<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 1999.
REGISTRATION NO. 333-71483
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
DURA AUTOMOTIVE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3460 38-3185711
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Number) Identification
incorporation or organization) No.)
</TABLE>
4508 IDS CENTER, MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 342-2311
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
STEPHEN E. K. GRAHAM
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
2791 RESEARCH DRIVE
ROCHESTER HILLS, MICHIGAN 48309
TELEPHONE: (248) 299-7500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
DENNIS M. MYERS, ESQ. JAMES K. SOMMER, ESQ.
KIRKLAND & ELLIS SOMMER & BARNARD, PC
200 East Randolph Drive 4000 Bank One Tower
Chicago, Illinois 60601 111 Monument Circle
Telephone: (312) 861-2000 Indianapolis, Indiana 46204
Telephone: (317) 630-4000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE, BUT
NOT EARLIER THAN THE DATE OF THE MEETINGS OF THE STOCKHOLDERS OF DURA AUTOMOTIVE
SYSTEMS, INC. ("DURA") AND THE SHAREHOLDERS OF EXCEL INDUSTRIES, INC. ("EXCEL").
--------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C> <C>
Tel. (612)
DURA AUTOMOTIVE 4508 IDS Center 332-2335
SYSTEMS, INC. Minneapolis, Minnesota 55402 Fax (612) 332-2012
</TABLE>
[LOGO]
Dear Fellow Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Special Meeting") of Dura Automotive Systems, Inc. ("Dura") to be held at
Dura's operating headquarters, 2791 Research Drive, Rochester Hills, Michigan,
at 9:00 a.m., local time, on March 23, 1999.
At the Special Meeting, you will be asked to consider and vote upon
proposals to: (i) approve the issuance of shares of Dura Class A Common Stock
pursuant to the terms of the Agreement and Plan of Merger, dated as of January
19, 1999 (the "Merger Agreement"), among Dura, Windows Acquisition Corporation,
a wholly owned subsidiary of Dura, and Excel Industries, Inc. ("Excel") under
which Excel will become a wholly owned subsidiary of Dura and (ii) approve and
adopt the Dura 1998 Stock Incentive Plan.
THE BOARD OF DIRECTORS OF DURA HAS DETERMINED THAT THE MERGER IS IN THE BEST
INTERESTS OF DURA AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS OF
DURA HAS UNANIMOUSLY APPROVED THE TRANSACTION AND UNANIMOUSLY RECOMMENDS THAT
DURA STOCKHOLDERS APPROVE THE ISSUANCE OF SHARES OF DURA CLASS A COMMON STOCK IN
THE MERGER.
Robert W. Baird & Co. Incorporated has acted as financial advisor to Dura in
connection with the merger and has delivered to the Dura board its written
opinion dated as of January 18, 1999, to the effect that as of that date, the
merger consideration to be paid by Dura in connection with the merger was fair
to Dura.
The attached Joint Proxy Statement/Prospectus explains in detail the terms
of the proposed merger and related matters. Please carefully review and consider
all of this information.
Consummation of the merger is subject to the satisfaction or waiver of
certain conditions, including approval of the Merger Agreement by the holders of
Excel Common Stock and approval of the issuance of shares of Dura Class A Common
Stock in the merger by the holders of Dura Common Stock.
It is very important that your shares are represented at the Special
Meeting, whether or not you plan to attend in person. In order to ensure that
your vote is represented at the Special Meeting, please sign, date and mail the
proxy card in the enclosed envelope. You are, of course, welcome to attend the
meeting and to vote your shares in person.
I look forward to seeing you at the Special Meeting.
Sincerely yours,
[SIGNATURE]
S. A. Johnson
Chairman of the Board
February 17, 1999
<PAGE>
[LOGO]
DURA AUTOMOTIVE SYSTEMS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Date: March 23, 1999
Time: 9:00 a.m., Local Time
Place:Dura Automotive Systems, Inc.
2791 Research Drive
Rochester Hills, Michigan 48309
To Our Stockholders:
We invite you to attend our Special Meeting of Stockholders to consider and
vote on the following:
1. To approve the issuance of shares of Dura Class A Common Stock pursuant
to the terms of a merger agreement under which Excel Industries, Inc.
will become a wholly owned subsidiary of Dura Automotive Systems, Inc;
2. To approve and adopt the Dura Automotive Systems, Inc. 1998 Stock
Incentive Plan; and
3. To act on any other matters that may properly come before the Special
Meeting and any adjournment or postponement of the Special Meeting.
THE BOARD OF DIRECTORS OF DURA HAS UNANIMOUSLY APPROVED THE MERGER AND THE
PROPOSALS DESCRIBED ABOVE, AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE
EACH OF THESE PROPOSALS AT THE SPECIAL MEETING.
If you were a stockholder of record at the close of business on February 16,
1999, you may vote at the Special Meeting. Approval of proposals 1 and 2
requires the affirmative vote of at least a majority of the votes entitled to be
cast, with the holders of Dura Class A Common Stock and Dura Class B Common
Stock voting together as a single class. We urge you to read carefully the
accompanying Joint Proxy Statement/Prospectus, which contains detailed
information concerning each of the proposals. A copy of the merger agreement and
a copy of the Dura Automotive Systems, Inc. 1998 Stock Incentive Plan are
attached as Appendices A and B, respectively, to the accompanying Joint Proxy
Statement/Prospectus.
Whether or not you plan to attend the Special Meeting in person, and
regardless of the number of shares you own, please complete, sign, date and
return the enclosed proxy card promptly in the enclosed envelope. This will
ensure that your shares are voted as you wish and that a quorum will be present.
By Order of the Board of Directors,
[SIGNATURE]
David R. Bovee
ASSISTANT SECRETARY
February 17, 1999
YOUR VOTE IS IMPORTANT!
TO VOTE YOUR SHARES, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY
CARD.
<PAGE>
[LETTERHEAD]
Dear Fellow Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders (the
"Special Meeting") of Excel Industries, Inc. ("Excel") to be held at the
executive offices of Excel, 1120 North Main Street, Elkhart, Indiana, at 9:00
a.m., local time, on March 23, 1999.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Merger, dated as of
January 19, 1999 (the "Merger Agreement") among Dura Automotive Systems, Inc.
("Dura"), Windows Acquisition Corporation ("Sub"), a wholly owned subsidiary of
Dura, and Excel. Pursuant to the Merger Agreement, Excel will be merged with and
into Sub (the "Merger"), with Sub continuing as the surviving corporation and a
wholly owned subsidiary of Dura. As a result of the Merger, each outstanding
share of common stock, no par value per share ("Common Stock"), of Excel will be
converted into the right to receive EITHER (1) 0.8 of a share of Dura Class A
Common Stock, OR (2) $25.50 in cash; provided that no more than 50% of the
outstanding shares of Excel Common Stock will be exchanged for Dura Class A
Common Stock and no more than 50% of Excel Common Stock will be exchanged for
cash (the "Merger Consideration"). Cash will be paid in lieu of any fractional
shares of Dura Class A Common Stock.
THE BOARD OF DIRECTORS OF EXCEL HAS DETERMINED THAT THE MERGER AGREEMENT IS
ADVISABLE AND IN THE BEST INTERESTS OF EXCEL AND ITS SHAREHOLDERS. ACCORDINGLY,
THE BOARD OF DIRECTORS OF EXCEL HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF EXCEL COMMON STOCK VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Morgan Stanley & Co. Incorporated has acted as financial advisor to Excel in
connection with the Merger and has delivered to the Excel board its written
opinion dated as of January 19, 1999, to the effect that as of that date, the
Merger Consideration was fair to the holders of the outstanding shares of Excel
Common Stock from a financial point of view.
The attached Joint Proxy Statement/Prospectus explains in detail the terms
of the proposed Merger and related matters. Please carefully review and consider
all of this information.
Consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including approval of the Merger Agreement and certain other
matters in connection with the Merger by the requisite vote of both the holders
of Excel Common Stock and the holders of Dura Common Stock.
It is very important that your shares are represented at the Special
Meeting, whether or not you plan to attend in person. THE AFFIRMATIVE VOTE OF
THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF EXCEL COMMON STOCK IS
REQUIRED FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. ACCORDINGLY, YOUR
FAILURE TO VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. In
order to ensure that your vote is represented at the Special Meeting, please
sign, date and mail the proxy card in the enclosed envelope. You are, of course,
welcome to attend the meeting and to vote your shares in person.
I look forward to seeing you at the Special Meeting.
Sincerely yours,
[SIGNATURE]
James O. Futterknecht, Jr.
Chairman of the Board and Chief
Executive Officer
February 17, 1999
<PAGE>
[LOGO]
EXCEL INDUSTRIES, INC.
---------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 23, 1999
------------------------
Dear Shareholder:
A Special Meeting of Shareholders (the "Special Meeting") of Excel
Industries, Inc., an Indiana corporation ("Excel"), will be held at the
executive offices of Excel, 1120 North Main Street, Elkhart, Indiana, at 9:00
a.m., local time, on March 23, 1999, for the following purposes:
(1) To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of January 19, 1999
(the "Merger Agreement"), among Dura Automotive Systems,
Inc., a Delaware corporation ("Dura"), Windows Acquisition
Corporation ("Sub"), an Indiana corporation and a wholly
owned subsidiary of Dura, and Excel pursuant to which Excel
will be merged with and into Sub, with Sub continuing as the
surviving corporation and a wholly owned subsidiary of Dura.
A copy of the Merger Agreement is included as an appendix to
the accompanying Joint Proxy Statement/ Prospectus.
(2) The transaction of such other business, if any, as may
properly come before the Special Meeting or at any
adjournments or postponements thereof.
Only holders of record of common stock, no par value (the "Excel Common
Stock"), of Excel, at the close of business on February 16, 1999, are entitled
to notice of and to vote at the Special Meeting or any adjournments or
postponements thereof. The affirmative vote of the holders of a majority of the
outstanding shares of Excel Common Stock is required for approval and adoption
of the Merger Agreement.
By Order of the Board of Directors
[SIGNATURE]
Joseph A. Robinson, Secretary
February 17, 1999
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY, WHETHER OR NOT
YOU PLAN TO ATTEND THE SPECIAL MEETING. IF YOU SIGN AND RETURN YOUR PROXY CARD
WITHOUT SPECIFYING THE MANNER IN WHICH YOU WOULD LIKE YOUR SHARES TO BE VOTED,
YOUR SHARES WILL BE VOTED FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
THE BOARD OF DIRECTORS OF EXCEL HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF EXCEL VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
<PAGE>
<TABLE>
<S> <C>
[LOGO] [LOGO]
</TABLE>
JOINT PROXY STATEMENT
------------------
DURA AUTOMOTIVE SYSTEMS, INC.
PROSPECTUS
------------------
PROPOSED MERGER--YOUR VOTE IS VERY IMPORTANT
This Joint Proxy Statement/Prospectus constitutes the proxy statement of
each of Dura Automotive Systems, Inc. and Excel Industries, Inc. relating to the
solicitation of proxies by their respective Boards of Directors for use at the
Dura Special Meeting of Stockholders and the Excel Special Meeting of
Shareholders to be held on March 23, 1999. This Joint Proxy Statement/Prospectus
also constitutes the Prospectus of Dura with respect to the Dura Class A Common
Stock to be issued to Excel shareholders in the merger. A registration statement
on Form S-4 has been filed with the Securities and Exchange Commission with
respect to these shares of Dura Class A Common Stock.
The Boards of Directors of both Dura and Excel have approved a merger
agreement that would have the effect of causing Excel to become a wholly owned
subsidiary of Dura.
In the merger, each Excel shareholder will be entitled to receive, at his or
her election, but subject to the limitations and proration procedures described
in this Joint Proxy Statement/Prospectus, for each share of Excel Common Stock
held by such shareholder, EITHER: (1) 0.8 of a share of Dura Class A Common
Stock, OR (2) $25.50 in cash; provided that no more than 50% of the outstanding
shares of Excel Common Stock will be exchanged for Dura Class A Common Stock and
no more than 50% of the outstanding shares of Excel Common Stock will be
exchanged for cash. Cash will be paid in lieu of any fractional share of Dura
Class A Common Stock.
The Dura Class A Common Stock is traded on the Nasdaq National Market under
the symbol "DRRA."
Assuming that the merger is completed, here is what the stock ownership
percentages of Dura Common Stock would be:
<TABLE>
<CAPTION>
DURA EXCEL
STOCKHOLDERS SHAREHOLDERS
--------------- ---------------
<S> <C> <C>
Following completion of
the merger.............. 70.9% 29.1%
</TABLE>
We based these percentages on the number of shares of each company
outstanding on February 16, 1999.
WE ARE ASKING DURA STOCKHOLDERS TO APPROVE:
- - The issuance of shares of Dura Class A Common Stock pursuant to the terms of
the merger agreement, approval of which is necessary to permit the merger to
occur.
- - The Dura 1998 Stock Incentive Plan.
WE ARE ASKING EXCEL SHAREHOLDERS TO APPROVE:
- - The merger agreement, approval of which is necessary to permit the merger to
occur.
BE SURE TO READ THE "RISK FACTORS" BEGINNING ON PAGE 16.
YOUR VOTE IS IMPORTANT. Please vote on these proposals by completing and
mailing the enclosed proxy card, even if you plan to attend a special meeting.
Also, you should read this document carefully before you vote. It provides
detailed information about the proposed merger and the other matters needing
your approval. You may obtain more information about Dura and Excel from
documents that we have filed with the Securities and Exchange Commission.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE DURA CLASS A COMMON STOCK TO BE ISSUED IN
CONNECTION WITH THIS DOCUMENT OR DETERMINED IF THIS DOCUMENT IS ACCURATE OR
ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is February 17, 1999, and
it is first being mailed to stockholders of Dura and shareholders of Excel on
February 18, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
WHERE YOU CAN FIND INFORMATION.... iii
INCORPORATION BY REFERENCE........ iii
QUESTIONS AND ANSWERS ABOUT THE
MERGER.......................... 1
WHO CAN HELP ANSWER MY OTHER
QUESTIONS?...................... 2
SUMMARY........................... 3
SELECTED CONSOLIDATED FINANCIAL
DATA............................ 9
Dura Automotive Systems, Inc.
