union Bank of Switzerland New York Branch 299 Park Avenue New York, New York 10171 Telephone: (212) 821-3415 Facsimile: (212) 821-3383 EUROCURRENCY OFFICE Union Bank of Switzerland New York Branch 299 Park Avenue New York, New York 10171 Telephone: (212) 821-3415 Facsimile: (212) 821-3383 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Union Bank of Switzerland ABA Routing No.: 026008439 Account No.: 519243USICC1 Account Name: Credit Corporate Clearing Reference No.: TRW Commitment Fee -18- 20 Amount of Percentage of Commitment Commitments - ---------- ----------- $15,000,000 2 % Bank of China, New York Branch ----- By: /s/ Zhu, ZhiCheng ----------------- Name: Zhu, ZhiCheng Title: General Manager, USA DOMESTIC OFFICE Bank of China New York Branch 410 Madison Avenue New York, New York 10017 Telephone: (212) 935-3101 ext. 475 Facsimile: (212) 688-0919 EUROCURRENCY OFFICE Bank of China New York Branch 410 Madison Avenue New York, New York 10017 Telephone: (212) 935-3101 ext. 475 Facsimile: (212) 688-0919 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Bank of China, New York Branch ABA Routing No.: 026003269 Account No.: 160081555553-001-001 . Reference No.: TRW Commitment Fee -19- 21 Amount of Percentage of Commitment Commitments - ---------- ----------- $15,000,000 2 % Wells Fargo Bank, N.A. ----- By: /s/ Edith R. Lim ----------------- Name: Edith R. Lim Title: Vice President By: /s/ Frieda Youlios ----------------- Name: Frieda Youlios Title: Vice President DOMESTIC OFFICE Wells Fargo Bank, N.A. 707 Wilshire Blvd., 16th. Floor Los Angeles, CA 90017 Telephone: (213) 614-5038 Facsimile: (213) 614-2305 EUROCURRENCY OFFICE Wells Fargo Bank, N.A. 707 Wilshire Blvd., 16th. Floor Los Angeles, CA 90017 Telephone: (213) 614-5038 Facsimile: (213) 614-2305 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Wells Fargo Bank, N.A. ABA Routing No.: 121-000-248 Account No.: 451-8054341 Account Name: SYNDIC/WFB CORP/ACH Reference No.: TRW Ref No 9118583038 - ------------ ---- $750,000,000 100% Total -20- EX-3.B 12 EXHIBIT (B)(3) 1 Exhibit (b)(3) November 17, 1997 Bank of America Bank of China Banque Nationale de Paris Barclays Bank Chase Manhattan Bank Citibank Dresdner Bank KeyBank Morgan Guaranty Trust Company National City Bank NBD Bank Royal Bank of Canada Sakura Bank Sumitomo Bank Tokai Bank Union Bank of Switzerland Wells Fargo Re: COMMITMENT LETTER FOR 364-DAY REVOLVING CREDIT FACILITY Ladies and Gentlemen: Each of you is a party to the Multi-Year Revolving Credit Agreement, as amended and restated as of May 8, 1996, as amended by Amendment thereto dated as of August 7, 1997 (as so amended and restated and as so amended, the "MULTI-YEAR CREDIT AGREEMENT"), among TRW Inc., an Ohio corporation (the "COMPANY"), and the financial institutions named therein. The Company desires to establish a separate 364-day revolving credit facility providing for up to $750 million of revolving loans (the "NEW 364-DAY REVOLVING CREDIT FACILITY"), which would have all of the same terms, conditions and provisions as the Multi-Year Credit Agreement except for the changes marked on the proposed form of agreement attached hereto and the final allocation of commitments among the lenders. 2 Page 2 We invite you to indicate in the space provided below the principal amount of the New 364-day Revolving Credit Facility you agree to provide (which amount shall be subject to reduction by the Company upon allocation of commitments among the lenders). Your commitment will be subject only to (i) the Company obtaining commitments from some or all of the other financial institutions who are parties to the Multi-Year Credit Facility for the remaining balance of the New 364-day Revolving Credit Facility, and (ii) the execution of the contemplated definitive documentation on or before December 10, 1997. If you do wish to participate, please sign in the space provided below and return a signed copy of this letter to the undersigned, whereupon this letter shall be a binding agreement. TRW INC. By: ------------------------------------ J.R. Sydenstricker Vice President and Treasurer We agree to participate in accordance with this letter in the principal amount indicated below: Bank Name:_____________________________ Amount: $_____________________________ By:_____________________________ Name: Title: EX-4.B 13 EXHIBIT (B)(4) 1 Exhibit (b)(4) ================================================================================ REVOLVING CREDIT AGREEMENT dated as of December 10, 1997 among TRW INC. and THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF ================================================================================ 2 TABLE OF CONTENTS Page ---- PREAMBLE..................................................................... 1 SECTION 1 COMMITMENT OF THE BANKS; TYPES OF LOANS; PROCEDURES FOR BORROWING OR CONVERTING................................................. 1 1.1 Commitment.................................................... 1 1.2 Extension of Revolving Period Termination Date................ 2 1.3 Various Types of Loans........................................ 2 1.4 Notice of Borrowing, Continuation, or Conversion............................................... 2 1.5 Conversion and Continuation Procedures........................ 3 1.6 Negotiated Loans.............................................. 3 1.7 Local Currency Loans.......................................... 3 1.8 Loans to Designated Subsidiaries.............................. 4 SECTION 2 REPAYMENT OF LOANS; NOTES EVIDENCING LOANS.................... 4 2.1 Repayment of Loans............................................ 4 2.2 Notes......................................................... 4 2.3 Other Provisions of the Notes................................. 5 2.4 Recordkeeping................................................. 5 SECTION 3 INTEREST...................................................... 5 3.1 Interest Rates................................................ 5 3.2 Interest Payment Dates........................................ 6 3.3 Interest Periods for Fixed Rate Loans......................... 6 3.4 Setting and Notice of Rates................................... 6 3.5 Computation of Interest....................................... 6 SECTION 4 FEES.......................................................... 7 4.1 Commitment Fee................................................ 7 4.2 Computation of Fees........................................... 7 SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENT....................................... 7 5.1 Reduction or Termination of the Commitments................... 7 5.2 Optional Prepayment........................................... 7 5.3 Mandatory Prepayment.......................................... 7 (i) 3 Page ---- SECTION 6 MAKING AND APPLICATION OF PAYMENTS............................ 8 6.1 Making of Payments............................................ 8 6.2 Application of Certain Payments............................... 8 6.3 Due Date Extension............................................ 8 SECTION 7 INCREASED COSTS AND TAXES..................................... 8 7.1 Increased Capital............................................. 8 7.2 Increased Costs............................................... 9 7.3 Basis for Determining Interest Rate Inadequate................10 7.4 Changes in Law Rendering Certain Loans Unlawful...............10 7.5 Funding Losses................................................11 7.6 Currency Indemnity............................................11 7.7 Increased Tax Costs...........................................12 SECTION 8 WARRANTIES....................................................12 8.1 Corporate Organization........................................12 8.2 Authorization; No Conflict....................................13 8.3 Validity and Binding Nature...................................13 8.4 Financial Statements..........................................13 8.5 Litigation....................................................13 8.6 Compliance with ERISA.........................................13 8.7 Environmental Matters.........................................14 8.8 Taxes.........................................................14 8.9 Government Regulation.........................................14 SECTION 9 COVENANTS.....................................................14 9.1 Reports, Certificates and Other Information...................14 9.1.1 Audit Report...........................................14 9.1.2 Quarterly Reports......................................14 9.1.3 Compliance Certificates................................15 9.1.4 Current Reports........................................15 9.1.5 Other Information......................................15 9.2 Net Worth.....................................................15 9.3 Liens.........................................................15 9.4 Sale and Leaseback............................................17 9.5 Mergers, Consolidations, Sales................................18 SECTION 10 CONDITIONS OF LENDING.........................................18 10.1 Initial Loan to the Company...................................18 (ii) 4 Page ---- 10.1.1 Note...................................................18 10.1.2 Resolutions............................................18 10.1.3 Incumbency and Signatures..............................19 10.1.4 Opinion of Counsel.....................................19 10.2 Loans to Designated Subsidiaries..............................19 10.2.1 Resolutions............................................19 10.2.2 Acceptance of this Agreement...........................19 10.2.3 Incumbency and Signatures..............................19 10.3 All Loans.....................................................19 10.4 Conversions...................................................19 SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT............................19 11.1 Events of Default.............................................20 11.1.1 Nonpayment of Notes or Fees............................20 11.1.2 Nonpayment of Other Indebtedness for Borrowed Money....................................20 11.1.3 Bankruptcy or Insolvency...............................20 11.1.4 Noncompliance with Other Provisions....................20 11.1.5 Warranties.............................................21 11.1.6 Judgments..............................................21 11.2 Effect of Event of Default....................................21 SECTION 12 GUARANTY......................................................21 SECTION 13 CERTAIN DEFINITIONS...........................................22 SECTION 14 GENERAL.......................................................32 14.1 Waiver; Amendments............................................32 14.2 Confirmations.................................................33 14.3 Notices.......................................................33 14.4 Computations..................................................34 14.5 Confidentiality...............................................34 14.6 Assignments and Participations................................35 14.6.1 Assignments............................................35 14.6.2 Participations.........................................35 14.6.3 Disclosure of Information..............................35 14.7 Securities Laws...............................................35 14.8 Costs and Expenses............................................35 14.9 Governing Law.................................................36 14.10 Counterparts..................................................36 14.11 Captions......................................................36 14.12 Successors and Assigns........................................36 14.13 Entire Agreement..............................................36 (iii) 5 Page ---- 14.14 Appointment of Administrator..................................36 14.15 Non-U.S. Bank Tax Information.................................37 14.16 Regulation U..................................................37 EXHIBITS EXHIBIT A Form of Note EXHIBIT B Form of Compliance Certificate EXHIBIT C Form of Opinion of Counsel to the Company SCHEDULES SCHEDULE 8.5 Undisclosed Material Legal Proceedings (iv) 6 REVOLVING CREDIT AGREEMENT This Revolving Credit Agreement, dated as of December 10, 1997 (this "AGREEMENT"), is among TRW Inc., an Ohio corporation (the "COMPANY") and the financial institutions listed on the signature pages hereof together with their successors or assigns (collectively, the "BANKS" and individually, a "BANK"). Certain terms being used in this Agreement are hereinafter defined in Section 13. W I T N E S S E T H: -------------------- WHEREAS, the Company has requested the Banks to make certain unsecured loans to the Company and certain Subsidiaries of the Company designated by the Company for general corporate purposes, including without limitation for working capital, capital expenditures, acquisitions (directly or indirectly) of assets, stock or other ownership interests, and repurchases or redemptions of securities; and WHEREAS, the Banks have agreed to make such loans on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1 COMMITMENT OF THE BANKS; TYPES OF LOANS; PROCEDURES FOR BORROWING OR CONVERTING. 1.1 COMMITMENT. Subject to the terms and conditions of this Agreement, each of the Banks, severally and for itself alone, agrees to make loans (collectively, the "LOANS" and individually, a "LOAN") to the Company and, as provided in Section 1.8, to any Designated Subsidiary on a revolving basis from time to time during the period (the "REVOLVING PERIOD") from the date hereof through the Revolving Period Termination Date, as it may be extended from time to time pursuant to Section 1.2, in such aggregate amounts as the Company or any Designated Subsidiary may from time to time request from such Bank; provided, however, that the aggregate principal amount of Loans that any Bank shall be committed to have outstanding to the Company and the Designated Subsidiaries shall not at any one time exceed the amount set forth opposite such Bank's signature hereto, or any subsequent amendment hereto (except to the extent provided in Section 1.9 hereof). The foregoing commitment of each Bank to make Loans as reduced from time to time in accordance with the terms hereof is herein called such Bank's "COMMITMENT" and the commitments of all Banks are herein sometimes collectively called the "COMMITMENTS." Loans may not be made after the Revolving Period Termination Date, as it may be extended from time to time pursuant to Section 1.2, but if the Company shall have made the election provided in clause (ii) of Section 2.1, Loans outstanding at the end of the Revolving Period may thereafter be Continued or Converted as herein provided. 7 1.2 EXTENSION OF REVOLVING PERIOD TERMINATION DATE. No later than 60 days prior to the Revolving Period Termination Date then in effect, the Company may request, by written notice, that any one or more of the Banks extend the Revolving Period Termination Date as to that Bank's Commitment for a period of one year commencing on the Revolving Period Termination Date then in effect. Each Bank receiving such an extension request from the Company shall notify the Company in writing no later than 20 days prior to the Revolving Period Termination Date then in effect of such Bank's determination to extend or not to extend the Revolving Period Termination Date. A notice given by a Bank to extend the Revolving Period Termination Date pursuant to this Section 1.2 shall be irrevocable (subject to Section 11.2). Any Bank that fails to respond to the Company's request to extend the Revolving Period Termination Date within such time period shall be deemed to have given notice to the Company that such Bank does not desire to extend the Revolving Period Termination Date. 1.3 VARIOUS TYPES OF LOANS. Each Loan shall be either a Base Rate Loan, a Domestic CD Loan, a Eurocurrency Loan, a Local Currency Loan, or a Negotiated Loan (each herein called a "TYPE" of Loan), as the Company shall specify in the related notice of borrowing, Continuation, or Conversion pursuant to Section 1.4 or 1.5. Domestic CD Loans, Eurocurrency Loans, Local Currency Loans, and Negotiated Loans bearing interest at a fixed rate for a fixed period of time are sometimes collectively called "FIXED RATE LOANS." Each Loan shall be made in U.S. Dollars or such other currency as is requested by the Company and shall be available at the time and for the period requested by the Company. Each Loan shall bear interest at the rate specified in Section 3.1 and shall mature on and be due and payable in full on the earliest of (i) the Termination Date, (ii) the end of an Interest Period (unless the Loan is Continued or Converted) or (iii) such other date as the Company and the Relevant Bank shall otherwise agree in writing. The Eurocurrency specified in any notice of borrowing, Continuation, or Conversion given by the Company pursuant to Section 1.4 or 1.5 shall be deemed to be available for purposes of this Agreement, unless the Relevant Bank gives the Company notice (which may be by telephone) no later than the earlier of (a) 12:00 noon, Cleveland time, on the second Business Day prior to the proposed date making the Eurocurrency Loan, or (b) one hour after the Relevant Bank has received the notice of borrowing, Continuation, or Conversion, as applicable. The Relevant Bank's determination in good faith that a proposed Eurocurrency is or is not available shall be final. 1.4 NOTICE OF BORROWING. CONTINUATION. OR CONVERSION. The Company, through an Authorized Person, shall give written or telephonic notice to the Relevant Bank of each proposed borrowing from such Bank, or Conversion or Continuation of Loans made by such Bank, by 11:00 a.m., Cleveland time, (a) on the proposed date of such borrowing, Conversion, or Continuation if such borrowing, Conversion, or Continuation is comprised of Base Rate Loans, Domestic CD Loans, or Negotiated Loans, (b) at least two Business Days prior to the proposed date of such borrowing, Conversion, or Continuation if such borrowing, Conversion, or Continuation is comprised of Eurocurrency Loans (provided that at least one -2- 8 Business Day prior to such written or telephonic notice of proposed nondollar denominated Eurocurrency Loan borrowing, Continuation or Conversion, the Company, through an Authorized Person, shall give written or telephonic notice to the Relevant Bank of the Company's intention to request a Eurocurrency Loan), and (c) with respect to Local Currency Loans, at least two Business Days prior to the proposed date of such borrowing, Conversion, or Continuation or such other period of time as is customary for the particular Local Currency. Each such notice shall be effective upon receipt by the Relevant Bank and shall specify the date, amount, currency, and type of borrowing and, in the case of a borrowing comprising Fixed Rate Loans, the initial Interest Period for such borrowing. Each notice of a Conversion or Continuation of Loans shall specify the date and amount of such Conversion or Continuation, the Loans to be so Converted or Continued, the type and currency of Loans to be Converted into or Continued, and, in the case of a Conversion into or Continuation of Fixed Rate Loans, the initial or succeeding Interest Period, as the case may be. Each borrowing shall be on a Business Day and shall be in an aggregate amount of not less than 1,000,000 U.S. Dollars for Base Rate Loans and not less than 5,000,000 U.S. Dollars (or the Eurocurrency Equivalent Amount) for any other type of Loan, other than Local Currency Loans (which shall be as agreed between the Company and the Relevant Bank). 1.5 CONVERSION AND CONTINUATION PROCEDURES. The Company may convert all or part of any outstanding Loans to Loans of a different type, or may elect to continue any Fixed Rate Loans for an additional Interest Period, by giving notice to the Relevant Bank of such Conversion or Continuation within the time periods specified in Section 1.4. If, with respect to any Fixed Rate Loan, the Company shall not either repay the Loan in full by 2:00 p.m., Cleveland time, on the last day of the Interest Period applicable thereto or give notice of its intention to Convert or Continue such Fixed Rate Loan within the time periods specified in Section 1.4, then the Company shall be deemed to have requested that such Loan automatically be converted into a Base Rate Loan at the end of such Interest Period (and such Loan shall automatically so Convert into a Base Rate Loan at the end of such Interest Period). Except as provided in Section 7.4, no Fixed Rate Loans shall be Converted on any day other than the last day of the current Interest Period relating to such Loans. 1.6 NEGOTIATED LOANS. From time to time, the Company may request, through an Authorized Person, and a Bank may, but shall not be obligated to, agree to make, a Loan in U.S. Dollars bearing interest at a rate per annum, and for a fixed period, agreed to by the Relevant Bank and the Company (each, a "NEGOTIATED Loan" and collectively, the "NEGOTIATED LOANS"). 1.7 LOCAL CURRENCY LOANS. From time to time, the Company may request, through an Authorized Person, and a Bank may, but shall not be obligated to, agree to make a Loan in a Local Currency specified by the Company bearing interest at a rate per annum agreed to by the Bank and the Company (each, a "LOCAL CURRENCY LOAN" and collectively, the "LOCAL CURRENCY LOANS"). Repayments of principal of and interest on Local Currency Loans shall be made in the currency borrowed and shall be paid to the local office of the Relevant Bank which made the Loan. The local office -3- 9 may request additional documentation of the indebtedness if customary at the place of business of the branch; provided, however, that the terms and conditions of that documentation shall be consistent with those set forth in this Agreement unless unlawful or ineffective under local law. 1.8 LOANS TO DESIGNATED SUBSIDIARIES. Each Designated Subsidiary may request, through an Authorized Person, Local Currency Loans or Eurocurrency Loans and Convert or Continue such Loans, and shall repay the principal of and accrued interest on such Loans, all as though the Designated Subsidiaries were parties to this Agreement and references to the "Company" in Sections 1.3, 1.4, 1.5, 1.7, 2.1, 3.1, 3.4, 3.5, 5.2 and 6.1 shall mean and include the Designated Subsidiaries. The Relevant Bank may request additional documentation of the indebtedness if customary at the place of business of the Relevant Bank; provided, however, that the terms and conditions of that documentation shall be consistent with those set forth in this Agreement unless unlawful or ineffective under local law. SECTION 2 REPAYMENT OF LOANS; NOTES EVIDENCING LOANS. 2.1 REPAYMENT OF LOANS. The Company hereby promises to pay to each Bank the aggregate unpaid principal amount of such Bank's Loans on the earliest of: (i) the Revolving Period Termination Date, unless the Company shall have made the election provided for in clause (ii) below; (ii) the Term-Out Maturity Date, if the Company shall have elected in a written notice delivered to all of the Banks no later than 15 days prior to the Revolving Period Termination Date to pay, on the Term-Out Maturity Date, all Loans which are outstanding at the end of the Revolving Period; (iii) the last day of the applicable Interest Period for such Loan (unless the Loan is Continued or Converted); or (iv) such other date as the Company and the Relevant Bank may agree in writing. Repayment of any Eurocurrency Loan shall be in the same currency in which such Loan was advanced. 2.2 NOTES. The Loans of each Bank shall be evidenced by a promissory note (individually, a "NOTE", and collectively for all Banks, the "NOTES") substantially in the form set forth in Exhibit A, with appropriate insertions, dated the date of the initial Loan (or such earlier date as shall be satisfactory to the Relevant Bank), payable to the order of such Bank in the principal amount of such Bank's -4- 10 Commitment (or, if less, in the aggregate unpaid principal amount of all of such Bank's Loans hereunder). 2.3 OTHER PROVISIONS OF THE NOTES. Each Note shall provide for the payment of interest as provided in Section 3. 2.4 RECORDKEEPING. Each Bank shall record in its records, or at its option on the schedule attached to its Note, the date, amount, and type of each Loan made by such Bank, each repayment, Continuation, or Conversion thereof, and the dates on which each Interest Period for each Fixed Rate Loan shall begin and end. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Note. The failure so to record any such amount or any error in so recording any such amount, however, shall not limit or otherwise affect the obligations of the Company hereunder or under any Note to repay the principal amount of the Loans, together with all interest accruing thereon. SECTION 3 INTEREST. 3.1 INTEREST RATES. With respect to each Loan, the Company hereby promises to pay interest on the unpaid principal amount thereof for the period commencing on the date of such Loan until such Loan is paid in full, as follows: (a) At all times while such Loan is a Base Rate Loan, at a rate per annum equal to the Base Rate from time to time in effect; (b) At all times while such Loan is a Domestic CD Loan, during each Interest Period, at a rate per annum equal to the Domestic CD Rate (Adjusted) applicable to such Interest Period, plus the Applicable Margin; (c) At all times while such Loan is a Eurocurrency Loan, during each Interest Period, at a rate per annum equal to the Eurocurrency Rate (Reserve Adjusted) applicable to such Interest Period, plus the Applicable Margin; and (d) At all times while such Loan is a Negotiated Loan or a Local Currency Loan, at the rate per annum agreed to by the Company and the Relevant Bank pursuant to Section 1.6 or 1.7, as applicable. Notwithstanding the provisions of the preceding clauses (a), (b), (c) or (d) and subject to Section 1.5, in the event that any principal of any Loan is not paid when due (whether by acceleration or otherwise), after the due date of such principal until such principal is paid, the unpaid principal amount of, and accrued but unpaid interest on, Revolving Loan shall bear interest at a rate per annum equal to the higher of the rate -5- 11 borne by such Loan or the Relevant Bank's Base Rate from time to time in effect, plus 1% per annum, subject to the maximum applicable legal rate. 3.2 INTEREST PAYMENT DATES. Accrued interest on each Base Rate Loan outstanding for 45 days or more shall be payable (i) quarterly in arrears on the tenth day of each April, July, October, and January for the quarterly period ended on the last day of the preceding month, and (ii) at maturity, commencing with the earlier of such dates to occur after the date hereof. Accrued interest on each Base Rate Loan outstanding for less than 45 days shall be payable in full on the date such Base Rate Loan is paid in full. Except as otherwise agreed by the Relevant Bank, accrued interest on each Fixed Rate Loan shall be payable on the last day of the Interest Period of each such Loan (or, in the case of a Domestic CD Loan or Negotiated Rate Loan with an Interest Period of 90 days or longer or a Eurocurrency Loan with an Interest Period of three months or longer, accrued interest shall be payable quarterly in arrears on the tenth day of each April, July, October and January and on the last day of each such Interest Period). After maturity, accrued interest on all Loans shall be payable on demand. Interest on any Eurocurrency Loan shall be paid in the same currency in which such Loan was advanced. 3.3 INTEREST PERIODS FOR FIXED RATE LOANS. Prior to each borrowing, Continuation, or Conversion of Fixed Rate Loans, the Company shall specify, in the related notice of borrowing, Continuation, or Conversion pursuant to Sections 1.4 or 1.5, the duration of the Interest Period for such Fixed Rate Loans. Each notice to the Relevant Bank of an Interest Period shall be in writing or by telephone and shall be given by an Authorized Person. 3.4 SETTING AND NOTICE OF RATES. For each Loan made hereunder, the applicable interest rate for each Interest Period or other period shall be the rate quoted by the Relevant Bank to the Company for that particular type of Loan. The Relevant Bank shall, upon written request of the Company, deliver to the Company a statement showing the calculation of (i) any applicable Domestic CD Rate (Adjusted), (ii) any applicable Eurocurrency Rate (Reserve Adjusted) or (iii) the rate of interest per annum applicable to Negotiated Loans or Local Currency Loans hereunder. 3.5 COMPUTATION OF INTEREST. Interest shall be computed for the actual number of days elapsed (with interest accruing on the first day, but not the last day, of such Loan) on the basis of (a) with respect to Domestic CD Loans and Eurocurrency Loans, a 360 day year, (b) with respect to Base Rate Loans, a 365 or 366 day year, as the case may be, (c) with respect to Negotiated Loans, a 365 or 366 day year, as the case may be, or such other basis as is agreed to by the Company and the Relevant Bank, and (d) with respect to Local Currency Loans, on a basis consistent with local customs that is agreed to by the Relevant Bank and the Company. -6- 12 SECTION 4 FEES. 4.1 COMMITMENT FEE. The Company agrees to pay to each Bank a commitment fee, for the period from and including the date of this Agreement to the Revolving Period Termination Date, on the daily average of the Unused Amount of such Bank's Commitment hereunder equal to the Applicable Commitment Fee in effect from time to time times the Unused Amount. Such commitment fee shall be payable quarterly in arrears on the tenth day of each April, July, October, and January (the first such payment to be made on January 10, 1998) for the quarterly period ended on the last day of the preceding month and on the Revolving Period Termination Date. The Company may make such payments according to the Electronic Payment Instructions. 4.2 COMPUTATION OF FEES. Fees shall be computed for the actual number of days elapsed on the basis of a 365 or 366 day year, as the case may be. SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENT. 5.1 REDUCTION OR TERMINATION OF THE COMMITMENTS. The Company may from time to time prior to the Termination Date on at least three Business Days' prior written notice given by an Authorized Person to any Bank permanently reduce the amount of such Bank's Commitment to an amount not less than the aggregate unpaid principal amount of the Loans made by such Bank then outstanding. Any such reduction shall be in an aggregate amount of not less than 1,000,000 U.S. Dollars, or such lesser amount of such Bank's Unused Amount then remaining. 5.2 OPTIONAL PREPAYMENT. The Company may from time to time prepay the Loans in whole or in part, provided that (a) an Authorized Person shall give the Relevant Bank not less than three Business Days' prior notice thereof, specifying the Loans to be prepaid, and the date and amount of prepayment and (b) each partial prepayment shall be in the principal amount of 1,000,000 U.S. Dollars (or the Eurocurrency or Local Equivalent Amount thereof) or such lesser amount as is then outstanding on the Loan being prepaid. 5.3 MANDATORY PREPAYMENT. On each day on which the aggregate outstanding principal amount of Loans owing to any Bank on such day exceeds (whether as a result of currency fluctuations or otherwise) such Bank's Commitment hereunder, the Company shall pay to such Bank on demand a mandatory prepayment in the amount of such excess. Mandatory prepayments required by this Section 5.3 shall be applied first to Base Rate Loans until paid in full and then, at the Company's election and in the order specified by the Company, to Fixed Rate Loans. -7- 13 SECTION 6 MAKING AND APPLICATION OF PAYMENTS. 6.1 MAKING OF PAYMENTS. Except as otherwise provided in Section 11.2 hereof, all payments (including those made pursuant to Section 5) of principal of, or interest on, the Loans shall be made by the Company to the Relevant Bank in immediately available funds in the Obligation Currency. 6.2 APPLICATION OF CERTAIN PAYMENTS. Each payment of principal on any Loan shall be applied first to Base Rate Loans and then to such of the other Loans as the Company shall direct by written or telephonic notice given by an Authorized Person to the Relevant Bank on or before the date of such payment, or in the absence of such notice, as the Relevant Bank shall determine in its discretion. 6.3 DUE DATE EXTENSION. If any payment of principal or interest with respect to any of the Loans or Notes falls due on a Saturday, Sunday, or other day which is not a Business Day, then such due date shall be extended to the next following Business Day (except as provided in the last sentence of the definition of Interest Period), and additional interest shall accrue and be payable for the period of such extension. SECTION 7 INCREASED COSTS AND TAXES. 7.1 INCREASED CAPITAL. (a) If, after the date of this Agreement, the adoption of any applicable law, rule, or regulation regarding capital adequacy, or any change therein, or change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or comparable agency, has the effect of reducing the rate of return on such Bank's capital as a consequence of its obligations hereunder to a level below that which such Bank would have achieved but for such adoption, change, or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time within 15 days after demand by such Bank, the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such reduction; provided, that, no Bank shall request, and the Company shall not be obligated to pay, any amounts in excess of the amounts charged by such Bank to similarly situated borrowers of such Bank under revolving credit facilities similar to the one provided herein. Notwithstanding the foregoing, a Bank shall not be entitled to compensation from the Company for any -8- 14 such additional amounts incurred more than 30 days before the date on which the Bank notifies the Company of any event which would entitle the Bank to compensation pursuant to this Section 7.1. (b) Each Bank will promptly notify the Company of any event of which it has knowledge that will entitle such Bank to compensation pursuant to this Section 7.1, together with a certificate signed by an authorized officer of the Bank setting forth the basis of such demand and certifying that the amounts demanded hereunder are not in excess of the amounts charged by such Bank to similarly situated borrowers of such Bank under revolving credit facilities similar to the one provided herein. The Bank will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank or contrary to its stated policies. The Bank's certification of the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of demonstrable error. In determining such amount, such Bank may use reasonable averaging and attribution methods. 7.2 INCREASED COSTS. If, after the date hereof, the adoption of any applicable law, rule, or regulation or any change therein, or any change in the interpretation or administration thereof, or compliance by any Bank with any request, or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency, (a) shall subject any Bank to any tax, duty, or other charge with respect to its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans, or shall change the basis of taxation of payments to any Bank of the principal of or interest on its Fixed Rate Loans or any other amounts due under this Agreement in respect of its Fixed Rate Loans or its obligation to make Fixed Rate Loans (except for the imposition of any tax or changes in the rate of tax imposed on the overall income of such Bank); or (b) shall impose, modify, or deem applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of interest rates pursuant to Section 3), special deposit, or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank; and as a result of any of the foregoing the cost to such Bank of making or maintaining any Fixed Rate Loan is increased (or a cost is imposed on such Bank), or the amount of any sum received or receivable by such Bank under this Agreement or under its -9- 15 Notes with respect thereto is reduced, then within 15 days after demand by such Bank (which demand shall be accompanied by a statement setting forth the basis of such demand), the Company shall pay directly to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or such reduction. Notwithstanding the foregoing, a Bank shall not be entitled to any compensation from the Company for any such increased cost or such reduction attributable to any period that is more than 30 days before the date on which the Bank notifies the Company of any event which would entitle the Bank to compensation pursuant to this Section 7.2. No Bank is entitled to reimbursement for any amounts paid as a result of taxes currently imposed on such Bank. 7.3 BASIS FOR DETERMINING INTEREST RATE INADEQUATE. If with respect to any Interest Period: (a) a Bank reasonably determines that deposits in a requested Eurocurrency (in the applicable amounts) are not being offered to the Bank in the relevant market for such Interest Period requested by the Company, or a Bank otherwise reasonably determines (which determination shall be binding and conclusive on all parties) that by reason of circumstances affecting the interbank eurocurrency market adequate and reasonable means do not exist for ascertaining the applicable Eurocurrency Rate (Reserve Adjusted); or (b) a Bank advises the Company that the making or funding of Eurocurrency Loans has become impracticable as a result of an event occurring after the date of this Agreement which in the opinion of such Bank materially affects Eurocurrency Loans, then: (i) the affected Bank shall promptly notify the Company of such circumstance, (ii) so long as such circumstances shall continue the affected Bank shall not be under any obligation to make, Continue, or Convert Loans into Eurocurrency Loans, and (iii) on the last day of the then current Interest Period for Eurocurrency Loans, such Eurocurrency Loans shall, unless then repaid in full or Converted into a Loan of a different type pursuant to Section 1.5, automatically Convert to Base Rate Loans. 7.4 CHANGES IN LAW RENDERING CERTAIN LOANS UNLAWFUL. In the event that there occurs after the date hereof any change in applicable laws or regulations (including the adoption of any new laws), or any change in the interpretation of applicable laws or regulations by any governmental or other regulatory body charged with the administration thereof, that makes it unlawful for a Bank to make, maintain, or fund a type of Fixed Rate Loans, then (a) such Bank shall promptly notify the Company of such circumstance, (b) the obligation of such Bank to make, Continue, or Convert Loans into the type of Fixed Rate Loans made unlawful for that Bank shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness, and (c) on the last day of the current Interest Period for Fixed Rate Loans of such type (or, in any event, if the Bank affected by such change so requests, on such earlier date as -10- 16 may be required by the relevant law, regulation, or interpretation), the Fixed Rate Loans of such type made by such Bank shall, unless then repaid in full or Converted into a Loan of a different type pursuant to Section 1.5, automatically Convert to Base Rate Loans. 