Item 1.01
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Entry into a Material Definitive Agreement.
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Merger Agreement
On
September 9, 2018, Engility Holdings, Inc., a Delaware corporation (Engility), entered into an Agreement and Plan of Merger (the Merger Agreement) with Science Applications International Corporation (SAIC), a
Delaware corporation (SAIC), and Raptors Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of SAIC (the Merger Sub) pursuant to which, on the terms and subject to the conditions set forth therein,
Merger Sub will merge with and into Engility (the Merger), with Engility surviving the Merger. At the effective time of the Merger (the Effective Time), each outstanding share of common stock, $0.01 par value, of Engility
(Engility Common Stock) will be converted into the right to receive 0.450 of a share (the Exchange Ratio) of SAICs common stock, $0.0001 par value (SAIC Common Stock). Outstanding Engility equity awards will
be converted, based upon the Exchange Ratio, into equivalent equity awards of SAIC on substantially the same terms and conditions; provided that Engilitys performance-based awards will convert into an equivalent number of SAIC time-vesting
restricted stock units based on the terms of the applicable award agreements. Following the Effective Time, SAIC will expand its board of directors to consist of eleven directors, two of which will be Engility designees.
The Merger Agreement contains customary representations and warranties from both Engility and SAIC, each with respect to its and its
subsidiaries businesses, and each party has agreed to customary covenants, including, among others, covenants relating to the conduct of its business during the period between the execution of the Merger Agreement and the Effective Time. Each
party has resolved to call a meeting of its stockholders to approve, in the case of Engility, the Merger Agreement and the transactions contemplated thereby, including the Merger (the Engility Stockholder Approval), and, in the case of
SAIC, the issuance of the shares of SAIC Common Stock constituting the consideration to be received by Engilitys stockholders in the Merger (the SAIC Stockholder Approval). Each partys board of directors has resolved to
recommend that its stockholders vote in favor of such approvals, and not to withhold, withdraw, qualify or modify in an adverse manner, such recommendation, subject to certain limited exceptions described below.
The Engility board of directors is permitted to change its recommendation if it receives an unsolicited alternative proposal that the board
determines (after consultation with outside counsel and its financial advisor) is more favorable to the Companys stockholders than the Merger, and that the failure to change its recommendation would reasonably be expected to be inconsistent
with the directors fiduciary duties under applicable law. The Engility board may also change its recommendation if, as a result of a material development or change in circumstances that was not known to, or reasonably foreseeable by, the
Engility board prior to the execution of the Merger Agreement (an Intervening Event), the Engility board determines in good faith (after consultation with its outside counsel and its financial advisor) that the failure to take such
action would be inconsistent with the directors fiduciary duties under applicable law. The SAIC board of directors has a similar right to change its recommendation in the event of an Intervening Event relating to SAIC.
Both SAIC and Engility have agreed to customary
non-solicitation
covenants that prohibit them from
soliciting proposals or entering into discussions or negotiations or providing confidential information in connection with certain proposals for an alternative acquisition. However, if the Engility board determines in good faith (after consultation
with outside counsel and its financial advisor) that an alternative acquisition proposal constitutes or could reasonably be expected to result in a superior proposal, and that the failure to take any action would reasonably be expected
to be inconsistent with the directors fiduciary duties under applicable law, Engility may furnish information to, and negotiate with, the third party making such alternative proposal.
If SAIC receives an unsolicited proposal (whether for stock or cash consideration) to acquire SAIC, SAIC has the right to respond to such
proposal and furnish information to and negotiate with the third party making such proposal, only if the proposal requires, as a condition to the consummation of such proposal, either that SAIC first consummate the Merger with Engility or that the
Merger Agreement is terminated as a result of the Engility Stockholder Approval not being obtained.