Selected Historical Financial
Data.......................... 9
Excel Industries, Inc. Selected
Historical Financial Data..... 11
UNAUDITED PRO FORMA CONDENSED
FINANCIAL INFORMATION........... 12
COMPARATIVE PER SHARE DATA........ 13
COMPARATIVE MARKET PRICES AND
DIVIDENDS....................... 14
FORWARD-LOOKING STATEMENTS MAY
PROVE INACCURATE................ 15
RISK FACTORS...................... 16
Risk Factors Relating to the
Merger........................ 16
Risk Factors Relating to the
Automotive Industry........... 22
MEETINGS, VOTING AND PROXIES...... 25
Dura Special Meeting of
Stockholders.................. 25
Excel Special Meeting of
Shareholders.................. 26
THE COMPANIES..................... 28
Dura............................ 28
Excel........................... 30
Windows Acquisition
Corporation................... 30
THE MERGER........................ 31
Background...................... 31
Recommendations of Dura Board of
Directors; Reasons of Dura for
the Merger.................... 33
Opinion of Financial Advisor to
Dura.......................... 35
Recommendations of Excel Board
of Directors; Reasons of Excel
for the Merger................ 41
Opinion of Financial Advisor to
Excel......................... 43
<CAPTION>
PAGE
----
<S> <C>
Interests of Certain Persons in
the Merger.................... 47
Dura Board of Directors
Following the Merger.......... 49
Amendment of Excel Rights
Agreement..................... 49
The Financing................... 49
HSR Act and Other Regulatory
Approvals..................... 52
Dissenters' Rights.............. 53
Nasdaq National Market Listing
of Dura Class A Common
Stock......................... 53
Delisting and Deregistration of
Excel Common Stock............ 53
Federal Securities Law
Consequences.................. 53
THE MERGER AGREEMENT.............. 54
The Merger...................... 54
Conversion of Securities........ 54
Elections....................... 54
Conversion of Options........... 56
Conversion of Warrants.......... 56
Election Procedure.............. 56
Exchange of Stock
Certificates.................. 57
Representations and
Warranties.................... 59
Covenants....................... 59
Conditions to the Merger........ 63
Termination..................... 64
Termination Fees................ 65
Amendment and Waiver............ 66
ACCOUNTING TREATMENT.............. 66
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER...... 66
Tax Opinion..................... 67
Only Shares of Dura Class A
Common Stock Received......... 67
Only Cash Received.............. 67
Shares of Dura Class A Common
Stock and Cash Received....... 68
Effect of Overlapping or
Constructive Ownership........ 69
Treatment of Dividends to
Corporate Shareholders........ 70
Tax Basis and Holding Period of
Shares of Dura Class A Common
Stock Received in the
Merger........................ 70
Fractional Shares............... 70
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
UNAUDITED PRO FORMA FINANCIAL
STATEMENTS...................... 71
<S> <C>
DESCRIPTION OF DURA CAPITAL
STOCK........................... 85
General Matters................. 85
Class A Common Stock............ 85
Class B Common Stock............ 85
Preferred Stock................. 86
Transfer Agent and Registrar.... 86
COMPARISON OF CERTAIN RIGHTS OF
DURA STOCKHOLDERS AND EXCEL
SHAREHOLDERS.................... 87
Amendment to Charter
Documents..................... 87
Amendment of By-laws............ 87
Provisions Affecting Business
Combinations.................. 87
Control Share Acquisition
Laws.......................... 88
Antitakeover Laws............... 88
Antitakeover Provisions of the
Excel Articles................ 89
Right to Call Special
Meetings...................... 89
Stockholder Action Without a
Meeting....................... 89
Dividends and Repurchases....... 90
Dissenters' Rights.............. 90
Size of Board................... 90
Removal of Directors............ 90
Vacancies on the Board of
Directors..................... 91
Other Corporate
Constituencies................ 91
Director Liability.............. 91
Indemnification................. 92
APPROVAL OF THE DURA 1998 STOCK
INCENTIVE PLAN.................. 94
Introduction.................... 94
General......................... 94
<CAPTION>
PAGE
----
<S> <C>
Types of Awards................. 95
Transferability................. 96
Amendment and Termination of the
1998 Plan..................... 97
Certain Federal Income Tax
Consequences.................. 97
Vote Required................... 98
EXECUTIVE COMPENSATION............ 98
Summary Compensation Table...... 98
Option Grant Table.............. 99
Option Exercises and Year-End
Value Table................... 99
Compensation Committee
Interlocks and Insider
Participation................. 100
Director Compensation........... 100
STOCKHOLDER PROPOSALS............. 101
LEGAL MATTERS..................... 101
EXPERTS........................... 101
FINANCIAL STATEMENTS OF ADWEST
AUTOMOTIVE PLC.................. F-1
APPENDIX A
Merger Agreement................ A-1
APPENDIX B
Dura Automotive Systems, Inc.
1998 Stock Incentive Plan..... B-1
APPENDIX C
Fairness Opinion of Financial
Advisor to Dura with respect
to the Merger................. C-1
APPENDIX D
Fairness Opinion of Financial
Advisor to Excel with respect
to the Merger................. D-1
</TABLE>
ii
<PAGE>
WHERE YOU CAN FIND INFORMATION
Dura and Excel file annual, quarterly and special reports and other
information with the Commission. You may read and copy any reports, statements
or other information we file at the Commission's public reference rooms in
Washington, D.C. at 450 Fifth Street, N.W., Washington, D.C. 20549, New York,
New York at 7 World Trade Center, 13th Floor and Chicago, Illinois at Suite
1400, Northwestern Atrium Center, 500 West Madison Street. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. Our Commission filings are also available to the public from commercial
document retrieval services and at the web site maintained by the Commission at
http://www.sec.gov.
Dura has filed a Registration Statement on Form S-4 to register with the
Commission the Dura Class A Common Stock to be issued to Excel shareholders in
the merger. This Joint Proxy Statement/ Prospectus is a part of that
Registration Statement and constitutes the prospectus of Dura as well as the
proxy statements of Dura and Excel for the Dura Special Meeting and the Excel
Special Meeting. As allowed by Commission rules, this Joint Proxy
Statement/Prospectus does not contain all the information you can find in the
Registration Statement or the exhibits to the Registration Statement.
INCORPORATION BY REFERENCE
The Commission allows us to "incorporate by reference" information into this
Joint Proxy Statement/ Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the Commission. The information incorporated by reference is deemed to be part
of this Joint Proxy Statement/Prospectus, except for any information superseded
by information in this Joint Proxy Statement/Prospectus. This Joint Proxy
Statement/Prospectus incorporates by reference the documents set forth below
that we have previously filed with the Commission. These documents contain
important information about Dura and Excel and their finances.
<TABLE>
<CAPTION>
DURA COMMISSION FILINGS (FILE NO. 0-21139) PERIOD
- ------------------------------------------------------- -------------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q Quarters ended March 31, June 30 and September 30, 1998
Quarterly Reports on Form 10-Q/A Quarter ended June 30, 1998 (filed on August 17, 1998)
Current Report on Form 8-K Filed on May 14, 1998
Current Report on Form 8-K/A Filed on November 12, 1997 (amending the September 12,
1997 Form 8-K)
Current Report on Form 8-K/A Filed on August 31, 1998 (amending the May 14, 1998
Form 8-K)
Current Report on Form 8-K Filed on January 22, 1999
Current Report on Form 8-K Filed on February 3, 1999
Current Report on Form 8-K Filed on February 16, 1999
Prospectus, dated June 11, 1998, filed under Rule Filed on June 12, 1998
424(b) (Registration Statement No. 333-53661)
Description of Dura Class A Common Stock contained in Filed on August 5, 1996
Dura's registration statement on Form 8-A
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
EXCEL COMMISSION FILINGS (FILE NO. 1-8684) PERIOD
- ------------------------------------------------------- -------------------------------------------------------
Annual Report on Form 10-K Year ended December 27, 1997
<S> <C>
Annual Report on Form 10-K/A Year ended December 28, 1996 (filed on June 22, 1998)
Quarterly Reports on Form 10-Q Quarters ended March 28, June 27 and September 26, 1998
Quarterly Report on Form 10-Q/A Quarters ended March 29, 1997 (filed on June 22, 1998),
June 28, 1997 (filed on June 22, 1998) and September
27, 1997 (filed on June 22, 1998)
Current Reports on Form 8-K Filed on September 14 and November 19, 1998
Current Reports on Form 8-K/A Filed on November 12 and December 15, 1998 (each
amending the September 14, 1998 Form 8-K)
Current Report on Form 8-K Filed on January 25, 1999
</TABLE>
We are also incorporating by reference additional documents that we file
with the Commission between the dates of this Joint Proxy Statement/Prospectus
and the date of the Dura Special Meeting and the Excel Special Meeting.
Dura has supplied all information contained or incorporated by reference in
this Joint Proxy Statement/Prospectus relating to Dura and Excel has supplied
all such information relating to Excel.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the
Commission. Documents incorporated by reference are available from us without
charge, excluding all exhibits unless we have specifically incorporated by
reference an exhibit in this Joint Proxy Statement/Prospectus. Stockholders may
obtain documents incorporated by reference in this Joint Proxy
Statement/Prospectus by requesting them in writing or by telephone from the
appropriate party at the following addresses:
<TABLE>
<CAPTION>
<S> <C>
Dura Automotive Systems, Inc. Excel Industries, Inc.
4508 IDS Center 1120 North Main Street
Minneapolis, Minnesota 55402 Elkhart, Indiana 46514
Tel: (612) 342-2311 Tel: (219) 264-2131
</TABLE>
If you would like to request documents from us, please do so by March 16,
1999 to receive them before the Special Meetings.
PLEASE COMPLETE THE ENCLOSED PROXY CARD AND MAIL IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE.
iv
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT ARE THE BENEFITS OF THE MERGER?
A: We believe that the merger will allow Dura to realize important benefits.
The merger should enable Dura to increase profitability through increased
customer penetration, cost savings, operational efficiencies, economies of
scale and other synergies. In addition, the merger will allow Dura to
increase its product offerings and acquire new technology, thereby allowing
it to capitalize on industry trends toward consolidation, which favor
full-service suppliers who are able to supply larger portions of a vehicle.
As a result, we believe that the merger should increase stockholder value
for you.
Q: IF I AM A DURA STOCKHOLDER, WHAT DO I NEED TO DO NOW?
A: After you read and consider carefully the information contained in this
document, please fill out and sign your proxy card. Then mail your signed
proxy card in the enclosed return envelope as soon as possible so that your
shares may be represented at the Dura Special Meeting.
Q: IF I AM AN EXCEL SHAREHOLDER, WHAT DO I NEED TO DO NOW?
A: After you read and consider carefully the information contained in this
document, please do the following:
1. Fill out and sign your proxy card and mail your signed proxy card in the
enclosed return envelope as soon as possible so that your shares may be
represented at the Excel Special Meeting.
2. Complete and sign the enclosed Form of Election and Letter of
Transmittal and return the Form of Election and Letter of Transmittal,
accompanied by the stock certificates representing the shares of Excel
Common Stock for which an election is being made, for receipt by Dura's
exchange agent no later than 5:00 p.m. (Eastern time) on March 22, 1999.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares.
Q: CAN I CHANGE MY VOTE OR REVOKE MY PROXY AFTER I HAVE MAILED MY SIGNED PROXY
CARD?
A: You can change your vote at any time before your proxy is voted at the Dura
Special Meeting or the Excel Special Meeting. You can do this in one of
three ways. First, you can send a written notice stating that you would like
to revoke your proxy. Second, you can complete and submit a new proxy card.
If you choose either of these methods, you must timely submit your notice of
revocation or your new proxy card to Dura or Excel, as the case may be.
Third, you can attend the Dura Special Meeting or the Excel Special Meeting
and vote in person. Simply attending a meeting, however, will not revoke
your proxy. If you have instructed a broker to vote your shares, you must
follow directions received from your broker to change your vote.
Q: CAN I CHANGE OR REVOKE MY ELECTION ONCE I HAVE MAILED MY SIGNED FORM OF
ELECTION?
A. You can change or revoke your election prior to the election deadline. In
the event you revoke your Form of Election prior to the election deadline,
Dura will, or will cause its exchange agent to, cause the certificates
representing the shares of Excel Common Stock covered by your Form of
Election to be promptly returned to you without charge upon your written
request.
Q: IF I AM AN EXCEL SHAREHOLDER, SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: Yes. The Form of Election and Letter of Transmittal enclosed contain
instructions informing you how to send in your stock certificates to Dura's
exchange agent.
1
<PAGE>
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working towards completing the merger as soon as possible. For the
merger to occur, it must be approved by both the Dura stockholders and the
Excel shareholders. If both the Dura stockholders and Excel shareholders
approve the merger, we expect to complete the merger on or about March 23,
1999.
Q: WHAT ARE THE TAX CONSIDERATIONS OF THE MERGER?
A: Neither Dura nor Excel will recognize gain or loss as a result of the
merger. Excel shareholders who receive only Dura Class A Common Stock in the
merger will not recognize gain or loss as a result of the merger (other than
with respect to cash received in lieu of any fractional shares). Excel
shareholders who receive cash in the merger will recognize gain, if any, but
not in excess of the amount of cash received in the merger. To review the
tax considerations of the merger in greater detail, see "Certain Federal
Income Tax Consequences of the Merger."
WHO CAN HELP ANSWER MY OTHER QUESTIONS?
If you have more questions about the merger, you should contact the solicitation
agent:
GEORGESON & CO.