7.5 FUNDING LOSSES. The Company hereby agrees that upon demand by any Bank (which demand shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed), the Company will indemnify such Bank against any net loss or expense which such Bank sustains or incurs (including, without limitation, any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund or maintain Fixed Rate Loans), as reasonably determined by such Bank, as a result of (a) any payment or prepayment or Conversion of any Fixed Rate Loan of such Bank on a date other than the last day of an Interest Period for such Loan, or (b) any failure of the Company to borrow, Continue, or Convert any Loans on a date specified therefor in a notice of borrowing (which shall not include the Company's notice of intention to request a Eurocurrency Loan), Continuation, or Conversion pursuant to this Agreement. 7.6 CURRENCY INDEMNITY. (a) The obligation of the Company under this Agreement and the Notes to make payments in Dollars or in any Eurocurrency or Local Currency in which the Loans or any portion thereof are outstanding (the "OBLIGATION CURRENCY") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent to which such tender or recovery shall result in the effective receipt by the Banks of the full amount of the Obligation Currency expressed to be payable under this Agreement or the Notes. If, for the purpose of obtaining or enforcing judgment against the Company in any court or in any jurisdiction, it becomes necessary to convert into any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "JUDGMENT CURRENCY") an amount due in the Obligation Currency under the Notes, the conversion shall be made, at the option of the Relevant Bank, at the rate of exchange prevailing on the Business Day immediately preceding the day on which the judgment is given (such Business Day as the case may be, being hereinafter in this Section 7.6 referred to as the "JUDGMENT CURRENCY CONVERSION DATE"). (b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Company agrees to pay such additional amounts as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the -11- 17 rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date. (c) Any amount due from the Company under the foregoing subparagraph will be due as a separate debt and shall not be affected by judgment being obtained for any other sums due otherwise hereunder. 7.7 INCREASED TAX COSTS. The Company agrees to make all payments or reimbursements under this Agreement free and clear of, and without deduction for, any future taxes (including withholding taxes) imposed (except for any tax or changes in the rate of tax imposed on overall income of any Bank) on payments of principal, interest and fees or charges under the Agreement which are attributable to, or represent, the application of any such tax for any time period after the Company has received notice of such tax from such Bank. Such Bank will use its reasonable efforts to minimize any taxes and will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such tax(es) and will not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank or contrary to its stated policies. In the event that the Company is required to directly pay any such taxes, the Company agrees to furnish such Bank with official tax receipts evidencing payment of such taxes within forty-five (45) days after the due date for each such payment. Each Bank agrees that in the event that any such additional amount paid or reimbursed by the Company to or for such Bank in respect of any taxes be recovered, in whole or in part, by such Bank (by credit, offset, deduction or otherwise), against or in computing any income, franchise or other taxes, such Bank will promptly reimburse the Company the amount of such recovery. A transferee of any interest in the Agreement or the Notes shall not be entitled to the benefits of this Section 7.7 with respect to any taxes which would not have been incurred if there had been no transfer. SECTION 8 WARRANTIES. The Company warrants to the Banks as of the date of this Agreement that: 8.1 CORPORATE ORGANIZATION. The Company is a corporation duly incorporated and in good standing under the laws of the State of Ohio and the Company is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction of the United States where, because of the nature of its activities or properties, such qualification is required and where the failure to be so qualified would materially and adversely affect the consolidated financial condition of the Company and its Consolidated Subsidiaries taken as a whole. -12- 18 8.2 AUTHORIZATION; NO CONFLICT. The execution, delivery, and performance by the Company of this Agreement and the Notes are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not and will not contravene or conflict with any provision of applicable law in effect on the date hereof or of the Amended Articles of Incorporation or Regulations of the Company or of any agreement for borrowed money or other material agreement binding upon the Company. The Company has duly executed and delivered this Agreement. 8.3 VALIDITY AND BINDING NATURE. This Agreement is, and the Notes when duly executed and delivered will be, legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. 8.4 FINANCIAL STATEMENTS. The Company's audited consolidated financial statements as at December 31, 1996 and its unaudited consolidated financial statements as at September 30, 1997, copies of which have been furnished to each Bank, have been prepared in accordance with GAAP, applied on a basis consistent with that of the preceding fiscal year, and fairly present in all material respects the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries as of the dates and for the periods indicated, as applicable, and since the dates thereof until the date of this Agreement there has been no material adverse change in the consolidated financial condition of the Company and its Consolidated Subsidiaries taken as a whole. 8.5 LITIGATION. Except as set forth in Schedule 8.5, there are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its Consolidated Subsidiaries is a party or to which any of their respective properties is subject that are required to be disclosed in the Company's periodic reports under the Securities Exchange Act of 1934 and that have not been so disclosed. 8.6 COMPLIANCE WITH ERISA. Each member of the controlled group of corporations (as defined in Section 414(b) of the Internal Revenue Code of 1986), which includes the Company (the "TRW GROUP"), has (i) fulfilled its obligations under the minimum funding standards of Part 3 of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA") and Section 412 of the Internal Revenue Code of 1986 ("CODE") with respect to each defined benefit plan (as defined in Section 3 (35) of ERISA) maintained by a member of the TRW Group ("PLAN") and (ii) is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each such Plan. No member of the TRW Group has (x) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Plan, (y) failed to make any contribution or payment required to be made to a Plan or to any multi-employer plan (as defined in Section 3 (37)(A) of ERISA) or made any amendment to any Plan which has resulted or could result in the imposition of a lien or the posting of a bond or other security under ERISA or the Code or (z) incurred any -13- 19 liability under Title IV of ERISA other than the liability to the Pension Benefit Guaranty Corporation for premiums under Section 4007 of ERISA. 8.7 ENVIRONMENTAL MATTERS. The Company has conducted periodic reviews of the effect of compliance with federal, state and local requirements relating to the discharge of materials into the environment, in the course of which it has identified and evaluated potential liabilities and costs. The Company has established accruals for matters that are probable and reasonably estimable as required by FASB Statement No. 5, "Accounting for Contingencies." To the Company's knowledge, any liability that may result from the resolution of known environmental matters in excess of amounts accrued therefor will not have a material adverse effect on the financial position of the Company. 8.8 TAXES. The Company and its Consolidated Subsidiaries have filed all United Stated federal income tax returns and all other material tax returns which are required to have been filed by them (subject to any available extensions) and have paid all taxes indicated as due on such returns. The Company has made adequate and reasonable provision for all material taxes not yet due and payable, if any, and all material assessments, if any. 8.9 GOVERNMENT REGULATION. Neither the Company nor any of its Consolidated Subsidiaries is registered as a public utility under the Public Utility Holding Company Act of 1935 or as an investment company under the Investment Company Act of 1940. SECTION 9 COVENANTS. Until the later of (i) the expiration or termination of the Commitments and (ii) all obligations of the Company hereunder and under the Notes are paid in full, the Company agrees that, unless at any time the Majority Banks shall otherwise expressly consent in writing: 9.1 REPORTS. CERTIFICATES AND OTHER INFORMATION. 9.1.1 AUDIT REPORT. Within 120 days after each fiscal year of the Company, the Company will provide to each Bank a copy of the Company's Annual Report to Shareholders and its Annual Report on Form 10-K for the year then ended, as filed with the Securities and Exchange Commission and which will include an annual audit report of the Company, prepared on a consolidated basis and in accordance with the Company's then current method of accounting, which methods must be in accordance with GAAP, duly certified by independent certified public accountants of nationally recognized standing selected by the Company. 9.1.2 QUARTERLY REPORTS. Within 60 days after each quarter (except the last quarter) of each fiscal year of the Company, the Company will provide to each -14- 20 Bank a copy of the Company's Quarterly Report on Form 10-Q for the quarter then ended, as filed with the Securities and Exchange Commission. 9.1.3 COMPLIANCE CERTIFICATES. Contemporaneously with the furnishing of a copy of each Annual Report on Form 10-K provided for in Section 9.1.1 and of each Quarterly Report on Form 10-Q provided for in Section 9.1.2, the Company will provide to each Bank a duly completed certificate in the form of Exhibit B with appropriate insertions (each such certificate called a "COMPLIANCE CERTIFICATE"), dated not more than 10 days prior to the date furnished, signed by an officer of the Company, showing compliance with the Consolidated Net Worth covenant set forth in Section 9.2, and to the effect that no Event of Default or Unmatured Event of Default has occurred and is continuing or, if there is any such an event, describing it and the steps, if any, being taken to cure it. 9.1.4 CURRENT REPORTS. The Company will provide to each Bank copies of each Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission, promptly upon the filing thereof. 9.1.5 OTHER INFORMATION. The Company will provide to a Bank such other information concerning the Company as such Bank may reasonably request from time to time. 9.2 NET WORTH. The Company will not permit Consolidated Net Worth to be less than 1,600,000,000 U.S. Dollars less an amount equal to the lesser of (i) the aggregate amount expended by the Company subsequent to December 31, 1995 for the repurchase of its common stock and (ii) 600,000,000 U.S. Dollars. 9.3 LIENS. (a) The Company will not, and will not permit any Domestic Subsidiary to, directly or indirectly, create or assume any mortgage, encumbrance, lien, pledge, charge, or security interest of any kind (collectively and individually, a "MORTGAGE" or "LIEN") upon or in any of its interests in any Principal Property or upon or in any shares of capital stock or indebtedness of any Domestic Subsidiary, whether such interest, capital stock or indebtedness is now owned or hereafter acquired, if such mortgage secures or is intended to secure, directly or indirectly, the payment of any indebtedness for money borrowed evidenced by notes, bonds, debentures, or other written evidences of indebtedness (such indebtedness for money borrowed being hereafter in Sections 9.3 and 9.4 collectively called "DEBT") without making effective provision, and the Company in such case will make or cause to be made effective provision, whereby all of the Loans shall be secured by such mortgage equally and ratably with any other Debt thereby secured; excluding, however, from the operation of this Section 9.3: -15- 21 (i) mortgages on any Principal Property acquired, constructed, or improved by the Company or any Domestic Subsidiary after July 1, 1992 which are created or assumed contemporaneously with, or within 120 days after, such acquisition or completion of such construction or improvement to secure or provide for the payment of any part of the purchase price of such Principal Property or the cost of such construction or improvement incurred after July 1, 1992, or, in addition to mortgages contemplated by clauses (ii) and (iii) below, mortgages on any such Principal Property existing at the time or placed thereon at the time of acquisition or leasing thereof by the Company or any Domestic Subsidiary, or conditional sales agreements or other title retention agreements with respect to any Principal Property now owned or leased or hereafter acquired or leased by the Company or a Domestic Subsidiary; (ii) mortgages on property (including shares of capital stock or indebtedness of a corporation) of a corporation existing at the time such corporation becomes a Domestic Subsidiary or is merged or consolidated with the Company or a Domestic Subsidiary or existing at the time of a sale, lease, or other disposition of the properties of such corporation (or a division thereof) or other Person as an entirety or substantially as an entirety (which includes the sale, lease, or other disposition of all or substantially all the assets thereof) to the Company or a Domestic Subsidiary, provided that no such mortgage shall extend to any other Principal Property of the Company or any Domestic Subsidiary or to any shares of capital stock or any indebtedness of any Domestic Subsidiary; (iii) mortgages created by the Company or a Domestic Subsidiary to secure indebtedness of the Company or a Domestic Subsidiary to the Company or to a Wholly Owned Domestic Subsidiary; (iv) mortgages in favor of the United States of America or any State, territory or possession thereof, or any foreign country or any department, agency, instrumentality, or political subdivision of any of such domestic or foreign jurisdictions to secure partial, progress, advance, or other payments pursuant to any contract or statute or to secure any debt incurred for the purpose of financing all or any part of -16- 22 the purchase price of, or the cost of constructing, the property subject to such mortgages; and (v) mortgages for the sole purpose of extending, renewing, or replacing (or successively extending, renewing, or replacing) in whole or in part any mortgage existing on July 1, 1992 or referred to in the foregoing clauses (i) to (iv) inclusive or of any debt secured thereby; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal, or replacement, and that such extension, renewal, or replacement mortgage shall be limited to all or a part of the property which secured the mortgage so extended, renewed, or replaced (plus improvements on such property). (b) Notwithstanding the provisions of paragraph (a) of this Section 9.3, the Company or any Domestic Subsidiary may, without equally and ratably securing all the Loans, create or assume mortgages which would otherwise be subject to the foregoing restrictions if at the time of such creation or assumption, and after giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated Net Tangible Assets determined as of a date not more than 90 days prior thereto. 9.4 SALE AND LEASEBACK. (a) The Company will not, and will not permit any Domestic Subsidiary to, sell, lease or transfer any Principal Property owned by the Company or a Domestic Subsidiary as an entirety, or any substantial portion thereof, to anyone other than a Wholly Owned Domestic Subsidiary (or the Company or a Wholly Owned Domestic Subsidiary in the case of a Domestic Subsidiary) with the intention of taking back a lease of such property (herein referred to as a "SALE AND LEASEBACK TRANSACTION") except a lease for a period of not more than 36 months by the end of which it is intended that the use of such property by the lessee will be discontinued; provided, that, notwithstanding the foregoing, the Company or any Domestic Subsidiary may sell any such property and lease it back if the net proceeds of such sale are at least equal to the fair value (as determined by resolution adopted by the Board of Directors of the Company) of such property, and (i) the Company or such Domestic Subsidiary would be entitled pursuant to paragraph (a) of Section 9.3 to create Debt secured by a mortgage on the property to be leased in an amount equal to the -17- 23 Attributable Debt with respect to such Sale and Leaseback Transaction without equally and ratably securing all the Loans, or (ii) if such sale or transfer does not come within the exception provided by the preceding clause (i), the net proceeds of such sale shall, and in any such case the Company covenants that they will, within 120 days after such sale, be applied (to the greatest extent possible) either to the repayment of the Loans then outstanding when due (whereupon the Commitments hereunder shall be reduced, on a pro rata basis, to the extent that such net proceeds are so applied) or to the retirement of other Consolidated Funded Debt of the Company ranking at least on a parity with the Loans, or in part to one or more of such alternatives and in part to another. (b) Notwithstanding the provisions of paragraph (a) of this Section 9.4, the Company or any Domestic Subsidiary may enter into Sale and Leaseback Transactions if, at the time of such entering into, and after giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated Net Tangible Assets determined as of a date not more than 90 days prior thereto. 9.5 MERGERS, CONSOLIDATIONS, SALES. The Company shall not consolidate with, or sell or convey all or substantially all its assets to, or merge into, any other Person, unless (a) the Company is the surviving corporation of such transaction; or (b) the Company is the nonsurviving party to a merger or consolidation, the primary purpose of which is to effect a reincorporation of the Company under the laws of another state. SECTION 10 CONDITIONS OF LENDING. The obligation of each Bank to make its Loans is subject to the following conditions precedent: 10.1 INITIAL LOAN TO THE COMPANY. The obligation of each Bank to make its initial Loan to the Company is, in addition to the conditions precedent specified in Section 10.3, subject to the condition precedent that such Bank shall have received all of the following, each duly executed and dated the date of such Loan (or such earlier date as shall be satisfactory to such Bank), in form and substance satisfactory to such Bank: 10.1.1 NOTE. The Note of the Company payable to the order of such Bank, substantially in the form of Exhibit A. 10.1.2 RESOLUTIONS. Certified copies of resolutions of the Board of Directors of the Company authorizing the Company to obtain Loans hereunder. -18- 24 10.1.3 INCUMBENCY AND SIGNATURES. A certificate of the Secretary or an Assistant Secretary of the Company certifying the names of the officer or officers of the Company who have signed or will sign this Agreement, the Notes, and other documents provided for in this Agreement to be executed by the Company, together with a sample of the true signature of each such officer, and a certificate of authorization setting forth each Person who is authorized to effect Loans and other transactions hereunder, together with a sample of the true signature of each such Authorized Person. Each Bank may conclusively rely on such certificates until it shall have received notice to the contrary. 10.1.4 OPINION OF COUNSEL. The opinion of counsel to the Company, substantially in the form of Exhibit C. 10.2 LOANS TO DESIGNATED SUBSIDIARIES. The obligation of each Bank to make any Loans to any Designated Subsidiary is subject to the condition precedent that such Bank shall have received the following: 10.2.1 RESOLUTIONS. A certified copy of the resolutions of the appropriate governing body of the Designated Subsidiary that requested the Loan authorizing it to obtain Loans hereunder or such other evidence of corporate authority as is customary in the country of domicile of the Designated Subsidiary. 10.2.2 ACCEPTANCE OF THIS AGREEMENT. A letter signed by an authorized officer of such Designated Subsidiary evidencing its agreement to be bound by the terms of this Agreement with respect to each Loan made to it hereunder. 10.2.3 INCUMBENCY AND SIGNATURES. A certificate of the Secretary or an Assistant Secretary of the Designated Subsidiary certifying the name and signature of the officer or officers of the Designated Subsidiary who have signed or will sign the letter referenced in Section 10.2.2, together with a sample of the true signature of each such officer, and a certificate of authorization setting forth each Person who is authorized to effect Loans and other transactions hereunder, together with a sample of the true signature of each such Authorized Person. Each Bank may conclusively rely on such certificates until it shall have received notice to the contrary. 10.3 ALL LOANS. The obligation of each Bank to make any Loan hereunder is subject to the further conditions precedent that: (a) No Event of Default or Unmatured Event of Default has occurred and is continuing or will result from the making of such Loan, and (b) the warranties of the Company contained in Sections 8.1, 8.2, and 8.3, are true and correct as of the date of such requested Loan, with the same effect as though made on the date of such Loan. 10.4 CONVERSIONS. Except for Section 10.3(a), the conditions set forth in Sections 10.1, 10.2, and 10.3 shall not apply to the Conversion of Loans from one type to another type or Continuation of Loans. -19- 25 SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT. 11.1 EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: 11.1.1 NONPAYMENT OF NOTES OR FEES. Default in the payment when due of any principal of any Note or default in the payment when due of interest on any Note or fees payable by the Company hereunder and continuance of such failure to pay interest or fees for five Business Days after written notice thereof to the Company from the Bank to which such amounts are owed. 11.1.2 NONPAYMENT OF OTHER INDEBTEDNESS FOR BORROWED MONEY. Default in the payment when due at maturity (subject to any applicable grace period) or by acceleration of any other indebtedness for borrowed money having a principal amount in excess of 50,000,000 U.S. Dollars of, or guaranteed by, the Company ("OTHER INDEBTEDNESS"), or default in the performance or observance of any obligation or condition with respect to any such Other Indebtedness if such default results in the acceleration of the maturity of any such Other Indebtedness; provided, that, if such default shall subsequently be remedied, cured, or waived prior to either the termination of Commitments or the declaration that all Loans are immediately due and payable, in each case pursuant to Section 11.2 hereof, and as a result the payment of such Other Indebtedness is no longer due, the Event of Default existing hereunder by reason thereof shall likewise be deemed thereupon to be remedied, cured, or waived and no longer in existence, all without any further action by the parties hereto. 11.1.3 BANKRUPTCY OR INSOLVENCY. The Company generally fails to pay, or admits in writing its inability to pay, debts as they become due; or the Company applies for, consents to, or acquiesces in the appointment of, a trustee, receiver, or other custodian for the Company or for a substantial part of the property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver, or other custodian is appointed for the Company or for a substantial part of the property of the Company; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding is commenced in respect of the Company and if such case or proceeding is not commenced by the Company, it is consented to or acquiesced in by the Company or remains for 90 consecutive days undismissed or unstayed; or the Company takes any corporate action to authorize any of the foregoing. 11.1.4 NONCOMPLIANCE WITH OTHER PROVISIONS. Failure by the Company to comply with or to perform in any material respect any other provision of this Agreement (and not constituting an Event of Default under any of the preceding provisions of this Section 11.1) and continuance of such failure for 30 days after written notice thereof to the Company from the Majority Banks. -20- 26 11.1.5 WARRANTIES. Any warranty made by the Company in Sections 8 or 14.16 of this Agreement is breached or is incorrect when made in any material respect and the Company shall fail to take corrective actions reasonably satisfactory to the Majority Banks within 30 days after written notice thereof to the Company from the Majority Banks, except only in the case of a breach of the warranties contained in Section 8 or 14.16 made on the date of this Agreement, in which case there shall be no opportunity to take corrective actions. 11.1.6 JUDGMENTS. Any final and unappealable judgment or order from a judicial or administrative body (which order or judgment is fully enforceable against the Company or any of its Consolidated Subsidiaries in courts of the United States of America or any state thereof) for the payment of money in excess of 50,000,000 U.S. Dollars (after adjustments to reflect reductions for credits and set-offs asserted in good faith by the Company) shall be rendered against the Company, shall not have been discharged or vacated and shall have been in effect, in its final and unappealable form, for a period of 30 consecutive days. 11.2 EFFECT OF EVENT OF DEFAULT. If any Event of Default described in Section 11.1.3 shall occur, the Commitments (if they have not theretofore terminated) shall immediately terminate and all Loans and Notes shall automatically become immediately due and payable, all without notice of any kind; and, in the case of any other Event of Default, the Majority Banks may declare the Commitments (if they have not theretofore terminated) to be terminated and the Outstanding Majority Banks may declare that all Loans and Notes shall become immediately due and payable. The Majority Banks and the Outstanding Majority Banks shall promptly advise the Company in writing of any such declaration. Following the declaration that all Loans and Notes are immediately due and payable, all payments made by the Company on account of the Loans and Notes shall be made to the Administrator, which shall distribute such payments on a pro rata basis (in relation to the amounts of outstanding Loans) to Banks with outstanding Loans. Following such declaration, if any Bank receives a payment that is not on a pro rata basis, such Bank will remit to the Administrator any amount in excess of its pro rata portion. Upon receipt of any such remittance, the Administrator will distribute such amount to the Banks with outstanding Loans in order that all distributions will be pro rata. The effect as an Event of Default of any event described in Section 11.1.1 or Section 11.1.3 may be waived only by the written concurrence of the holders of 100% of the aggregate unpaid principal amount of the Notes and the Majority Banks, and the effect as an Event of Default of any other event described in this Section 11 may be waived by the written concurrence of the Majority Banks and the Outstanding Majority Banks. SECTION 12 GUARANTY. The Company hereby unconditionally, absolutely and irrevocably guarantees, as primary obligor and not merely as surety, the repayment to each Relevant Bank, when due pursuant to the terms and conditions of this Agreement, of the amount of -21- 27 any Loan made pursuant to this Agreement to a Designated Subsidiary, together with accrued interest on such Loan; provided, however, that before any amount shall be deemed due and payable pursuant to this Section 12, the Relevant Bank must first give notice to the Company of the nonpayment by the Designated Subsidiary, and the Company shall have five Business Days from the receipt of such notice to cure or cause to be cured any and all such nonpayments. The Company's obligations hereunder constitute a guaranty of payment and not of collection merely. The Company hereby waives notice of, and consents to, any extensions of time of payment, renewals, compromises, settlements, releases or other indulgences from time to time granted by the Relevant Bank in respect of Loans made to Designated Subsidiaries. Except as otherwise provided in this Section 12, the Company hereby waives presentment, protest, demand of payment, notice of dishonor and all notices and demands whatsoever. The obligations of the Company hereunder shall not be released, discharged or otherwise affected by (i) any change in the corporate existence or constitution, structure or ownership of any Designated Subsidiary or the Company, (ii) any insolvency, bankruptcy, reorganization or similar proceeding affecting the Designated Subsidiary or its assets or the Company or (iii) the existence of any claim, set-off or other rights which the Company may have at any time against the Relevant Bank or any other person. If at any time any payment of any obligation guaranteed hereunder is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of a Designated Subsidiary or otherwise, the Company's obligations under this Section 12 with respect to such payment shall be reinstated at such time as though such payment had not been made. The Company shall not exercise any of its subrogation rights with respect to amounts paid to a Relevant Bank pursuant to this Section 12 until all amounts guaranteed hereunder payable to such Relevant Bank have been paid in full. Following such payment in full with regard to a Relevant Bank, the Company shall be entitled to subrogation in the Relevant Bank's rights and, upon the reasonable request of the Company, the Relevant Bank agrees to cooperate with the Company in enforcement of the Company's subrogation rights, including the transfer and delivery by the Relevant Bank to the Company of any and all evidence of indebtedness relating to such Loan within the possession or control of the Relevant Bank. SECTION 13 CERTAIN DEFINITIONS. When used herein the following terms shall have the following meaning: "AFFILIATE" means, with respect to a particular Person, any Person which, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, control of a Person shall mean the power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "AGREEMENT" means this Agreement, as it may be amended, modified, or supplemented and in effect from time to time. -22- 28 "APPLICABLE COMMITMENT FEE" means the percentage in effect from time to time as set forth in the following table opposite the highest of the then-current rating assigned to the Company's senior unsecured long-term debt by Moody's Investors Service, Inc. ("MOODY'S") or Standard & Poor's Ratings Group ("S&P"): Rating Applicable (Moody's/S&P) Commitment Fee --------------------- -------------- higher than A1/A+ 0.040% A1/A+ 0.050% A2/A 0.060% A3/A- 0.070% Baa1/BBB+ 0.080% Baa2/BBB 0.105% Baa3/BBB- 0.130% lower than Baa3/BBB- 0.155% -23- 29 "APPLICABLE MARGIN" means, at any time, the percentage set forth in the following table opposite the highest of the then-current rating assigned to the Company's senior unsecured long-term debt by Moody's or S&P: Applicable Applicable Margin for Margin for Rating Domestic CD Eurocurrency (Moody's/S&P) Loans Loans ---------------------------------------------------------------------- higher than A1/A+ 0.275% 0.175% A1/A+ 0.300% 0.200% A2/A 0.325% 0.225% A3/A- 0.350% 0.250% Baa1/BBB+ 0.400% 0.300% Baa2/BBB 0.475% 0.375% Baa3/BBB- 0.550% 0.450% lower than Baa3/BBB- 0.600% 0.500% "ASSESSMENT RATE" means, for any Domestic CD Loan (and for the purpose of computing the Domestic CD Rate (Adjusted)), the annual assessment rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) applicable to the Relevant Bank on its insured deposits under the Federal Deposit Insurance Act, determined by annualizing the most recent assessment levied on the Relevant Bank by the Federal Deposit Insurance Corporation (the "FDIC") with respect to such deposits, after giving effect to the most recent rebate granted to the Relevant Bank by the FDIC with respect to deposit insurance as well as the loss to the Relevant Bank (determined in the good faith judgment of the Relevant Bank) of the use of such rebate prior to the date credit is taken by the Relevant Bank with respect to such rebate. "ATTRIBUTABLE DEBT" means, as to any particular lease under which any Person is liable at the time and at any date as of which the amount thereof is to be determined, the lesser of (a) the fair value of the property subject to such lease (as determined by the Directors of the Company) or (b) the total net amount of rent required to be paid by such Person under such lease during the remaining term thereof, discounted from the respective due dates thereof to such date at the actual interest factor included in such rent. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of the rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. -24- 30 "AUTHORIZED PERSON" means, as to the Company, any person designated as such in a certificate signed by the Chief Financial Officer, Treasurer, or Assistant Treasurer of the Company, and, as to any Designated Subsidiary, means any person designated as such in a certificate signed by one or more officers of the Designated Subsidiary, as authorized by resolution of the Designated Subsidiary or otherwise by law. "BANKS" or "BANK" -- see Preamble. "BASE RATE" means the higher of (i) the rate of interest per annum publicly announced and in effect from time to time by the Relevant Bank at its Domestic Office identified on the signature pages hereto as its prime, base or reference rate for U.S. Dollar Loans or (ii) the Federal Funds Rate plus the Applicable Margin for Eurocurrency Loans. The Base Rate shall change simultaneously with each change in such announced prime, base or reference rate and Federal Funds Rate, as applicable. The Base Rate may not be the lowest rate charged by the Relevant Bank for commercial or other extensions of credit. "BASE RATE LOAN" means any Loan of U.S. Dollars that bears interest at or by reference to the Relevant Bank's Base Rate. "BUSINESS DAY" means (i) in the case of a Business Day that relates to a Eurocurrency Loan, any day of the year on which banks are open for business in both New York and, with regard to any such Bank only, the city in which the applicable Eurocurrency Office of such Bank is located and on which dealings are carried on in the interbank eurocurrency market; (ii) in the case of a Business Day that relates to a Base Rate Loan, a Domestic CD Loan, or a Negotiated Loan, any day of the year on which banks are open for business in both New York and, with regard to any such Bank only, the city in which the applicable Domestic Office of such Bank is located; and (iii) in the case of a Business Day that relates to a Local Currency Loan, any day of the year on which the local office of the Relevant Bank in that locality is open for business. "COMMITMENT(S)" means the commitments of the Banks to make Loans hereunder; and Commitment as to any Bank shall mean the commitment of such Bank to make Loans hereunder in an aggregate amount not to exceed the U.S. Dollar amount set forth opposite its signature hereto or any subsequent amendment hereto. "COMPANY" -- see Preamble. "COMPLIANCE CERTIFICATE" -- see Section 9.1.3 and Exhibit B. "CONSOLIDATED FUNDED DEBT" means the Funded Debt of the Company and its Consolidated Subsidiaries consolidated in accordance with GAAP. -25- 31 "CONSOLIDATED NET TANGIBLE ASSETS" means the total of all assets of the Company and its Consolidated Subsidiaries appearing on a consolidated balance sheet prepared in accordance with GAAP, including the equity in and the net amount of advances to other Subsidiaries, after deducting therefrom (without duplication of deductions) as shown on such balance sheet, the sum of: (i) intangible assets, including goodwill, cost of acquired businesses in excess of recorded net assets at acquisition dates, patents, licenses, trademarks, trade names, copyrights, unamortized debt discount and expense less unamortized debt premium, and corporate organization expense (but excluding deferred charges and prepaid expense); (ii) any write-up of the book value of any assets (other than equity in Subsidiaries which are not Consolidated Subsidiaries and other than as a result of currency revaluations) resulting from the revaluation thereof subsequent to March 31, 1992; (iii) all liabilities of the Company and its Consolidated Subsidiaries other than: Funded Debt; capital stock; surplus; surplus reserves; reserves for deferred Federal income taxes arising from accelerated depreciation, investment and other tax credits, and similar provisions; and contingency reserves not allocated for any particular purpose; (iv) reserves for depreciation and amortization and other reserves (other than the reserves referred to in the preceding clause(iii)); and (v) any minority interest in the shares of stock and surplus of any Consolidated Subsidiary. "CONSOLIDATED NET WORTH" means at any date the sum of the consolidated shareholders' investment and minority interests of the Company and its Consolidated Subsidiaries determined as of such date. Consolidated shareholders' investment and minority interests of the Company shall be as included in the annual and quarterly financial statements of the Company, as applicable. "CONSOLIDATED SUBSIDIARY" means each Subsidiary other than (a) any Subsidiary the accounts of which (i) are not required by GAAP to be consolidated with those of the Company for financial reporting purposes and (ii) were not consolidated with those of the Company in the Company's then most recent Annual Report to Shareholders and are not intended by the Company to be consolidated with those of the Company in its next Annual Report to Shareholders, or (b) any Subsidiary the primary business of which consists of financing the sale or lease of merchandise, equipment or services by the Company or any Subsidiary or owning, leasing, dealing -26- 32 in or developing real property, or providing services directly related thereto, or which is otherwise primarily engaged in the business of a finance or real estate company. "CONTINUE," "CONTINUATION" and "CONTINUED" shall refer to a continuation of Loans pursuant to Section 1.5. "CONVERT," "CONVERSION" and "CONVERTED" shall refer to a conversion of Loans pursuant to Sections 1.5, 3.3, 7.3, or 7.4. "DEBT" -- see Section 9.3. "DESIGNATED SUBSIDIARY" means any Subsidiary of the Company which (i) the Company from time to time designates in writing signed by the Chief Financial Officer, Treasurer, or Assistant Treasurer of the Company as a Designated Subsidiary entitled to receive Eurocurrency and Local Currency Loans hereunder and (ii) the Relevant Bank has not objected in writing to such designation of a Designated Subsidiary within thirty (30) days of the Relevant Bank's receipt of the Company's designation. Such designation shall contain the address of the Subsidiary which shall be used to give notice to the Subsidiary pursuant to Section 14.3. "DOMESTIC CD LOAN" shall mean any Loan of U. S. Dollars that bears interest at a rate determined by reference to the Relevant Bank's Domestic CD Rate (Adjusted). "DOMESTIC CD RATE" means, with respect to any Interest Period for any Domestic CD Loan, the rate of interest determined by the Relevant Bank to be the average (rounded