Wall Street Plaza
New York, New York 10005
Call Collect (212) 440-9800
Call Toll Free (800) 223-2064
Banks and Brokers Call (212) 440-9800
2
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS JOINT PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND THE MERGER FULLY, YOU SHOULD READ CAREFULLY THIS
ENTIRE JOINT PROXY STATEMENT/PROSPECTUS AND THE DOCUMENTS TO WHICH WE HAVE
REFERRED YOU. SEE "WHERE YOU CAN FIND INFORMATION." UNLESS THE CONTEXT REQUIRES
OTHERWISE, WE USE THE TERMS "DURA" OR "COMPANY" TO REFER TO DURA AUTOMOTIVE
SYSTEMS, INC. AND ALL OF ITS SUBSIDIARIES AND "EXCEL" TO REFER TO EXCEL
INDUSTRIES, INC. AND ALL OF ITS SUBSIDIARIES.
GENERAL
Dura and Excel are parties to a merger agreement that would result in Excel
becoming a wholly owned subsidiary of Dura. The merger agreement must be
approved by both the Dura stockholders and the Excel shareholders in order for
the merger to be completed. This Joint Proxy Statement/Prospectus is being sent
to stockholders of both companies. It contains information about what the
shareholders of Excel would receive in the proposed merger and other information
that you should consider in determining how you wish to vote at the special
meetings that Dura and Excel will hold to consider and vote upon the merger.
THE COMPANIES
DURA AUTOMOTIVE SYSTEMS, INC.
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
TELEPHONE (612) 342-2311
Dura is a leading designer and manufacturer of driver control systems,
cable-related systems and engineered mechanical components for the global
automotive industry. Dura has manufacturing and product development facilities
located in the United States, Australia, Brazil, Canada, France, Germany,
Mexico, Spain and the United Kingdom and has strategic alliances in India and
Japan.
EXCEL INDUSTRIES, INC.
1120 NORTH MAIN STREET
ELKHART, INDIANA 46514
TELEPHONE (219) 264-2131
Excel is a technically innovative tier-one and tier-two supplier to the
automotive, heavy truck, recreational vehicle and bus industries with
manufacturing operations in North America, South America and Europe. It produces
window, door and seating systems, decorative trims, RV appliances and complex
injection molded parts. Excel has a global commitment to continuous improvement
of quality, cost and delivery of reliable components and systems.
Following completion of the merger, Excel will become a wholly owned
subsidiary of Dura.
REASONS FOR THE MERGER
The merger should provide Dura with an enhanced competitive position as one
of the leading suppliers of engineered mechanical components for the global
automotive industry. We believe that the merger should enable Dura:
- - to capitalize on industry trends toward consolidation and globalization which
favor full-service suppliers who are able to supply larger portions of a
vehicle on a global basis;
- - to increase customer penetration in the OEM market;
- - to increase profitability through cost savings, operational efficiencies,
economies of scale, stronger market position and other synergies; and
- - to acquire new and enhanced design technology to better serve its customers.
Excel believes its shareholders will benefit from the merger in the
following ways:
- - shareholder value will be maximized;
- - Excel shareholders who desire to continue their investment will have the
opportunity to do so under favorable terms;
- - the merger will capitalize on industry trends toward consolidation and
globalization which favor full-service suppliers who are able to supply larger
portions of a vehicle on a global basis; and
- - Dura has a record of achieving its performance goals in connection with the
integration of
3
<PAGE>
acquired companies which will be of assistance in integrating Excel's
operations.
THE SPECIAL MEETINGS
DURA SPECIAL MEETING
The Dura Special Meeting of Stockholders is scheduled to be held on March
23, 1999 at 9:00 a.m. (local time), at Dura's operating headquarters, 2791
Research Drive, Rochester Hills, Michigan. Stockholders of Dura will be asked to
consider and vote upon (1) a proposal to approve the issuance of shares of Dura
Class A Common Stock pursuant to a merger agreement under which Excel will
become a wholly owned subsidiary of Dura and (2) a proposal to approve and adopt
the Dura 1998 Stock Incentive Plan.
EXCEL SPECIAL MEETING
The Excel Special Meeting is scheduled to be held on March 23, 1999 at 9:00
a.m. (local time), at the executive offices of Excel, 1120 North Main Street,
Elkhart, Indiana. Shareholders of Excel will be asked to consider and vote upon
a proposal to approve and adopt a merger agreement under which Excel will become
a wholly owned subsidiary of Dura, with each share of Excel Common Stock being
converted into the right to receive, at the option of the holder of such stock,
EITHER: (1) 0.8 of a share of Dura Class A Common Stock OR (2) $25.50 in cash,
subject to proration to ensure that 50% of the Excel Common Stock is converted
into Dura Class A Common Stock and 50% of the Excel Common Stock is converted
into cash.
The following table sets forth the stock ownership percentages of Dura
Common Stock for stockholders who are affiliates and for stockholders who are
not affiliates of each of Dura and Excel both before and immediately after
completion of the merger:
<TABLE>
<CAPTION>
OWNERSHIP OF OWNERSHIP OF OWNERSHIP OF
DURA PRIOR TO EXCEL PRIOR DURA AFTER
THE MERGER TO THE MERGER THE MERGER
------------- ------------- -------------
<S> <C> <C> <C>
DURA:
Affiliates 27.2% -- 19.3%
Other Stockholders 72.8% -- 51.6%
EXCEL:
Affiliates -- 0.8% 0.2%
Other Stockholders -- 99.2% 28.9%
</TABLE>
BOARD RECOMMENDATIONS TO STOCKHOLDERS
DURA
The Dura Board of Directors has reviewed carefully the merger. It has
received an opinion from Robert W. Baird & Co. Incorporated as to the fairness,
from a financial point of view, to Dura of the merger consideration to be paid
by Dura. THE DURA BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF DURA AND ITS STOCKHOLDERS. THE DURA BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED THE TRANSACTION AND RECOMMENDS THAT DURA STOCKHOLDERS
APPROVE THE ISSUANCE OF SHARES OF DURA CLASS A COMMON STOCK IN THE MERGER.
EXCEL
The Excel Board of Directors has reviewed carefully the merger. It has
received an opinion from Morgan Stanley & Co. Incorporated as to the fairness,
from a financial point of view, of the merger consideration to the holders of
Excel Common Stock. THE EXCEL BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER
IS IN THE BEST INTERESTS OF EXCEL AND ITS SHAREHOLDERS. IT HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT EXCEL SHAREHOLDERS APPROVE THE
MERGER AGREEMENT.
Copies of the fairness opinions of Robert W. Baird & Co. Incorporated and
Morgan Stanley & Co. Incorporated are attached to this Joint Proxy
Statement/Prospectus as Appendices C and D, respectively. WE URGE YOU TO READ
THESE OPINIONS CAREFULLY.
REQUIRED VOTES
To complete the merger, the following stockholder approvals are required:
DURA STOCKHOLDERS
- - the approval of the issuance of the Dura Class A Common Stock under the merger
agreement by a majority of the votes entitled to be cast, with the holders of
Dura Class A Common Stock and Dura Class B Common Stock voting together as a
single class.
4
<PAGE>
EXCEL SHAREHOLDERS
- - the approval of the merger agreement by the holders of at least a majority of
the Excel Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
As of the record date for the Dura Special Meeting, the directors and
executive officers of Dura and their affiliates held shares representing an
aggregate of approximately 78% of the votes entitled to be cast with respect to
the issuance of shares of Dura Class A Common Stock in the merger and the
approval of the Dura 1998 Stock Incentive Plan. As of the record date for the
Excel Special Meeting, the directors and executive officers of Excel and their
affiliates held shares representing 0.8% of the Excel Common Stock. Each of the
directors and executive officers of Dura and Excel has advised the respective
companies that he or she plans to vote, or to direct the vote, of all shares of
Dura Common Stock or Excel Common Stock owned by him or her and entitled to vote
in favor of the issuance of Dura Class A Common Stock in the merger and the
adoption of the 1998 Stock Incentive Plan, in the case of Dura, and in favor of
the merger, in the case of Excel.
FORM OF MERGER CONSIDERATION; ELECTION PROCEDURES FOR EXCEL SHAREHOLDERS
If you are an Excel shareholder, you are entitled to receive, for each share
of Excel Common Stock you hold, at your option, EITHER: (1) 0.8 of a share of
Dura Class A Common Stock, OR (2) $25.50 in cash, subject to proration to ensure
that 50% of the Excel Common Stock is exchanged for Dura Class A Common Stock
and 50% of the Excel Common Stock is exchanged for cash. All elections must be
made on the enclosed Form of Election and Letter of Transmittal. You must return
your Form of Election and Letter of Transmittal for receipt by the exchange
agent no later than 5:00 p.m. (Eastern time) on March 22, 1999, the last
business day prior to the Excel Special Meeting. If you do not return your Form
of Election and Letter of Transmittal you will be deemed to have expressed no
preference as to the receipt of Dura Class A Common Stock or cash in the merger.
Please see "The Merger Agreement-- Elections" and "--Election Procedure" for a
more detailed description of the election procedures and method of proration.
DISSENTERS' RIGHTS
Dissenters' rights are not available to Dura stockholders or to Excel
shareholders.
EXCHANGE OF STOCK CERTIFICATES
Excel shareholders should send their stock certificates with their Form of
Election and Letter of Transmittal to Dura's exchange agent. Firstar Bank
Milwaukee, N.A. is acting as exchange agent with respect to the merger and is
referred to herein as the "Exchange Agent."
CONDITIONS TO THE MERGER
We are working towards completing the proposed merger as soon as possible.
We currently expect to complete the merger on or about March 23, 1999. However,
there are several conditions to the merger that must be satisfied (or waived)
before the merger can be completed. In the event that any of these conditions is
not satisfied, the merger may not occur.
In particular, we will not waive the condition that the merger receive, and
will not complete the merger without having obtained, the necessary approvals of
both the Dura stockholders and the Excel shareholders.
Completion of the merger is also conditioned upon satisfaction or waiver of
certain other conditions to closing. These conditions include, among others, the
following:
- - the Commission having declared the registration statement effective for the
Dura Class A Common Stock to be issued as merger consideration and Nasdaq
having approved the listing of these shares on the Nasdaq National Market; and
- - Dura having obtained the financing necessary to complete the merger. Dura is
obligated to use its best efforts to obtain such financing subject to a
maximum cost.
If either Dura or Excel waives a material condition to the merger, it will
then consider resoliciting your approval of the merger. Whether the Boards of
Directors of Dura and Excel decide to resolicit proxies from you will depend
upon
5
<PAGE>
whether a stockholder could reasonably be expected to want to know, before
signing a proxy, that the condition has been waived.
TERMINATION OF MERGER AGREEMENT
The merger agreement may be terminated by either Dura or Excel under certain
circumstances, including:
- - if the other party fails to comply in any material respect with any of the
covenants or agreements contained in the merger agreement and such failure is
not cured within five business days after receipt of notice;
- - if the merger has not been consummated by July 31, 1999;
- - if the Excel shareholders do not approve the merger agreement or if the Dura
stockholders do not approve the issuance of the Dura Class A Common Stock
under the merger agreement; or
- - if the other party's board of directors has withdrawn, modified or changed its
approval or recommendation as to the merger or the issuance of Dura Class A
Common Stock.
In addition, Excel may terminate the merger agreement if (1) the closing
price of the Dura Class A Common Stock on the Nasdaq National Market is less
than $24.00 per share on each trading day in any period of five or more
consecutive trading days (the "Measurement Period") beginning on January 27,
1999, (2) the closing price of the S&P 400 MidCap Index on the last day of the
Measurement Period has not decreased by 20% or more from its closing price on
January 19, 1999 (385.65), (3) the average of the closing prices on the last day
of the Measurement Period of the companies included in Dura's industry peer
group set forth in Dura's 1998 proxy statement has not decreased by 20% or more
from the average closing price of such peer group on January 19, 1999 ($29.060),
and (4) Excel provides Dura notice of intention to terminate within 5 trading
days after the last day of the Measurement Period.
If Excel has the right to terminate the merger agreement under this
provision and elects not to do so, it will then consider resoliciting your
approval of the merger. In considering whether to resolicit your approval, the
Excel Board will take into account, consistent with its fiduciary duties, all
relevant facts and circumstances that exist at such time, including, without
limitation, the advice of its financial adviser and legal counsel. Shareholder
approval of the merger agreement shall be deemed to confer upon the Excel Board
the power, consistent with its fiduciary duties, to elect to consummate the
merger notwithstanding Excel's right to terminate the merger agreement pursuant
to this provision.
TERMINATION FEES. Dura or Excel would be liable to the other for
termination fees in the following circumstances:
- - The merger agreement provides that Excel will pay a fee of $12.5 million
("Termination Fee"), plus reasonable expenses of up to $500,000 ("Expenses"),
to Dura if the merger agreement is terminated under certain circumstances
relating to competing offers for Excel before the merger is effected. The
merger agreement also provides that Dura will pay a Termination Fee plus
Expenses to Excel if the merger agreement is terminated under certain
circumstances relating to the recommendation of the merger by the Dura Board
of Directors, or another business combination involving Dura.
- - Excel is obligated to pay Expenses to Dura in the event the merger agreement
is terminated (a) either (i) because the Merger is not consummated by July 31,
1999 or (ii) the requisite stockholder approvals are not obtained AND (b)
Excel receives a competing proposal before the termination. If within 18
months of the termination, Excel is involved in a "Takeover," generally, a
transaction in which 20% or more of the company's shares or assets are sold,
then Excel must pay to Dura the full Termination Fee.
- - Dura is obligated to pay Expenses to Excel in the event the merger agreement
is terminated (a) either (i) because the merger is not consummated by July 31,
1999 or (ii) the requisite stockholder approvals are not obtained AND (iii)
Dura receives a competing proposal before the termination, or (c) Dura cannot
obtain acceptable financing. If within 18 months of the termination, Dura is
involved in a Takeover, then Dura must pay to Excel the full Termination Fee.