upward, if necessary, to the nearest 1/100 of 1%) of the rates quoted to the Relevant Bank on the first day of such Interest Period by two certificate of deposit dealers in New York of recognized standing selected by the Relevant Bank for the purchase from the Relevant Bank or major commercial banks at face value of certificates of deposit issued by the Relevant Bank in an amount equal or comparable to the amount of the Domestic CD Loan and having a maturity equal to such Interest Period; provided, that, if such quotations from such dealers are not available to the Relevant Bank, it shall determine a reasonably equivalent rate on the basis of another source or sources selected by it. "DOMESTIC CD RATE (ADJUSTED)" means, with respect to any Interest Period for any Domestic CD Loan, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Domestic CD Domestic CD = Rate + Assessment Rate (Adjusted) ------------ Rate (1 - Reserve Requirement) -27- 33 "DOMESTIC OFFICE" means, with respect to any Bank, the office of such Bank or Affiliate of such Bank, designated as such under such Bank's signature hereto, or such other office of such Bank or Affiliate of such Bank, as such Bank may hereafter from time to time designate as its Domestic Office. "DOMESTIC SUBSIDIARY" means each Consolidated Subsidiary other than: (a) any Consolidated Subsidiary which the Directors of the Company reasonably determine not to be material to the business or financial condition of the Company; (b) any Consolidated Subsidiary the major portion of the assets of which are located, or the major portion of the business of which is carried on, outside the United States of America, its territories and possessions; (c) any Consolidated Subsidiary which, during the 12 most recent calendar months (or such shorter period as shall have elapsed since its organization) derived the major portion of its gross revenues from sources outside the United States of America; (d) any Consolidated Subsidiary the major portion of the assets of which consists of securities or obligations, or both, of one or more corporations (whether or not Consolidated Subsidiaries) of the types described in the preceding clauses (b) and (c); and (e) any Consolidated Subsidiary organized after March 31, 1992 which the Company intends shall be operated in such manner as to come within one or more of the preceding clauses (b), (c) and (d). "ELECTRONIC PAYMENT INSTRUCTIONS" means the Bank Routing and account number information identifying the account of each Bank to receive the payment of Commitment Fees. Such Electronic Payment Instructions for each Bank are set forth below the signature block of such Bank to this Agreement and may be changed at any time by written notice by such Bank to the Company. "EUROCURRENCY" means any freely transferable and convertible currency on deposit outside the country of issuance. "EUROCURRENCY LOAN" means any Loan of a Eurocurrency that bears interest at a rate determined by reference to the Relevant Bank's Eurocurrency Rate (Reserve Adjusted). "EUROCURRENCY OFFICE" means, with respect to any Bank, the office of such Bank or Affiliate of such Bank, designated as such under such Bank's signature hereto, or such other office of such Bank or Affiliate of such Bank, as such Bank may hereafter from time to time designate as its Eurocurrency Office. A Eurocurrency Office may be, at the option of such Bank, either a domestic or foreign office of such Bank or a domestic or foreign office of an affiliate of such Bank. "EUROCURRENCY OR LOCAL CURRENCY EQUIVALENT AMOUNT" means, in the case of a Eurocurrency or Local Currency, on any Business Day, the amount of such currency which would be freely converted into a specified amount of U.S. Dollars, computed at the spot buying rate for dollars of the Relevant Bank at the close of business on such day. -28- 34 "EUROCURRENCY RATE" means, with respect to any Eurocurrency Loan for any Interest Period, the rate per annum equal to the rate per annum at which deposits of the currency of the Loan in immediately available funds are offered by the Eurocurrency Office of the Relevant Bank two Business Days prior to the beginning of such Interest Period to major banks in the interbank eurocurrency market of such Eurocurrency Office for delivery on the first day of such Interest Period and for the number of days comprised therein and in an amount equal or comparable to the amount of the Eurocurrency Loan of the Relevant Bank for such Interest Period. "EUROCURRENCY RATE (RESERVE ADJUSTED)" means, with respect to any Eurocurrency Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurocurrency Rate Eurocurrency Rate = ----------------------- (Reserve Adjusted) 1-Eurocurrency Reserve Percentage "EUROCURRENCY RESERVE PERCENTAGE" means, with respect to each Interest Period, that percentage (expressed as a decimal) prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining reserve requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable regulation of the Board of Governors that prescribes reserve requirements applicable to "Eurocurrency Liabilities" as presently defined in Regulation D. "EVENT OF DEFAULT" means any of the events described in Section 11.1. "EXEMPTED INDEBTEDNESS" means, as of any particular time, the sum of (i) the aggregate principal amount of all then outstanding indebtedness for borrowed money of the Company and Domestic Subsidiaries incurred after July 1, 1992 and secured by any mortgage, security interest, pledge or lien other than those permitted by paragraph (a) of Section 9.3 and (ii) all Attributable Debt pursuant to Sale and Leaseback Transactions (as defined in Section 9.4) incurred by the Company and Domestic Subsidiaries after July 1, 1992 at such time outstanding other than that which is not prohibited by or is permitted pursuant to paragraph (a) of Section 9.4. "FEDERAL FUNDS RATE" means, for any Interest Period selected by the Company, the average of rates for Federal funds for the Interest Period quoted to the Relevant Bank by two leading brokers of Federal funds transactions in New York City. "FIXED RATE LOAN(S)" -- see Section 1.3. "FUNDED DEBT" means all indebtedness for money borrowed having a maturity of more than 12 months from the date such indebtedness was incurred or having a maturity of 12 months or less but by its terms being renewable or extendable beyond 12 months from the date such indebtedness was incurred at the option of the borrower. -29- 35 "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "INTEREST PERIOD" means, with respect to any Fixed Rate Loan, the period commencing on the date such Loan was made, or on the date such Loan was Converted from a Loan of a different type, or on the date of expiration of the immediately preceding Interest Period for such Loan, and (i) ending 30, 60, 90, 120, 150, 180 days, or, if available, more than 180 days up to and including 360 days, thereafter in the case of a Domestic CD Loan, or (ii) ending one, two, three, or six months, or, if available, more than six months up to and including twelve months, thereafter in the case of a Eurocurrency Loan, all as the Company or any Designated Subsidiary may specify pursuant to Section 1.4, 1.5, or 3.3; the Interest Period for any Negotiated Loan or any Local Currency Loan shall be as agreed by the Company or any Designated Subsidiary and the Relevant Bank pursuant to Section 1.6 or 1.7. Each Interest Period for a Fixed Rate Loan that would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day (unless such next succeeding Business Day is the first Business Day of a calendar month, in which case with respect to a Eurocurrency Loan such Interest Period shall end on the next preceding Business Day). "JUDGMENT CURRENCY" -- see Section 7.6. "JUDGMENT CURRENCY CONVERSION DATE" -- see Section 7.6. "LIEN" or "MORTGAGE" -- see Section 9.3. "LOCAL CURRENCY" means, with respect to any Local Currency Loan, any legal currency of the nation where the Local Currency Loan is being funded. "LOCAL CURRENCY LOAN(S)" -- see Section 1.7. "LOANS" or "LOAN" -- see Section 1.1. "MAJORITY BANKS" means Banks having an aggregate Percentage of 66-2/3% or more. "NEGOTIATED LOAN(S)" -- see Section 1.6. "NOTE(S)" -- see Section 2.2 and Exhibit A. "OBLIGATION CURRENCY" -- see Section 7.6. "OUTSTANDING MAJORITY BANKS" means Banks having 66-2/3% or more of the aggregate principal amount of Loans outstanding. -30- 36 "PERCENTAGE" means as to any Bank the percentage of such Bank's share of the total Commitments of all Banks. "PERSON" shall mean an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or any agency or political subdivision thereof), or other entity of any kind. "PRINCIPAL PROPERTY" means any single manufacturing plant, engineering facility or research facility owned or leased by the Company or a Domestic Subsidiary other than any such plant or facility or portion thereof which the Board of Directors reasonably determines not to be of material importance to the Company and its Subsidiaries taken as a whole. "PROPRIETARY INFORMATION" -- see Section 14.5. "RELEVANT BANK" means, with respect to any Loan, the Bank that made the Loan, and, prior to the making of such Loan or requested Loan, any Bank that has been requested to make such Loan. "RESERVE REQUIREMENT" means, with respect to each Interest Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the aggregate reserve requirement (including all basic, supplemental, marginal, and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during such Interest Period) specified under Regulation D of the Board of Governors of the Federal Reserve System, or any other regulation of the Board of Governors which prescribes reserve requirements applicable to nonpersonal time deposits as presently defined in Regulation D, as then in effect, as applicable to the class of banks of which the Relevant Bank is a member, on deposits of the type used as a reference in determining the Domestic CD Rate and having a maturity approximately equal to such Interest Period. "REVOLVING PERIOD" -- see Section 1.1. "REVOLVING PERIOD TERMINATION DATE" means the earlier to occur of (a) December 8, 1998, subject to extension for one or more successive one-year periods as to any Bank or Banks pursuant to Section 1.2, or (b) such other date on which the Commitments shall terminate pursuant to Section 11.2. "SALE AND LEASEBACK TRANSACTION" -- see Section 9.4. "SUBSIDIARY" means a corporation of which the Company and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than 50% of the ordinary voting power for the election of directors. "TERM-OUT MATURITY DATE" means December 8, 1999, unless the Revolving Period Termination Date is extended as provided in Section 1.2, in which case -31- 37 the Term-Out Maturity Date shall be the first anniversary of the Revolving Period Termination Date as so extended. "TYPE OF LOAN OR BORROWING" -- see Section 1.3. The various types of Loans or borrowings available under this Agreement are as follows: Base Rate Loans or borrowings and Fixed Rate Loans or borrowings. Fixed Rate Loans or borrowings consist of Domestic CD Loans or borrowings, Eurocurrency Loans or borrowings, Negotiated Loans or borrowings, and Local Currency Loans or borrowings. "U.S. DOLLAR(S)" and the sign "$" shall mean lawful money of the United States of America. "UNMATURED EVENT OF DEFAULT" means any event that if it continues uncured will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default. "UNUSED AMOUNT" means the amount of the Commitment of the Relevant Bank less any outstanding Loans made by such Bank. Loans in an Obligation Currency other than U.S. Dollars will be translated into U.S. Dollars for purposes of this calculation at the spot rate for dollars published in THE WALL STREET JOURNAL on each day in which such Loan is outstanding (provided, that if such day is not a Business Day, the applicable spot rate for such day should be the spot rate on the Business Day immediately prior to such day). "WHOLLY OWNED DOMESTIC SUBSIDIARY" means each Domestic Subsidiary all the outstanding shares of which, other than directors' qualifying shares, shall at the time be owned by the Company, or by the Company and one or more Wholly Owned Domestic Subsidiaries, or by one or more Wholly Owned Domestic Subsidiaries. SECTION 14 GENERAL. 14.1 WAIVER; AMENDMENTS. No delay on the part of any Bank or the holder of any Note in the exercise of any right, power, or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power, or remedy preclude other or further exercise thereof, or the exercise of any other right, power, or remedy. No amendment, modification, or waiver of, or consent with respect to, any provision of this Agreement or the Notes shall in any event be effective unless the same shall be in writing and signed and delivered by Banks having an aggregate Percentage of not less than the aggregate Percentage expressly designated herein with respect thereto (or in the case of the Outstanding Majority Banks, the aggregate principal amount outstanding) or, in the absence of such designation as to any provision of this Agreement or the Notes, by the Majority Banks, and then any such amendment, modification, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment, modification, waiver, or consent (i) shall extend or increase the amount of the Commitments, the maturity of the Notes or reduce the fees hereunder or the rate of interest payable with respect to the Notes or reduce the aggregate Percentage -32- 38 required to effect an amendment, modification, waiver, or consent or eliminate the guaranty set forth in Section 12 hereof without the written consent of all of the Banks or (ii) shall extend the maturity or reduce the principal amount of, or rate of interest on, any Note without the written consent of the holder of such Note. Notwithstanding the foregoing, the Company may add one or more financial institutions as Bank parties to this Agreement, from time to time and without the consent of the then-current Bank parties to this Agreement; provided, that in no event will the aggregate amount of the Commitments of the new financial institutions exceed 125 million U.S. Dollars in excess of the Commitments as of the date hereof. Each such addition of a Bank shall be effective upon such Bank's written agreement to become a Bank party hereto and to be bound by the terms of this Agreement applicable to "Banks." The Company shall give the then-current Bank parties to this Agreement prompt notice of any change to the Bank's respective Percentages and Commitments resulting from the addition of any Bank as a party to, or the reduction of any Bank's Commitment under, this Agreement. 14.2 CONFIRMATIONS. The Company and each holder of a Loan agree from time to time, upon written request received by it from the other, to confirm to the other in writing the aggregate unpaid principal amount of Loans then outstanding to such holder. 14.3 NOTICES. Except as otherwise provided in Sections 1.3, 1.4, 1.5, 3.3, and 6.2, all notices hereunder shall be in writing. Notices given by mail shall be deemed to have been given three days after the date sent if sent by registered or certified mail, postage prepaid, and: (i) if to the Company, addressed to the Company at its address shown below its signature hereto; (ii) if to any Designated Subsidiary, addressed to it at the address given by the Company pursuant to its designation of such Subsidiary as a Designated Subsidiary entitled to receive Loans hereunder; or (iii) if to any Bank, addressed to such Bank at the address shown below its signature as its Domestic Office address; or in the case of each party, such other address as such party may, by written notice to the other parties to this Agreement, have designated as its address for notices. Notices given by facsimile, telegram, or telex shall be deemed to have been given when sent, if properly addressed to the party to whom sent, at its address, as aforesaid. Each Bank shall be entitled to rely upon all telephonic notices given by an Authorized Person pursuant to Sections 1.3, 1.4, 1.5, 3.3, or 6.2, and the Company shall hold each Bank harmless from any loss, cost, or expense ensuing from any such reliance, except for such loss, cost or expenses as a result of the Bank's gross -33- 39 negligence or willful misconduct. All notices, waivers, or consents given to, or any requests made upon, the Company by any Bank or holder of any Note shall be promptly notified to all other parties to this Agreement. Whenever a notice, declaration, or other action is required to be taken, given, or made by the Majority Banks or the Outstanding Majority Banks, such notice, declaration, or action shall be in writing and shall be signed by, as the case may be, Banks having an aggregate Percentage of 66-2/3% or more or Banks having 66-2/3% or more of the aggregate principal amount of Loans outstanding. 14.4 COMPUTATIONS. Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with the Company's then current method of accounting, which method must be in accordance with GAAP; provided, however, if any changes in accounting principles from those used in the preparation of the financial statements referred to in Section 8.4 hereafter occasioned by the promulgation of rules, regulations, pronouncements, and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) result in a change in the method of calculation of the financial covenants, standards, or terms found in Section 9.2 hereof, the parties hereto agree to enter into negotiations to amend such provisions so as equitably to reflect such changes with the desired result that the criteria for evaluating the Company's financial condition shall be the same after such changes as if such changes had not been made. 14.5 CONFIDENTIALITY. Unless the Company otherwise agrees in writing, each Bank hereby agrees to keep all Proprietary Information (as defined below) confidential and not to disclose or reveal any Proprietary Information to any Person other than the Bank's directors, officers, employees, Affiliates, and agents, and then only on a confidential basis; provided, however, that a Bank may disclose Proprietary Information (a) as required by law, rule, regulation, or judicial process, (b) to its attorneys and accountants, (c) as requested or required by any state, federal, or foreign authority or examiner regulating banks or banking, or (d) to actual or potential assignees or participants as permitted by Section 14.6.3. For purposes of this Agreement, the term "PROPRIETARY INFORMATION" shall include all information about the Company, any Subsidiary, or any of their respective Affiliates which has been furnished by the Company, any Subsidiary, or any of their respective Affiliates, whether furnished before or after the date hereof, and regardless of the manner furnished; provided, however, that Proprietary Information shall not include information which (x) is or becomes generally available to the public other than as a result of a disclosure by a Bank not permitted by this Agreement, (y) was available to a Bank on a nonconfidential basis prior to its disclosure to such Bank by the Company, any Subsidiary, or any of their respective Affiliates, or (z) becomes available to a Bank on a nonconfidential basis from a Person other than the Company, any Subsidiary, or any of their respective Affiliates who, to the best knowledge of such Bank, is not otherwise -34- 40 bound by a confidentiality agreement with the Company, any Subsidiary, or any of their respective Affiliates, or, to the best knowledge of such Bank, is not otherwise prohibited from transmitting the information to such Bank. 14.6 ASSIGNMENTS AND PARTICIPATIONS. 14.6.1 ASSIGNMENTS. Unless the Company otherwise consents in writing, which consent shall not be unreasonably withheld, no holder of any Note (including any Bank) shall assign or transfer such Note or any interest therein to any other Person, except as otherwise permitted under Section 14.6. Except as otherwise expressly agreed in writing by the Company, no Bank shall, by reason of the assignment or transfer of any Note or otherwise, be relieved of any of its obligations hereunder. Each transferee of any Note shall take such Note subject to the provisions of this Agreement and to any request made, waiver or consent given, or other action taken hereunder, prior to such transfer, by each previous holder of such Note; and the Company shall be entitled to conclusively assume that the transferee shall thereafter be vested with all rights and powers under this Agreement of the Bank named as the payee of the Note which is the subject of such transfer. Nothing herein shall prohibit any Bank from pledging or assigning any Note to any Federal Reserve Bank pursuant to applicable law. 14.6.2 PARTICIPATIONS. Any Bank may grant participations in or to all or any part of any Loan or Loans then owing to such Bank and the Notes held by such Bank without the consent of the Company. Except as otherwise expressly agreed in writing by the Company, no grant of a participation shall relieve any Bank of its obligations hereunder, the Company shall be entitled to deal solely with the Banks (and their respective assignees) for all purposes of this Agreement and the Notes, and no holder of a participation in all or any part of the Loans or the Notes shall have any rights under this Agreement, except that the holder of a participation shall be entitled to the benefits of Section 7 hereunder (but the dollar amount of such Section 7 benefits shall not exceed those benefits that the assigning Bank would have otherwise received). 14.6.3 DISCLOSURE OF INFORMATION. The Company hereby consents to the disclosure of any information obtained in connection herewith by any Bank to any Person which is an assignee or potential assignee or a participant or potential participant pursuant to Section 14.6.1 or 14.6.2, it being understood that such Bank shall advise any such actual or potential assignee or participant of its obligation to keep confidential any nonpublic information disclosed to it pursuant to this Section 14.6.3 and, prior to the disclosure of such information, shall cause each such actual or potential assignee or participant to execute a confidentiality agreement containing the confidentiality provisions set forth in Section 14.5. 14.7 SECURITIES LAWS. Each Bank represents that it is the present intention of such Bank to acquire each Note drawn to its order for its own account and not with a view to the distribution or sale thereof, subject, nevertheless, to the necessity that such Bank remain in control at all times of the disposition of the -35- 41 property held by it for its own account, it being understood that the foregoing representation shall not affect the character of the Loans as commercial lending transactions. 14.8 COSTS AND EXPENSES. The Company agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Banks (including the reasonable fees and out-of-pocket expenses of counsel for the Banks and reasonable allocated costs of in-house counsel for the Banks) in connection with the enforcement of this Agreement, the Notes, and any other instruments or documents executed in connection herewith. 14.9 GOVERNING LAW. This Agreement and each Note shall be a contract made under and governed by the internal laws of the State of Ohio. Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. All obligations of the Company and rights of the Banks and any other holders of the Notes expressed herein or in the Notes shall be in addition to and not in limitation of those provided by applicable law. 14.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. When counterparts executed by all the parties shall have been lodged with the Company (or, in the case of any Bank as to which an executed counterpart shall not have been so lodged, the Company shall have received telegraphic, telex, or other written confirmation from such Bank of execution of a counterpart hereof by such Bank), this Agreement shall become effective as of the date hereof. 14.11 CAPTIONS. Section captions used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. 14.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company, each Bank, and their respective successors and assigns, and shall inure to the sole benefit of the Company, each Bank, and their respective successors and assigns. 14.13 ENTIRE AGREEMENT. This Agreement supersedes any prior agreement or understanding of the parties hereto, and contains the entire agreement of the parties hereto, with respect to the matters covered hereby. 14.14 APPOINTMENT OF ADMINISTRATOR. TRW hereby appoints National City Bank to serve as administrator (the "ADMINISTRATOR") to coordinate any votes that may be taken under this Agreement and to distribute payments, if any, required to be -36- 42 made to the Banks on a pro rata basis as provided in Section 11.2. In the event that National City Bank is unable or unwilling to act as Administrator, TRW shall appoint a successor, subject to the approval of the Majority Banks, which shall not be unreasonably withheld. Except as otherwise specifically provided herein, borrowing, repayment and fee procedures set forth in this Agreement shall not be affected by the appointment of the Administrator. 14.15 NON-U.S. BANK TAX INFORMATION. Upon the request of the Company, any Bank that is not organized under the laws of the United States of America or any state thereof will (i) deliver to the Company accurate and complete signed copies of Forms 1001 and 4224 (or such additional or successor forms) and any amendments or modifications thereto and (ii) inform the Company if the Company can no longer rely upon such forms. 14.16 REGULATION U. The Company hereby represents and warrants that neither the Company nor any of its Consolidated Subsidiaries is principally engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System) and covenants that the Company's use of proceeds of any borrowings under this Agreement will not cause a violation of Regulation U. Each of the Banks hereby represents and warrants to the Company that it is not relying and will not rely on any margin stock (as described above) in determining whether to extend or maintain credit under this Agreement. -37- 43 SIGNATURE PAGES TO REVOLVING CREDIT AGREEMENT, DATED AS OF DECEMBER 10, 1997 - ---------------------------------------------------------------------------- Delivered at Cleveland, Ohio, as of the day and year first above written. TRW INC. By:_____________________________________ Name: Jeanne R. Sydenstricker Title: Vice President and Treasurer 1900 Richmond Road Cleveland, Ohio 44124 Telephone: 216/291-7566 Facsimile: 216/291-7831 -38- 44 BANKS: Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Bank of America National Trust and Savings Association By:___________________________________________ Name: Deborah J. Graziano Title: Vice President DOMESTIC OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7178 Facsimile: (510) 675-7531 Attention: Mandy Sneary EUROCURRENCY OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7178 Facsimile: (510) 675-7531 Attention: Mandy Sneary ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Bank of America ABA Routing No.: 121000358 Account No.: 12331-83980 Account Name: Incoming Money Transfer Reference No.: TRW Commitment Fee - -39- 45 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Barclays Bank PLC By:___________________________________________ Name: Gary F. Albanese Title: Associate Director DOMESTIC OFFICE Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: (212) 412-3728 Facsimile: (212) 412-5306 EUROCURRENCY OFFICE Barclays Nassau, Bahamas Branch c/o Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: (212) 412-3728 Facsimile: (212) 412-5306 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Barclays Bank PLC-New York ABA Routing No.: 026-002-574 Account No.: 050-019-104 Account Name: TRW Reference No.: TRW Commitment Fee; C. Tenn Sing Que 46 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% The Chase Manhattan Bank By:___________________________________________ Name: Joan F. Garvin Title: Managing Director DOMESTIC OFFICE The Chase Manhattan Bank 270 Park Avenue 10th Floor New York, New York 10017-2070 Telephone: (212) 270-5730 Facsimile: (212) 270-5127 EUROCURRENCY OFFICE The Chase Manhattan Bank One Chase Manhattan Plaza Eighth Floor New York, New York 10081 Telephone: (212) 552-7472 Facsimile: (212) 552-5662 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan Bank ABA Routing No.: 021-000021 Account No.: Account Name: Commercial Loan Opns. Reference No.: TRW Commitment Fee -41- 47 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Citibank, N.A. By:___________________________________________ Name: Mark Stanfield Packard Title: Vice President DOMESTIC OFFICE Citibank, N.A. c/o Citicorp Securities, Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 EUROCURRENCY OFFICE Citibank, N.A. c/o Citicorp Securities, Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Citibank, N.A., New York ABA Routing No.: 021000089 Account No.: 38483095 Account Name: Chicago NEO Loan Acct. Reference No.: TRW Commitment Fee -42- 48 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Morgan Guaranty Trust Company of New York By:___________________________________________ Name: Patricia P. Lunka Title: Vice President DOMESTIC OFFICE Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260-0060 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE Morgan Guaranty Trust Company of New York Nassau, Bahamas Office c/o J.P. Morgan Services Inc. Euro-Loan Servicing Unit 902 Market Street Wilmington, Delaware 19801 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Morgan Guaranty Trust ABA Routing No.: 021000238 Account No.: 999-99-090 Account Name: _____________ Reference No.: TRW Com. Fee Corp. Proc. Module 30 -43- 49 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% National City Bank By:___________________________________________ Name: David R. Bonner Title: Vice President DOMESTIC OFFICE National City Bank National City Center P. O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE National City Bank National City Center P. O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: National City Bank ABA Routing No.: 041000124 Account No.: 2537557 Account Name: _____________ Reference No.: TRW Commitment Fee -44- 50 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% The Sumitomo Bank, Limited By:___________________________________________ Name: John H. Kemper Title: Senior Vice President DOMESTIC OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 876-6444 Facsimile: (312) 876-6436 EUROCURRENCY OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 879-7668 Facsimile: (312) 876-0523 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 15-01208 Account Name: Sumitomo Bank Ltd, Chicago Branch. Reference No.: TRW Commitment Fee -45- 51 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Banque Nationale de Paris By:___________________________________________ Name: Arnaud Collin du Bocage Title: Executive Vice President and General Manager DOMESTIC OFFICE Banque Nationale de Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2211 Facsimile: (312) 977-1380 EUROCURRENCY OFFICE Banque Nationale de Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2211 Facsimile: (312) 977-1380 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Banque Nationale de Paris, New York Branch ABA Routing No.: 026007689 Account No.: 14119400189 Account Name: BNP, Chicago Branch Reference No.: TRW Commitment Fee -46- 52 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Dresdner Bank AG By:___________________________________________ Name: D. Slusavczyk Title: Vice President By:___________________________________________ Name: A. R. Morris Title: Vice President DOMESTIC OFFICE Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 Facsimile: (212) 429-2524 EUROCURRENCY OFFICE Dresdner Bank AG Grand Cayman Branch c/o Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 Facsimile: (212) 429-2524 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan (NY,NY) ABA Routing No.: 021-000-021 Account No.: 920-1-059-079 Account Name: Dresdner Bank AG, New York Branch Reference No.: TRW Commitment Fee -47- 53 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% NBD Bank By:___________________________________________ Name: William J. McCaffrey Title: Vice President DOMESTIC OFFICE NBD Bank Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3444 Facsimile: (313) 225-3269 EUROCURRENCY OFFICE NBD Bank, N.A. Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3444 Facsimile: (313) 225-3269 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: NBD Bank ABA Routing No.: 072000326 Account No.: 1424183 Account Name: Commercial Loans Reference No.: TRW Commitment Fee -48- 54 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Royal Bank of Canada By:___________________________________________ Name: Patrick Shields Title: Senior Manager DOMESTIC OFFICE Royal Bank of Canada Grand Cayman (North America No. 1) Branch c/o New York Branch 32 Old Slip New York, New York 10005-3531 Telephone: (212) 428-6323 Facsimile: (212) 428-2372 EUROCURRENCY OFFICE Royal Bank of Canada Grand Cayman (North America No. 1) Branch c/o New York Branch 32 Old Slip New York, New York 10005-3531 Telephone: (212) 428-6323 Facsimile: (212) 428-2372 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan, NY ABA Routing No.: 021000021 Account No.: 9201033363 Account Name: Royal Bank Reference No.: TRW Commitment Fee -49- 55 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% KeyBank National Association By:___________________________________________ Name: Marianne Meil Title: Vice President DOMESTIC OFFICE KeyBank National Association 127 Public Square Cleveland, Ohio 44114 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE KeyBank National Association 127 Public Square Cleveland, Ohio 44114 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: KeyBank National Association ABA Routing No.: 041001039 Account No.: 00100-39140 Account Name: Commercial Loan Opns Reference No.: TRW Commitment Fee -50- 56 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% The Sakura Bank, Limited By:___________________________________________ Name: Shunji Sakurai Title: Joint General Manager DOMESTIC OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 Facsimile: (312) 332-5345 EUROCURRENCY OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 Facsimile: (312) 332-5345 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 1512951 Account Name: Sakura Bank, Chicago Reference No.: TRW Commitment Fee -51- 57 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% The Tokai Bank, Limited By:___________________________________________ Name: Hiroshi Tanaka Title: General Manager DOMESTIC OFFICE The Tokai Bank, Limited Chicago Branch Attention: Corporate Finance 181 West Madison Street, Suite 3600 Chicago, Illinois 60602 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE The Tokai Bank, Limited Chicago Branch Attention: Corporate Finance 181 West Madison Street, Suite 3600 Chicago, Illinois 60602 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 15-08997 Account Name: Tokai Bank, Chicago Branch Reference No.: TRW Commitment Fee Loan Administration -52- 58 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Union Bank of Switzerland By:___________________________________________ Name: Dieter Hoeppli Title: Vice President By:___________________________________________ Name: Samuel Azizo Title: Vice President DOMESTIC OFFICE Union Bank of Switzerland New York Branch 299 Park Avenue New York, New York 10171 Telephone: (212) 821-3415 Facsimile: (212) 821-3383 EUROCURRENCY OFFICE Union Bank of Switzerland New York Branch 299 Park Avenue New York, New York 10171 Telephone: (212) 821-3415 Facsimile: (212) 821-3383 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Union Bank of Switzerland ABA Routing No.: 026008439 Account No.: 519243USICC1 Account Name: Credit Corporate Clearing Reference No.: TRW Commitment Fee -53- 59 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Bank of China, New York Branch By:___________________________________________ Name: Zhu, ZhiCheng Title: General Manager, USA DOMESTIC OFFICE Bank of China New York Branch 410 Madison Avenue New York, New York 10017 Telephone: (212) 935-3101 ext. 475 Facsimile: (212) 688-0919 EUROCURRENCY OFFICE Bank of China New York Branch 410 Madison Avenue New York, New York 10017 Telephone: (212) 935-3101 ext. 475 Facsimile: (212) 688-0919 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Bank of China, New York Branch ABA Routing No.: 026003269 Account No.: 160081555553-001-001 Reference No.: TRW Commitment Fee -54- 60 Amount of Percentage of Commitment Commitments - ----------- ------------- $__,000,000 __% Wells Fargo Bank, N.A. By:___________________________________________ Name: Edith R. Lim Title: Vice President By:___________________________________________ Name: Frieda Youlios Title: Vice President DOMESTIC OFFICE Wells Fargo Bank, N.A. 707 Wilshire Blvd., 16th. Floor Los Angeles, CA 90017 Telephone: (213) 614-5038 Facsimile: (213) 614-2305 EUROCURRENCY OFFICE Wells Fargo Bank, N.A. 707 Wilshire Blvd., 16th. Floor Los Angeles, CA 90017 Telephone: (213) 614-5038 Facsimile: (213) 614-2305 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Wells Fargo Bank, N.A. ABA Routing No.: 121-000-248 Account No.: 451-8054341 Account Name: SYNDIC/WFB CORP/ACH Reference No.: TRW Ref No 9118583038 $750,000,000 100% Total -55- 61 EXHIBIT A to Revolving Credit Agreement REVOLVING NOTE Up to a maximum of $_________________ (or the Eurocurrency or Date:__________________, 1997 Local Currency equivalent Cleveland, Ohio hereof) FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of _____________________ (the "BANK") for the account of its Domestic or Eurocurrency Office, as applicable (capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement referred to below), the outstanding principal amount of the Loans made by the Bank to the undersigned pursuant to the Credit Agreement. The principal amount of each Loan evidenced hereby shall be payable on the earliest of: (i) the Revolving Period Termination Date, unless the Company shall have made the election provided for in clause (ii) of Section 2.1 of the Credit Agreement; (ii) the Term-Out Maturity Date, if the Company shall have made such election; (iii) the last day of the applicable Interest Period for such Loan (unless the Loan is Continued or Converted); or (iv) such other date as the Company and the Relevant Bank may agree in writing. The undersigned promises to pay interest on the unpaid principal amount of each Loan evidenced hereby from the date such Loan is made until the principal amount of such Loan is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal of, and interest on, any Loan are payable in immediately available funds in the currency of such Loan to the Bank as its Domestic or Eurodollar Office that made the Loan. The Loans made by the Bank to the undersigned, and all payments made on account of principal thereof, shall be recorded by the Bank and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note. This Note is one of the Notes referred to in, and is entitled to the benefits of, the Revolving Credit Agreement, dated as of December 10, 1997, among the undersigned, the Bank, and the other bank parties named therein, as Banks (as the same may be amended, modified, or supplemented and in effect from time to time, the "CREDIT AGREEMENT"). The Credit Agreement, among other things, (i) provides for the making of Loans by the Bank to the undersigned from time to time in an aggregate principal amount not to exceed at any time the dollar amount first mentioned above and the indebtedness of the undersigned resulting from each such Loan being evidenced by this Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for payments on account of the principal hereof prior to the maturity 62 hereof upon the terms and conditions and in accordance with the provisions therein specified. Reference is hereby made to the Credit Agreement for a statement of said terms and provisions. In addition to, and not in limitation of, the foregoing and the provisions of the Credit Agreement hereinabove referred to, the undersigned further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including reasonable attorneys' fees and expenses, incurred by the holder of this Note in seeking to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise. DEMAND, PRESENTMENT, PROTEST, AND NOTICE OF NON-PAYMENT ARE HEREBY WAIVED BY THE UNDERSIGNED. THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF OHIO. TRW INC. By:_____________________________________ Jeanne R. Sydenstricker Vice President and Treasurer -2- 63 Schedule Attached to Revolving Note dated _________________, 1997 of TRW Inc. payable to the order of ______________________________________ BASE RATE BORROWINGS Unpaid Date and Date and Amount Principal Amount of of Repayment Balance of Base Rate of Base Rate Base Rate Notation Borrowing Borrowing Borrowings Made By - --------- --------------- ---------- -------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 64 Schedule Attached to Revolving Note dated _________________, 1997 of TRW Inc. payable to the order of ______________________________________ FIXED RATE BORROWINGS Date, Amount, Date and Unpaid and Type of Interest Amount of Principal Notation Borrowing Period Repayment Balance Made By - ------------- -------- --------- --------- --------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 65 EXHIBIT B to Revolving Credit Agreement COMPLIANCE CERTIFICATE To: Each of the Bank Parties to the Credit Agreement referred to below Reference is made to our Revolving Credit Agreement, dated as of December 10, 1997 (herein as amended, modified or supplemented and in effect from time to time called the "CREDIT AGREEMENT") with you. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. The Company hereby certifies and warrants to you that the following is a true and correct computation as at _________________ 19 __ (the "COMPUTATION DATE") of Consolidated Net Worth contained in Section 9.2 of the Credit Agreement: MINIMUM CONSOLIDATED NET WORTH REQUIRED UNDER SECTION 3.2 $1,600,000,000 LESS: The lessor of (i) the aggregate amount expended by the Company subsequent to December 31, 1995 for repurchase of its Common Stock and (ii) $600,000,000 $_____________ $_____________ CONSOLIDATED NET WORTH OF THE COMPANY Consolidated shareholders' investment $_____________ PLUS: Minority interests $_____________ $_____________ The Company hereby further certifies and warrants to you that no Event of Default or Unmatured Event of Default has occurred and is continuing. 66 IN WITNESS WHEREOF, the Company has caused this Certificate to be executed and delivered by its duly authorized officer this ___ day of ________________, 19__. TRW INC. By _____________________________________ Its_____________________________________ 67 EXHIBIT C to Revolving Credit Agreement December 10, 1997 To: Each of the Banks party to the Credit Agreements referred to below Ladies and Gentlemen: I am General Counsel of TRW Inc., an Ohio corporation (the "Company"), and have acted in such capacity in connection with the Revolving Credit Agreement, dated as of December 10, 1997 (the "Credit Agreement"), among the Company and each of the financial institutions listed on the signature pages thereof. Capitalized terms used but not otherwise defined are used herein as defined in the Credit Agreement. In connection with the opinions expressed below, I have examined or caused to be examined by members of the TRW Law Department a copy of the Credit Agreement and the Notes thereunder; and I have also made or caused to be made such other examinations and inquiries as I have deemed necessary to enable me to give the opinions hereinafter expressed. However, as to each of the opinions set forth below which is limited to my knowledge, you should be aware that I have neither made nor caused to be made any independent review for purposes of rendering this opinion, although in the regular course of advising the Company I have reviewed or caused to be reviewed various documents, records and matters of law. Based upon the foregoing, I am of the opinion that: 68 December 10, 1997 Page 2 1. The Company is a corporation duly incorporated and in good standing under the laws of the State of Ohio. 2. The Company has full power to execute, deliver, and perform the Credit Agreement and to borrow moneys thereunder and to execute, deliver, and perform its obligations under the Notes. 3. The execution and delivery of the Credit Agreement and the Notes, the borrowings under the Credit Agreement, and the performance by the Company of its obligations under the Credit Agreement and the Notes, have been duly authorized by all necessary corporate action, and do not and will not contravene or conflict with any material provision of applicable law now in effect or of the Amended Articles of Incorporation or Regulations of the Company or, to my knowledge, of any agreement for borrowed money or other material agreement binding upon the Company. 4. The Credit Agreement and the Notes have been duly executed and delivered by the Company and are the legal, valid, and binding obligations of the Company, enforceable in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium laws or debtor relief proceedings or any similar laws or proceedings affecting creditors' rights generally or by general principles of equity. I am a member of the bar of the State of Ohio and do not purport to be an expert on, generally familiar with or qualified to express legal conclusions based on laws other than the laws of the State of Ohio and the United States of America. This opinion is being delivered to you solely for your benefit as creditor under the Credit Agreement and may be relied upon only by you for such purpose. Very truly yours, General Counsel EX-1.C 14 EXHIBIT (C)(1) 1 Exhibit (c)(1) CONFORMED VERSION ================================================================================ ============================================== BDM INTERNATIONAL, INC., TRW INC. and SYSTEMS ACQUISITION INC. ============================================== ============================================== AGREEMENT AND PLAN OF MERGER ============================================== ============================================== Dated as of November 20, 1997 ============================================== ================================================================================ 2 TABLE OF CONTENTS -----------------
Page ---- ARTICLE I. TENDER OFFER AND MERGER 1.1. The Offer..............................................................................................2 1.2. Company Action.........................................................................................4 1.3. Directors..............................................................................................5 1.4. The Merger.............................................................................................6 1.5. Effective Time.........................................................................................7 1.6. Conversion of Shares...................................................................................7 1.7. Dissenting Shares......................................................................................8 1.8. Surrender of Shares....................................................................................8 1.9. Options................................................................................................10 1.10. Certificate of Incorporation and Bylaws................................................................11 1.11. Directors and Officers.................................................................................11 1.12. Other Effects of Merger................................................................................11 1.13. Proxy Statement........................................................................................11 1.14. Additional Actions.....................................................................................12
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization and Good Standing.........................................................................12 2.2. Capitalization.........................................................................................13 2.3. Subsidiaries...........................................................................................14 2.4. Authorization; Binding Agreement.......................................................................14 2.5. Governmental Approvals.................................................................................15 2.6. No Violations..........................................................................................16 2.7. Securities Filings.....................................................................................16 2.8. Company Financial Statements...........................................................................17 2.9. Absence of Certain Changes or Events...................................................................17 2.10. Compliance with Laws...................................................................................18 2.11. Permits................................................................................................18 2.12. Litigation.............................................................................................18 2.13. Contracts..............................................................................................19 2.14. Employee Benefit Plans.................................................................................19 2.15. Taxes and Returns......................................................................................21 2.16 Intellectual Property..................................................................................22 2.17. Environmental Matters..................................................................................22 2.18. Offer Documents; Proxy Statement.......................................................................24 2.19. Finders and Investment Bankers.........................................................................25 2.20. Fairness Opinion.......................................................................................25 2.21. Related Party Transactions.............................................................................25
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT
3.1. Organization and Good Standing.........................................................................25
i 3
3.2. Authorization; Binding Agreement.......................................................................25 3.3. Governmental Approvals.................................................................................26 3.4. No Violations..........................................................................................26 3.5. Offer Documents; Proxy Statement.......................................................................27 3.6. Finders and Investment Bankers.........................................................................27 3.7. Financing Arrangements.................................................................................27 3.8. No Prior Activities....................................................................................27
ARTICLE IV. ADDITIONAL COVENANTS OF THE COMPANY
4.1. Conduct of Business of the Company and the Company Subsidiaries ..........................................................................................28 4.2. Notification of Certain Matters........................................................................31 4.3. Access and Information.................................................................................31 4.4. Proxy Statement........................................................................................32 4.5. Reasonable Best Efforts................................................................................32 4.6. Public Announcements...................................................................................32 4.7. Compliance.............................................................................................33 4.8. No Solicitation........................................................................................33 4.9. SEC and Stockholder Filings............................................................................35 4.10. Takeover Statutes......................................................................................35 4.11. Related Party Agreements...............................................................................35
ARTICLE V. ADDITIONAL COVENANTS OF PARENT
5.1. Reasonable Best Efforts................................................................................36 5.2. Public Announcements...................................................................................36 5.3. Compliance.............................................................................................37 5.4. Employee Benefit Plans.................................................................................37 5.5. Indemnification, Exculpation and Insurance.............................................................37
ARTICLE VI. MERGER CONDITIONS
6.1. Offer .................................................................................................38 6.2. Stockholder Approval...................................................................................38 6.3. No Injunction or Action................................................................................38 6.4. Other Approvals........................................................................................38 6.5. Conditions of Obligations of Parent and Merger Sub.....................................................39
ARTICLE VII. TERMINATION AND ABANDONMENT
7.1. Termination............................................................................................39 7.2. Effect of Termination and Abandonment..................................................................40
ii 4 ARTICLE VIII. MISCELLANEOUS
8.1. Confidentiality........................................................................................42 8.2. Amendment and Modification.............................................................................42 8.3. Waiver of Compliance; Consents.........................................................................42 8.4. Survival...............................................................................................42 8.5. Notices................................................................................................42 8.6. Binding Effect; Assignment.............................................................................43 8.7. Expenses...............................................................................................44 8.8. Governing Law..........................................................................................44 8.9. Counterparts...........................................................................................44 8.10. Interpretation.........................................................................................44 8.11. Entire Agreement.......................................................................................44 8.12. Severability...........................................................................................45 8.13. Specific Performance...................................................................................45 8.14. Third Parties..........................................................................................45 8.15. Disclosure Letters.....................................................................................45
ANNEX I
Conditions to the Offer.......................................................................................1
iii 5 This Agreement and Plan of Merger (this "AGREEMENT") is made and entered into as of November 20, 1997, by and among, BDM International, Inc., a Delaware corporation (the "COMPANY"), TRW Inc., an Ohio corporation ("PARENT"), and Systems Acquisition Inc., a Delaware corporation and wholly owned subsidiary of Parent ("MERGER SUB"). W I T N E S S E T H: WHEREAS, the respective Boards of Directors of the Company, Merger Sub and Parent have approved the acquisition by Parent of the Company in accordance with the provisions of this Agreement; WHEREAS, in furtherance thereof, it is proposed that, upon the terms and subject to the conditions set forth herein, Parent will make a cash tender offer (as it may be amended from time to time in accordance herewith, the "OFFER") to purchase all of the outstanding shares ("SHARES") of common stock, $.01 par value, of the Company ("COMPANY STOCK"), for $29.50 per Share or such higher price as may be paid in the Offer (the "PER SHARE AMOUNT"), in each case net to the seller in cash, without interest; WHEREAS, also in furtherance of such acquisition, the respective Boards of Directors of the Company, Merger Sub and Parent have each approved the merger (the "MERGER") of Merger Sub with and into the Company following the expiration of the Offer in accordance with the laws of the State of Delaware and the provisions of this Agreement; WHEREAS, Parent and Merger Sub are unwilling to enter into this Agreement (and effect the transactions contemplated hereby) unless, immediately after the execution and delivery hereof, certain holders of Shares (the "STOCKHOLDERS") enter into an agreement (the "STOCKHOLDERS AGREEMENT") providing for certain matters with respect to their Shares, the tender of their Shares and certain other actions relating to the Offer and the other transactions contemplated by this Agreement and, in order to induce Parent and Merger Sub to enter into this Agreement, the Company has approved the execution and delivery by Parent and Merger Sub and such Stockholders of the Stockholders Agreement, and such Stockholders have agreed to execute and deliver the Stockholders Agreement; WHEREAS, the Board of Directors of the Company has approved this Agreement and the Stockholders Agreement, has resolved to recommend acceptance of the Offer and the Merger to the holders of Shares and has determined that the consideration to be paid for each Share in the Offer and the Merger is fair to the holders of such Shares and to recommend that the holders of such Shares accept the Offer and adopt this Agreement and the transactions contemplated hereby; and 6 WHEREAS, the Company, Merger Sub and Parent desire to make certain representations, warranties and agreements in connection with, and establish various conditions precedent to, the transactions contemplated hereby. NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements hereinafter set forth, the parties hereto agree as follows: ARTICLE I. TENDER OFFER AND MERGER 1.1. THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with SECTION 7.1 hereof and no event set forth in Annex I hereto shall have occurred and be existing, Parent shall cause Merger Sub to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "SECURITIES EXCHANGE ACT")) the Offer as promptly as practicable, but in no event later than five business days following the public announcement of this Agreement; PROVIDED, HOWEVER, that Parent may designate another direct subsidiary of Parent as the bidder (within the meaning of Rule 14d-1(c) under the Securities Exchange Act) in the Offer, in which case references herein to Merger Sub shall be deemed to apply to such subsidiary, as appropriate. The obligation of Parent to cause Merger Sub to accept for payment any Shares tendered shall be subject to the satisfaction of only those conditions set forth in ANNEX I hereto (the "OFFER CONDITIONS"). The Per Share Amount shall be net to each seller in cash, subject to reduction only for any applicable federal back-up withholding or stock transfer taxes payable by such seller. The Company agrees that no Shares held by the Company will be tendered pursuant to the Offer. (b) Without the prior written consent of the Company, Parent shall not permit Merger Sub to (i) decrease the Per Share Amount or change the form of consideration payable in the Offer, (ii) decrease the number of Shares sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition (as defined in ANNEX I hereto) or (iv) impose additional conditions to the Offer or amend any other term of the Offer in any manner adverse to the holders of Shares, provided that nothing herein will prohibit any waiver of any condition or term of the Offer (other than the Minimum Condition) or any other action permitted hereby. Upon the terms and subject to the conditions of the Offer, Parent will cause Merger Sub to accept for payment and purchase, as soon as practicable after the expiration of the Offer, all Shares validly tendered and not withdrawn prior to the expiration of the Offer. It is agreed that the Offer Conditions are for the benefit of Merger Sub and may be asserted by Merger Sub regardless of the circumstances giving rise to any such condition (except for any action or inaction by Parent or Merger Sub 2 7 constituting a breach of this Agreement) or, except with respect to the Minimum Condition, may be waived by Merger Sub, in whole or in part at any time and from time to time, in its sole discretion. (c) The Offer shall be made by means of an offer to purchase (the "OFFER TO PURCHASE") having only the conditions set forth in ANNEX I hereto. On the date the Offer is commenced, Parent and Merger Sub shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the Offer that will contain (including as an exhibit) or incorporate by reference the Offer to Purchase and forms of the related letter of transmittal and summary advertisement (which documents, together with any supplements or amendments thereto, and any other SEC schedule or form which is filed in connection with the Offer and related transactions, are referred to collectively herein as the "OFFER DOCUMENTS"). Each of Parent, Merger Sub and the Company agrees promptly to correct any information provided by it for use in the Schedule 14D-1 or the Offer Documents if and to the extent that it shall have become false or misleading in any material respect and to supplement the information provided by it specifically for use in the Schedule 14D-1 or the Offer Documents to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and Parent and Merger Sub further agree to take all steps necessary to cause the Schedule 14D-1, as so corrected or supplemented, to be filed with the SEC and the Offer Documents, as so corrected or supplemented, to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on any Offer Documents before they are filed with the SEC. (d) The Offer to Purchase shall provide for an initial expiration date (the "EXPIRATION DATE") of 20 business days (as defined in Rule 14d-1 under the Securities Exchange Act) from the date of commencement. Parent and Merger Sub agree that they shall not terminate or withdraw the Offer or extend the Expiration Date unless at the Expiration Date any of the Offer Conditions shall not have been satisfied or earlier waived. Notwithstanding but without limiting the foregoing, Merger Sub may (i) extend the Expiration Date (including as it may be extended) for up to ten business days in connection with an increase in the consideration to be paid pursuant to the Offer so as to comply with applicable rules and regulations of the SEC, (ii) in its sole discretion, extend the initial Expiration Date for up to ten business days after the initial Expiration Date, and (iii) extend the initial Expiration Date (including as it may be extended) for up to ten business days, notwithstanding that on such Expiration Date the Offer Conditions shall have been 3 8 satisfied or waived, if the number of Shares that have been validly tendered and not withdrawn represent more than 50% but less than 90% of the voting power of the then issued and outstanding Shares, PROVIDED that, in the case of clause (iii) of this SECTION 1.1(d), Parent and Merger Sub expressly and irrevocably waive any Offer Condition that subsequently may not be satisfied during such extension of the Offer. 1.2. COMPANY ACTION. (a) The Company hereby approves of and consents to the Offer and represents and warrants that (A) the Board of Directors of the Company, at a meeting duly called and held on November 20, 1997, at which all of the Directors were present, duly approved by unanimous vote this Agreement and the transactions contemplated hereby, including the Offer, the Merger and the Stockholders Agreement, resolved to recommend that the stockholders of the Company accept the Offer, tender their Shares pursuant to the Offer and adopt this Agreement and the transactions contemplated hereby, including the Merger, and determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the stockholders of the Company and (B) Wasserstein Perella & Co., Inc. (the "FINANCIAL ADVISOR") has delivered to the Board of Directors of the Company its written opinion that as of the date hereof the consideration to be received by the stockholders of the Company pursuant to each of the Offer and the Merger is fair to the stockholders of the Company from a financial point of view. The Company has been authorized by the Financial Advisor to permit the inclusion of such fairness opinion (or a reference thereto) in the Offer Documents and in the Schedule 14D-9 referred to below. The Company hereby consents to the inclusion in the Offer Documents of the recommendations of the Company's Board of Directors described in this Section 1.2(a). (b) The Company shall file with the SEC, no later than the fifth business day following the public announcement of this Agreement, a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that will comply in all material respects with the provisions of all applicable Law (as hereinafter defined), including federal securities Laws. The Company shall mail such Schedule 14D-9 to the stockholders of the Company promptly after the commencement of the Offer together with the initial mailing of the Offer Documents. The Schedule 14D-9 and the Offer Documents shall contain the recommendations of the Board of Directors of the Company described in SECTION 1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and to the extent that it shall become false or misleading in any material respect (and each of Parent and Merger Sub, with respect to written information supplied by it specifically for use in the Schedule 14D-9, shall promptly notify the Company of any required corrections of such information and cooperate with the Company with respect to correcting such 4 9 information) and to supplement the information contained in the Schedule 14D-9 to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company shall take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the Company's stockholders to the extent required by applicable Laws, including federal securities laws. Parent and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 before it is filed with the SEC. (c) In connection with the Offer, the Company shall promptly upon execution of this Agreement furnish Parent with mailing labels containing the names and addresses of all record holders of Shares, non-objecting beneficial owner lists (to the extent reasonably available), security position listings of Shares held in stock depositories, each as of a recent date, and shall promptly furnish Parent with such additional information, including updated lists of stockholders, mailing labels and security position listings, and such other information and assistance as Parent or its agents may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of Shares. 1.3. DIRECTORS. Promptly upon the purchase by Merger Sub of any Shares pursuant to the Offer (and assuming that the Minimum Condition has been satisfied), and from time to time thereafter as Shares are acquired by Merger Sub, Merger Sub shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as will give Merger Sub, subject to compliance with Section 14(f) of the Securities Exchange Act, representation on the Board of Directors of the Company equal to at least that number of directors which equals the product of the total number of directors on the Board of Directors of the Company (giving effect to the directors appointed or elected pursuant to this sentence and including current directors serving as officers of the Company) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent or any affiliate of Parent (including for purposes of this SECTION 1.3 such Shares as are accepted for payment pursuant to the Offer, but excluding Shares held by the Company) bears to the number of Shares outstanding. At such times, if requested by Parent, the Company will also cause each committee of the Board of Directors of the Company and the Board of Directors of each Company Subsidiary (as hereinafter defined) to include persons designated by Parent constituting the same percentage of each such committee and the Board of Directors of each Company Subsidiary as Parent's designees are of the Board of Directors of the Company. The Company shall, upon request by Parent, promptly increase the size of the Board of Directors of the Company as is necessary to enable Parent designees to be elected to the Board of Directors of the Company in accordance with the terms of this SECTION 1.3 and shall cause Parent's 5 10 designees to be so elected; PROVIDED, HOWEVER, that, subject to the following proviso, in the event that Parent's designees are appointed or elected to the Board of Directors of the Company, until the Effective Time (as hereinafter defined) the Board of Directors of the Company shall have at least one director who is a director on the date hereof and who is neither an officer of the Company nor a designee, stockholder, affiliate or associate (within the meaning of the federal securities laws) of Parent (one or more of such directors, the "INDEPENDENT DIRECTORS"); PROVIDED FURTHER, that if no Independent Directors remain, the other directors shall designate one person to fill one of the vacancies who shall not be either an officer of the Company or a designee, shareholder, affiliate or associate of Parent, and such person shall be deemed to be an Independent Director for purposes of this Agreement. Subject to applicable Law, the Company shall promptly take all action necessary pursuant to Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this SECTION 1.3 and shall include in the Schedule 14D-9 mailed to stockholders promptly after the commencement of the Offer (or an amendment thereof or an information statement pursuant to Rule 14f-1 if Parent has not theretofore designated directors) such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this SECTION 1.3. Parent will supply the Company and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the contrary, prior to the Effective Time, the affirmative vote of a majority of the Independent Directors shall be required to (i) amend or terminate this Agreement on behalf of the Company, (ii) exercise or waive any of the Company's rights or remedies hereunder, (iii) extend the time for performance of Parent's obligations hereunder or (iv) take any other action by the Company in connection with this Agreement required to be taken by the Board of Directors of the Company. 1.4. THE MERGER. Upon the terms and subject to the conditions of this Agreement, the Merger shall be consummated in accordance with the Delaware General Corporation Law (the "DELAWARE CODE"). At the Effective Time (as defined in SECTION 1.5 hereof), upon the terms and subject to the conditions of this Agreement, Merger Sub shall be merged with and into the Company in accordance with the Delaware Code and the separate existence of Merger Sub shall thereupon cease, and the Company, as the surviving corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its corporate existence under the laws of the State of Delaware as a subsidiary of Parent. At Parent's election, any direct or indirect subsidiary of Parent other than Merger Sub may be merged with and into the Company instead of Merger Sub. In the event of such an election, the parties agree to execute an appropriate amendment to this 6 11 Agreement to reflect such election. The parties shall prepare and execute a certificate of merger in order to comply in all respects with the requirements of the Delaware Code and with the provisions of this Agreement or, if applicable, a certificate of ownership and merger (each, a "Certificate of Merger"). 1.5. EFFECTIVE TIME. The Merger shall become effective at the time of the filing of the Certificate of Merger with the Secretary of State of Delaware in accordance with the applicable provisions of the Delaware Code or at such later time as may be specified in the Certificate of Merger. As soon as practicable after all of the conditions set forth in ARTICLE VI of this Agreement have been satisfied or waived by the party or parties entitled to the benefit of the same, the parties hereto shall cause the Merger to become effective. Parent and the Company shall mutually determine the time of such filing and the place where the closing of the Merger (the "CLOSING") shall occur. The time when the Merger shall become effective is herein referred to as the "EFFECTIVE TIME" and the date on which the Effective Time occurs is herein referred to as the "CLOSING DATE." 1.6. CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, the Company or the holder of any of the following securities: (a) Each Share issued and outstanding immediately before the Effective Time (other than any Shares to be cancelled pursuant to SECTION 1.6(b) hereof and any Dissenting Shares (as hereinafter defined)) shall be cancelled and extinguished and be converted into the right to receive the Per Share Amount (the "MERGER CONSIDERATION") in cash payable to the holder thereof, without interest, promptly upon surrender of the certificate representing such Share or appropriate proof of lost certificates, in accordance with Section 1.8 hereof. From and after the Effective Time, the holders of certificates evidencing ownership of any such Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided for herein or by applicable Law. (b) Each Share held in the treasury of the Company and each Share owned by Parent or any direct or indirect wholly owned subsidiary of Parent (other than Shares held by TRW Investment Management Co., its advisors or Parent's employee benefit plans) immediately before the Effective Time, including without limitation Merger Sub, shall be cancelled and extinguished and no payment or other consideration shall be made with respect thereto. (c) The shares of Merger Sub common stock outstanding immediately prior to the Merger shall be converted into one 7 12 validly issued, fully paid and non-assessable share of the common stock of the Surviving Corporation (the "SURVIVING CORPORATION COMMON STOCK"), which one share of the Surviving Corporation Common Stock shall constitute all of the issued and outstanding capital stock of the Surviving Corporation and shall be owned by Parent. 1.7. DISSENTING SHARES.(a) Notwithstanding any provision of this Agreement to the contrary, any Shares issued and outstanding immediately prior to the Effective Time and held by a holder who has demanded and perfected his demand for appraisal of his Shares in accordance with the Delaware Code (including but not limited to Section 262 thereof) and as of the Effective Time has neither effectively withdrawn nor lost his right to such appraisal ("DISSENTING SHARES") shall not be converted into or represent a right to receive the Merger Consideration, but the holder thereof shall be entitled to only such rights as are granted by the Delaware Code. (b) Notwithstanding the provisions of SECTION 1.7(a) hereof, if any holder of Shares who demands appraisal of his Shares under the Delaware Code shall effectively withdraw or lose (through failure to perfect or otherwise) his right to appraisal, then as of the Effective Time or the occurrence of such event, whichever occurs later, such holder's Shares shall automatically be converted into and represent only the right to receive the Merger Consideration, without interest thereon, upon surrender of the certificate or certificates representing such Shares. (c) The Company shall give Parent (i) prompt notice of any written demands for appraisal or payment of the fair value of any Shares, withdrawals of such demands, and any other instruments served pursuant to the Delaware Code received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the Delaware Code. The Company shall not voluntarily make any payment with respect to any demands for appraisal and shall not, except with the prior written consent of Parent, settle or offer to settle any such demands. 1.8. SURRENDER OF SHARES. (a) Prior to the Closing Date, Parent shall appoint First Chicago Trust Company of New York or another agent reasonably acceptable to the Company to act as exchange agent (the "EXCHANGE AGENT") for the Merger. When and as needed, Parent shall make available to the Exchange Agent for the benefit of holders of Shares, the aggregate consideration to which such holders shall be entitled at the Effective Time pursuant to SECTION 1.6 hereof. Such funds shall be invested by the Exchange Agent as directed by Parent or, after the Effective Time, the Surviving Corporation, provided that such investments shall be in obligations of or guaranteed by the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard & Poor's 8 13 Corporation, respectively, or in certificates of deposit, bank repurchase agreements or banker's acceptances of commercial banks with capital exceeding $500 million. Any net profit resulting from, or interest or income produced by, such investments will be payable to the Merger Sub or Parent, as Parent directs. In the event that such funds as invested are inadequate to pay the full Merger Consideration for all Shares converted into the Merger Consideration pursuant to the Merger, the Parent shall provide additional funds to do so. (b) On the Closing Date, Parent shall instruct the Exchange Agent to mail to each holder of record of a certificate representing any Shares cancelled upon the Merger pursuant to SECTION 1.6(a) hereof, within five business days of receiving from the Company a list of such holders of record, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates shall pass, only upon delivery of the certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the certificates. Each holder of a certificate or certificates representing any Shares cancelled upon the Merger pursuant to SECTION 1.6(a) hereof may thereafter surrender such certificate or certificates to the Exchange Agent, as agent for such holder, to effect the surrender of such certificate or certificates on such holder's behalf for a period ending one year after the Effective Time. Upon the surrender of certificates representing the Shares, Parent shall cause the Exchange Agent to pay the holder of such certificates in exchange therefor cash in an amount equal to the Per Share Amount multiplied by the number of Shares represented by such certificate. Until so surrendered, each such certificate (other than certificates representing Dissenting Shares or Shares held by Parent or in the treasury of the Company) shall represent solely the right to receive the aggregate Merger Consideration relating thereto. (c) If payment of cash in respect of cancelled Shares is to be made to a person other than the person in whose name a surrendered certificate or instrument is registered, it shall be a condition to such payment that the certificate or instrument so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other Taxes (as hereinafter defined) required by reason of such payment in a name other than that of the registered holder of the certificate or instrument surrendered or shall have established to the satisfaction of Parent or the Exchange Agent that such Tax either has been paid or is not payable. (d) At the Effective Time, the stock transfer books of the Company shall be closed and no transfer of Shares shall be made thereafter, other than transfers of Shares that have occurred prior to the Effective Time. In the event that, after 9 14 the Effective Time, certificates for Shares are presented to the Surviving Corporation, its transfer agent or the Exchange Agent, they shall be cancelled and exchanged for cash as provided in SECTION 1.6(a) hereof. No interest shall accrue or be paid on any cash payable upon the surrender of a certificate or certificates which immediately before the Effective Time represented outstanding Shares. (e) The Merger Consideration paid in the Merger shall be net to the holder of Shares in cash, subject to reduction only for any applicable federal back-up withholding or, as set forth in SECTION 1.8(c) hereof, stock transfer Taxes payable by such holder. (f) Promptly following the date which is 180 calendar days after the Effective Time, the Exchange Agent shall deliver to Parent all cash (including interest received with respect thereto), certificates and other documents in its possession relating to the transactions contemplated hereby, and the Exchange Agent's duties shall terminate. Thereafter, each holder of a certificate representing Shares (other than certificates representing Dissenting Shares and certificates representing Shares to be cancelled pursuant to SECTION 1.6(b) hereof) may surrender such certificate to Parent and (subject to applicable abandoned property, escheat and similar Laws) receive in consideration thereof the aggregate Merger Consideration relating thereto payable upon surrender of such certificate, without any interest or dividends thereon. (g) None of the Company, Merger Sub, Parent or the Exchange Agent shall be liable to any holder of Shares for cash delivered to a public official pursuant to any abandoned property, escheat or similar law, rule, regulation, statute, order, judgment or decree. 