6
<PAGE>
CONFLICTS OF INTEREST OF BOARDS AND MANAGEMENT
DURA. Certain directors and/or executives of Dura are executives and/or
partners of Hidden Creek Industries, a private industrial management company,
which will receive a fee of $2.0 million for services rendered to Dura in
connection with the merger.
EXCEL. Certain Excel executives will receive an aggregate of 54,400 shares
of Dura Class A Common Stock in exchange for entering into certain non-compete
agreements with Excel. Also, certain Excel executives are parties to executive
separation agreements with Excel. The separation agreements provide for
severance payments to and certain other benefits for the executives, if the
executive's employment is terminated by Excel or its successor within two years
after a change in control of Excel. In addition, all of the outstanding options
held by directors and executive officers of Excel will be converted into options
exercisable exclusively for shares of Dura Class A Common Stock.
FEDERAL INCOME TAX CONSIDERATIONS
Dura and Excel intend that the merger be treated for federal income tax
purposes as a reorganization pursuant to Section 368(a) of the Internal Revenue
Code of 1986, as amended, and the obligation of Dura and Excel to consummate the
merger is conditioned on the receipt of opinions of their respective legal
counsel to the effect that the merger will be treated as such.
Assuming that the merger constitutes such a reorganization, neither Dura nor
Excel will recognize any gain or loss as a result of the merger. In addition,
holders of shares of Excel Common Stock who exchange their shares of Excel
Common Stock for shares of Dura Class A Common Stock will not (other than with
respect to the receipt of cash, if any, in lieu of fractional shares) recognize
gain or loss in the merger, and holders of Excel Common Stock who exchange their
Excel Common Stock for cash or for Dura Class A Common Stock and cash will
recognize gain, if any, but not in excess of the amount of cash received, which
may or may not qualify for capital gains treatment.
WE URGE EXCEL SHAREHOLDERS TO CONSULT WITH A TAX ADVISOR FOR A FULL
UNDERSTANDING OF THE TAX CONSEQUENCES TO THEM OF THE PROPOSED MERGER. CERTAIN
SHAREHOLDERS MAY BE SUBJECT TO SPECIAL TREATMENT UNDER FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS THAT IS NOT EXPLAINED IN THIS JOINT PROXY STATEMENT/
PROSPECTUS.
ACCOUNTING TREATMENT
The merger will be accounted for under the "purchase" method of accounting
in accordance with generally accepted accounting principles. Therefore, the
aggregate consideration paid by Dura in connection with the merger will be
allocated to Excel's assets and liabilities based on their fair market values,
with any excess being treated as goodwill.
COMPARISON OF STOCKHOLDERS' RIGHTS
Dura and Excel are incorporated in different states having differing
corporation laws. In addition, the governing documents of the two companies
vary. As a result, the rights, protections and duties that Excel shareholders
have as shareholders of Excel will be different from those that they will have
if they receive shares of Dura Class A Common Stock. For a complete description
of some of these differences, see "Comparison of Certain Rights of Dura
Stockholders and Excel Shareholders."
LISTING OF COMMON STOCK RECEIVED
Shares of Dura Class A Common Stock issued to Excel shareholders will be
listed on the Nasdaq National Market under the symbol "DRRA."
APPROVAL OF THE DURA 1998 STOCK INCENTIVE PLAN
In addition to voting to approve the issuance of Dura Class A Common Stock
under the merger agreement, Dura stockholders are being asked to consider and
vote upon a proposal to approve and adopt Dura's 1998 Stock Incentive Plan. For
a description of this proposal and the 1998 Stock Incentive Plan, see "Approval
of Dura 1998 Stock Incentive Plan."
7
<PAGE>
RECENT DEVELOPMENTS
On January 26, 1999, Dura announced an offer to acquire all of the
outstanding common stock of Adwest Automotive plc ("Adwest"), a leading European
designer and manufacturer of driver control and engine control mechanisms. The
offer of L1.50 per share (approximately $2.48 per share) has been recommended by
the directors of Adwest and is subject to acceptance by at least 90% of Adwest's
shareholders. In the event all shares are ultimately tendered, the total
consideration would be approximately $210 million. In addition, approximately
$120 million of indebtedness will be assumed as part of the acquisition.
Although Dura believes the acquisition of Adwest will be completed, the
completion of the acquisition is subject to certain conditions, including, among
others, that at least 90% of the Adwest shareholders vote to accept the offer.
The transaction is expected to close by the end of the first quarter. Dura has
included in this Joint Proxy Statement/Prospectus the audited financial
statements of Adwest for the three years ended June 30, 1998 and has prepared
unaudited pro forma financial information giving effect to the Adwest
acquisition. See "Unaudited Pro Forma Financial Statements."
8
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
We are providing the following historical financial information to aid you
in your analysis of the financial aspects of the proposed merger. We derived
this information from audited financial statements for 1993 through 1997 and
unaudited financial statements for the nine months ended September 30, 1997 and
1998 in the case of Dura and for the nine months ended September 27, 1997 and
September 26, 1998 in the case of Excel. The results of operations for the nine
months ended September 30, 1998 for Dura and for the nine months ended September
26, 1998 for Excel are not necessarily indicative of the results that may be
expected by the companies for the entire year.
This information is only a summary and you should read it in conjunction
with the historical financial statements and related notes which have been filed
with the Commission. See "Where You Can Find Information."
DURA AUTOMOTIVE SYSTEMS, INC.
SELECTED HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1993 1994(1) 1995(2) 1996(3) 1997(4) 1997(4) 1998(5)
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................. $ 129,328 $ 189,675 $ 253,726 $ 245,329 $ 449,111 $ 324,579 $ 498,383
Cost of sales............................ 116,611 170,625 219,559 207,810 375,086 273,309 413,230
--------- --------- --------- --------- --------- --------- ---------
Gross profit........................... 12,717 19,050 34,167 37,519 74,025 51,270 85,153
Selling, general and administrative
expenses............................... 8,643 10,485 15,513 17,157 32,815 22,972 33,986
Amortization expense..................... 487 690 1,094 1,036 3,600 2,806 6,724
--------- --------- --------- --------- --------- --------- ---------
Operating income....................... 3,587 7,875 17,560 19,326 37,610 25,492 44,443
Interest expense, net.................... 1,533 3,473 4,822 2,589 9,298 6,152 14,185
Other income (2)......................... -- -- (4,240) -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Income before provision for income
taxes and minority interest.......... 2,054 4,402 16,978 16,737 28,312 19,340 30,258
Provision for income taxes............... 936 1,822 6,852 6,609 11,670 8,039 12,591
Minority interest (6).................... -- -- -- -- -- -- 1,297
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary item....... $ 1,118 $ 2,580 $ 10,126 $ 10,128 $ 16,642 $ 11,301 $ 16,370
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Basic earnings per share (7)............. $ 0.41 $ 0.75 $ 2.04 $ 1.57 $ 1.89 $ 1.28 $ 1.61
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Diluted earnings per share (7)........... $ 0.41 $ 0.75 $ 2.03 $ 1.57 $ 1.88 $ 1.27 $ 1.58
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.......................... $ 3,287 $ 18,631 $ 13,701 $ 27,528 $ 50,304 $ 48,617 $ 68,226
Total assets............................. 52,823 166,133 140,531 246,129 419,264 394,987 900,456
Total debt............................... 16,792 70,112 46,639 77,376 178,081 175,423 321,677
Total stockholders' investment........... 4,369 17,418 27,683 87,367 101,708 96,809 226,672
</TABLE>
- ------------------------------
(1) In August 1994, Dura acquired the automotive parking brake and cable
business and light duty cable business of Alkin Co. The results of
operations of this acquired business have been included in the consolidated
financial statements of Dura from August 31, 1994, the date of acquisition.
(2) In April 1995, Dura sold the net assets of its window regulator business to
Rockwell International Corporation ("Rockwell"), realizing a pretax gain of
approximately $4.2 million. The results of operations of the window
regulator business have been included in the consolidated financial
statements of Dura through April 2, 1995, the date of divestiture.
(3) Includes the results of operations of (i) the parking brake business from
Rockwell from October 1, 1996 and (ii) KPI Automotive Group from December 5,
1996, their respective dates of acquisition. Dura issued an aggregate of
3,795,000 shares of its Class A Common Stock in August 1996 in connection
with its initial public offering.
(4) Includes the results of operations of (i) the VOFA Group from January 1,
1997, (ii) the parking brake business of Excel from May 5, 1997, (iii) GT
Automotive Systems, Inc. ("GT Automotive") from August 29, 1997, and (iv)
REOM Industries (Aust) Pty Ltd. from December 12, 1997, which represent
their respective dates of acquisition.
(5) Includes the results of operations of (i) Universal Tool & Stamping Co.,
Inc. ("Universal") from March 8, 1998, (ii) Trident Automotive plc
("Trident") from April 30, 1998 and (iii) the hinge business of Tower
Automotive, Inc. (the "Hinge Business") from September 8, 1998, which
represent their respective dates of acquisition.
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<PAGE>
(6) Represents dividends, net of income taxes, on the 7 1/2% Convertible Trust
Preferred Securities (the "Trust Preferred Securities") issued by the Dura
Automotive Systems Capital Trust.
(7) Basic earnings per share were computed by dividing net income by the
weighted average number of shares of Class A Common Stock and Class B Common
Stock outstanding during the year. Diluted earnings per share include the
dilutive effects of outstanding stock options using the treasury stock
method and the Trust Preferred Securities.
10
<PAGE>
EXCEL INDUSTRIES, INC.
SELECTED HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
-------------------------------------------------------------------- -------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, DECEMBER 28, DECEMBER 27, SEPTEMBER 27,
1993 1994 1995 1996(1) 1997 1997
------------ ------------ ------------ ------------ ------------ -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................ $ 515,681 $ 607,183 $ 596,014 $ 887,741 $ 962,333 $ 729,238
Cost of goods sold................... 463,943 545,817 540,716 783,375 846,990 639,482
------------ ------------ ------------ ------------ ------------ -------------
Gross profit....................... 51,738 61,366 55,298 104,366 115,343 89,756
Selling, general and engineering
expenses........................... 30,054 32,723 32,973 65,652 79,267 58,585
Disposal of Canadian facility........ -- -- (1,582) -- -- --
------------ ------------ ------------ ------------ ------------ -------------
Operating income................... 21,684 28,643 23,907 38,714 36,076 31,171
Interest expense..................... 3,474 3,406 3,322 9,784 10,984 8,476
Other income, net.................... (2,015) (2,145) (3,805) (1,736) (1,930) (1,407)
------------ ------------ ------------ ------------ ------------ -------------
Income before provision for income
taxes and minority interest...... 20,225 27,382 24,390 30,666 27,022 24,102
Provision for income taxes........... 7,785 10,131 8,125 11,550 9,458 8,436
Minority interest.................... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ -------------
Net income......................... $ 12,440 $ 17,251 $ 16,265 $ 19,116 $ 17,564 $ 15,666
------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------ ------------ ------------ -------------
Basic earnings per share............. $ 1.23 $ 1.60 $ 1.52 $ 1.79 $ 1.59 $ 1.46
------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------ ------------ ------------ -------------
Diluted earnings per share........... $ 1.15 $ 1.46 $ 1.41 $ 1.62 $ 1.48 $ 1.33
------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------ ------------ ------------ -------------
Cash dividends per share............. $ 0.30 $ 0.37 $ 0.44 $ 0.455 $ 0.50 $ 0.375
------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------ ------------ ------------ -------------
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital...................... $ 94,761 $ 96,145 $ 91,453 $ 114,140 $ 116,550 $ 104,060
Total assets......................... 229,316 254,630 269,518 443,234 457,797 465,143
Long-term debt (less current
portion)........................... 35,094 33,578 24,021 123,452 105,943 106,926
Shareholders' equity................. 106,436 122,643 134,317 150,725 185,315 162,610
<CAPTION>
SEPTEMBER 26,
1998(2)
-------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................ $ 758,462
Cost of goods sold................... 681,584
-------------
Gross profit....................... 76,878
Selling, general and engineering
expenses........................... 56,157
Disposal of Canadian facility........ --
-------------
Operating income................... 20,721
Interest expense..................... 8,127
Other income, net.................... (1,521)
-------------
Income before provision for income
taxes and minority interest...... 14,115
Provision for income taxes........... 1,304
Minority interest.................... 87
-------------
Net income......................... $ 12,724
-------------
-------------
Basic earnings per share............. $ 1.02
-------------
-------------
Diluted earnings per share........... $ 1.01
-------------
-------------
Cash dividends per share............. $ 0.375
-------------
-------------
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital...................... $ 113,430
Total assets......................... 606,835
Long-term debt (less current
portion)........................... 153,673
Shareholders' equity................. 192,353
</TABLE>
- ------------------------------
(1) On April 3, 1996, Excel acquired Anderson Industries, Inc., whose primary
asset was Atwood Industries, Inc. ("Atwood"). The results of operations of
Atwood have been included in the consolidated financial statements of Excel
from April 3, 1996.
(2) Excel acquired, effective July 1, 1998, 70% of Schade GmbH & Co. KG
("Schade"), located in Plettenberg, Germany. The results of operations of
Schade have been included in the consolidated financial statements of Excel
since the date of acquisition.
11
<PAGE>
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
We expect that the merger with Excel and the acquisition of Adwest will be
accounted for as purchase transactions, which means that for accounting and
financial reporting purposes we will allocate the total purchase price for each
company to the fair value of the assets acquired and the liabilities assumed.
Any excess of the purchase price over the fair value of the net tangible assets
of Excel and Adwest, as the case may be, will be recorded as goodwill and other
intangible assets.
The following presents selected unaudited pro forma financial information of
Dura that reflects the purchase method of accounting and is intended to give you
a better picture of what our business might have looked like had the acquisition
of Excel, on the one hand, and the acquisition of both Excel and Adwest, on the
other hand, been completed at the beginning of the earliest period presented.