1.9. OPTIONS. (a) The Company hereby represents and warrants, and based thereon Parent and Merger Sub hereby acknowledge, that (i) all outstanding options to purchase Shares (the "COMPANY OPTIONS") granted under the Company's stock option plans referred to in SECTION 2.14 of the Company Disclosure Letter (as hereinafter defined), each as amended (collectively, the "COMPANY OPTION PLANS"), whether or not then exercisable or vested, shall, pursuant to the terms of the Company Option Plans, be fully exercisable and vested during the ten-day period immediately prior to the initial Expiration Date and (ii) pursuant to the terms thereof, all Company Options which are outstanding immediately prior to the consummation of the Offer shall be cancelled as of the consummation of the Offer and the holders thereof shall be entitled to receive from the Company (or, at Parent's option, Parent) upon consummation of the Offer, in respect of each Share subject to such Company Option, an amount in cash equal to the excess, if any, of the Per Share Amount over the exercise price per share thereof (such payment to 10 15 be net of applicable withholding taxes), PROVIDED, HOWEVER, that with respect to any person subject to Section 16(a) of the Securities Exchange Act, any such amount shall be paid as soon as practicable after the first date payment can be made without liability to such person under Section 16(b) of the Securities Exchange Act. Upon the consummation of the Offer, Parent shall provide the Company with the funds necessary to satisfy any of its obligations under this SECTION 1.9(a). (b) The Company hereby represents and warrants that all Company Option Plans provide, or have been or will be amended to provide, for the actions described in SECTION 1.9(a) hereof. The Company shall cause the Company Option Plans to terminate as of the Effective Time. 1.10. CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to SECTION 5.5 hereof, at the Effective Time, the Certificate of Incorporation and the Bylaws of the Surviving Corporation shall be the Certificate of Incorporation and the Bylaws of Merger Sub in effect at the Effective Time (subject to any subsequent amendments). 1.11. DIRECTORS AND OFFICERS. At the Effective Time, the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation, in each case until their successors are duly elected or appointed and qualified. 1.12. OTHER EFFECTS OF MERGER. The Merger shall have all further effects as specified in the applicable provisions of the Delaware Code. 1.13. PROXY STATEMENT. (a) As promptly as practicable after the consummation of the Offer and if required by applicable Law, the Company shall prepare and file with the SEC, and shall use all reasonable best efforts to have cleared by the SEC, and promptly thereafter shall mail to stockholders, a proxy statement in connection with a meeting of the Company's stockholders to consider the Merger or an information statement, as appropriate (such proxy statement or information statement, as amended or supplemented, is herein referred to as the "PROXY STATEMENT"). The Proxy Statement shall contain the recommendation of the Board of Directors of the Company in favor of the Merger and the fairness opinion of the Financial Advisor and such other disclosures as are required by Law. (b) Parent will furnish the Company with such information concerning Parent and its subsidiaries as is necessary in order to cause the Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply with applicable Law. Parent agrees promptly to advise the Company if, at any 11 16 time prior to the meeting of stockholders of the Company referenced herein, any information provided by it specifically for inclusion in the Proxy Statement is or becomes incorrect or incomplete in any material respect and to provide the Company with the information needed to correct such inaccuracy or omission. Parent will furnish the Company with such supplemental information as may be necessary in order to cause the Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply with applicable Law after the mailing thereof to the stockholders of the Company. (c) The Company and Parent agree to cooperate in making any preliminary filings of the Proxy Statement with the SEC, as promptly as practicable, pursuant to Rule 14a-6 under the Securities Exchange Act. (d) The Company shall provide Parent for its review a copy of the Proxy Statement at least such amount of time prior to each filing thereof as is customary in transactions of the type contemplated hereby. Parent authorizes the Company to utilize in the Proxy Statement the information concerning Parent and its subsidiaries provided to the Company in connection with, or contained in, the Proxy Statement. 1.14. ADDITIONAL ACTIONS. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Merger Sub or the Company or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of Merger Sub or the Company, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of Merger Sub or the Company, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement. ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Merger Sub that, except as set forth in the correspondingly numbered Sections of the letter, dated the date hereof, from the Company to Parent (the "COMPANY DISCLOSURE LETTER"): 2.1. ORGANIZATION AND GOOD STANDING. The Company and each of the Company Subsidiaries is a corporation or partnership 12 17 duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has all requisite corporate or partnership power and authority and any necessary governmental approval to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of the Company Subsidiaries is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have or be reasonably likely in the future to have a material adverse effect on the business, assets, condition (financial or otherwise), liabilities or results of operations of the Company and the Company Subsidiaries taken as a whole ("COMPANY MATERIAL ADVERSE EFFECT") or prevent or delay the consummation of the Offer or Merger. The Company has heretofore made available to Parent accurate and complete copies of the Certificate of Incorporation and Bylaws, as currently in effect, of the Company. For purposes of this Agreement, the term "COMPANY SUBSIDIARY" shall mean any corporation, partnership or other legal entity of which the Company (either alone or through or together with any other subsidiary) owns a majority of the capital stock or other equity interests, and the Company is entitled to vote for the election of the board of directors or other governing body of such corporation, partnership or other legal entity. 2.2. CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of (a) 50,000,000 shares of Company Stock, (b) 2,000,000 of Class B Common Stock, par value $0.01 per share (the "COMPANY CLASS B STOCK"), and (c) 500,000 shares of preferred stock, par value $0.01 per share. As of the close of business on the day immediately preceding the date hereof, (a) 29,723,431 shares of Company Stock were issued and outstanding, (b) no shares of Company Class B Stock were issued and outstanding, (c) no shares of preferred stock were issued and outstanding and (d) 22,891 shares of Company Stock were issued and held in the treasury of the Company. No other capital stock of the Company is authorized or issued. All issued and outstanding shares of the Company Stock are duly authorized, validly issued, fully paid and non-assessable and free of preemptive or similar rights. Except as set forth in the Company Filed Documents (as hereinafter defined) or SECTION 2.2 of the Company Disclosure Letter, as of the date hereof there were no, and as of the Expiration Date there will be no, outstanding rights, subscriptions, warrants, puts, calls, unsatisfied preemptive rights, options or other agreements of any kind relating to any of the outstanding, authorized but unissued, unauthorized or treasury shares of the capital stock or any other interest in the ownership or earnings of the Company or other security of the Company, and there is no authorized or outstanding security of any kind convertible into 13 18 or exchangeable for any such capital stock or other security. Except as set forth in SECTION 2.2 of the Company Disclosure Letter, there are no outstanding contractual obligations of the Company or any Company Subsidiaries to repurchase, redeem or otherwise acquire any shares of Company Common Stock or the capital stock of any Company Subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such subsidiary or any other entity. 2.3. SUBSIDIARIES. SECTION 2.3 of the Company Disclosure Letter sets forth the name and jurisdiction of incorporation or organization of each Company Subsidiary, each of which is wholly owned by the Company except as otherwise indicated in said SECTION 2.3 of the Company Disclosure Letter. All of the capital stock and other interests of the Company Subsidiaries so held by the Company are owned by it or a Company Subsidiary as indicated in said SECTION 2.3 of the Company Disclosure Letter, free and clear of any claim, lien, encumbrance, security interest or agreement with respect thereto. All of the outstanding shares of capital stock in each of the Company Subsidiaries directly or indirectly held by the Company are duly authorized, validly issued, fully paid and non-assessable and were issued free of preemptive or similar rights and in compliance with applicable Laws. No equity securities or other interests of any of the Company Subsidiaries are or may become required to be issued or purchased by reason of any options, warrants, rights to subscribe to, puts, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any capital stock of any Company Subsidiary, and there are no contracts, commitments, understandings or arrangements by which any Company Subsidiary is bound to issue additional shares of its capital stock, or options, warrants or rights to purchase or acquire any additional shares of its capital stock or securities convertible into or exchangeable for such shares. 2.4. AUTHORIZATION; BINDING AGREEMENT. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, the Merger, have been duly and validly authorized by the Company's Board of Directors and no other corporate proceedings on the part of the Company or any Company Subsidiary are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby (other than the adoption of this Agreement by the stockholders of the Company to the extent required by the Delaware Code). This Agreement has been duly and validly executed and delivered by the Company and constitutes the legal, valid and binding agreements of the Company, enforceable against the Company in accordance with its terms. The Board of Directors 14 19 of the Company has approved this Agreement, the Stockholders Agreement and the transactions contemplated hereby and thereby (including but not limited to the Offer, the Merger and the matters provided for in the Stockholders Agreement) so as to render inapplicable hereto and thereto the limitation on business combinations contained in Section 203 of the Delaware Code (or any similar provision), assuming Parent and its "associates" and "affiliates" (as defined in Section 203 of the Delaware Code) collectively beneficially own and have beneficially owned at all times during the three-year period prior to the execution of this Agreement and the Stockholders Agreement less than 15% of the Shares outstanding. As a result, the only vote of holders of any class or series of the Company's capital stock required to adopt this Agreement and the transactions contemplated hereby, including the Merger, is the affirmative vote of a majority of the outstanding Shares, and if Section 253 of the Delaware Code is applicable to the Merger, no such vote will be required. No other state takeover or control share statute or similar statute or regulation applies or purports to apply to the Offer, the Merger, the Stockholder Agreement or any of the transactions contemplated hereby or thereby. 2.5. GOVERNMENTAL APPROVALS. No consent, approval, waiver or authorization of, notice to or declaration or filing with ("CONSENT"), any nation or government, any state or other political subdivision thereof, any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any governmental or regulatory authority, agency, department, board, commission, administration or instrumentality, any court, tribunal or arbitrator and any self-regulatory organization, domestic or foreign ("GOVERNMENTAL AUTHORITY"), on the part of the Company or any of the Company Subsidiaries is required in connection with the execution, delivery or performance by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby other than (i) the filing of the Certificate of Merger with the Secretary of State of Delaware in accordance with the Delaware Code, (ii) filings with the SEC and the National Association of Securities Dealers, Inc. ("NASD"), (iii) filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR ACT") and similar foreign requirements, (iv) such filings as may be required in any jurisdiction where the Company is qualified or authorized to do business as a foreign corporation in order to maintain such qualification or authorization and (v) those Consents that, if they were not obtained or made, individually or in the aggregate, would not have or be reasonably likely in the future to have a Company Material Adverse Effect, or prevent or materially delay consummation of the Offer or the Merger or the Company from performing its obligations under this Agreement. 15 20 2.6. NO VIOLATIONS. The execution, delivery and performance of this Agreement, the consummation of the transactions contemplated hereby and compliance by the Company with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws or other governing instruments of the Company or any of the Company Subsidiaries, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any Company Material Contract (as hereinafter defined), (iii) result in the creation or imposition of any lien or encumbrance of any kind upon any of the assets of the Company or any Company Subsidiary or (iv) subject to obtaining the Consents from Governmental Authorities referred to in SECTION 2.5 hereof, contravene any applicable provision of any statute, law, rule or regulation or any order, decision, injunction, judgment, award or decree ("LAW") to which the Company or any Company Subsidiary or its or any of their respective assets or properties are subject, except, in the case of clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which would not, individually or in the aggregate, have or be reasonably likely in the future to have a Company Material Adverse Effect or prevent or materially delay consummation of the Offer or the Merger or the Company from performing its obligations under this Agreement. 2.7. SECURITIES FILINGS. The Company and, to the extent applicable, each of its then or current Company Subsidiaries, has filed all forms, reports, statements and documents required to be filed with the SEC since December 31, 1994, each of which has complied in all material respects with the applicable requirements of the Securities Act (as hereinafter defined) or the Securities Exchange Act, each as in effect on the date so filed. The Company has made available to Parent true and complete copies of (i) its Annual Reports on Form 10-K, as amended, for the years ended December 31, 1994, 1995 and 1996, as filed with the SEC, (ii) its proxy statements relating to all of the meetings of stockholders (whether annual or special) of the Company since January 1, 1995, as filed with the SEC, and (iii) all other reports, statements and registration statements and amendments thereto (including, without limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by the Company with the SEC since January 1, 1994, or, in the case of Quarterly Reports on Form 10-Q, since October 1, 1996, and prior to the date hereof (collectively, the "COMPANY FILED DOCUMENTS"). The reports and statements required to be filed or furnished to stockholders pursuant to the Securities Exchange Act subsequent to the date hereof, collectively with the Company Filed Documents, are referred to collectively herein as the "COMPANY SECURITIES FILINGS." As of their respective dates, or as of the date of the last amendment thereof, if amended after filing, none of the Company Securities Filings contained or, as 16 21 to the Company Securities Filings subsequent to the date hereof, will contain, any untrue statement of a material fact or omitted or, as to the Company Securities Filings subsequent to the date hereof, will omit, to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company has heretofore furnished or made available to Parent a complete and correct copy of any amendments or modifications which have not yet been filed with the SEC to executed agreements, documents or other instruments which previously had been filed by the Company with the SEC pursuant to the Securities Act or the Securities Exchange Act. 2.8. COMPANY FINANCIAL STATEMENTS. The audited consolidated financial statements and unaudited interim financial statements of the Company included in the Company Securities Filings (the "COMPANY FINANCIAL STATEMENTS") have been or will be, as the case may be, prepared in accordance with generally accepted accounting principles applied on a consistent basis (except, with respect to any Company Filed Documents, as may be indicated therein or in the notes thereto) and present fairly, in all material respects, the consolidated financial position of the Company and the Company Subsidiaries as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments (which in the aggregate are not material in nature or amount), any other adjustments described in the Company Filed Documents and the fact that certain information and notes have been condensed or omitted in accordance with the Securities Exchange Act. 2.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the Company Filed Documents, since December 31, 1996, the Company and the Company Subsidiaries have conducted their businesses only in the ordinary course and in a manner consistent with past practice and, since such date, there has not been: (i) any event that, individually or in the aggregate, has had or is reasonably likely in the future to have a Company Material Adverse Effect, (ii) any declaration, payment or setting aside for payment of any dividend or other distribution or any redemption or other acquisition of any shares of capital stock or securities of the Company by the Company, (iii) any material damage or loss to any material asset or property, whether or not covered by insurance, (iv) any change by the Company in accounting principles or practices, (v) any revaluation by the Company of any of its material assets, including but not limited to, writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business, (vi) any entry by the Company or any Company Subsidiaries into any commitment or transactions material to the Company and the Company Subsidiaries taken as a whole (other than commitments or transactions entered into in the ordinary course 17 22 of business), or (vii) any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including without limitation the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan or agreement or arrangement, or, since July 1, 1997, any other increase in the compensation payable or to become payable to any present or former directors or officers, or any employment, consulting or severance agreement or arrangement entered into with any such present or former directors, officers or employees of the Company or any of the Company Subsidiaries covered by SECTION 5.4 of the Company Disclosure Letter ("KEY Employees"). Since January 1, 1997, neither the Company nor any Company Subsidiary has taken, or failed to take, any action that would have constituted a breach of SECTION 4.1 hereof had the covenants therein applied since that date, except as described in SECTION 2.9 of the Company Disclosure Schedule or ordinary course increases in compensation as relates to Key Employees (other than those entitled under SECTION 5.4 of the Company Disclosure Letter to "Senior Management Severance"). 2.10. COMPLIANCE WITH LAWS. The business and operations of the Company and each of the Company Subsidiaries have been operated in compliance with all Laws applicable thereto, except for any instances of non-compliance which, individually or in the aggregate, have had or would be reasonably likely in the future to have a Company Material Adverse Effect. 2.11. PERMITS. (i) The Company and the Company Subsidiaries have all permits, certificates, licenses, approvals and other authorizations required in connection with the operation of their respective businesses (collectively, "COMPANY PERMITS"), (ii) neither the Company nor any of the Company Subsidiaries is in violation of any Company Permit and (iii) no proceedings are pending or, to the knowledge of the Company, threatened, to revoke or limit any Company Permit, except, in each case, those the absence or violation of which, individually or in the aggregate, have had or would be reasonably likely in the future to have a Company Material Adverse Effect or prevent or result in a material delay of the consummation of the Offer or the Merger. 2.12. LITIGATION. Except as disclosed in the Company Filed Documents, there is no suit, action, investigation, claim or proceeding ("LITIGATION") pending or, to the best knowledge of the Company, threatened against the Company or any of the Company Subsidiaries which, individually or in the aggregate, has had or would be reasonably likely in the future to have a Company Material Adverse Effect, nor is there any judgment, decree, writ, award, injunction, rule or order of any Governmental Authority outstanding against the Company or any of the Company Subsidiaries which, individually or in the aggregate, has had or 18 23 would be reasonably likely in the future to have a Company Material Adverse Effect or prevent or result in a material delay of the consummation of the Offer or the Merger. 2.13. CONTRACTS. Neither the Company nor any of the Company Subsidiaries is a party or is subject to any note, bond, mortgage, indenture, contract, lease, license, agreement or instrument that is required to be described in or filed as an exhibit to any Company Securities Filing ("COMPANY MATERIAL CONTRACT") that is not so described in or filed as required by the Securities Act of 1933, as amended, and the rules and regulations thereunder (the "SECURITIES ACT"), or the Securities Exchange Act in respect of the Company Filed Documents, as the case may be. All such Company Material Contracts are valid and binding and are in full force and effect and enforceable against the Company or such subsidiary and, to the knowledge of the Company, against the other parties thereto in accordance with their respective terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by principles of equity regarding the availability of remedies. Neither the Company nor any of the Company Subsidiaries is in violation or breach of or default under any such Company Material Contract where such violation or breach, individually or in the aggregate, has had or would be reasonably likely in the future to have a Company Material Adverse Effect. 2.14. EMPLOYEE BENEFIT PLANS. (a) SECTION 2.14 of the Company Disclosure Letter contains a complete and accurate list of all material Benefit Plans (as hereinafter defined) maintained or contributed to by the Company or any of the Company Subsidiaries ("COMPANY BENEFIT PLAN"). A "BENEFIT PLAN" shall include (i) an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, together with all regulations thereunder ("ERISA"), even if, because of some other provision of ERISA, such plan is not subject to any or all of ERISA's provisions, and (ii) whether or not described in the preceding clause, any pension, profit sharing, severance, employment, change-in-control, bonus, stock bonus, deferred or supplemental compensation, retirement, thrift, stock purchase or stock option plan or any other compensation, welfare, fringe benefit or retirement plan, program, policy or arrangement providing for benefits for or the welfare of any or all of the current or former employees or agents of the Company or any of the Company Subsidiaries or their beneficiaries or dependents; provided that Benefit Plans shall not include any multiemployer plan, as defined in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN"). Each of the Company Benefit Plans has been maintained in compliance with its terms and all applicable Law, except where the failure to do so would not be reasonably likely in the future to result in a Company Material Adverse Effect. Neither the Company nor any of the Company Subsidiaries 19 24 contributes to, or has any outstanding liability with respect to, any Multiemployer Plan. (b) Except to the extent that any of the following would not have or be reasonably likely in the future to have a Company Material Adverse Effect: (i) each Benefit Plan has been established and administered in accordance with its terms and in compliance with applicable provisions of ERISA, the Code and other applicable laws, rules and regulations; (ii) each Benefit Plan which is intended to be qualified (within the meaning of Code Section 401(a)) is so qualified in form and operation and has received a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that would cause the loss of such qualification; (iii) no event has occurred and no condition exists that would subject the Company or any of the Company Subsidiaries, either directly or by reason of their affiliation with an ERISA Affiliate (as hereinafter defined) to any tax, fine, lien or penalty imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv) for each Benefit Plan with respect to which a Form 5500 has been filed, no material change has occurred with respect to the matters covered by the most recent Form 5500 since the date thereof; and (v) no "reportable event" (as such term is defined in ERISA Section 4043), "prohibited transactions" (as such term is defined in ERISA Section 406 and Code Section 4975), "accumulated funding deficiency" (as such term is defined in ERISA Section 302 and Code Section 412 (whether or not waived)) or failure to make by its due date a required installment under Code Section 412(m) has occurred with respect to any Benefit Plan or any other plan maintained for employees of any ERISA Affiliate of the Company or any of the Company Subsidiaries. "ERISA Affiliate," as applied to any person, means (i) any corporation which is a member of a controlled group of corporations (within the meaning of Code Section 414(b)) of which that person is a member, (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control (within the meaning of Code Section 414(c)) of which that person is a member and (iii) any member of an affiliated service group (within the meaning of Code Section 414(m) and (o)) of which that person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. (c) With respect to any Benefit Plan, (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the knowledge of the Company, threatened which has had or would be reasonably likely in the future to have a Company Material Adverse Effect and (ii) no facts or circumstances exist, to the knowledge of the Company, that could give rise to any such actions, suits or claims which would be reasonably likely in the future to result in a Company Material Adverse Effect. 20 25 (d) Except for (i) payments required to be made under the Company Supplemental Severance Program and (ii) the accelerated vesting and cash-out of Company Options as described in SECTION 1.9 hereof, no Benefit Plan exists that could result in the payment to any present or former employee of the Company or any Company Subsidiary of any money or other property, or accelerate or provide any other rights or benefits, to any present or former employee of the Company or any Company Subsidiary as a result of the transactions contemplated by this Agreement, whether or not such payment would constitute a parachute payment within the meaning of Code Section 280G, which payments, acceleration or provision of benefits would be reasonably likely in the future to result in a Company Material Adverse Effect. 2.15. TAXES AND RETURNS. (a) The Company and each of the Company Subsidiaries and any consolidated, combined, unitary or aggregate group for tax purposes of which the Company or any of the Company Subsidiaries is or has been a member has timely filed, or caused to be timely filed all Tax Returns (as hereinafter defined) required to be filed by it, and has paid, collected or withheld, or caused to be paid, collected or withheld, all Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Company Financial Statements have been established in accordance with generally accepted accounting principles, consistently applied, or which are being contested in good faith. All such Tax Returns were true, correct and complete in all material respects. There are no claims or assessments pending against the Company or any of the Company Subsidiaries for any alleged deficiency in any Tax, and the Company has not been notified in writing of any proposed Tax claims or assessments against the Company or any of the Company Subsidiaries (other than in each case, claims or assessments for which adequate reserves in the Company Financial Statements have been established or which are being contested in good faith and are immaterial in amount). Neither the Company nor any of the Company Subsidiaries has any waivers or extensions of any applicable statute of limitations to assess any Taxes. There are no outstanding requests by the Company or any of the Company Subsidiaries for any extension of time within which to file any Tax Return or within which to pay any material amounts of Taxes shown to be due on any return. To the best knowledge of the Company, there are no liens for Taxes on the assets of the Company or any of the Company Subsidiaries except for statutory liens for current Taxes not yet due and payable. (b) For purposes of this Agreement, the term "TAX" shall mean any federal, state, local, foreign or provincial income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, alternative or added minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty imposed by any 21 26 Governmental Authority. The term "TAX RETURN" shall mean a report, return or other information (including any attached schedules or any amendments to such report, return or other information) required to be supplied to or filed with a governmental entity with respect to any Tax, including an information return, claim for refund, amended return or declaration or estimated Tax. 2.16. INTELLECTUAL PROPERTY. The Company or its Subsidiaries own, or are licensed or otherwise possess legal enforceable rights to use all patents, trademarks, trade names, service marks, copyrights and any applications therefor, technology, know-how, trade secrets, computer software programs or applications, domain names and tangible or intangible proprietary information or materials that are used in the respective businesses of the Company and the Company Subsidiaries as currently conducted, except for any such failures to own, be licensed or possess that, individually or in the aggregate, has not had and is not reasonably likely in the future to have a Company Material Adverse Effect. To the best knowledge of the Company, all patents, trademarks, trade names, service marks and copyrights held by the Company or its Subsidiaries are valid and subsisting. 2.17. ENVIRONMENTAL MATTERS. (a) Except as set forth in SECTION 2.17 of the Company Disclosure Letter and except as, individually or in the aggregate, have not had and are not reasonably likely in the future to have a Company Material Adverse Effect or prevent or materially delay the consummation of the Offer or the Merger, to the Company's knowledge; (i) the Company and the Company Subsidiaries are, and within the period of all applicable statutes of limitation have been, in compliance with all Environmental Laws (as hereinafter defined); (ii) the Company and the Company Subsidiaries hold all Environmental Permits (as hereinafter defined) (each of which is in full force and effect) required for any of their current operations and for any property owned, leased, or otherwise operated by any of them, and are, and within the period of all applicable statutes of limitation have been, in compliance with the terms of all such Environmental Permits; (iii) no review by, or approval of, any Governmental Authority or other person is required under any Environmental Law in connection with the execution or delivery of this Agreement; (iv) neither the Company nor any of the Company Subsidiaries has received any written notice of Environmental Claim (as hereinafter defined) and no 22 27 such Environmental Claims are currently pending or threatened; (v) Hazardous Materials are not present on any property owned, leased or operated by the Company or any Company Subsidiaries that is reasonably likely to form the basis of any Environmental Claim against any of them, and neither the Company nor any of the Company Subsidiaries has reason to believe that Hazardous Materials are present on any other property that is reasonably likely to form the basis of any Environmental Claim against any of them; and (vi) the Company has informed the Parent and Merger Sub of: (A) all material facts which the Company reasonably believes could form the basis of a material Environmental Claim against any person (including, without limitation, any predecessor of the Company or any of the Company Subsidiaries whose liability the Company or any of the Company Subsidiaries has or may have retained or assumed, either contractually or by operation of law, arising out of non-compliance with any Environmental Law or the presence of Hazardous Materials (as hereinafter defined) at any location owned, operated or leased by the Company or the Company Subsidiaries or on any other property; (B) all currently estimated material costs the Company reasonably expects it and any of the Company Subsidiaries to incur to comply with Environmental Laws during the next three years; and (C) all currently estimated material costs the Company and any of the Company Subsidiaries reasonably expect to incur for ongoing, and reasonably anticipated, investigation and remediation of Hazardous Materials (including, without limitation, any payments to resolve any threatened or asserted Environmental Claim for investigation and remediation costs). (b) For purposes of this Agreement, the terms below shall have the following meanings: "Environmental Claim" means any claim, demand, action, suit, complaint, proceeding, directive, investigation, lien, demand letter, or notice of alleged noncompliance, violation or liability, by any person or entity asserting liability or potential liability (including without limitation, liability or potential liability for enforcement, investigatory costs, remediation costs, operation and maintenance costs, governmental response costs, natural resource damages, property damage, personal injury, fines or penalties), regardless of legal theory, arising out of, based on or resulting from (i) the presence, discharge, emission, release or threatened release of any 23 28 Hazardous Materials at any location or (ii) otherwise relating to obligations or liabilities under any Environmental Law. "Environmental Laws" means any and all laws, rules, orders, regulations, statutes, ordinances, guidelines, codes, decrees or other legally enforceable requirement (including, without limitation, common law) of any foreign government, the United States or any state, local, municipal or other governmental authority regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment. "Environmental Permit" means all permits, licenses, registrations, approvals, exemptions and other filings with or authorizations by any Governmental Authority under any Environmental Law. "Hazardous Materials" means all hazardous or toxic substances, wastes, materials or chemicals, petroleum (including crude oil or any fraction thereof), petroleum products, asbestos, asbestos-containing materials, pollutants, contaminants and all other materials, whether or not defined as such, that are regulated pursuant to any Environmental Laws. 2.18. OFFER DOCUMENTS; PROXY STATEMENT. The Proxy Statement will comply in all material respects with the applicable requirements of the Securities Exchange Act except that no representation or warranty is being made by the Company with respect to any information supplied to the Company by Parent or Merger Sub specifically for inclusion in the Proxy Statement. The Proxy Statement will not, at the time the Proxy Statement is filed with the SEC or first sent to stockholders, at the time of the Company's stockholders' meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the meeting of the Company's stockholders held for approval of the Merger which has become false or misleading. The Schedule 14D-9 will comply in all material respects with the Securities Exchange Act. Neither the Schedule 14D-9 nor any of the information relating to the Company or its affiliates provided by or on behalf of the Company specifically for inclusion in the Schedule 14D-1 or the Offer Documents will, at the respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer Documents are filed with the SEC or are first published, sent or given to stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. No representation is made by the Company with respect to written 24 29 information supplied by Parent or Merger Sub specifically for inclusion in the Schedule 14D-9. 2.19. FINDERS AND INVESTMENT BANKERS. Neither the Company nor any of its officers or directors has employed any broker, finder or financial advisor or otherwise incurred any liability for any brokerage fees, commissions or financial advisors' or finders' fees in connection with the transactions contemplated hereby, other than pursuant to an agreement with the Financial Advisor, a copy of which has been provided to Parent. 2.20. FAIRNESS OPINION. The Company's Board of Directors has received from the Financial Advisor a written opinion addressed to it to the effect that, as of the date hereof, the consideration to be paid to stockholders pursuant to each of the Offer and the Merger is fair to such stockholders from a financial point of view. 2.21. RELATED PARTY TRANSACTIONS. Except as set forth in the Company Filed Documents, no director, officer or affiliate of the Company, including for these purposes, the Stockholders, or director, officer or partner of such affiliate (each a "RELATED PARTY")(i) has outstanding any indebtedness or other similar obligation to the Company or any of the Company Subsidiaries or (ii) other than employment-related benefits contemplated by or disclosed in this Agreement, is a party to any legally binding material contract, commitment or obligation to, from or with the Company or any Company Subsidiary. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT Parent represents and warrants to the Company that, except as set forth in the correspondingly numbered Sections of the letter, dated the date hereof, from Parent to the Company (the "PARENT DISCLOSURE LETTER"): 3.1. ORGANIZATION AND GOOD STANDING. Parent and Merger Sub are each a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority and any necessary governmental authority to own, lease and operate its properties and to carry on its business as now being conducted. 3.2. AUTHORIZATION; BINDING AGREEMENT. Parent and Merger Sub have all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including, 25 30 but not limited to, the Merger, have been duly and validly authorized by the respective Boards of Directors of Parent and Merger Sub, as appropriate, and no other corporate proceedings on the part of Parent, Merger Sub or any other subsidiary of Parent are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby (other than the requisite approval by the sole stockholder of Merger Sub of this Agreement and the Merger). This Agreement has been duly and validly executed and delivered by each of Parent and Merger Sub and constitutes the legal, valid and binding agreements of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms. 3.3. GOVERNMENTAL APPROVALS. No Consent from or with any Governmental Authority on the part of Parent or Merger Sub is required in connection with the execution or delivery by Parent and Merger Sub of this Agreement or the consummation by Parent and Merger Sub of the transactions contemplated hereby other than (i) filings under the HSR Act and similar foreign requirements, (ii) filings with the SEC and the NASD, (iii) those Consents that, if they were not obtained or made, would not prevent or materially delay consummation of the Offer or the Merger, Parent or Merger Sub from performing its obligations under this Agreement and (iv) such filings as may be required in any jurisdiction where Parent is qualified or authorized to do business as a foreign corporation in order to maintain such qualification or authorization. 3.4. NO VIOLATIONS. The execution, delivery and performance of this Agreement, the consummation of the transactions contemplated hereby and compliance by Parent with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws or other governing instruments of Parent or any of the Parent Subsidiaries, (ii) require any Consent under or result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any material contract, instrument, permit, license or franchise to which the Parent is a party or by which Parent or any of its assets or property is subject, (iii) result in the creation or imposition of any material lien or encumbrance of any kind upon any of the assets of Parent or any subsidiary of Parent or (iv) subject to obtaining the Consents from Governmental Authorities referred to in SECTION 3.4 hereof, contravene any Law to which Parent or any subsidiary of Parent or its or any of their respective assets or properties are subject, except, in the case of clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which would not, individually or in the aggregate, have or be reasonably likely in the future to have a material adverse effect on the business, assets, condition (financial or otherwise), 26 31 liabilities or results of operations of Parent and its subsidiaries taken as a whole. 3.5. OFFER DOCUMENTS; PROXY STATEMENT. None of the information supplied by Parent, its officers, directors, representatives, agents or employees (the "PARENT INFORMATION"), specifically for inclusion in the Proxy Statement will, on the date the Proxy Statement is first mailed to stockholders, at the time of the Company's stockholders' meeting or at the Effective Time, contain any statement which, at such time and in light of the circumstances under which it will be made, will be false or misleading with respect to any material fact, or will omit to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for such stockholders' meeting which has become false or misleading. Neither the Offer Documents nor any amendments thereof or supplements thereto will, at any time the Offer Documents are filed with the SEC or first published, sent or given to the Company's stockholders, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, neither Parent nor Merger Sub makes any representation or warranty with respect to any information that has been supplied by the Company or its accountants, counsel or other authorized representatives for use in any of the foregoing documents. The Offer Documents will comply as to form in all material respects with the provisions of the Securities Exchange Act. 3.6. FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its officers or directors has employed any broker, finder or financial advisor or otherwise incurred any liability for any brokerage fees, commissions or financial advisors' or finders' fees in connection with the transactions contemplated hereby, other than pursuant to an agreement with Bear Stearns & Co., Inc. 3.7. FINANCING ARRANGEMENTS. At the Effective Time, Parent will have funds available to it sufficient to purchase the Shares in accordance with the terms of this Agreement and to pay all amounts due (or which will, as a result of the transactions contemplated hereby, become due) in respect of any indebtedness of the Company for money borrowed. 3.8. NO PRIOR ACTIVITIES. Except for obligations or liabilities incurred in connection with its incorporation or organization or the negotiation and consummation of this Agreement and the transactions contemplated hereby (including any financing in connection therewith), Merger Sub has not incurred any obligations or liabilities, and has not engaged in any 27 32 business or activities of any type or kind whatsoever or entered into any agreements or arrangements with any person or entity. ARTICLE IV. ADDITIONAL COVENANTS OF THE COMPANY The Company covenants and agrees as follows: 4.1. CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY SUBSIDIARIES. (a) Except as expressly contemplated by SECTION 4.1 of the Company Disclosure Letter, during the period from the date of this Agreement to the Effective Time, (i) the Company shall conduct, and it shall cause the Company Subsidiaries to conduct, its or their businesses in the ordinary course and consistent with past practice, and the Company shall, and it shall cause the Company Subsidiaries to, use its or their reasonable commercial efforts to preserve intact its business organization, to keep available the services of its officers and employees and preserve intact the present commercial relationships of the Company and the Company Subsidiaries with all persons with whom it does business and (ii) without limiting the generality or effect of the foregoing, neither the Company nor any of the Company Subsidiaries will: (A) amend or propose to amend its Certificate of Incorporation or Bylaws (or comparable governing instruments); (B) authorize for issuance, issue, deliver, grant, sell, pledge, dispose of or propose to issue, deliver, grant, sell, pledge or dispose of any shares of, or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any shares of, the capital stock or other securities of the Company or any of the Company Subsidiaries including, but not limited to, stock appreciation rights, phantom stock, any securities convertible into or exchangeable for shares of stock of any class of the Company or any of the Company Subsidiaries, except for (a) the issuance of up to 3,327,445 Shares pursuant to the exercise of either incentive or non-qualified stock options, including management stock options, outstanding on the close of business on the day immediately preceding the date of this Agreement and listed in SECTION 2.2 of the Company Disclosure Schedule in accordance with their present terms and (b) shares issued in accordance with the Company's Employee Stock Purchase Plan that are issuable on or prior to the date hereof (the specific number of which the Company will inform Parent within three business days of the date hereof); (C) split, combine or reclassify any shares of its capital stock or declare, pay or set aside any 28 33 dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than dividends or distributions to the Company or a Company Subsidiary in the ordinary course of business, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire, directly or indirectly, any shares of its capital stock or other securities; (D) (a) other than in the ordinary course of business consistent with past practice, (i) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any person or (ii) make any loans, advances or capital contributions to, or investments in, any other person (other than to a Company Subsidiary (or other entity in which the Company directly or indirectly owns at least 100% of the outstanding voting securities) and customary travel, relocation or business advances to employees); (b) acquire the stock or the assets of, or merge or consolidate with, any other person; (c) voluntarily incur any material liability or obligation (absolute, accrued, contingent or otherwise) other than in the ordinary course of business and in a manner consistent with past practice; or (d) sell, transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or properties, real, personal or mixed material to the Company and the Company Subsidiaries other than sales of products in the ordinary course of business and in a manner consistent with past practice; (e) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans, advances or capital contributions to, or investments in, any other person (other than in the ordinary course of business consistent with past practice); (f) enter into any contract or agreement other than in the ordinary course of business consistent with past practice; or (g) authorize any single capital expenditure which is in excess of $1,400,000 or capital expenditures (during any two-month period) which are, in the aggregate, in excess of $4,000,000 for the Company and the Company Subsidiaries taken as a whole; (E) increase in any manner the compensation of any of its directors, officers or employees or enter into, establish, amend or terminate any employment, consulting, retention, change in control, collective bargaining, bonus or other incentive compensation, profit sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other compensation or benefit plan, policy, agreement, trust, fund or arrangement with, for or in respect of, any stockholder, officer, director, other 29 34 employee, agent, consultant or affiliate other than (i) as required pursuant to the terms of agreements in effect on the date of this Agreement and set forth in SECTION 4.1 of the Company Disclosure Schedule, (ii) increases in salaries of employees who are not directors or officers of the Company or Key Employees made in the ordinary course of business consistent with past practice or (iii) increases in salaries of Key Employees who are not officers or entitled to "Senior Management Severance" pursuant to SECTION 5.4 of the Company Disclosure Letter, with Parent's prior written consent (which will not be unreasonably withheld); (F) except as may be required as a result of a change in Law or in generally accepted accounting principles, change any of the accounting practices or principles used by it; (G) make any material Tax election, settle or compromise any material federal, state, local or foreign Tax liability, or waive any statute of limitations for any Tax claim or assessment; (H) settle or compromise any pending or threatened suit, action or claim which is material or which relates to the transactions contemplated hereby; (I) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Company Subsidiary not constituting an inactive subsidiary (other than the Merger); (J) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (a) in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice and (b) of liabilities required to be paid, discharged or satisfied pursuant to the terms of any contract in existence on the date hereof (including, without limitation, benefit plans relating to directors) or entered into in accordance with this SECTION 4.1; (K) permit any material insurance policy naming the Company or any Company Subsidiary as a beneficiary or a loss payable payee to be cancelled or terminated without notice to Parent, except in the ordinary course of business and consistent with past practice; or (L) take, or offer or propose to take, or agree to take in writing or otherwise, any of the actions 30 35 described in SECTION 4.1(a) or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue and incorrect in any material respect as of the date when made if such action had then been taken, or would result in any of the Offer Conditions not being satisfied. (b) The Company shall, and the Company shall cause each of the Company Subsidiaries to, use its or their best efforts to comply in all material respects with all Laws applicable to it or any of its properties, assets or business and maintain in full force and effect all the Company Permits necessary for, or otherwise material to, such business. 4.2. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice to Parent if any of the following occur after the date of this Agreement: (i) receipt of any notice or other communication in writing from any third party alleging that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement; (ii) receipt of any notice or other communication from any Governmental Authority (including, but not limited to, the NASD or any securities exchange) in connection with the transactions contemplated by this Agreement; (iii) the occurrence of an event which would or would be reasonably likely in the future to (A) have a Company Material Adverse Effect or prevent or delay the consummation of the Offer or the Merger or (B) cause any Offer Condition to be unsatisfied at any time prior to the consummation of the Offer; (iv) any breach by the Company of any provision hereof; or (v) the commencement or threat of any Litigation involving or affecting the Company or any of the Company Subsidiaries, or any of their respective properties or assets, or, to its knowledge, any employee, agent, director or officer, in his or her capacity as such, of the Company or any of the Company Subsidiaries which, if pending on the date hereof, would have been required to have been disclosed in this Agreement or which relates to the consummation of the Merger. 4.3. ACCESS AND INFORMATION. Between the date of this Agreement and the Effective Time, the Company will give, and shall cause its accountants and legal counsel to give, Parent and its respective authorized representatives (including, without limitation, its financial advisors, accountants and legal counsel), at all reasonable times, access as reasonably requested to all personnel, offices and other facilities and to all contracts, agreements, commitments, books and records of or pertaining to the Company and the Company Subsidiaries, will permit the foregoing to make such reasonable inspections as they may require and will cause its officers promptly to furnish Parent with (a) such financial and operating data and other information with respect to the business and properties of the Company and the Company Subsidiaries as Parent may from time to time reasonably request, and (b) a copy of each report, schedule 31 36 and other document filed or received by the Company or any of the Company Subsidiaries pursuant to the requirements of applicable securities laws or the NASD. 4.4. STOCKHOLDER APPROVAL. As soon as practicable following the consummation of the Offer, the Company will take all steps necessary to duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of voting upon the approval and adoption of this Agreement and the transactions contemplated hereby and thereby (the "COMPANY PROPOSALS"), if such meeting is required. Except as otherwise contemplated by this Agreement, (i) the Board of Directors of the Company will recommend to the stockholders of the Company that they approve the Company Proposals, (ii) the Company will include in the Proxy Statement the unanimous recommendation of the Company's Board of Directors that the stockholders of the Company vote in favor of the adoption of this Agreement and the transactions contemplated hereby and the written opinion of the Financial Advisor that the consideration to be received by the stockholders of the Company pursuant to the Offer and the Merger is fair from a financial point of view and (iii) the Company will use its reasonable best efforts to obtain any necessary approval by the Company's stockholders of the Company Proposals. Notwithstanding the foregoing, in the event that Merger Sub shall acquire at least 90% of the outstanding Shares, the Company agrees, at the request of Merger Sub, subject to Article VI, to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after such acquisition, without a meeting of the Company's stockholders, in accordance with Section 253 of the Delaware Code. 4.5. REASONABLE BEST EFFORTS. Subject to the terms and conditions herein provided, the Company agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, including, but not limited to, (i) obtaining all Consents from Governmental Authorities and other third parties required for the consummation of the Offer and the Merger and the transactions contemplated thereby, (ii) timely making all necessary filings under the HSR Act and German anticompetition laws and (iii) having vacated, dismissed or withdrawn any order, stay, decree, judgment or injunction of any Governmental Authority which temporarily, preliminarily or permanently prohibits or prevents the transactions contemplated by this Agreement. Upon the terms and subject to the conditions hereof, the Company agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to satisfy the other conditions of the closing set forth herein. 4.6. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the Company shall not, and shall cause its 32 37 affiliates not to, issue or cause the publication of any press release or any other announcement with respect to the Offer or the Merger or the transactions contemplated hereby without the consent of Parent, except for such as the foregoing as the Company determines that such release or announcement is required by applicable Law or pursuant to any applicable listing agreement with, or rules or regulations of, the NASD, in which case the Company, prior to making such announcement, will, if practicable in the circumstances, consult with Parent regarding the same. 4.7. COMPLIANCE. In consummating the transactions contemplated hereby, the Company shall comply, and/or cause the Company Subsidiaries to comply or to be in compliance, in all material respects, with all applicable Laws. 4.8 NO SOLICITATION. (a) The Company shall, and shall cause its officers, directors, employees, representatives and agents to, immediately cease any discussions or negotiations with any parties that may be ongoing with respect to a Takeover Proposal (as hereinafter defined). The Company shall not, nor shall it permit any of the Company Subsidiaries to, nor shall it authorize or permit any of its officers, directors or employees or any investment banker, financial advisor, attorney, accountant or other representative retained by it or any of the Company Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage (including by way of furnishing information), or take any other action designed or reasonably likely to facilitate, any inquiries or the making of any proposal which constitutes, or may reasonably be expected to lead to, any Takeover Proposal or (ii) participate in any discussions or negotiations regarding any Takeover Proposal; PROVIDED, HOWEVER, that if, at any time prior to the Expiration Date and following the receipt of a Superior Proposal, the Board of Directors of the Company determines in good faith, based upon the advice of outside counsel, that such action is necessary for the Board of Directors to comply with its fiduciary duties to the Company's stockholders under applicable Law, the Company may, in response to a Superior Proposal that was made in circumstances not otherwise involving a breach of this Agreement, and subject to compliance with SECTION 4.8(c), (x) furnish information with respect to the Company to any person pursuant to a confidentiality agreement having terms substantially the same as the Confidentiality Agreement (as hereinafter defined), provided that (i) such confidentiality agreement may not include any provision calling for an exclusive right to negotiate with the Company and (ii) the Company advises Parent of all such nonpublic information delivered to such person concurrently with its delivery to the requesting party, and (y) participate in negotiations regarding such Superior Proposal. "TAKEOVER PROPOSAL" means any inquiry, proposal or offer from any person relating to any direct or indirect acquisition or purchase of 15% or more of the assets of the Company and the Company Subsidiaries or 15% or more of any class of equity securities of the Company or any Company Subsidiary, any tender offer or 33 38 exchange offer that if consummated would result in any person beneficially owning 15% or more of any class of equity securities of the Company or any Company Subsidiary, any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any Company Subsidiary, other than the transactions contemplated by this Agreement. (b) Except as set forth in this SECTION 4.8, neither the Board of Directors of the Company nor any committee thereof shall (i) withdraw or modify, or propose publicly to withdraw or modify, in a manner adverse to Parent, the approval or recommendation by such Board of Directors or such committee of the Offer, the Stockholders Agreement or the Company Proposals, (ii) approve or recommend, or propose publicly to approve or recommend, any Takeover Proposal or (iii) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, an "ACQUISITION AGREEMENT") related to any Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the Expiration Date the Board of Directors of the Company determines in good faith, in response to a Superior Proposal that was made in circumstances not otherwise involving a breach of this Agreement, after consultation with outside counsel, that such action is necessary for the Board of Directors to comply with its fiduciary duties to the Company's stockholders under applicable law, the Board of Directors of the Company may (subject to this and the following sentences) (x) withdraw or modify its approval or recommendation of the Offer or the Company Proposals or (y) approve or recommend a Superior Proposal, PROVIDED, HOWEVER, that any actions described in clauses (x) and (y) may be taken only at a time that is after the fifth business day following Parent's receipt of written notice advising Parent that the Board of Directors of the Company has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal, identifying the person making such Superior Proposal and providing notice of the determination of the Board of Directors of the Company of what action referred to herein the Board of Directors of the Company has determined to take, PROVIDED, FURTHER, that the foregoing proviso shall not prevent the Board of Directors of the Company from taking any actions described in clause (x) within five business days of the Expiration Date so long as the notice described in the foregoing proviso is received by Parent prior to Noon, New York City time, on the then scheduled Expiration Date. For purposes of this Agreement, a "Superior Proposal" means a bona fide written Takeover Proposal which (i) a majority of the disinterested members of the Board of Directors of the Company determines, in their good faith judgment (based on the opinion of independent financial advisors) that the value of the consideration provided for in such proposal exceeds 110% of the Per Share Amount then provided in the Offer, and, considering all relevant factors, is as or more favorable to the Company and its stockholders than the 34 39 Offer and the Merger and (ii) for which financing, to the extent required, is then fully committed or which, in the good faith judgment of a majority of the disinterested members of the Board of Directors (based on the advice of independent financial advisors), is reasonably capable of being financed by such third party. (c) In addition to the obligations of the Company set forth in paragraphs (a) and (b) of this SECTION 4.8, the Company shall promptly advise Parent orally and in writing of any request for information or of any Takeover Proposal, the material terms and conditions of such request or the Takeover Proposal and the identity of the person making such request or Takeover Proposal and shall keep Parent promptly advised of all significant developments which could reasonably be expected to culminate in the Board of Directors of the Company withdrawing, modifying or amending its recommendation of the Offer, the Merger and the Transaction contemplated by this Agreement. (d) Nothing contained in this SECTION 4.8 shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making any disclosure to the Company's stockholders; PROVIDED, HOWEVER, neither the Company nor its Board of Directors nor any committee thereof shall, except as in accordance with SECTION 4.8(b), withdraw or modify, or propose publicly to withdraw or modify, its position with respect to the Offer or the Company Proposals or approve or recommend, or propose publicly to approve or recommend, a Takeover Proposal. 4.9. SEC AND STOCKHOLDER FILINGS. The Company shall send to Parent a copy of all public reports and materials as and when it sends the same to its stockholders, the SEC or any state or foreign securities commission. 4.10. TAKEOVER STATUTES. If any "fair price," "moratorium," "control share acquisition" or other similar antitakeover statute or regulation enacted under state or federal laws in the United States (each a "TAKEOVER STATUTE") is or may become applicable to the Offer or the Merger, the Company and the members of its Board of Directors will grant such approvals, and take such actions as are necessary so that the transactions contemplated by this Agreement and the Company Proposals may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover Statute on any of the transactions contemplated hereby. 4.11. RELATED PARTY AGREEMENTS. Except as set forth in SECTION 4.11 of the Company Disclosure Letter and except for employment-related agreements or obligations contemplated by or disclosed in this Agreement, the Company shall take all actions 35 40 necessary to terminate, effective as of the Effective Time, all contracts, commitments or obligations to, from or with the Company or Company Subsidiary, on the one hand, and any Related Party, on the other hand. ARTICLE V. ADDITIONAL COVENANTS OF PARENT Parent covenants and agrees as follows: 5.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions herein provided, Parent agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, including, but not limited to, (i) obtaining all Consents from Governmental Authorities and other third parties required for the consummation of the Offer and the Merger and the transactions contemplated thereby, (ii) timely making all necessary filings under the HSR Act and (iii) having vacated, dismissed or withdrawn any order, stay, decree, judgment or injunction of any Governmental Authority which temporarily, preliminarily or permanently prohibits or prevents the transactions contemplated by this Agreement. Upon the terms and subject to the conditions hereof, Parent agrees to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to satisfy the other conditions of the closing set forth herein. Notwithstanding any other provision hereof, in no event will Parent, Merger Sub or any of their affiliates (collectively, the "PARENT GROUP") be required to take or fail to take any action in order to obtain or make a Consent arising out of any contractual or legal obligation of or applicable to the Company or the Company Subsidiaries, other than obligations such as those under the HSR Act which apply to both the Company and the Parent Group and then only to the extent applicable to the Parent Group, and in no event will any member of the Parent Group be required to enter into or offer to enter into any divestiture, hold-separate, business limitation or similar agreement or undertaking in connection with this Agreement or the transactions contemplated hereby. 5.2. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, Parent shall not, and shall cause its affiliates not to, issue or cause the publication of any press release or any other announcement with respect to the Offer or the Merger or the transactions contemplated hereby without the consent of the Company, except for such of the foregoing as to which Parent determines that such release or announcement is required by applicable Law or pursuant to any applicable listing agreement with, or rules or regulations of, any stock exchange on which shares the Parent's capital stock are listed or the NASD, in 36 41 which case Parent, prior to making such announcement, will, if practicable in the circumstances, consult with the Company regarding the same. 5.3. COMPLIANCE. In consummating the transactions contemplated hereby, Parent shall comply in all material respects with the provisions of the Securities Exchange Act and the Securities Act and shall comply, and/or cause its subsidiaries to comply or to be in compliance, in all material respects, with all other applicable Laws. 5.4. EMPLOYEE BENEFIT PLANS. As of the Effective Time or the consummation of the Offer, as applicable, Parent shall cause the Surviving Corporation to take such actions with respect to the Company Benefit Plans and the Key Employees as are set forth in SECTION 5.4 of the Company Disclosure Letter. 5.5. INDEMNIFICATION, EXCULPATION AND INSURANCE (a) All rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time existing in favor of the current or former directors, officers or employees of the Company as provided in the Company's certificate of incorporation or bylaws will be assumed by the Surviving Corporation and Parent will cause the Surviving Corporation to honor such obligations in accordance with the terms thereof, without further action, as of the Effective Time, and such rights will continue in full force and effort in accordance with their respective terms. Such rights, and the Surviving Corporation's and Parent's concomitant obligations, shall apply in all respects to the current or former directors, officers and employees of each of the Company Subsidiaries as though such directors, officers and employees were entitled to indemnification rights pursuant to the Company's certificate of incorporation or bylaws as in effect on the date hereof. In addition, from and after the Effective Time, directors and officers of the Company who become or remain directors or officers of Parent will be entitled to the same indemnity rights and protections (including those provided by directors' and officers' liability insurance) as are afforded to other directors and officers of Parent. Notwithstanding any other provision hereof, the provisions of this Section 5.5 (i) are intended to be for the benefit of, and will be enforceable by, each indemnified party, his or her heirs and his or her representatives and (ii) are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise. (b) Parent will, and will cause the Surviving Corporation to, maintain in effect for not less than six years after the Effective Time policies of directors' and officers' liability insurance equivalent in all material respects to those maintained by or on behalf of the Company and the Company Subsidiaries on the date hereof (and having coverage and containing terms and 37 42 conditions which in the aggregate are not less advantageous to the persons currently covered by such policies as insured) with respect to claims arising from any actual or alleged wrongful act or omission occurring prior to the Effective Time for which a claim has not been made against any director or officer of the Company and/or any director or officer of the Company Subsidiaries prior to the Effective Time; PROVIDED, HOWEVER, that if the aggregate annual premiums for such insurance at any time during such period exceed 150% of the per annum rate of premium currently paid by the Company and the Company Subsidiaries for such insurance on the date of this Agreement, then Parent will cause the Surviving Corporation to, and the Surviving Corporation will, provide the maximum coverage that will then be available at an annual premium equal to 150% of such rate. ARTICLE VI. MERGER CONDITIONS The respective obligations of each party to effect the Merger shall be subject to the fulfillment or waiver at or prior to the Effective Time of the following conditions, PROVIDED that the obligation of each party to effect the Merger shall not be relieved by the failure of any such conditions if such failure is the proximate result of any breach by such party of any of its material obligations under this Agreement: 6.1. OFFER. Merger Sub shall have accepted for payment all Shares validly tendered in the Offer and not withdrawn; PROVIDED, HOWEVER, that neither Parent nor Merger Sub may invoke this condition if Parent shall have failed to purchase Shares so tendered and not withdrawn in violation of the terms of this Agreement or the Offer. 6.2. STOCKHOLDER APPROVAL. If required, the Company Proposals shall have been approved at or prior to the Effective Time by the requisite vote of the stockholders of the Company in accordance with the Delaware Code and the Company Certificate of Incorporation, which the Company has represented shall be solely the affirmative vote of a majority of the outstanding Shares. 6.3. NO INJUNCTION OR ACTION. No order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been enacted, entered, promulgated or enforced by any court or other Governmental Authority which temporarily, preliminarily or permanently prohibits or prevents the consummation of the Merger which has not been vacated, dismissed or withdrawn prior to the Effective Time. 6.4. OTHER APPROVALS. On or prior to the Closing Date, the waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have been terminated or 38 43 shall have expired and the Consents specified in SECTION 6.4 of the Company Disclosure Letter, if any, shall have been obtained. 6.5. CONDITIONS OF OBLIGATIONS OF PARENT AND MERGER SUB. The obligations of Parent and Merger Sub to effect the Merger are subject to the satisfaction of the condition (which may be waived in whole or in part by Parent) that the Company shall have performed in all material respects all material obligations required to be performed by it under this Agreement on or before the earlier of (i) such time as Parent's or Merger Sub's designees shall constitute at least a majority of the Company's Board of Directors pursuant to SECTION 1.3 of this Agreement and (ii) the Closing Date; PROVIDED, HOWEVER, that no failure by the Company to have so performed any such material obligation shall constitute a failure of satisfaction of the foregoing condition where the Company's failure of performance was caused by Parent or occurred, and was actually known to Parent, at or prior to the time Parent, Merger Sub or any of their affiliates accepted for payment any Shares pursuant to the Offer. ARTICLE VII. TERMINATION AND ABANDONMENT 7.1. TERMINATION. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after approval of the stockholders of the Company and the stockholders of Parent described herein: (a) by mutual written consent of Parent and the Company or by the mutual action of their respective Boards of Directors; (b) by either Parent or the Company if any Governmental Authority shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement or, for the benefit of Parent only, the Stockholders Agreement, and such order, decree or ruling or other action shall have become final and nonappealable; (c) by Parent if the Company shall have breached in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement which breach or failure to perform is incapable of being cured or has not been cured within one business day prior to the then scheduled Expiration Date; (d) by Parent if (i) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified 39 44 in a manner adverse to Parent its approval or recommendation of the Offer or any of the Company Proposals, or failed to reconfirm its recommendation within five business days after a written request to do so, or approved or recommended any Takeover Proposal or (ii) the Board of Directors of the Company or any committee thereof shall have resolved to take any of the foregoing actions; (e) by the Parent if the Offer shall have expired or been terminated or withdrawn in accordance with this Agreement without any Shares being purchased thereunder by Parent or any of the events set forth in ANNEX I hereto shall have occurred and be continuing at the time of termination; (f) by the Company or the Parent if the Offer shall not have been consummated on or before the 120th calendar day after the date hereof, PROVIDED that the Company's failure to perform any of its obligations under this Agreement does not result in the failure of the Offer to be so consummated by such time; (g) by the Company if Parent shall have breached in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform is incapable of being cured or has not been cured within one business day prior to the Expiration Date; (h) by the Company in order to enter into a definitive agreement providing for a Superior Proposal entered into in accordance with SECTION 4.8, provided that prior thereto the Company has paid the Termination Fee in accordance with Section 7.2; or (i) by Parent, if the Company, any of its officers or directors or financial or legal advisors shall take any of the actions that would be proscribed by SECTION 4.8 hereof but for the exceptions therein allowing certain actions to be taken pursuant to the proviso in the second sentence of SECTION 4.8(a) hereof or pursuant to the second sentence of SECTION 4.8(b) hereof. The party desiring to terminate this Agreement pursuant to the preceding paragraphs shall give written notice of such termination to the other party in accordance with SECTION 8.5 hereof. 