We prepared the unaudited pro forma income statements and balance sheet by
making the purchase accounting adjustments described above and adding or
combining the historical amounts of Dura to such adjusted amounts for Excel and
Adwest. We then adjusted the combined amounts to give effect to the increased
borrowings by Dura necessary to finance such acquisitions and to refinance each
of the companies' debt. Additionally, the unaudited pro forma income statements
give effect to the previous acquisitions by Dura of GT Automotive (only for the
year ended December 31, 1997), Universal, Trident, the Hinge Business and the
March 1998 sale of the Trust Preferred Securities and the June 1998 sale of
3,500,000 shares of Dura Class A Common Stock (the "June 1998 Offering") as if
all of these transactions had occurred on January 1, 1997.
We have calculated weighted average common shares using an exchange ratio of
0.8 shares of Dura Class A Common Stock for each issued and outstanding share of
Excel Common Stock.
The companies may have performed differently if they had actually been
combined during the periods presented. You should not rely on the unaudited pro
forma information as being indicative of either the historical results that
would have been achieved or the future results that we will experience after the
transactions are completed. It is also important that you read the "Unaudited
Pro Forma Financial Statements" that we have included in this Joint Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
------------------------ ------------------------
PRO FORMA PRO FORMA
PRO FORMA FOR EXCEL PRO FORMA FOR EXCEL
FOR EXCEL AND ADWEST FOR EXCEL AND ADWEST
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................................... $ 2,097,178 $ 2,474,299 $ 1,537,006 $ 1,739,957
Cost of sales................................................. 1,803,419 2,113,207 1,329,195 1,503,883
----------- ----------- ----------- -----------
Gross profit................................................ 293,759 361,092 207,811 236,074
Selling, general and administrative expenses.................. 159,481 191,956 113,520 124,369
Amortization expense.......................................... 19,164 24,388 14,315 16,927
----------- ----------- ----------- -----------
Operating income............................................ 115,114 144,748 79,976 94,778
Interest expense.............................................. 46,230 70,090 36,406 48,336
Other income, net............................................. (882) (882) (1,152) (1,152)
----------- ----------- ----------- -----------
Income before provision for income taxes and minority
interest.................................................. 69,766 75,540 44,722 47,594
Provision for income taxes.................................... 28,258 32,107 18,112 20,032
Minority interest--trust preferred securities................. 2,486 2,486 1,919 1,919
Minority interest............................................. 1,617 2,511 1,168 1,595
----------- ----------- ----------- -----------
Net income.................................................. $ 37,405 $ 38,436 $ 23,523 $ 24,048
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Basic earnings per share...................................... $ 2.15 $ 2.21 $ 1.35 $ 1.38
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted earnings per share.................................... $ 2.13 $ 2.18 $ 1.35 $ 1.38
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1998
--------------------------
PRO FORMA
PRO FORMA FOR EXCEL
FOR EXCEL AND ADWEST
------------ ------------
<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....................................................................... $ 200,264 $ 213,507
Total assets.......................................................................... 1,655,304 2,116,913
Total debt............................................................................ 677,708 995,844
Total stockholders' investment........................................................ 394,176 394,176
</TABLE>
COMPARATIVE PER SHARE DATA
We have summarized below certain per share information for Dura and Excel on
a historical, pro forma combined and equivalent pro forma combined basis. The
Excel per share equivalents are calculated by multiplying the Dura amounts by
the exchange ratio of 0.8.
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- -------------------
<S> <C> <C>
DURA:
Historical per common share:
Income from continuing operations (1).................................. $ 1.88 $ 1.58
Dividends paid......................................................... -- --
Book value (2)......................................................... 11.54 18.36
Pro forma combined per common share (3):
Income from continuing operations...................................... $ 2.13 $ 1.35
Dividends paid......................................................... -- --
Book value............................................................. 21.65 22.63
EXCEL:
Historical per common share:
Income from continuing operations (1).................................. $ 1.48 $ 1.01
Dividends paid......................................................... 0.50 0.375
Book value (2)......................................................... 14.93 15.68
Equivalent pro forma combined per common share (4):
Income from continuing operations...................................... $ 1.70 $ 1.08
Dividends.............................................................. -- --
Book value............................................................. 17.32 18.10
</TABLE>
- ------------------------
(1) Historical income from continuing operations per common share for Dura and
Excel represents diluted earnings per share before extraordinary items.
(2) Historical book value per share information for Dura and Excel is computed
by dividing historical stockholders' investment by the number of shares
outstanding at the end of each period presented, excluding common stock
equivalents.
(3) Pro forma combined data per common share were computed giving effect to the
transactions described in "Unaudited Pro Forma Financial Statements Giving
Effect to the Excel Merger."
(4) Calculated by multiplying Dura pro forma combined data by the exchange ratio
of 0.8.
13
<PAGE>
COMPARATIVE MARKET PRICES AND DIVIDENDS
Dura Class A Common Stock is traded on the Nasdaq National Market under the
symbol "DRRA." The Dura Class A Common Stock commenced trading on August 14,
1996. Prior thereto, there was no public market for the Dura Class A Common
Stock. Excel Common Stock is traded on the New York Stock Exchange under the
symbol "EXC." The following table sets forth the high and low closing sales
prices per share of such securities as reported on the Nasdaq National Market
and the New York Stock Exchange, as applicable, based on published financial
sources, for the periods indicated.
<TABLE>
<CAPTION>
DURA CLASS A COMMON STOCK EXCEL COMMON STOCK
--------------------------------- ---------------------------------
DIVIDENDS DIVIDENDS
DECLARED DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
--------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
1996:
First Quarter............................... $ -- $ -- $ -- $ 14.000 $ 11.000 $ .110
Second Quarter.............................. -- -- -- 16.000 10.875 .110
Third Quarter............................... 19.750 17.000 -- 17.000 13.500 .110
Fourth Quarter.............................. 27.750 18.750 -- 16.750 14.375 .125
1997:
First Quarter............................... 27.000 23.125 -- 20.375 15.125 .125
Second Quarter.............................. 28.750 22.500 -- 20.250 17.125 .125
Third Quarter............................... 33.375 27.000 -- 25.500 18.250 .125
Fourth Quarter.............................. 35.375 23.875 -- 19.938 17.500 .125
1998:
First Quarter............................... 32.500 24.375 -- 20.625 17.250 .125
Second Quarter.............................. 40.250 30.375 -- 22.625 14.313 .125
Third Quarter............................... 34.313 20.000 -- 14.750 12.500 .125
Fourth Quarter.............................. 34.125 20.625 -- 18.125 11.750 .125
1999:
First Quarter (through February 16, 1999)... 33.563 30.25 -- 25.000 17.313 --
</TABLE>
Set forth below are the last reported sale prices of Dura Class A Common
Stock and Excel Common Stock on November 17, 1998 (the last trading day prior to
Excel's announcement that it had engaged Morgan Stanley & Co. Incorporated to
assist Excel in exploring strategic alternatives), January 15, 1999 (the last
trading day prior to the execution of the merger agreement) and on February 16,
1999 (the most recent practicable date prior to the date of this Joint Proxy
Statement/Prospectus), as well as the equivalent pro forma sale prices of Excel
Common Stock on such dates, as determined by multiplying the Dura Class A Common
Stock price by the exchange ratio of 0.8.
<TABLE>
<CAPTION>
DURA CLASS A EXCEL EXCEL
COMMON STOCK COMMON STOCK EQUIVALENT
-------------- -------------- -----------
<S> <C> <C> <C>
November 17, 1998..................................................... $ 28.000 $ 14.688 $ 22.400
January 15, 1999...................................................... 33.563 20.875 26.850
February 16, 1999..................................................... 30.250 24.000 24.200
</TABLE>
YOU ARE URGED TO OBTAIN CURRENT MARKET INFORMATION FOR DURA CLASS A COMMON
STOCK AND EXCEL COMMON STOCK. WE CAN GIVE NO ASSURANCE AS TO THE MARKET PRICES
OF DURA CLASS A COMMON STOCK OR EXCEL COMMON STOCK AT THE MERGER DATE. THERE IS
NO MINIMUM OR MAXIMUM INITIAL VALUE FOR THE CONSIDERATION TO BE RECEIVED BY
THOSE EXCEL SHAREHOLDERS WHO RECEIVE DURA CLASS A COMMON STOCK IN THE MERGER.
SEE "RISK FACTORS--FLUCTUATION IN THE VALUE OF THE EXCEL MERGER CONSIDERATION"
AND "--POSSIBLE VOLATILITY OF STOCK PRICE OF DURA CLASS A COMMON STOCK."
14
<PAGE>
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document (including information we have incorporated into this document
by reference) contains forward-looking statements that are subject to risks and
uncertainties. You should not place undue reliance on those statements because
they only speak as of the date of this document. Forward-looking statements
include information concerning possible or assumed future results of operations
of Dura and Excel, including forecasts, projections and descriptions of expected
cost savings or other anticipated synergies related to the merger. These
statements often include words such as "believe," "expect," "anticipate,"
"intend," "plan," "estimate," or similar expressions. These statements are based
on certain assumptions that the companies have made in light of their experience
in the industry as well as their perceptions of historical trends, current
conditions, expected future developments and other factors they believe are
appropriate in the circumstances. As you read and consider this document, you
should understand that these statements are not guarantees of performance or
results. They involve risks, uncertainties and assumptions. Although each of the
companies believes that its forward-looking statements are based on reasonable
assumptions, you should be aware that many factors could affect the actual
financial results or results of operations of Dura and Excel and could cause
actual results to differ materially from those in the forward-looking
statements. These factors include:
- the merger not being completed;
- expected synergies, economies of scale and cost savings from the merger
not being fully realized or realized within the expected time frames;
- unanticipated difficulties servicing the substantially higher level of
indebtedness of Dura after the merger is completed;
- costs or operational difficulties related to integrating the operations of
Excel with those of Dura being greater than expected:
- unanticipated increases in financing and financing-related costs;
- general economic or business conditions affecting the automotive industry
(which is dependent on consumer spending), either nationally or
regionally, being less favorable than expected;
- the inability of Dura to accomplish its strategic objectives for external
expansion;
- the failure of Dura to complete the Adwest acquisition;
- regulatory authorities making adverse determinations regarding the merger
or the acquisition of Adwest; and
- implementation of or changes in the laws, regulations or policies
governing the automotive industry that could negatively affect the
automotive components supply industry.
All future written and oral forward-looking statements by the companies or
persons acting on their behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to above. Except for their ongoing
obligations to disclose material information as required by the federal
securities laws, neither Dura nor Excel has any obligation or intention to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances in the future or to reflect the occurrence of
unanticipated events. YOU SHOULD ALSO READ CAREFULLY THE FACTORS DESCRIBED IN
THE "RISK FACTORS" SECTION OF THIS DOCUMENT.
15
<PAGE>
RISK FACTORS
YOU SHOULD READ AND CONSIDER CAREFULLY EACH OF THE FOLLOWING FACTORS, AS
WELL AS THE OTHER INFORMATION CONTAINED IN, ATTACHED TO OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT, BEFORE YOU VOTE ON THE MERGER. CERTAIN OF THE
FOLLOWING FACTORS RELATE SPECIFICALLY TO THE MERGER THAT WE ARE PROPOSING FOR
YOUR CONSIDERATION. OTHERS ARE FACTORS MORE GENERALLY ASSOCIATED WITH THE
BUSINESSES OF DURA AND EXCEL.
RISK FACTORS RELATING TO THE MERGER
EXCEL SHAREHOLDERS WHO RECEIVE DURA CLASS A COMMON STOCK IN THE MERGER ARE NOT
ASSURED OF A FIXED VALUE FOR THEIR EXCEL COMMON STOCK
Excel shareholders who receive shares of Dura Class A Common Stock in the
merger are not assured of receiving consideration having a set market value or a
minimum market value. If the merger is completed, each share of Excel Common
Stock will be converted into either (1) 0.8 of a share of Dura Class A Common
Stock or (2) $25.50 in cash. No adjustment will be made to the number of shares
of Dura Class A Common Stock to be received by Excel shareholders in the event
of any increase or decrease in the market price of Excel Common Stock or Dura
Class A Common Stock. The market prices of Excel Common Stock and Dura Class A
Common Stock when the merger takes place may vary from their prices at the date
of this Joint Proxy Statement/Prospectus and from their prices at the time their
respective stockholders vote on the proposals relating to the merger. On January
15, 1999 (the last trading day prior to the execution of the merger agreement),
the closing market prices of Dura Class A Common Stock and Excel Common Stock
were $33.563 and $20.875, respectively; on February 16, 1999 (the most recent
practicable date prior to the printing of this Joint Proxy
Statement/Prospectus), the closing market prices of Dura Class A Common Stock
and Excel Common Stock were $30.250 and $24.000, respectively. During the twelve
month period ending on January 15, 1999, the closing market price of Dura Class
A Common Stock varied from a low of $20.000 to a high of $40.250 and the closing
market price of Excel Common Stock varied from a low of $11.750 to a high of
$22.625. Changes in such market prices may result from, among other things:
- changes in market perceptions of the synergies and cost savings expected
to result from the merger;
- changes in the business, operations or prospects of Dura or Excel;
- changes in the laws and regulations affecting the automotive industry; and
- changes in general market and economic conditions.
As a result, at the time of the Special Meetings, you will not know the
exact market value of the Dura Class A Common Stock that Excel shareholders will
receive when the merger is completed. In addition, the market value of such
stock may be volatile for the reasons described below under "--Possible
Volatility of Dura's Stock Price After the Merger."
POSSIBLE VOLATILITY OF DURA'S STOCK PRICE AFTER THE MERGER
The trading price of Dura Class A Common Stock could be subject to wide
fluctuations in response to variations in Dura's quarterly operating results,
changes in earnings estimates by analysts, the failure of Dura to meet analysts'
quarterly earnings estimates, conditions in the automotive industry, the outlook
for the automotive industry as a whole or general market or economic conditions.
In addition, in recent years, the stock market has experienced extreme price and
volume fluctuations. These fluctuations have had a substantial effect on the
market prices for many emerging growth companies, often unrelated to the
operating performance of the specific companies. Such market fluctuations could
have a material adverse effect on the market price for Dura Class A Common
Stock.
16
<PAGE>
THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO AN EXCEL SHAREHOLDER
DEPENDS ON THE TYPE OF MERGER CONSIDERATION RECEIVED
As conditions to the merger, Dura must receive an opinion from its special
counsel, Kirkland & Ellis (a partnership including professional corporations),
and Excel must receive an opinion from its special counsel, Sommer & Barnard,
PC, that, subject to certain assumptions set forth herein, the merger will
qualify as a reorganization pursuant to Section 368(a) of the Code. Assuming
that the merger is a reorganization, (1) an Excel shareholder receiving solely
Dura Class A Common Stock in exchange for his or her Excel Common Stock will
recognize no gain or loss as a result of the merger (except with respect to the
receipt of cash, if any, in lieu of fractional shares), (2) an Excel shareholder
receiving all cash in exchange for his or her Excel Common Stock will recognize
gain or loss as a result of the merger and (3) an Excel shareholder receiving
cash and Dura Class A Common Stock in exchange for his or her Excel Common Stock
will recognize gain (but not loss) in the merger, but not in excess of the
amount of cash received by such shareholder.
Any gain recognized with respect to cash received by an Excel shareholder
may be taxed as a dividend if such shareholder does not qualify for "sale or
exchange" treatment under Section 302 of the Internal Revenue Code of 1986, as
amended, as such provision is applied under these circumstances. See "Certain
Federal Income Tax Consequences of the Merger," for a detailed discussion of the
application of these rules to an Excel shareholder. Under the proration
procedures described herein, an Excel shareholder may receive cash in the merger
even if such shareholder elects to receive solely stock, or may receive a
greater or lesser proportion of cash than such shareholder elects to receive,
and under some circumstances, any such cash received may be taxed as a dividend.
DURA'S ABILITY TO PROCURE FINANCING NECESSARY TO COMPLETE THE MERGER
Dura expects to enter into one or more credit agreements with Bank of
America National Trust and Savings Association ("Bank of America") and
NationsBanc Montgomery Securities LLC ("NationsBanc"), providing for loans to
Dura and it subsidiaries, a portion of which will be used to finance the cash
portion of the merger consideration to be paid to Excel shareholders and to pay
related fees and expenses of the merger. Dura's ability to obtain the necessary
financing for the merger will depend on the financial condition and results of
operations of Dura and Excel, the condition of the financial markets and factors
related to the automotive industry, which may affect the availability of credit
overall and the terms on which credit may be available. If any portion of the
financing expected by Dura from Bank of America and NationsBanc is unavailable
for any reason, Dura is obligated to use its best efforts to obtain alternative
debt financing from other commercially reasonable sources on pricing terms in
which the weighted average interest rate (including all applicable fees) with
respect to such alternative financing is not 40% greater than the weighted
average interest rate (including all applicable fees) of the expected financing,
and other non-pricing terms are not materially more restrictive than the
expected financing. If Dura is unable to procure financing on terms and
conditions that it believes are reasonable, Dura and Excel will not be able to
complete the merger.
YOU WILL HAVE A REDUCED OWNERSHIP AND VOTING INTEREST IN DURA AFTER THE MERGER
After completion of the merger you will own a significantly smaller
percentage of Dura than you currently own of Dura or Excel. Immediately
following completion of the merger, holders of Dura Common Stock and holders of
Excel Common Stock will hold approximately 70.9% and 29.1%, respectively, of the
outstanding shares of Dura Common Stock. In addition, because each share of Dura
Class B Common Stock is entitled to ten votes on all matters submitted to a vote
of stockholders, as compared to one vote for each share of Dura Class A Common
stock, these percentages correspond to 89.6% and 10.4%, respectively, of Dura's
outstanding voting power. As a result of the merger, the principal stockholders
of Excel will hold a significantly smaller percentage of the voting stock of
Dura than they own of Excel prior to the merger and, accordingly, may be able to
exercise less influence over the management
17
<PAGE>
and policies of Dura than they currently exercise with respect to Excel. The
following table sets forth the stock ownership percentages of Dura Common Stock
for stockholders who are affiliates and for stockholders who are not affiliates
of each of Dura and Excel both before and immediately after the merger, as well
as the percentage of the combined voting power of Dura that will be held by such
persons after the merger.
<TABLE>
<CAPTION>
PERCENT OF
OWNERSHIP OF DURA COMBINED VOTING
OWNERSHIP OF DURA OWNERSHIP OF EXCEL COMMON STOCK POWER AFTER THE
PRIOR TO THE MERGER PRIOR TO THE MERGER AFTER THE MERGER MERGER
------------------- ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
DURA:
Affiliates........................ 27.2% -- 19.3% 70.3%
Other Stockholders................ 72.8% -- 51.6% 19.0%
EXCEL:
Affiliates........................ -- 0.8% 0.2% 0.1%
Other Stockholders................ -- 99.2% 28.9% 10.6%
</TABLE>
For more information relating to the ownership of Dura Common Stock, see
"--Certain Stockholders Currently Control All Matters Affecting Dura."
DURA MAY EXPERIENCE DIFFICULTIES IN INTEGRATING EXCEL
Dura and Excel believe the merger will provide operating synergies and cost
savings that will increase stockholder value. There can be no assurance,
however, that such benefits will be realized, that the combination of Dura and
Excel will be successful, or that Dura will not experience difficulties in
integrating the operations of Excel with those of Dura. For example, the
integration of Excel will require the experience and expertise of certain key
managers of Excel who are expected to be retained by Dura. There can be no
assurance that the Excel managers retained by Dura will remain with Dura for the
time period necessary to successfully integrate Excel's operations with those of
Dura. Likewise, there can be no assurance that Dura will be successful in
integrating the operations of Adwest with those of Dura and Excel.
DURA MAY BE UNABLE TO REALIZE THE EXPECTED COST SAVINGS AND OTHER SYNERGIES FROM
THE MERGER
Even if Dura is able to integrate the operations of Excel successfully,
there can be no assurance that such integration will result in the realization
of the full benefits of the cost savings, synergies or revenue enhancements that
we currently expect to result from such integration or that such benefits will
be achieved within the time frame that we currently expect. The cost savings and
other synergies from the merger may be offset by costs incurred in integrating
Excel's operations or those of Adwest, as well as by increases in other
expenses, by operating losses or by problems in the business unrelated to the
merger.
DURA'S RAPID GROWTH MAY BE DIFFICULT TO MANAGE
Implementation of Dura's growth strategy may divert management's attention
from other aspects of Dura's business and place a strain on Dura's management,
operational and financial resources, and accounting controls. Continued growth
will require an increase in Dura personnel who possess the training and
experience necessary to operate Dura's facilities and systems. There can be no
assurance that Dura will be able to continue to attract, develop and retain the
personnel necessary to pursue its growth strategy.
DURA'S BUSINESS MAY BE ADVERSELY IMPACTED AS A RESULT OF ITS SUBSTANTIAL
LEVERAGE
Substantially all of the outstanding indebtedness of Dura and Excel is
expected to be refinanced. In connection with the refinancing, Dura expects to
enter into one or more credit agreements with Bank of America and NationsBanc, a
portion of which will be used to finance the cash portion of the merger
consideration to be paid to Excel shareholders and to pay related fees and
expenses of the merger.
18
<PAGE>
After consummation of the merger, Dura will be more highly leveraged than
either Dura or Excel is at present. In addition, Dura expects to incur
significant indebtedness in connection with the acquisition of Adwest. On a pro
forma basis giving effect to the proposed merger and the acquisition of Adwest,
Dura would have had approximately $995.8 million of outstanding debt, $55.3
million of outstanding Trust Preferred Securities and approximately $394.2
million of stockholders' investment as of September 30, 1998.
Dura's indebtedness could have several important consequences for the
holders of Class A Common Stock, including but not limited to the following:
- Dura's ability to obtain additional financing in the future for working
capital, capital expenditures, potential acquisition opportunities,
general corporate purposes or other purposes may be impaired;
- a substantial portion of Dura's cash flow from operations must be
dedicated to the payment of principal and interest on its indebtedness;
- Dura may be more vulnerable to economic downturns, may be limited in its
ability to withstand competitive pressures and may have reduced
flexibility in responding to changing business, regulatory and economic
conditions; and
- fluctuations in market interest rates will affect the cost of Dura's
borrowings to the extent not covered by interest rate hedge agreements
because a portion of Dura's indebtedness is payable at variable rates.
Dura's ability to service its indebtedness will depend on its future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Certain of these factors are
beyond Dura's control. We believe that, based upon current levels of operations,
Dura should be able to meet its debt service obligations when due. Significant
assumptions underlie this belief, including, among other things, that Dura will
succeed in implementing its business strategy and that there will be no material
adverse developments in the business, liquidity or capital requirements of Dura.
If, however, Dura were unable to service its indebtedness, it would be forced to
pursue one or more alternative strategies such as selling assets, restructuring
or refinancing its indebtedness or seeking additional equity capital (which may
substantially dilute the ownership interest of holders of its Common Stock). We
cannot assure you that any of these strategies could be effected on satisfactory
terms, if at all.
SUBSTANTIAL SALES OF DURA'S CLASS A COMMON STOCK COULD ADVERSELY AFFECT THE
MARKET PRICE
No prediction can be made as to the effect, if any, that future sales of
shares of Dura Class A Common Stock or the availability of such shares for
future sale will have on the market price of Dura Class A Common Stock
prevailing from time to time. Sales of substantial amounts of Dura Class A
Common Stock, or the perception that such sales could occur, could adversely
affect prevailing market prices for Dura Class A Common Stock. Currently, an
aggregate of 3,325,303 shares of Dura Class B Common Stock convertible into
shares of Dura Class A Common Stock are eligible for sale under Rule 144 under
the Securities Act and are subject to certain rights to register such shares
under the Securities Act at Dura's expense. In addition, an aggregate of
1,289,000 shares of Dura Class A Common Stock have been reserved for issuance
upon conversion of Dura's Trust Preferred Securities.
DURA MAY BE UNABLE TO COMPLETE STRATEGIC ACQUISITIONS
The automotive component supply industry has undergone, and is likely to
continue to experience, consolidation as OEMs seek to reduce costs and reduce
their supplier base. Dura intends to actively pursue acquisition targets that
will allow Dura to continue to expand into new geographic markets, add new
customers, provide new product, manufacturing and service capabilities or
increase model penetration with existing customers. There can be no assurance
that Dura will find attractive acquisition candidates or successfully integrate
acquired businesses into Dura's existing business. If the expected synergies
from such
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acquisitions do not materialize or Dura fails to successfully integrate new
businesses into its existing businesses, Dura's results of operations could be
adversely affected. To the extent that Dura may be considered as an acquisition
candidate by a third party, certain provisions in Dura's Amended and Restated
Certificate of Incorporation (the "Restated Certificate") and its Amended and
Restated By-laws (the "Dura By-laws") described below may inhibit a change in
control of Dura. See "--Certain Provisions of Dura's Organizational Documents
Could Delay or Prevent a Change of Control."
DURA MAY NOT COMPLETE THE ADWEST ACQUISITION
The consummation of the acquisition of Adwest is conditioned on several
factors, including, among other things, the tender by more than 90% of Adwest's
shareholders and the approval of the acquisition by certain regulatory
authorities. There can therefore be no assurance that the acquisition of Adwest
will be consummated or that it will be consummated in the time frame expected by
Dura. Dura has included the consolidated financial statements of Adwest for the
three years ended June 30, 1998 and unaudited pro forma financial information
giving effect to the acquisition of Adwest in this Joint Proxy Statement/
Prospectus as a result of Dura's determination that such acquisition is
"probable." Such information would not be relevant in the event that the
acquisition of Adwest is not completed. As a result, you should not place undue
reliance on this financial information.
DURA DOES INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
Dura currently intends to retain earnings to support its growth strategy and
does not anticipate paying dividends on its Class A Common Stock in the
foreseeable future. As a holding company, the ability of Dura to pay dividends
in the future is dependent upon the receipt of dividends or other payments from
its principal operating subsidiary, Dura Operating Corp. The payment of
dividends by such subsidiary to Dura for the purpose of paying dividends to
holders of Class A Common Stock is limited by the terms of Dura's existing bank
credit agreement and will be limited by terms of the credit agreement to be
entered into in connection with the merger.
DURA IS SUBJECT TO CERTAIN RISKS ASSOCIATED WITH ITS FOREIGN OPERATIONS
Dura has significant international operations, specifically in Europe,
Canada and Latin America. In addition, the acquisition of Excel and Adwest will
further increase Dura's international operations. Excel has significant
operations in Europe and all of Adwest's operations are located in Europe.
Certain risks are inherent in international operations, including:
- - the difficulty of enforcing agreements and collecting receivables through
certain foreign legal systems;
- - foreign customers may have longer payment cycles than customers in the United
States;
- - tax rates in certain foreign countries may exceed those in the United States
and foreign earnings may be subject to withholding requirements on the
imposition of tariffs, exchange controls or other restrictions;
- - general economic and political conditions in countries where Dura, Excel and
Adwest operate may have an adverse effect on their operations in those
countries;
- - the difficulties associated with managing a large organization spread
throughout various countries; and
- - required compliance with a variety of foreign laws and regulations.
As Dura continues to expand its business globally, its success will be
dependent, in part, on its ability to anticipate and effectively manage these
and other risks. Dura cannot assure you that these and other factors will not
have a material adverse effect on its international operations or its business
as a whole. In addition, Dura generates a significant portion of its revenues
and incurs a significant portion of its expenses in currencies other than U.S.
dollars. To the extent that Dura is unable to match revenues
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received in foreign currencies with costs paid in the same currency, exchange
rate fluctuations in any such currency could have an adverse effect on Dura's
financial results.