7.2. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of termination of this Agreement and the abandonment of the Offer or the Merger pursuant to this ARTICLE VII, this Agreement (other than SECTIONS 7.2, 8.1, 8.3, 8.5, 8.6, 8.7, 8.8, 8.11, 8.12, 8.13, 8.14 and 8.15 hereof) shall become void and of no effect with no liability on the part of any party hereto (or 40 45 of any of its directors, officers, employees, agents, legal or financial advisors or other representatives); PROVIDED, HOWEVER, that no such termination shall relieve any party hereto from any liability for any breach of this Agreement prior to termination. If this Agreement is terminated as provided herein, each party shall hold in confidence in accordance with the terms and conditions of the Confidentiality Agreement all materials obtained from, or based on or otherwise reflecting or generated in whole or in part from information obtained from, any other party hereto in connection with the transactions contemplated by this Agreement, and shall not use any such materials for the purpose of competing with the businesses of the other parties hereto, whether obtained before or after the execution hereof. (b) In the event that (A) a Takeover Proposal shall have been made known to the Company or has been made directly to its stockholders generally or any person shall have publicly announced an intention (whether or not conditional) to make a Takeover Proposal and thereafter this Agreement is terminated by the Company pursuant to SECTION 7.1(f) hereof or (B) this Agreement is terminated (x) by the Company pursuant to SECTION 7.1(h) hereof, (y) by Parent pursuant to SECTION 7.1(d) OR 7.1(i) hereof or (z) Parent pursuant to SECTION 7.1(c) hereof as a result of an intentional breach by the Company after a Takeover Proposal has been made, then the Company shall promptly, but in no event later than two business days after the date of such termination, pay Parent a fee equal to $35,000,000 (the "TERMINATION FEE"), payable by wire transfer of same day funds; PROVIDED, HOWEVER, that no Termination Fee shall be payable to Parent pursuant to a termination by the Company pursuant to SECTION 7.1(f) hereof or by Parent pursuant to SECTION 7.1(i) hereof unless and until within 18 months of such termination, the Company or any of the Company Subsidiaries enters into a definitive agreement providing for any Takeover Proposal. The Company acknowledges that the agreements contained in this SECTION 7.2(b) are an integral part of the transactions contemplated by this Agreement and that, without these agreements, Parent would not enter into this Agreement. In the event the Termination Fee becomes payable pursuant to this SECTION 7.2(b), the Company shall promptly pay upon Parent's request, all reasonable out-of-pocket charges and expenses incurred by Parent in connection with this Agreement and the transactions contemplated hereby in an amount not to exceed $5,000,000, which payments shall be in addition to the Termination Fee. Notwithstanding the foregoing, the fee or expense reimbursement contemplated hereby shall be paid pursuant to this SECTION 7.2(b) regardless of any alleged breach by Parent of its obligations hereunder, PROVIDED that no payment by the Company made pursuant to this SECTION 7.2(b) shall operate or be construed as a waiver by the Company of any breach of this Agreement by Parent or Merger Sub or of any rights of the Company in respect thereof. 41 46 ARTICLE VIII. MISCELLANEOUS 8.1. CONFIDENTIALITY. Each of Parent, Merger Sub and the Company will hold, and will cause its respective officers, employees, accountants, counsel, financial advisors and other representatives to hold, any nonpublic information in accordance with the terms of the Confidentiality Agreement dated September 12, 1997, between Parent and the Company (the "CONFIDENTIALITY AGREEMENT"). Notwithstanding the foregoing, paragraphs 2, 4, 5, 6 and 11 of the Confidentiality Agreement are hereby terminated as of the date hereof, PROVIDED, HOWEVER, that if this Agreement shall be terminated prior to the Effective Time, paragraphs 5 and 6 shall be reinstated as of the date of such termination. As of the Effective Time, all of Parent's restrictions and obligations under the Confidentiality Agreement shall terminate. 8.2. AMENDMENT AND MODIFICATION. This Agreement may be amended, modified or supplemented only by a written agreement among the Company, Parent and Merger Sub. 8.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company on the one hand, or Parent and Merger Sub on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by Parent on the one hand, or the Company on the other hand, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this SECTION 8.3. 8.4. SURVIVAL. The respective representations, warranties, covenants and agreements of the Company and Parent contained herein or in any certificates or other documents delivered prior to or at the Closing shall survive the execution and delivery of this Agreement, notwithstanding any investigation made or information obtained by the other party, but shall terminate at the Effective Time, except for those contained in SECTIONS 1.7, 1.8, 1.9, 1.14, 5.4, 5.5 and 8.1 hereof, which shall survive beyond the Effective Time. 8.5. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, receipt confirmed, or on the next business day when sent by overnight courier or on the second succeeding business day when sent by registered or certified mail (postage prepaid, return receipt 42 47 requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to the Company, to: BDM International, Inc. 1501 BDM Way McLean, Virginia 22102 Attention: John F. McCabe Telecopy: 703-848-6457 with a copy to: Willkie Farr & Gallagher One Citicorp Center 153 East 53rd Street New York, NY 10022 Attention: William J. Grant, Jr., Esq. Telecopy: 212-821-8111 and (ii) if to Parent or Merger Sub, to: TRW Inc. 1900 Richmond Road Cleveland, Ohio 44124 Attention: Secretary Telecopy: (216) 291-7563 with copies to: TRW Inc. 1900 Richmond Road Cleveland, Ohio 44124 Attention: Treasurer Telecopy: (216) 291-7831 and Jones, Day, Reavis & Pogue 599 Lexington Avenue New York, New York 10022 Attention: Robert A. Profusek, Esq. Telecopy: (212) 755-7306 8.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by any of the parties hereto prior to the Effective 43 48 Time without the prior written consent of the other party hereto except that Parent and Merger Sub may assign or delegate all or any of their respective rights and obligations hereunder to a direct or indirect wholly-owned subsidiary or subsidiaries of Parent, PROVIDED, HOWEVER, that no such assignment or delegation shall relieve the assigning or delegating party of its duties hereunder. 8.7. EXPENSES. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses, subject to the rights of Parent under SECTION 7.2(b) hereof. 8.8. GOVERNING LAW. This Agreement shall be deemed to be made in, and in all respects shall be interpreted, construed and governed by and in accordance with the internal laws of, the State of Delaware. 8.9. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 8.10. INTERPRETATION. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. As used in this Agreement, (i) the term "PERSON" shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an association, an unincorporated organization, a Governmental Authority and any other entity, (ii) unless otherwise specified herein, the term "AFFILIATE," with respect to any person, shall mean and include any person controlling, controlled by or under common control with such person and (iii) the term "SUBSIDIARY" of any specified person shall mean any corporation 50 percent or more of the outstanding voting power of which, or any partnership, joint venture, limited liability company or other entity 50 percent or more of the total equity interest of which, is directly or indirectly owned by such specified person. 8.11. ENTIRE AGREEMENT. This Agreement and the documents or instruments referred to herein including, but not limited to, the Annex(es) attached hereto and the Disclosure Letters referred to herein, which Annex(es) and Disclosure Letters are incorporated herein by reference, the Confidentiality Agreement and the Stockholders Agreement embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants, or undertakings, other than those expressly set forth or referred to 44 49 herein. This Agreement supersedes all prior agreements and the understandings between the parties with respect to such subject matter. 8.12. SEVERABILITY. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. 8.13. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties further agree that each party shall be entitled to an injunction or restraining order to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity. 8.14. THIRD PARTIES. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person that is not a party hereto or thereto or a successor or permitted assign of such a party; PROVIDED HOWEVER, that the parties hereto specifically acknowledge that the provisions of SECTIONS 1.9, 5.4 and 5.5 hereof are intended to be for the benefit of, and shall be enforceable by, the current or former employees, officers and directors of the Company and/or the Company Subsidiaries affected thereby and their heirs and representatives and the provisions of SECTION 1.8(b) are intended to be for the benefit of, and shall be enforceable by, stockholders of the Company affected thereby and their heirs and representatives. 8.15. DISCLOSURE LETTERS. The Company and Parent acknowledge that the Company Disclosure Letter and the Parent Disclosure Letter (i) relate to certain matters concerning the disclosures required and transactions contemplated by this Agreement, (ii) are qualified in their entirety by reference to specific provisions of this Agreement, (iii) are not intended to constitute and shall not be construed as indicating that such matter is required to be disclosed, nor shall such disclosure be construed as an admission that such information is material with respect to the Company or Parent, as the case may be, except to the extent required by this Agreement, and (iv) disclosure of the 45 50 information contained in one Section of the Company Disclosure Letter or Parent Disclosure Letter shall be deemed proper disclosure for the Section to which specific reference is made. 46 51 IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be signed and delivered by their respective duly authorized officers as of the date first above written. TRW INC. By: /s/ William B. Lawrence ---------------------------------------- Name: William B. Lawrence Title: SYSTEMS ACQUISITION INC. By: /s/ Kathleen A. Weigand ----------------------------------------- Name: Kathleen A. Weigand Title: BDM INTERNATIONAL, INC. By: /s/ Phillip A. Odeen ----------------------------------------- Name: Phillip A. Odeen Title: President and Chief Executive Officer 47 52 ANNEX I CONDITIONS TO THE OFFER. Notwithstanding any other provision of the Offer, Merger Sub shall not be required to accept .for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Securities Exchange Act (relating to Merger Sub's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and (subject to any such rules or regulations) may delay the acceptance for payment of any tendered Shares and (except as provided in this Agreement) amend or terminate the Offer (whether or not any Shares have been theretofore purchased or paid for pursuant to the Offer) (A) unless the following conditions shall have been satisfied: (i) there shall be validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares which represents a majority of the total voting power of the outstanding securities of the Company entitled to vote in the election of directors or in a merger ("VOTING SECURITIES") on a fully-diluted basis (the "MINIMUM CONDITION") ("on a fully-diluted basis" having the following meaning as of any date: the number of Voting Securities outstanding, together with Voting Securities issuable pursuant to obligations outstanding at that date under employee stock option or other benefit plans or otherwise) and (ii) any applicable waiting period under the HSR Act shall have expired or been terminated prior to the expiration of the Offer and the required approval of the German anticompetition authorities shall have been obtained or (B) if at any time after the date of this Agreement and before the time of payment for any such Shares (whether or not any Shares have theretofore been accepted for payment or paid for pursuant to the Offer,) any of the following events shall occur and be continuing: (a) there shall be in effect an injunction or other order, decree, judgment or ruling by a Governmental Authority of competent jurisdiction or a Law shall have been promulgated, enacted, taken or threatened by a Governmental Authority of competent jurisdiction which in any such case (i) restrains or prohibits the making or consummation of the Offer, the consummation of the Merger or the transactions contemplated by the Stockholders Agreement, (ii) prohibits or restricts the ownership or operation by Parent (or any of its affiliates or subsidiaries) of any portion of its or the Company's business or assets which is material to the business of all such entities taken as a whole, or compels Parent (or any of its affiliates or subsidiaries) to dispose of or hold separate any portion of its or the Company's business or assets which is material to the business of all such entities taken as a whole, (iii) imposes material limitations on the ability of Merger Sub effectively to acquire or to hold or to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Merger Sub on all matters properly presented to the stockholders of the Company, or (iv) imposes any material A-1 53 limitations on the ability of Parent or any of its affiliates or subsidiaries effectively to control in any material respect the business and operations of the Company; (b) any Governmental Authority shall have instituted any action, suit or proceeding seeking any relief or remedy referred to in paragraph (a) or material damages as a result of any of this Agreement, the Stockholders Agreement or any transactions contemplated thereby; (c) this Agreement shall have been terminated by the Company or Parent in accordance with its terms or any event shall have occurred which gives Parent or Merger Sub the right to terminate the Agreement or not to consummate the Merger; (d) there shall have occurred any event that, individually or when considered together with any other matter, has had or is reasonably likely in the future to have a Company Material Adverse Effect; (e) there shall have occurred (i) any general suspension of, or limitation on prices (other than suspensions or limitations triggered on the New York Stock Exchange by price fluctuations on a trading day) for, trading in securities on any national securities exchange or the over-the-counter market, (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material limitation (whether or not mandatory) by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, on, the extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed hostilities or other national calamity directly involving the United States and Parent shall have determined that there is a reasonable likelihood that such event may be of material adverse significance to it or the Company, (v) any decline of at least 20% in the Dow Jones Average of Industrial Stocks or 20% in the Standard & Poor's 500 Index from the levels thereof as of the last trading day immediately preceding the dated of this Agreement or (vi) in the case of any of the foregoing existing at the time of the execution of this Agreement, a material acceleration or worsening thereof; (f) it shall have been publicly disclosed or Purchaser shall have otherwise learned that beneficial ownership (determined for the purposes of this paragraph as set forth in Rule 13d-3 promulgated under the Securities Exchange Act) of more than 25% of the outstanding Shares has been acquired by any person (including the Company, any of the Company Subsidiaries or affiliates thereof) or group (as defined in Section 13(d)(3) of the Securities Exchange Act), other than Purchaser or any of its affiliates; (g) the Company or any of its officers, directors or financial or legal advisors shall have, directly or indirectly, A-2 54 (i) solicited, initiated, encouraged (including by way of furnishing information) or taken any other action designed or reasonably likely to facilitate, any inquiries or the making of any proposal which constituted, or may reasonably be expected to lead to, any Takeover Proposal or (ii) participated in any discussions or negotiations regarding any Takeover Proposal regardless of whether or not any of the foregoing actions is permitted by this Agreement; (h) any of the representations and warranties of the Company set forth in this Agreement that are qualified by reference to materiality or a Company Material Adverse Effect shall not be true and correct, or any such representations and warranties that are not so qualified shall not be true and correct in any respect that is reasonably likely to have a Company Material Adverse Effect, in each case as if such representations and warranties were made at the time of such determination; (i) the Company shall have failed to perform in any material respect any material obligation or to comply in any material respect with any material agreement or covenant of the Company to be performed or complied with by it under this Agreement; or (j) Parent and the Company shall have agreed that Parent shall amend the Offer to terminate the Offer or postpone the payment for Shares pursuant thereto; which, in the judgment of Parent with respect to each and every matter referred to above and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment of or payment for Shares or to proceed with the Merger. The foregoing conditions are for the sole benefit of Parent and may be asserted by Parent regardless of the circumstances giving rise to any such condition (except for any action or inaction by Parent or any of its affiliates constituting a breach of this Agreement) or (other than the Minimum Condition) may be waived by Parent in whole or in part at any time and from time to time in its sole discretion (subject to the terms of this Agreement). The failure by Parent at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. A-3 55 GLOSSARY OF DEFINED TERMS -------------------------
Acquisition Agreement..............34 Key Employees......................18 Affiliate..........................44 Law ...............................16 Agreement...........................1 Litigation.........................18 Benefit Plan.......................19 Merger..............................1 Certificate of Merger...............7 Merger Consideration................7 Closing.............................7 Merger Sub..........................1 Closing Date........................7 Minimum Condition...................1 Company.............................1 Multiemployer Plan.................19 Company Benefit Plan...............19 NASD...............................15 Company Class B Stock..............13 Offer...............................1 Company Disclosure Letter..........12 Offer Conditions....................2 Company Filed Documents............16 Offer Documents.....................3 Company Financial Offer to Purchase...................3 Statements .....................17 Parent..............................1 Company Material Adverse Parent Disclosure Letter...........25 Effect .........................13 Parent Group.......................36 Company Material Contract..........19 Parent Information.................27 Company Option Plans...............10 Per Share Amount....................1 Company Options....................10 Person.............................44 Company Permits....................18 Proxy Statement....................11 Company Proposals..................32 Related Party......................25 Company Securities Schedule 14D-1......................3 Filings .........................16 Schedule 14D-9......................4 Company Stock.......................1 SEC ................................3 Company Subsidiary.................13 Securities Act.....................19 Confidentiality Agreement..........41 Securities Exchange Act.............2 Consent............................15 Shares..............................1 Delaware Code.......................6 Stockholders........................1 Dissenting Shares...................8 Stockholders Agreement..............1 Effective Time......................7 Subsidiary.........................44 Environmental Claim................23 Superior Proposal..................34 Environmental Laws.................24 Surviving Corporation...............6 Environmental Permit...............24 Surviving Corporation ERISA..............................19 Common Stock .....................8 Exchange Agent......................8 Takeover Proposal..................33 Expiration Date.....................3 Takeover Statute...................35 Financial Advisor...................4 Tax ...............................21 Governmental Authority.............15 Tax Return.........................22 Hazardous Materials................24 Termination Fee....................41 HSR Act............................15 Voting Securities...................1 Independent Directors...............6
iv EX-2.C 15 EXHIBIT (C)(2) 1 Exhibit (c)(2) CONFORMED VERSION STOCKHOLDERS AGREEMENT This Stockholders Agreement, dated as of November 20, 1997 (this "AGREEMENT"), is made and entered into among TRW Inc., an Ohio corporation ("PARENT"), Systems Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and each other party listed on the signature pages hereof (each, a "STOCKHOLDER"). WHEREAS, as of the date hereof, each Stockholder owns (beneficially and of record) the number of shares of common stock, par value $.01 per share, of BDM International, Inc., a Delaware corporation (the "COMPANY"), set forth opposite such Stockholder's name on EXHIBIT A hereto (all such shares so owned and which may hereafter be acquired by the Stockholders prior to the termination of this Agreement, whether upon the exercise of Company Options or by means of purchase, dividend, distribution or otherwise, being referred to herein as the "SHARES"); WHEREAS, immediately prior to the execution and delivery of this Agreement, Parent, Merger Sub and the Company have entered into an Agreement and Plan of Merger, dated as of the date hereof (the "MERGER AGREEMENT"), which provides, upon the terms and subject to the conditions set forth therein, for the merger of Merger Sub with and into the Company (the "MERGER"); and WHEREAS, as a condition to the willingness of Parent and Merger Sub to enter into the Merger Agreement, Parent and Merger Sub have required that the Stockholders agree, and in order to induce Parent and Merger Sub to enter into the Merger Agreement, each Stockholder has agreed, severally and not jointly, to enter into this Agreement. NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows: ARTICLE I. TRANSFER AND VOTING OF SHARES 1.1. VOTING OF SHARES. Each Stockholder hereby agrees that from the date hereof until the termination of this Agreement pursuant to Section 6.2 hereof ("the Term"), at any meeting of the stockholders of the Company, however called, and in any action by consent of the stockholders of the Company, such Stockholder shall vote its Shares (i) in favor of the Merger and the Merger Agreement (as amended from time to time), (ii) against any Takeover Proposal and against any proposal for action or 2 agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which is reasonably likely to result in any of the conditions of the Company's obligations under the Merger Agreement not being fulfilled, any change in the directors of the Company, any change in the present capitalization of the Company or any amendment to the Company's certificate of incorporation or bylaws, any other material change in the Company's corporate structure or business, or any other action which in the case of each of the matters referred to in this clause (ii) could reasonably be expected to impede, interfere with, delay, postpone or materially adversely affect the transactions contemplated by the Merger Agreement or the likelihood of such transactions being consummated and (iii) in favor of any other matter necessary for consummation of the transactions contemplated by the Merger Agreement which is considered at any such meeting of shareholders or in such consent, and in connection therewith to execute any documents which are necessary or appropriate in order to effectuate the foregoing, including the ability for Merger Sub or its nominees to vote the Shares directly. 1.2. DISPOSITION OR ENCUMBRANCE OF SHARES. Each Stockholder hereby agrees that, during the Term, it shall not, and shall not offer or agree to, sell, transfer, tender, assign, pledge, hypothecate or otherwise dispose of, or create or permit to exist any Encumbrance (as hereinafter defined) on any of such Stockholder's Shares. 1.3. PROXY. Each Stockholder hereby revokes any and all prior proxies or powers of attorney in respect of any Shares and constitutes and appoints Merger Sub and Parent, or any nominee of Merger Sub and Parent, with full power of substitution and resubstitution, at any time during the Term, as its true and lawful attorney and proxy (its "PROXY"), for and in its name, place and stead, to demand that the Secretary of the Company call a special meeting of the stockholders of the Company for the purpose of considering any matter referred to in Section 1.1 and to vote each of such Shares as its Proxy, at every annual, special, adjourned or postponed meeting of the stockholders of the Company, including the right to sign its name (as stockholder) to any consent, certificate or other document relating to the Company that the law of the State of Delaware may permit or require as provided in Section 1.1. THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED WITH AN INTEREST THROUGHOUT THE TERM. 1.4. NO SOLICITATION. Each Stockholder covenants and agrees that, during the Term, it shall not, directly or indirectly through any officer, director, agent or other representative, solicit, initiate or encourage, or take any other action designed or reasonably likely to facilitate, any inquiries 2 3 or the making of any proposal from any person (other than Parent, Merger Sub and any of their affiliates) relating to (i) any acquisition of all or any of the such Stockholder's Shares or (ii) any transaction that constitutes a Takeover Proposal, or participate in any negotiations regarding, or furnish to any person any information with respect to, or otherwise cooperate in any way with, or assist or participate in or facilitate or encourage, any effort or attempt by any person to do or seek any of the foregoing. Each Stockholder immediately shall cease and cause to be terminated all existing discussions or negotiations of such Stockholder and its officers, directors, agents or other representatives with any person conducted heretofore with respect to any of the foregoing. Each Stockholder shall notify Parent and Merger Sub promptly if any such proposal or offer, or any inquiry or contact with any person with respect thereto, is made and shall, in any such notice to Parent and Merger Sub, indicate in reasonable detail the identity of the person making such proposal, offer, inquiry or contact and the terms and conditions of such proposal, offer, inquiry or contact. Notwithstanding any provision of this Section 1.4 to the contrary, if any Stockholder or any officer, director, agent or representative of such Stockholder is a member of the Board of Directors of the Company, such member of the Board of Directors of the Company may take actions in such capacity to the extent permitted by Section 4.8 of the Merger Agreement. ARTICLE II. TENDER OF SHARES 2.1. TENDER. Each Stockholder hereby agrees to validly tender (or cause the record owner of such shares to validly tender), and not to withdraw, pursuant to and in accordance with the terms of the Offer, not later than the fifth business day after commencement of the Offer pursuant to Section 1.1 of the Merger Agreement and Rule 14d-2 under the Securities Exchange Act, its Shares. Each Stockholder hereby acknowledges and agrees that Parent's and Merger Sub's obligation to accept for payment and pay for the Shares in the Offer, including the Shares owned by such Stockholder, is subject to the terms and conditions of the Offer. For all its Shares validly tendered in the Offer and not withdrawn, each Stockholder will be entitled to receive the highest price paid by Parent pursuant to the Offer. 2.2. CERTAIN WARRANTIES. Without limiting the generality or effect of any other term or condition of the Offer, the transfer by each Stockholder of the Shares to Merger Sub in the Offer shall pass to and unconditionally vest in Merger Sub good and valid title to the Shares, free and clear of all liens, claims, restrictions, security interests, pledges, limitations and encumbrances whatsoever. 3 4 2.3. DISCLOSURE. Each Stockholder hereby authorizes Parent and Merger Sub to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC), its identity and ownership of the Company Common Stock and the nature of its commitments, arrangements and understandings under this Agreement. ARTICLE III. OPTION 3.1. OPTION SHARES. In order to induce Parent and Merger Sub to enter into the Merger Agreement, each Stockholder hereby grants to Merger Sub an irrevocable option (the "Stock Option") to purchase the number of Shares set forth opposite each Stockholder's name on Exhibit A hereto (the "Option Shares") at a purchase price per share equal to $29.50. If (a) the Company shall become obligated, pursuant to Section 7.2(b) of the Merger Agreement by reason of termination of the Merger Agreement pursuant to any of Section 7.1(c), 7.1(d) or 7.1(h), to pay the Termination Fee, (b) the Offer is consummated but (due to failure by any Stockholder to validly tender and not withdraw) Merger Sub has not accepted for payment or paid for the aggregate number of Shares set forth opposite such Stockholder's name on EXHIBIT A hereto (in which case the price per share for the Option Shares will be equal to the highest price paid in the Offer) or (c) the Merger Agreement is terminated in accordance with its terms for reasons other than the failure of Parent or Merger Sub to fulfill any obligation under the Merger Agreement, the Stock Option (i) shall become exercisable, in whole but not in part, on the date on which the first event referred to in this sentence shall occur or, if later, the date on which (x) all waiting periods under the HSR Act or similar German Law required for the purchase of the Option Shares upon such exercise shall have expired or been waived and (y) there shall not be in effect any preliminary or final injunction or other order issued by any court or governmental, administrative or regulatory agency or authority prohibiting the exercise of the Stock Option pursuant to this Agreement, and (ii) shall remain exercisable until the date which is 30 days following the first such date on which the Stock Option becomes exercisable pursuant to clause (i) of this sentence. In the event that Parent wishes to exercise the Stock Option, Parent, prior to the expiration thereof, shall send a written notice (the "Notice") to each Stockholder identifying the place for the closing of such purchase at least three business days prior to such closing. ARTICLE IV. 4 5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE STOCKHOLDERS Each Stockholder, severally and not jointly, hereby represents and warrants to Parent and Merger Sub as follows: 4.1. DUE ORGANIZATION, AUTHORIZATION, ETC. Such Stockholder (if it is a corporation, partnership or other legal entity) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Such Stockholder has all requisite power and authority to execute, deliver and perform this Agreement, to appoint Merger Sub and Parent as its Proxy and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement, the appointment of Merger Sub as such Stockholders' Proxy and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of such Stockholder. This Agreement has been duly executed and delivered by or on behalf of such Stockholder and, assuming its due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which a Stockholder is trustee whose consent is required for the execution and delivery of this Agreement of the consummation by such Stockholder of the transactions contemplated hereby. 4.2. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS. (a) The execution and delivery of this Agreement by such Stockholder do not, and the performance of this Agreement by such Stockholder will not, (i) conflict with or violate the trust agreement, Certificate of Incorporation or Bylaws or other similar organizational documents of such Stockholder (in the case of a Stockholder that is a trust, corporation, partnership or other legal entity), (ii) conflict with or violate any Law applicable to such Stockholder or by which such Stockholder or any of such Stockholder's properties is bound or affected or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any assets of such Stockholder or (if such Stockholder is a corporation, partnership or other legal entity) any of its subsidiaries, including, without limitation, the Shares, pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which such Stockholder is a party or by which such Stockholder or any of such Stockholder's assets is bound or affected, except, in the case of clauses (ii) and (iii), for any such breaches, defaults or other occurrences that would 5 6 not prevent or delay the performance by such Stockholder of such Stockholder's obligations under this Agreement. (b) The execution and delivery of this Agreement by such Stockholder do not, and the performance of this Agreement by such Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority (other than the necessary filing under the HSR Act or the Securities Exchange Act), domestic or foreign, except where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay the performance by the Stockholder of such Stockholder's obligations under this Agreement. 4.3. TITLE TO SHARES. Such Stockholder is the sole record and beneficial owner of the Shares set forth opposite such Stockholder's name on EXHIBIT A hereto, free and clear of any pledge, lien, security interest, mortgage, charge, claim, equity, option, proxy, voting restriction, voting trust or agreement, understanding, arrangement, right of first refusal, limitation on disposition, adverse claim of ownership or use or encumbrance of any kind ("ENCUMBRANCES"), other than restrictions imposed by the securities laws or pursuant to this Agreement and the Merger Agreement. 4.4. NO INCONSISTENT ARRANGEMENTS. Each Stockholder hereby covenants and agrees that, except as contemplated by this Agreement and the Merger Agreement, it shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge or other disposition), or consent to any transfer of, any or all of such Stockholder's Shares, Company Options or any interest therein, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of such shares, Company Options or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to such Shares or Company Options, (iv) deposit such Shares or Company Options into a voting trust or enter into a voting agreement or arrangement with respect to such Shares or Company Options, or (v) take any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement. 4.5. NO FINDER'S FEES. Other than may be payable pursuant to the engagement letter between the Company and Wasserstein Perella & Co., Inc. referenced in Section 2.19 of the Merger Agreement, no broker, investment banker, financial adviser or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of a Stockholder. 6 7 4.6. AFFILIATE AGREEMENTS. As of the Effective Time, each Stockholder, on behalf of itself and its affiliates, hereby terminates any and all contractual rights in favor of such Stockholder and its affiliates then in effect between such Stockholder or affiliates, on the one hand, and the Company, on the other hand, including without limitation, any monitoring and advisory fees to The Carlyle Group, L.P., and each Stockholder, on behalf of itself and its affiliates, hereby acknowledges that it is not entitled to receive any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated hereby or by the Merger Agreement. ARTICLE V. REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PURCHASER Parent and Merger Sub hereby, jointly and severally, represent and warrant to each Stockholder as follows: 5.1. DUE ORGANIZATION, AUTHORIZATION, ETC. Merger Sub and Parent are corporations duly organized, validly existing and in good standing under the laws of the States of Delaware and Ohio, respectively. Merger Sub and Parent have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by each of Merger Sub and Parent have been duly authorized by all necessary corporate action on the part of Merger Sub and Parent, respectively. This Agreement has been duly executed and delivered by each of Merger Sub and Parent and, assuming its due authorization, execution and delivery by each Stockholder, constitutes a legal, valid and binding obligation of each of Merger Sub and Parent, enforceable against Merger Sub and Parent in accordance with its terms, subject to the Enforceability Exceptions. 5.2. INVESTMENT REPRESENTATIONS. (a) Merger Sub is acquiring the Stock Option and the Option Shares (collectively, the "SECURITIES") for its own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Securities in violation of the Securities Act. (b) Merger Sub has had such opportunity as it deems adequate to obtain from representatives of the Company such information as is necessary to permit Merger Sub to evaluate the merits and risks of its investment in the Company. (c) Merger Sub, directly or through its affiliates, has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase 7 8 of the Securities and to make an informed investment decision with respect to such purchase. (d) Merger Sub acknowledges that (A) the Securities have not been registered under the Securities Act and are "restricted securities" within the meaning of Rule 144 under the Securities Act and (B) the Securities cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available. ARTICLE VI. MISCELLANEOUS 6.1. DEFINITIONS. Terms used but not otherwise defined in this Agreement, including those defined in Section 8.10 of the Merger Agreement, have the meanings assigned to such terms in the Merger Agreement. 6.2. TERMINATION. This Agreement shall terminate and be of no further force and effect (i) by the written mutual consent of the parties hereto, (ii) by Parent or any Stockholder (with respect to such Stockholder) if the Offer or the Merger shall not have been consummated on or before 120 calendar days after the date hereof, or (iii) automatically and without any required action of the parties hereto upon the earlier to occur of (A) the Effective Time and (B) immediately after the termination of the Merger Agreement in accordance with its terms; PROVIDED, HOWEVER, that in the event that the Stock Option shall become exercisable pursuant to Section 3.1 hereof, Articles III, IV, V and VI of this Agreement shall survive the termination of this Agreement until the earlier to occur of the closing of the exercise of the Stock Option and the expiration of the Stock Option. No such termination of this Agreement shall relieve any party hereto from any liability for any breach of this Agreement prior to termination. 6.3. EXPENSES. All costs and expenses incurred in connection with the transactions contemplated by this Agreement shall be paid by the party incurring such costs and expenses. 6.4. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, receipt confirmed, or on the next business day when sent by overnight courier or on the second succeeding business day when sent by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): 8 9 (a) if to Parent or Merger Sub, to: TRW Inc. 1900 Richmond Road Cleveland, Ohio 44124 Attention: Secretary Telecopy: with copies to: TRW Inc. 1900 Richmond Road Cleveland, Ohio 44124 Attention: Treasurer Telecopy: and Jones, Day, Reavis & Pogue 599 Lexington Avenue New York, New York 10022 Attention: Robert A. Profusek, Esq. Telecopy: (212) 755-7306 (b) If to a Stockholder, to: The Carlyle Group, L.P. 1001 Pennsylvania Avenue, N.W. Suite 220 South Washington, D.C. 20004 Attention: William E. Conway, Jr. Telecopy: 202-347-9250 6.5. SEVERABILITY. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. 6.6. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the Merger Agreement, as amended from time to time, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect thereto. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by any of the parties hereto (whether by operation of law or otherwise), provided, however, that Parent or Merger Sub may, in its sole discretion, assign or delegate its 9 10 rights and obligations hereunder to any direct or indirect wholly-owned subsidiary of Parent. 6.7. PARTIES IN INTEREST. This Agreement shall be binding upon and shall inure solely to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any person, other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities of any nature whatsoever under or by reason of this Agreement, PROVIDED, HOWEVER, that the parties hereto specifically acknowledge that the provisions of Section 4.6 hereof are intended to be for the benefit of, and shall be enforceable by, the Company. 6.8. WAIVER OF APPRAISAL RIGHTS. Each Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger. 6.9. FURTHER ASSURANCE. From time to time, at the other party's request and without consideration, each party hereto shall execute and deliver such additional documents and take all such further action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transaction contemplated by this Agreement. 6.10. STOP TRANSFER. Each Stockholder agrees with, and covenants to, Parent and Merger Sub that such Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of such Stockholder's Shares, unless such transfer is made in compliance with this Agreement (including the provisions of Article III hereof). 6.11. CERTAIN EVENTS. Each Stockholder agrees that this Agreement and the obligations hereunder shall attach to such Stockholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise, including, without limitation, such Stockholder's heirs, guardians, administrators, or successors. Notwithstanding any transfer of Shares, the transferor shall remain liable for the performance of all obligations under this Agreement. 6.12. NO WAIVER. The failure of any party hereto to exercise any right, power, or remedy provided under this agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, any custom or practice of the parties at variance with the terms hereof shall not constitute a 10 11 waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. 6.13. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties further agree that each party shall be entitled to an injunction or restraining order to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity. 6.14. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that state. 6.15. HEADINGS. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 6.16. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11 12 IN WITNESS WHEREOF, each of Parent and Merger Sub has caused this Agreement to be executed by its officer thereunto duly authorized and each Stockholder has caused this Agreement to be executed, or duly executed by an authorized signatory, as of the date first written above. TRW INC. By: /s/ William B. Lawrence ----------------------------- Name: William B. Lawrence Title: Executive Vice President, General Counsel and Secretary SYSTEMS ACQUISITION INC. By: /s/ Kathleen A. Weigand ----------------------------- Name: Kathleen A. Weigand Title: Vice President and Secretary STOCKHOLDERS THE CARLYLE PARTNERS LEVERAGED CAPITAL FUND I, L.P. BDM ACQUISITION PARTNERS, L.P. BDM ACQUISITION PARTNERS II, L.P. By THE CARLYLE GROUP, L.P. General Partner of Each By TWC VIRGINIA, INC. Its General Partner By: /s/ William E. Conway, Jr. ----------------------------- Name: William E. Conway, Jr. Title: Executive Vice President 12 13 EXHIBIT A List of Stockholders --------------------