DURA AND EXCEL MAY BE ADVERSELY IMPACTED BY WORK STOPPAGES AND OTHER LABOR
MATTERS
Approximately 2,900 of Dura's employees are unionized and approximately
3,300 of Excel's employees are unionized (representing approximately 35% and 35%
of Dura's employees and Excel's employees, respectively, at December 31, 1998).
No assurance can be given that Dura or Excel will not encounter strikes, further
unionization efforts or other types of conflicts with labor unions or their
respective employees. Any of these factors may have an adverse effect on the
companies or may limit the companies' flexibility in dealing with their
respective workforce. In addition, many OEMs and their suppliers have unionized
work forces. Work stoppages or slow-downs experienced by OEMs or their suppliers
could result in slow-downs or closures of assembly plants where the companies'
products are included in assembled vehicles. In such an event, Dura's and
Excel's results of operations could be materially adversely affected.
DURA AND EXCEL MAY BE ADVERSELY AFFECTED BY THE IMPACT OF ENVIRONMENTAL AND
SAFETY REGULATIONS TO WHICH THEY ARE SUBJECT
Dura and Excel are subject to the requirements of Federal, state, local and
foreign environmental and occupational health and safety laws and regulations.
There can be no assurance that Dura or Excel is at all times in complete
compliance with all such requirements. Dura and Excel have made and will
continue to make capital and other expenditures to comply with environmental
regulations. If a release of hazardous substances occurs on or from Dura's or
Excel's properties or any associated offsite disposal location, or if
contamination is discovered at any of Dura's or Excel's current or former
properties, Dura or Excel may be held liable, and the amount of such liability
could be material. Dura is currently addressing environmental contamination
matters at its Mancelona and Kentwood, Michigan and Butler, Indiana facilities
and at certain of its Canadian facilities.
THE LOSS OF CERTAIN KEY PERSONNEL COULD ADVERSELY AFFECT DURA
Dura's continued success largely will depend on the efforts and abilities of
its executive officers and certain other key employees. Dura currently does not
have employment agreements with any of its executive officers or other key
employees. Dura's operations could be adversely affected if, for any reason,
such executive officers or key employees do not remain with Dura.
CERTAIN STOCKHOLDERS CURRENTLY CONTROL ALL MATTERS AFFECTING DURA
Onex DHC LLC (together with its affiliates, "Onex"), Alkin Co. and certain
other stockholders associated with Dura or Hidden Creek Industries ("Hidden
Creek"), a private industrial management company which provides management
services to Dura and its affiliates, beneficially own all of the outstanding
shares of Dura Class B Common Stock. Each share of Dura Class B Common Stock has
ten votes, as compared to one vote for each share of Dura Class A Common Stock.
After giving effect to the merger, shares of Dura Class B Common Stock owned by
such stockholders will represent 70% of the combined voting power of the
outstanding Dura Common Stock. As a result of such stock ownership, these
stockholders are able to control the vote on all matters submitted to a vote of
the holders of Dura Common Stock, including the election of directors,
amendments to the Restated Certificate and the Dura By-laws and approval of
significant corporate mergers. See "Description of Dura Capital Stock." Such
consolidation of voting power could also have the effect of delaying, deterring
or preventing a change in control of Dura that might be otherwise beneficial to
stockholders.
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CERTAIN PROVISIONS OF DURA'S ORGANIZATIONAL DOCUMENTS COULD DELAY OR PREVENT A
CHANGE OF CONTROL
Certain provisions of Dura's Restated Certificate and the Dura By-laws may
inhibit changes in control of Dura that are not approved by Dura's Board of
Directors. These provisions include (1) disparate voting rights per share
between the Class A Common Stock and the Class B Common Stock, (2) a prohibition
on stockholder action through written consents, (3) a requirement that special
meetings of stockholders be called only by the Board, (4) advance notice
requirements for stockholder proposals and nominations, (5) limitations on the
ability of stockholders to amend, alter or repeal the Dura By-laws and (6) the
authority of the Board to issue without stockholder approval preferred stock
with such terms as the Board may determine. Dura is also subject to the
protections of Section 203 of the Delaware General Corporation Law, which could
have similar effects. See "Description of Dura Capital Stock."
RISK FACTORS RELATED TO THE AUTOMOTIVE INDUSTRY
DURA AND EXCEL ARE DEPENDENT ON FORD, GM AND DAIMLERCHRYSLER AS THEIR LARGEST
CUSTOMERS
Dura's net sales to Ford, GM and DaimlerChrysler represented approximately
31%, 23% and 12%, respectively, of Dura's pro forma revenues in 1997 (giving
effect to the previous acquisitions of GT Automotive, Universal and Trident) and
approximately 42%, 25% and 7%, respectively, of Dura's actual revenues in 1997.
Excel's net sales to Ford, GM and DaimlerChrysler represented approximately 41%,
7% and 11%, respectively, of Excel's revenues in 1997. The loss of Ford, GM,
DaimlerChrysler or any other significant customer could have a material adverse
effect on Dura and Excel. The contracts Dura and Excel have entered into with
many of their customers provide for supplying the customers' requirements for a
particular model, rather than for manufacturing a specific quantity of products.
Such contracts range from one year to the life of the model, usually three to
seven years, and do not require the purchase by the customer of any minimum
number of parts. Therefore, the loss of any one of such customers or a
significant decrease in demand for certain key models or group of related models
sold by any of its major customers could have a material adverse effect on Dura
or Excel. Dura is involved in claims with Ford involving alleged failures of
certain self-adjust parking brakes originally manufactured by the brake and
cable business of Alkin Co. Ford has maintained that Dura or Alkin Co. is
responsible for all damages or liabilities incurred by Ford as a result of these
claims. As a result of these claims, it is possible that Dura's relationship
with Ford could be adversely affected.
There is substantial and continuing pressure from the major OEMs to reduce
costs, including the cost of products purchased from outside suppliers such as
Dura and Excel. If Dura or Excel is unable to generate sufficient production
cost savings in the future to offset price reductions, Dura's gross margin could
be adversely affected.
CYCLICALITY AND SEASONALITY COULD ADVERSELY AFFECT DURA AND EXCEL
The automotive market is highly cyclical and is dependent on consumer
spending. Economic factors adversely affecting automotive production and
consumer spending could adversely impact Dura and Excel. In addition, Dura's and
Excel's business is somewhat seasonal. Dura and Excel typically experiences
decreased revenues and operating income during the third calender quarter of
each year due to the impact of scheduled OEM plant shutdowns in July and August
for vacations and new model changeovers.
FAILURE TO OBTAIN BUSINESS RELATED TO NEW AND REDESIGNED MODEL INTRODUCTIONS
Dura and Excel principally competes for new business both at the beginning
of the development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to five years prior
to the marketing of such models to the public. The failure of Dura and Excel to
obtain new business on new models or to retain or increase business on
redesigned existing models could adversely affect Dura and Excel.
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DURA MAY BE ADVERSELY AFFECTED BY PRODUCT LIABILITY EXPOSURE CLAIMS
Dura faces an inherent business risk of exposure to product liability claims
in the event that the failure of its products results in personal injury or
death, and there can be no assurance that Dura will not experience any material
product liability losses in the future. In addition, if any of Dura's products
prove to be defective, Dura may be required to participate in a recall involving
such products. In late 1994, Ford issued a recall of a series of
manual-transmission Ford F-Series pickups to repair the self-adjust parking
brakes originally manufactured by the brake and cable business of Alkin Co.
Dura's share of such costs, which was fully reserved at the time of the
acquisition of the brake and cable business from Alkin Co., has reached the full
$6.0 million limit agreed to by Dura and Ford. Dura is also involved in a
product recall relating to the same issue with respect to the Mondeo in Europe.
Dura has agreed to pay 50% of the update costs of that recall not to exceed $1.0
million, which payments totaled $0.4 million at December 31, 1998. The types of
alleged failures that prompted the F-Series recall have also led to a number of
claims and lawsuits filed against Ford, one of which culminated in a July 1998
award of punitive damages against Ford of more than $155 million (which has
subsequently been reduced to $69 million and, to Dura's knowledge, will continue
to be contested by Ford on appeal). To date, two cases have been instituted
directly against Dura or Alkin Co. relating to personal injury claims, and, at
last report, Ford has indicated that it has received over 400 claims (generally
for property damage) relating to alleged defects in the self-adjust parking
brakes. Ford has maintained that Dura or Alkin Co. is responsible for all
damages or liabilities incurred by Ford as a result of these claims, and as of
December 31, 1998, Ford had tendered its defense of approximately 30 such claims
to Dura and Alkin Co. Dura and Alkin Co. have submitted these claims to their
insurance carriers. Dura maintains insurance against product liability claims,
but there can be no assurance that such coverage will be adequate for
liabilities ultimately incurred or that it will continue to be available on
terms acceptable to Dura. In November 1996, an insurance carrier of Dura brought
a declaratory judgment that its policy did not provide coverage for an allegedly
defective parking brake manufactured prior to August 31, 1994.
A successful claim brought against Dura in excess of available insurance
coverage or a requirement to participate in any product recall may have a
material adverse effect on Dura's results of operations or financial condition.
DURA AND EXCEL OPERATE IN THE HIGHLY COMPETITIVE AUTOMOTIVE SUPPLY INDUSTRY
The automotive component supply industry is highly competitive. Some of
Dura's and Excel's competitors are companies, or divisions or subsidiaries of
companies, that are larger and have greater financial and other resources than
Dura or Excel. In addition, with respect to certain of its products, some of
Dura's and Excel's competitors are divisions of its OEM customers. There can be
no assurance that Dura's and Excel's products will be able to compete
successfully with the products of these other companies.
TECHNOLOGICAL AND REGULATORY CHANGES MAY ADVERSELY AFFECT DURA AND EXCEL
Changes in legislative, regulatory or industry requirements or competitive
technologies may render certain of Dura's or Excel's products obsolete. Dura's
and Excel's ability to anticipate changes in technology and regulatory standards
and to develop and introduce new and enhanced products successfully on a timely
basis will be a significant factor in Dura's and Excel's ability to grow and to
remain competitive. There can be no assurance that Dura or Excel will be able to
achieve the technological advances that may be necessary for them to remain
competitive or that certain of their products will not become obsolete. Dura and
Excel are also subject to the risks generally associated with new product
introductions and applications, including lack of market acceptance, delays in
product development and failure of products to operate properly.
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DURA AND EXCEL MAY BE ADVERSELY IMPACTED BY THE YEAR 2000 ISSUE
Dura and Excel are currently working to resolve the potential impact of the
year 2000 on the processing of time-sensitive information by their respective
computerized information systems. Any of Dura's or Excel's programs that have
time-sensitive software may recognize the year "00" as 1900 rather than the year
2000. This could result in miscalculations, classification errors or system
failures.
While Dura's and Excel's various operations are at different stages of Year
2000 readiness, Dura and Excel have nearly completed their respective global
compliance review. Based on the information available to date, neither Dura nor
Excel anticipate any significant readiness problems with respect to its systems.
The most reasonable likely worst case scenario that Dura or Excel currently
anticipates with respect to Year 2000 is the failure of some of their suppliers,
including utilities suppliers, to be ready. This could cause a temporary
interruption of materials or services that each needs to make their products,
which could result in delayed shipments to customers and lost sales and profits
for Dura and Excel. As the critical supplier assessments are completed, Dura and
Excel will develop contingency plans, as necessary, to address the risks which
are identified. Although such plans have not been developed yet, they might
include resourcing materials or building inventory banks.
The outcome of Dura and Excel Year 2000 program is subject to a number of
risks and uncertainties, some of which (such as the availability of qualified
computer personnel and the Year 2000 responses of third parties) are beyond its
control. Therefore, there can be no assurances that Dura and Excel will not
incur material remediation costs beyond the above anticipated future costs, or
that Dura's or Excel's business, financial condition, or results of operations
will not be significantly impacted if Year 2000 problems with its systems, or
with the products or systems of other parties with whom it does business, are
not resolved in a timely manner.
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MEETINGS, VOTING AND PROXIES
DURA SPECIAL MEETING OF STOCKHOLDERS
PURPOSE OF DURA SPECIAL MEETING. The purpose of the Dura Special Meeting is
to consider and vote upon a proposal to approve the issuance of shares of Dura
Class A Common Stock (the "Share Issuance") under the merger agreement, dated as
of January 19, 1999 (the "Merger Agreement"), among Dura, Excel and Windows
Acquisition Corporation ("Merger Sub") pursuant to which Excel will merge with
and into Merger Sub (the "Merger") and become a wholly owned subsidiary of Dura.
Each Excel shareholder will be entitled to receive, at such shareholder's
option, for each share of Excel Common Stock held by such shareholder, EITHER:
(1) 0.8 of a share (the "Exchange Ratio") of Dura Class A Common Stock OR (2)
$25.50 in cash (the "Merger Consideration"), subject to proration to ensure that
50% of Excel Common Stock is exchanged for Dura Class A Common Stock and 50% of
Excel Common Stock is exchanged for cash. It is expected that approximately 5.1
million shares of Dura Class A Common Stock will be issued to Excel
shareholders, which will represent approximately 29.1% of the outstanding Dura
Common Stock following the Merger (10.4% of the combined voting power of Dura).
THE DURA BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT DURA STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
SHARE ISSUANCE AND FOR THE APPROVAL AND ADOPTION OF THE DURA 1998 STOCK
INCENTIVE PLAN. The completion of the Merger is conditioned upon approval of the
Share Issuance by Dura stockholders.
DATE, PLACE AND TIME; RECORD DATE. The Dura Special Meeting is scheduled to
be held on March 23, 1999, at 9:00 a.m., local time, at Dura's operating
headquarters, 2791 Research Drive, Rochester Hills, Michigan. Holders of Dura
Class A Common Stock will be entitled to one vote for each share of Dura Class A
Common Stock held of record as of February 16, 1999 (the "Dura Record Date") and
holders of Dura Class B Common Stock will be entitled to ten votes for each
share of Dura Class B Common Stock held of record as of the Dura Record Date. At
the close of business on the Dura Record Date, 9,063,588 shares of Class A
Common Stock and 3,325,303 shares of Class B Common Stock were issued and
outstanding and entitled to vote.