Name of Stockholder Number of Shares - ------------------- ---------------- The Carlyle Partners Leveraged 6,470,000 Capital Fund I, L.P. BDM Acquisition Partners, L.P. 190,000 BDM Acquisition Partners II, L.P. 1,000,000
EX-3.C 16 EXHIBIT (C)(3) 1 Exhibit (c)(3) [WASSERSTEIN PERELLA & CO., INC. LETTERHEAD] September 12, 1997 TRW Inc. 1900 Richmond Way Cleveland, OH 44124 Dear Gentlemen: Wasserstein Perella & Co., Inc. ("WP&Co.") is acting on behalf of BDM International, Inc. (the "Company") to explore the possible sale of the Company (the "Transaction"). In that connection, you have requested certain information concerning the Company from officers, directors, employees and/or agents of the Company, including WP&Co. All such information (whether written or oral) furnished to you and your Representatives (as defined below), by the Company, its officers, directors, employees or agents, on or following the date hereof, which is marked as "confidential" or, if furnished orally, is contemporaneously identified in writing as being confidential, together with analyses, compilations, forecasts, studies or other documents or records prepared by you or your Representatives which contain, are based on or otherwise reflect or are generated in whole or in part from such information, including that stored on any computer, word processor or other similar device, are collectively referred to herein as the "Evaluation Material." You hereby agree as follows: (1) You shall use the Evaluation Material solely for the purpose of evaluating the Transaction and you shall keep the Evaluation Material confidential, except that you may disclose the Evaluation Material or portions thereof to those of your directors, officers, employees, affiliates, representatives (including, without limitation, financial advisors, attorneys and accountants) and your potential sources of financing (if any) for the Transaction (collectively, the "Representatives") (a) who need to know such information for the purpose of evaluating the Transaction, (b) who are informed by you of the confidential nature of the Evaluation Material and (c) who agree to be bound by the terms of this agreement as if they were parties hereto. You shall be responsible for any breach of this agreement by your Representatives. In the event that you or any of your Representatives are requested or required (by deposition, interrogatory, 2 request for documents, subpoena, civil investigative demand or similar process) to disclose any of the Evaluation Material, you shall provide the Company with prompt prior written notice of such requirement, you shall furnish only that portion of the Evaluation Material which you are advised by written opinion of counsel is legally required, and you shall exercise your best efforts to obtain reliable assurance that confidential treatment will be accorded such Evaluation Material. (2) If you determine not to proceed with the Transaction, you will promptly inform WP&Co. of that decision and, in that case or at any time upon the request of the Company or WP&Co., you and your representatives shall promptly either (i) destroy all copies of the written Evaluation Material in your or their possession or under your or their custody or control (including that stored in any computer, word processor or similar device) and confirm such destruction to the Company in writing or (ii) return to WP&Co. all copies of the Evaluation Material furnished to you by or on behalf of the Company in your possession or in the possession of your Representatives. Any oral Evaluation Material will continue to be held subject to the terms of this agreement. If requested, you shall provide a certification by an appropriate officer that all such Evaluation Material has been returned or destroyed. (3) The term "Evaluation Material" does not include any information which (i) is generally available to and known by the public (other than as a result of a disclosure by you or by any of the Representatives); (ii) was available to you on a non-confidential basis from a source (other than the Company or its representatives) that is not and was not prohibited from disclosing such information to you by a contractual, legal or fiduciary obligation; or was known to you prior to your receipt thereof. (4) The parties hereto both agree that, without the prior written consent of the other party, neither party nor their representatives shall disclose to any person (unless required by law) (a) that any investigations, discussions or negotiations are taking place concerning the Transaction or any other possible Transaction involving the Company and you, (b) that you have requested or received any Evaluation Material or (c) any of the terms, conditions or other facts with respect to the Transaction involving you or such investigations, discussions or negotiations, including the status thereof. The term "person" as used in this agreement shall be broadly interpreted to include the media and any corporation, partnership, group, individual or entity. (5) You agree that (i) all communication regarding the Transaction, (ii) requests for additional information, facility tours or management meetings, and (iii) discussions or questions regarding procedures with respect to the Transaction, will be first submitted or directed to WP&Co. 3 and not to the Company. Accordingly, you agree that until the consummation of the Transaction by you or a third party, you will not, directly or indirectly, contact or communicate with any officer, director, employee or agent of the Company without the express prior consent of the Company or WP&Co. Both parties agree that, for a period of one year from the date of this agreement, neither party will, directly or indirectly, solicit for employment or hire any employee of either party with whom the parties have had contact or who became known to the parties in connection with the parties' consideration of the Transaction. For purposes of this paragraph, the term "solicit" shall not include general solicitations of employment by means of newspaper, periodical or trade publication used in the ordinary course of business. You acknowledge and agree that (a) WP&Co. and the Company are free to conduct the process leading up to a possible Transaction as WP&Co. and the Company, in their sole discretion, may determine (including, without limitation, by negotiating with any prospective buyer and entering into a preliminary or definitive agreement without prior notice to you or any other person), (b) WP&Co. and the Company reserve the right, in their sole discretion, to change the procedures relating to your consideration of the Transaction at any time without prior notice to you or any other person, to reject any and all proposals made by you or any of your Representatives with regard to the Transaction, and to terminate discussions and negotiations with you at any time and for any reason, and (c) unless and until a written definitive agreement concerning the Transaction has been executed, neither WP&Co. nor the Company, nor their respective officers, directors, employees, affiliates, stockholders, agents or controlling persons will have any legal obligation to you of any kind whatsoever with respect to the Transaction, whether by virtue of this agreement, any other written or oral expression with respect to the Transaction or otherwise. For purposes hereof, the term "definitive agreement" does not include an executed letter or intent or any other preliminary written agreement. (6) You agree that, for a period of two years from the date of this agreement, unless such shall have been specifically invited in writing by the Company, neither you nor any of your affiliates (as such term is defined under the Securities Exchange Act of 1934, as amended (the "1934 Act")) or Representatives will in any manner, directly or indirectly, (a) effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or of beneficial ownership thereof) in excess of 5% of the Company, or assets of the Company or any of its subsidiaries; (ii) any tender or exchange offer, merger or other business combination involving the Company or any of its subsidiaries; (iii) any recapitalization, restructuring, liquidation, 4 dissolution or other extraordinary Transaction with respect to the Company or any of its subsidiaries; or (iv) any solicitation of proxies or consents to vote any voting securities of the Company; (b) form, join or in any way participate in a "group" (as defined under the 1934 Act); (c) take any action which might force the Company to make a public announcement regarding any of the types of matters set forth in (a) above; or (d) enter into any discussions or arrangements with any third party with respect to any of the foregoing. This paragraph shall not apply to TRW Investment Management Co., it's advisors, or TRW's employee benefit plans. (7) You acknowledge that you and your Representatives may receive material non-public information in connection with your evaluation of the Transaction and you are aware (and you will so advise your Representatives) that the United States securities laws impose restrictions on trading in securities when in possession of such information. (8) You understand and acknowledge that none of the Company, WP&Co. or any of their respective officers, directors, employees, affiliates, stockholders, agents or controlling persons is making any representation or warranty, express or implied, as to the accuracy or completeness of the Evaluation Material, and each of the Company, WP&Co. and such other persons expressly disclaims any and all liability to you or any other person that may be based upon or relate to (a) the use of the Evaluation Material by you or any of the Representatives or (b) any errors therein or omissions therefrom. You further agree that you are not entitled to rely on the accuracy and completeness of the Evaluation Material and that you will be entitled to rely solely on those particular representations and warranties, if any, that are made to a purchaser in a definitive agreement relating to the Transaction when, as, and if it is executed, and subject to such limitations and restrictions as may be specified in such definitive agreement. (9) Both parties acknowledge that remedies at law may be inadequate to protect either party against any actual or threatened breach of this agreement. Without prejudice to any other rights and remedies otherwise available to either party, both parties agree that the other party is entitled to equitable relief in the event of any such breach. (10) You agree that no failure to delay by the Company in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 5 (11) This agreement is for the benefit of the parties and their respective successors and assigns. The rights of the Company under this agreement may be assigned in whole or in part to any purchaser of the Company which purchaser shall be entitled to enforce this agreement to the same extent and in the same manner as the Company is entitled to enforce this agreement. (12) This agreement and all controversies arising from or relating to performance under this agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to its conflicts of laws principles. (13) This agreement contains the entire agreement between you and the Company concerning the subject matter hereof, and no modification of this agreement or wavier of the terms and conditions hereof will be binding unless approved in writing by the Company and you. (14) The obligations of the parties will continue in effect from the date of this agreement through September 12, 1999. Please confirm your agreement to the foregoing by signing both copies of this agreement and returning one to WP&Co., Attn: Paul J. S. Haigney. Very truly yours, WASSERSTEIN PERELLA & CO., INC. As Financial Advisor to, and as Representative of BDM International, Inc. By: /s/ Paul J. S. Haigney ------------------------------------ Paul J. S. Haigney Managing Director CONFIRMED AND AGREED AS OF THE DATE WRITTEN ABOVE: TRW Inc. By: /s/ Donald G. Kovar ----------------------------------- Name: Donald G. Kovar Title: Vice President EX-4.C 17 EXHIBIT (C)(4) 1 Exhibit (c)(4) EXCLUSIVITY AGREEMENT BDM International, Inc. ("BDM"), The Carlyle Partners Leveraged Capital Fund I, L.P., BDM Acquisition Partners, L.P., BDM Acquisition Partners II, L.P., The Carlyle Group, L.P., and TWC Virginia, Inc. (collectively, hereinafter the "Carlyle Group") hereby severally agree that they will immediately cease all discussions and negotiations with any party other than TRW Inc. that related to, or may reasonably be expected to lead to, any merger or consolidation involving BDM or any sale, lease, or other disposition of assets of BDM or its direct or indirect subsidiaries representing fifteen percent (15%) or more of the consolidated assets of BDM and such subsidiaries, or the issuance, sale, or other disposition (to one or more persons or to any group of persons) of any such equity interests or of securities representing fifteen percent (15%) or more of any class of stock of BDM or any such equity interests, or any recapitalization, restructuring, liquidation, dissolution, or other extraordinary transaction with respect to BDM or any of its subsidiaries, or any such equity interests. In addition, BDM and the Carlyle Group severally agree that until the earlier of (i) the date which is seventeen (17) days following the execution of this letter by BDM and the Carlyle Group, or (ii) the date on which definitive agreements which supersede this letter are executed by the parties hereto, BDM and the Carlyle Group will neither directly or indirectly, take (nor shall it authorize or permit any of its subsidiaries, officers, directors, employees, representatives, investment bankers, attorneys, accountants, or other agents or affiliates, to take) any action to solicit, encourage, or initiate the submission of any transaction proposal, enter into any agreement providing for any transaction proposal, or participate in any way in discussions or negotiations with or furnish any information to any person, which may reasonably be expected to lead to any transaction proposal or assist any person in the making of any transaction proposal. Accepted and Agreed to, as of November 14, 1997 BDM INTERNATIONAL, INC. THE CARLYLE PARTNERS LEVERAGED CAPITAL FUND I, L.P. BDM ACQUISITION PARTNERS, L.P. BDM ACQUISITION PARTNERS II, L.P. By: THE CARLYLE GROUP, L.P. General Partner of Each By: /s/ Philip A. Odeen By: TWC VIRGINIA, INC. ---------------------------------- Its General Partner Name: Philip A. Odeen Title: President By: /s/ William E. Conway, Jr. ------------------------------------ Name: William E. Conway, Jr. Title: Executive Vice President EX-5.C 18 EXHIBIT (C)(5) 1 Exhibit (c)(5) EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November 20, 1997, but effective as provided herein, is made and entered into by and between TRW Inc., an Ohio corporation (the "Company" or "TRW", as the context requires), and _____________________ (the "Executive"). WHEREAS, the Executive has been serving as the ____________ of BDM International, Inc. ("BDM"), a Delaware corporation; WHEREAS, pursuant to the Agreement and Plan of Merger (the "Merger Agreement") among the Company, Systems Acquisition Inc., a wholly owned subsidiary of the Company ("Merger Sub"), and BDM (the "Merger Agreement"), as of the effective time of the Merger (the "Effective Time"), Merger Sub will be merged with and into BDM, with BDM as the surviving entity (the "Merger"); WHEREAS, pursuant to the Merger Agreement it is contemplated that Executive will execute this Agreement upon the signing of the Merger Agreement and, upon the date of the consummation of the Offer, as defined in the Merger Agreement (the "Closing Date"), Executive will serve in the employ of the Company or a subsidiary of the Company ("Company" as used herein will mean the Company or a subsidiary of the Company); WHEREAS, the Company considers it in the best interests of its stockholders to foster the continuous employment of certain key management personnel of BDM; WHEREAS, the Company wishes to assure itself of both present and future continuation of management in light of the Merger; WHEREAS, the Company wishes to employ the Executive and the Executive is willing to render services, both on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, it is agreed as follows: 1. EMPLOYMENT. 1.1 The Company hereby agrees to continue to employ the Executive, and the Executive hereby agrees to continue employment with the Company, upon the terms and conditions herein set forth. 2 1.2 Employment will continue for a term commencing on the Closing Date and, subject to earlier expiration upon the Executive's termination under Section 3, expiring on the third anniversary of the Closing Date (the "Employment Term"). 1.3 DUTIES. During the Employment Term, the Executive will be the Company's full-time employee in a position requiring the Executive to provide services of a similar character to those provided by the Executive to BDM immediately prior to the date hereof. The Executive will devote all of his business time and attention to the performance of his duties to the Company. Notwithstanding the foregoing, the Executive may, (i) subject to the approval of the Company, serve as a director of a company which is not engaged in "Competition" (as defined in Section 5.1) with the Company, (ii) serve as an officer, director or otherwise participate in purely educational, welfare, social, religious and civic organizations, and (iii) manage personal and family investments. 2. COMPENSATION AND RELATED MATTERS. 2.1 COMPENSATION AND BENEFITS. (i) ANNUAL BASE SALARY. Executive will receive an annual base salary of not less than his annual base salary in effect immediately prior to the Effective Time. In the event that the Executive relocates his location of principal employment at the request of the Company, the Company will in good faith consider a cost of living adjustment to annual base salary. Annual base salary and merit increases to such salary will be payable at the times and in the manner consistent with Banneker's general policies regarding compensation of executive employees. (ii) ANNUAL INCENTIVE COMPENSATION. Executive will be eligible to receive annual incentive compensation based on incentive target percentages of base salary comparable to such percentages in effect immediately prior to the Effective Time. Nothing in this Section 2.1(ii) will guarantee to the Executive any specific amount of incentive compensation, or prevent the Board from establishing performance goals and compensation targets applicable to the Executive. 2.2 EXECUTIVE BENEFITS. In addition to the compensation described in Section 2.1, the Executive and his eligible dependents during the Employment Term will be entitled to participate in employee benefit plans currently offered by BDM, including without limitation supplemental retirement plans, executive life insurance and executive deferred compensation plans, provided however that the Company reserves the right to provide comparable benefits under new or substituted benefit plans. 2.3 EXPENSES. The Company will promptly reimburse the Executive for all travel and other business expenses the Executive incurs in order to perform his duties to the Company under this Agreement in a manner commensurate with the Executive's position and level of responsibility with the Company, and in accordance with the Company's policy regarding expenses. -2- 3 3. TERMINATION. Notwithstanding the Employment Term specified in Section 1.2, the termination of the Executive's employment hereunder will be governed by the following provisions: 3.1 CAUSE. (i) The Company may terminate the Executive's employment hereunder for Cause (as defined below). In the event of the Executive's termination for Cause, the Company will promptly pay to the Executive (or his representative) the unpaid annual base salary to which he is entitled, pursuant to Section 2.1, through the date the Executive is terminated and the Executive will be entitled to no other compensation, except as otherwise due to him under applicable law. (ii) For purposes of this Agreement, the term "Cause" means either (a) that the Executive shall have committed: (1) an intentional act of fraud, embezzlement or theft in connection with his duties or in the course of his employment with the Company; (2) intentional wrongful damage to property of the Company; (3) intentional misconduct that is materially injurious to the Company, monetarily or otherwise; (4) an intentional breach of the Executive's obligations set forth in Section 5, and any such act shall have been materially harmful to the Company; or (b) the failure by the Executive to comply with the policies and procedures then applicable to employees of the Company who have positions comparable to the Executive; provided, however, that the Executive shall not be terminated for Cause pursuant to this Section 3.1(ii)(b) unless he shall have received a written report setting forth in reasonable detail the manner in which he has failed to meet such policies and procedures and within 30 calendar days after receiving such report, the Board (or Chief Executive Officer and/or President of the Company) shall have determined in good faith that the Executive shall have failed to make substantial progress in meeting the Company's policies and procedures. For purposes of this Agreement, an act or failure to act on the part of the Executive shall be deemed "intentional" only if done or omitted to be done by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. 3.2 TERMINATION. (i) INVOLUNTARY TERMINATION. The Executive's employment hereunder may be terminated by the Company for any reason by written notice as provided in Section 8.4. The Executive will be treated for purposes of this Agreement as having been involuntarily terminated by the Company other than for Cause if the Executive terminates his employment with the Company for any of the following reasons: (a) the Company requests that the Executive provide services that are not of a similar character to those provided by the Executive to BDM immediately prior to the date hereof; (b) the Company has breached any material provision of this Agreement and within 30 days after notice thereof from the Executive, the Company fails to cure such breach; or (c) the Company requires the Executive to relocate his principal place of employment to any location outside a fifty mile radius from the location of the Executive's principal place of employment immediately prior to the date hereof. -3- 4 (ii) VOLUNTARY TERMINATION. The Executive may voluntarily terminate the Agreement at any time by notice to the Company as provided in Section 8.4. 3.3 TERMINATION PAYMENTS AND BENEFITS. (i) FORM AND AMOUNT. Upon the Executive's involuntary termination other than for Cause during the Employment Term, the Company will pay an amount to the Executive as follows: (a) if the termination occurs on or prior to the second anniversary of the Closing Date, an amount equal to three times the sum of the Executive's annual salary and target annual incentive compensation in effect immediately prior to the termination, multiplied by a fraction the numerator of which is the number of full months remaining in the Employment Term and the denominator of which is 36; and (b) if the termination occurs after the second anniversary of the Closing Date, an amount equal to the sum of the Executive's annual salary and target annual incentive compensation in effect immediately prior to the termination. Any amount due pursuant to this Section 3.3 will be payable in a lump sum less applicable taxes within 30 days following termination. (ii) MAINTENANCE OF BENEFITS. During the period set forth below, the Company will use its best efforts to maintain in full force and effect for the continued benefit of the Executive, and his or her eligible dependents, all health and welfare benefits which the Executive was entitled to receive immediately prior to his termination or will arrange to make available to the Executive benefits substantially similar to those that the Executive would otherwise have been entitled to receive if his employment had not been terminated. Such benefits will be provided to the Executive on the same terms and conditions (including employee contributions toward the premium payments) under which the Executive was entitled to participate immediately prior to his termination. The term of continued benefits will be as follows: (a) if the termination occurs on or prior to the second anniversary of the Closing Date, the term will be the remainder of the Employment Term if there had been no termination and (b) if the termination occurs after the second anniversary of the Closing Date, the term will be 12 months. (iii) RELEASE. No amount or benefit will be paid or made available under this Section 3 unless (a) the Executive executes a release in a form satisfactory to the Company, and (b) to the extent such payment or benefit is subject to the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or to any similar revocation period in effect on the date of termination of Executive's employment, such revocation period has expired. 4. MITIGATION AND OFFSET. The Executive is under no obligation to mitigate damages or the amount of any payment provided for hereunder by seeking other employment or otherwise; provided, however, that the Executive's coverage under the Company's health and welfare plans will be reduced to the extent that the Executive becomes covered under any comparable employee -4- 5 benefit plan made available by another employer and covering the same type of benefits. The Executive will report to the Company any such benefits actually received by him. 5. COMPETITION; CONFIDENTIALITY; NONSOLICITATION 5.1 The Executive hereby covenants and agrees that during the Employment Term and for the applicable period following the Employment Term specified in Section 3.3(ii)(a) or (b), whichever would be applicable if Section 3.3(ii) applied (regardless of whether the Executive's termination of employment was for cause or otherwise), he will not, without the prior written consent of the Company, engage in Competition (as defined below) with the Company. Notwithstanding the foregoing, in the event that the Executive voluntarily terminates his employment with the Company, the Non-Competition period provided for herein will end on the later of (a) the second anniversary of the Closing Date and (b) the six month anniversary of the termination date. For purposes of this Agreement, "Competition" means participating in the management of any business enterprise if such enterprise engages in substantial and direct competition with the Company and such enterprise's sales of any product or service competitive with any product or service of the Company amounted to 25% of such enterprise's net sales for its most recently completed fiscal year and if the Company's net sales of said product or service amounted to 25% of the Company's net sales for its most recently completed fiscal year. "Competition" will not include (i) the mere ownership of securities in any enterprise and exercise of rights appurtenant thereto or (ii) participation in management of any enterprise or business operation thereof other than in connection with the competitive operation of such enterprise. 5.2 During the Employment Term, the Company agrees that it will disclose to Executive its confidential or proprietary information (as defined in this Section 5.2) to the extent necessary for Executive to carry out his obligations under this Agreement. The Executive hereby covenants and agrees that he will not, without the prior written consent of the Company, during the Employment Term or thereafter disclose to any person not employed by the Company, or use in connection with engaging in Competition with the Company, any confidential or proprietary information of the Company. For purposes of this Agreement, the term "confidential or proprietary information" will include all information of any nature and in any form that is owned by the Company and that is not publicly available or generally known to persons engaged in businesses similar or related to those of the Company. Confidential information will include, without limitation, the Company's financial matters, customers, employees, industry contracts, and all other secrets and all other information of a confidential or proprietary nature. Confidential information shall not include information that comes into the possession of the Executive following termination from a source not under a duty to the Company to refrain from disclosing such information. The foregoing obligations imposed by this Section 5.2 will cease if such confidential or proprietary information will have become, through no fault of the Executive, generally known to the public or the Executive is required by law to make disclosure (after giving the Company notice and an opportunity to contest such requirement). 5.3 The Executive hereby covenants and agrees that during the Employment Term and for one year following the Employment Term he will not attempt to influence, persuade or induce, or assist any other person in so persuading or inducing, any employee of the Company to give up, or to not commence, employment or a business relationship with the Company. -5- 6 5.4 For purposes of this Section 5, the term the "Company" means the Company and its subsidiaries, collectively. 6. POST-TERMINATION ASSISTANCE. The Executive agrees that after his employment with the Company has terminated he will provide, upon reasonable notice, such information and assistance to the Company as may reasonably be requested by the Company in connection with any litigation, investigation, audit or similar matter in which it or any of its affiliates is or may become a party; provided, however, that the Company agrees to reimburse the Executive for any related out-of-pocket expenses, including travel expenses. 7. SURVIVAL. The expiration or termination of the Employment Term will not impair the rights or obligations of any party hereto that accrue hereunder prior to such expiration or termination, except to the extent specifically stated herein. In addition to the foregoing, the Executive's covenants contained in Sections 5.1, 5.2, 5.3 and 6 and the Company's obligations under Section 3 will survive the expiration or termination of Executive's employment. 8. MISCELLANEOUS PROVISIONS. 8.1 BINDING ON SUCCESSORS. This Agreement will be binding upon and inure to the benefit of the Company, the Executive and each of their respective successors, assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees and legatees, as applicable. 8.2 GOVERNING LAW. This Agreement will be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of Ohio, without regard to conflict of law principles. 8.3 SEVERABILITY. Any provision of this Agreement that is deemed invalid, illegal or unenforceable in any jurisdiction will, as to that jurisdiction be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant will be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 8.4 NOTICES. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder must be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as Federal Express, UPS or Purolator, addressed as follows, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt. -6- 7 (i) TO THE COMPANY. If to the Company, addressed to: TRW Inc. 1900 Richmond Road Cleveland, Ohio 44124 Attn: Secretary Telecopy: 216.291.7563 (ii) TO THE EXECUTIVE. If to the Executive, to him at ___________ ____________________________________________________________ ____________________________________. 8.5 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same Agreement. 8.6 ENTIRE AGREEMENT. The terms of this Agreement are intended by the parties to be the final expression of their agreement with respect to the Executive's employment by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Agreement will constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative or other legal proceeding to vary the terms of this Agreement. This agreement supersedes any and all prior agreements applicable to the terms and conditions of Executive's employment with any entity referred to herein. 8.7 AMENDMENTS; WAIVERS. This Agreement may not be modified, amended, or terminated except by an instrument in writing, approved by the Company and signed by the Executive and the Company. Failure on the part of either party to complain of any action or omission, breach or default on the part of the other party, no matter how long the same may continue, will never be deemed to be a waiver of any rights or remedies hereunder, at law or in equity. The Executive or the Company may waive compliance by the other party with any provision of this Agreement that such other party was or is obligated to comply with or perform only through an executed writing; provided, however, that such waiver will not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. 8.8 NO INCONSISTENT ACTIONS. The parties will not voluntarily undertake or fail to undertake any action or course of action that is inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement. 8.9 HEADINGS AND SECTION REFERENCES. The headings used in this Agreement are intended for convenience or reference only and will not in any manner amplify, limit, modify or otherwise be used in the construction or interpretation of any provision of this Agreement. All section references are to sections of this Agreement, unless otherwise noted. -7- 8 9. TREATMENT OF OPTIONS. Executive agrees that he will not exercise any options which he currently holds to purchase common stock of BDM (the "Options") prior to the Closing Date, and that upon the Closing Date, Executive will receive cash in exchange for the cancellation of his Options as set forth in Section 1.9(a) of the Merger Agreement. 10. EFFECTIVENESS. This Agreement will become effective upon the Closing Date, except for the provisions of Section 9, which shall become effective as of the date hereof. Notwithstanding any other provision of this Agreement, if the Merger Agreement is terminated prior to the Effective Time, this Agreement will have no further force or effect. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written, but effective as provided in Section 9. Name:___________________________________ TRW INC., an Ohio corporation By:_____________________________________ DULY AUTHORIZED -8- -----END PRIVACY-ENHANCED MESSAGE-----