VOTING RIGHTS. A majority of shares issued and outstanding and entitled to
vote, present in person or by proxy, will constitute a quorum for the
transaction of business at the Dura Special Meeting. Abstentions and broker
non-votes (proxies from brokers or nominees indicating that they have not
received voting instructions from the beneficial owners or other persons
entitled to vote shares) will be considered present for the purpose of
establishing a quorum. In determining whether the proposals have received the
requisite number of affirmative votes, abstentions and broker non-votes will
have the same effect as votes cast against approval. The affirmative vote of a
majority of the votes entitled to be cast, with the holders of the Class A
Common Stock and the Class B Common Stock voting together as a single class, is
required for approval of the Share Issuance and for the approval and adoption of
the Dura 1998 Stock Incentive Plan (the "1998 Plan"). Dura's executive officers,
directors and affiliates hold approximately 78% of the votes entitled to be cast
with respect to these proposals.
Dura stockholders are not entitled to dissenters' rights under Delaware law.
PROXIES. Proxies are being solicited on behalf of the Dura Board of
Directors. All shares represented by properly executed proxies received in time
for the Dura Special Meeting will be voted in accordance with the instructions
specified in such proxies. If no instructions are specified, the shares will be
voted FOR approval of the Share Issuance and FOR the approval and adoption of
the 1998 Plan. Holders of proxies will be authorized to vote the shares
represented thereby in their discretion as to any matters incident to the
conduct of the Dura Special Meeting.
A stockholder giving a proxy may revoke it at any time before it is voted.
Proxies may be revoked by: (1) filing with the Secretary of Dura a written
notice of revocation bearing a later date than the proxy;
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(2) duly executing a later-dated proxy relating to the same shares and
delivering it to the Secretary of Dura before the taking of the vote at the Dura
Special Meeting; or (3) attending the Dura Special Meeting and voting in person.
Attendance at the Dura Special Meeting will not by itself revoke a proxy.
The expenses of soliciting proxies for the Dura Special Meeting, if any,
will be paid by Dura (except that Dura and Excel will share equally in expenses
incurred in connection with the printing and mailing of this Joint Proxy
Statement/Prospectus) and will include reimbursement of banks, brokerage firms,
nominees, fiduciaries and other custodians for expenses of forwarding
solicitation materials to beneficial owners of voting shares. The solicitation
is being made by mail and may also be made in person or by letter, telephone,
telecopy, telegram or other means of communication by directors, officers and
employees of Dura and its subsidiaries who will not be additionally compensated
therefor. In addition, Georgeson & Co. (the "Information Agent") has been
retained by Dura to assist in the solicitation of proxies and will be paid a fee
not to exceed $8,000 plus reimbursement for reasonable out-of-pocket expenses.
In these efforts, the Information Agent will make targeted telephone
solicitations of major stockholders and follow up such calls with reminder
mailings and has conducted the required broker search process.
The Dura Special Meeting may be adjourned to another date or place for any
proper purpose.
EXCEL SPECIAL MEETING OF SHAREHOLDERS
PURPOSE OF EXCEL SPECIAL MEETING. The purpose of the Excel Special Meeting
is to consider and vote upon a proposal to approve and adopt the Merger
Agreement. Each Excel shareholder will be entitled to receive, at such
shareholder's option, for each share of Excel Common Stock held by such
shareholder, EITHER: (1) 0.8 of a share of Dura Class A Common Stock OR (2)
$25.50 in cash, subject to proration to ensure that 50% of Excel Common Stock is
exchanged for Dura Class A Common Stock and 50% of Excel Common Stock is
exchanged for cash.
THE EXCEL BOARD OF DIRECTORS, BY A UNANIMOUS VOTE, HAS APPROVED THE MERGER
AGREEMENT AND THE MERGER CONTEMPLATED THEREBY AND RECOMMENDS THAT EXCEL
SHAREHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. The
completion of the Merger is conditioned upon approval of the Merger Agreement by
Excel shareholders.
DATE, PLACE AND TIME; RECORD DATE. The Excel Special Meeting is scheduled
to be held on March 23, 1999, at 9:00 a.m., local time, at the executive offices
of Excel, 1120 North Main Street, Elkhart, Indiana. Shareholders who are present
at the Excel Special Meeting in person or by proxy will be entitled to vote
their shares of Excel Common Stock held of record at the close of business on
February 16, 1999 (the "Excel Record Date"). At the close of business on the
Excel Record Date, 12,179,448 shares of Excel Common Stock were issued and
outstanding and entitled to vote.
VOTING RIGHTS. A majority of shares entitled to vote, present in person or
by proxy, will constitute a quorum for the transaction of business at the Excel
Special Meeting. Abstentions and broker non-votes (proxies from brokers or
nominees indicating that they have not received voting instructions from the
beneficial owners or other persons entitled to vote shares) will be considered
present for the purpose of establishing a quorum. In determining whether the
proposals have received the requisite number of affirmative votes, abstentions
and broker non-votes will have the same effect as votes cast against approval.
The affirmative vote of the holders of a majority of the outstanding shares of
Excel Common Stock is required for approval and adoption of the Merger Agreement
and is a condition to completion of the Merger. Excel's executive officers,
directors and affiliates hold approximately 0.8% of the votes entitled to be
cast with respect to this proposal.
Dissenters' rights are not available to Excel shareholders under Indiana law
because the Excel Common Stock is listed on a national securities exchange.
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PROXIES. Proxies are being solicited on behalf of the Board of Directors of
Excel. All shares represented by properly executed proxies received in time to
be voted at the Excel Special Meeting will be voted in accordance with the
instructions specified thereon. If no instructions are specified, the shares
will be voted FOR the adoption and approval of the Merger Agreement. Holders of
proxies are also authorized to vote the shares represented thereby in their
discretion as to any matters incident to the conduct of the Excel Special
Meeting.
A shareholder giving a proxy may revoke it at any time before it is voted.
Proxies may be revoked by (a) filing with the Secretary of Excel, a written
notice of revocation bearing a later date than the proxy; (b) duly executing a
later-dated proxy relating to the same shares and delivering it to the Secretary
of Excel before the taking of the vote at the Excel Special Meeting; or (c)
attending the Excel Special Meeting and voting in person. Attendance at the
Excel Special Meeting will not by itself revoke a proxy.
The expenses of soliciting proxies for the Excel Special Meeting will be
paid by Excel (except Excel and Dura will share equally in expenses incurred in
connection with the filing, printing and mailing of this Joint Proxy
Statement/Prospectus) and will include reimbursement of banks, brokerage firms,
nominees, fiduciaries and other custodians for expenses of forwarding
solicitation materials to beneficial owners of voting shares. The solicitation
is being made by mail and may also be made in person or by letter, telephone,
telecopy, telegram or other means of communication by directors, officers and
employees of Excel and its subsidiaries who will not be additionally compensated
therefor. In addition, the Information Agent has been retained by Excel to
assist in the solicitation of proxies and will be paid a fee of $8,000, plus
reimbursement for reasonable out-of-pocket expenses. In these efforts, the
Information Agent will make targeted telephone solicitations of major
shareholders and follow up such calls with reminder mailings, and has conducted
the required broker search process.
The Excel Special Meeting may be adjourned to another date or place for any
proper purpose.
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THE COMPANIES
DURA
Dura is a holding company whose subsidiaries and affiliates operate
predominantly in the automotive components industry. Dura is a leading designer
and manufacturer of driver control systems, cable-related systems and engineered
mechanical components for the global automotive industry. Dura's products
include parking brake systems, automotive cables, transmission shifter systems,
latches, underbody tire carriers, automotive lighting products, jacks, brake,
clutch and accelerator pedals, and other mechanical assemblies. Dura sells its
products to the major North American, Japanese and European automotive OEMs.
Dura has manufacturing and product development facilities located in the United
States, Australia, Brazil, Canada, France, Germany, Mexico, Spain and the United
Kingdom and, through strategic alliances, in India and Japan.
Since 1993, Dura's revenues have grown rapidly through a focused strategy of
internal growth and a highly disciplined acquisition program. During the last
five years, Dura has successfully completed ten acquisitions and two joint
ventures. As a result of these acquisitions and internal growth, Dura's revenues
have increased from $129.3 million in 1993 to approximately $739 million in
1998, representing a compound annual growth rate of approximately 41.7%.
Dura competes in what it believes to be a highly fragmented market that
provides numerous potential acquisition and joint venture opportunities. As a
result, Dura has broadened its acquisition scope from the original focus on
cable-driven controls to include other highly engineered automotive components.
Dura seeks acquisition and joint venture opportunities that: (1) provide
additional product, manufacturing and technical capabilities; (2) broaden Dura's
geographic coverage and strengthen its ability to supply products on a global
basis; (3) increase the number of models for which Dura supplies products and
increase the content supplied for existing models; and (4) add new customers.
THE ADWEST ACQUISITION
On January 26, 1999, Dura announced an offer to acquire all of the
outstanding common stock of Adwest, a leading European designer and manufacturer
of driver control and engine control mechanisms, for L1.50 (approximately $2.48)
per share (the "Offer"). Adwest's products include engine control systems,
gearshifters, parkbrakes, pedal boxes, control cables, jacks, steering columns,
engine thermostats and radiator caps, with engine control systems comprising
approximately 20% of its total revenues in its latest fiscal year ended June 30,
1998. Adwest's customers include Volkswagen, BMW, Ford, GM, Peugeot, Citroen,
Renault, Nissan, Honda, Toyota, Volvo and Fiat. Adwest generates annual revenues
of approximately $400 million from its operations located in 16 facilities in
the United Kingdom, Germany, France, Spain and the United States.
The Offer has been recommended by the board of directors of Adwest to
Adwest's shareholders. The offer price of L1.50 (approximately $2.48) per share
represents a premium of approximately 104% over the market price of Adwest's
shares on January 22, 1999 (the last trading day prior to the date Adwest
publicly announced that it was in an advanced stage of discussion that may or
may not lead to an offer for Adwest). The Offer is fully financed under the
terms of a Bridge Credit Facility with Dura's lender. Although Dura believes
that the Adwest Offer will be consummated, the consummation of the acquisition
is subject to certain conditions, including, among others, that at least 90% of
the Adwest shareholders vote to accept the Offer.
Dura believes that the acquisition of Adwest (the "Adwest Acquisition") will
provide several strategic and financial benefits, including the following:
SYSTEMS OPPORTUNITIES. Adwest's strong position in the European driver
control mechanism market complements Dura's existing driver control cable
capabilities in Europe. The combination of these products will allow Dura to
provide completely integrated driver control systems--the combination of the
gearshifter mechanism with the associated cable--thereby providing increased
value to its customers. This
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combination will result in Dura becoming one of only a few suppliers capable of
providing such fully integrated systems.
EXPANDED PRODUCT OFFERINGS. The addition of steering mechanisms, pedal
boxes and engine control products will increase Dura's product offering. These
expanded product offerings will enhance Dura's ability to provide more complete
systems to its customers and provide Dura with opportunities to integrate
complementary product technologies currently used by Dura, Excel and Adwest.
DIVERSIFICATION OF CUSTOMER BASE. Adwest has strong relationships with many
of the major European OEM's. The six largest OEM's comprise more than 80% of
Adwest's total revenues, with no individual OEM constituting more than 20% of
Adwest's total revenues. As a result, Dura's customer base following the Adwest
Acquisition will be more diverse and its relationship with many of the major
European OEM's will be strengthened.
OPERATIONAL EFFICIENCIES AND COST SAVINGS. The Adwest Acquisition will
provide Dura with a number of opportunities to reduce costs and improve
operational efficiency. For example, many of Dura's, Excel's and Adwest's
facilities are geographically located in such a way that manufacturing, design
and administrative functions may be optimized. In addition, the increased size
of Dura in Europe will allow for the negotiation of more favorable terms with
suppliers in the purchase or raw materials and services.
On January 24, 1999, Dura Operating Corp. ("Dura Operating"), Dura
Automotive Acquisition Limited, an indirectly wholly owned subsidiary of Dura
which will acquire the stock of Adwest in connection with the Adwest Acquisition
("Dura UK"), and certain other subsidiaries of Dura entered into a Bridge Credit
Agreement (the "Bridge Credit Facility"), which provides for an acquisition
facility allocated to Dura UK for the financing of the Adwest Acquisition as
well as additional facilities to refinance Dura's indebtedness under its
existing credit facility. Although the Bridge Credit Facility is effective, no
funds have been drawn under the Bridge Credit Facility and Dura's existing
credit facility will remain in effect until funds are drawn under the Bridge
Credit Facility. Prior to the initial funding under the Bridge Credit Facility,
Dura currently expects to enter into a comprehensive credit facility which will
provide for the financing of the Adwest Acquisition, the financing of the Merger
and the refinancing of Dura's indebtedness under its existing credit facility,
in which case the acquisition of Adwest and the repayment of Dura's existing
indebtedness will be financed under this comprehensive credit facility and the
Bridge Credit Facility will automatically terminate. For a description of the
comprehensive credit facility, see "The Merger--The Financing."
OTHER RECENT ACQUISITIONS
The following summarizes certain other recent acquisitions completed by
Dura:
- In April 1998, Dura acquired Trident Automotive plc, a leading
international designer and manufacturer of automotive cables. Trident's
products include parking brake and manual transmission shifter systems,
clutch, accelerator and speed control cables, lighting products and door
handles. At the time of the acquisition of Trident, Trident had annual
revenues of approximately $300 million and a substantial share of the
North American and European automotive cable markets. The acquisition of
Trident significantly expanded Dura's penetration with North American
OEM's, making it the largest supplier of driver control systems and
cable-related systems to Ford, GM and DaimlerChrysler. This acquisition
also doubled sales to BMW, Mercedes and Renault and added new customers
such as Fiat and Porsche. Dura also added 12 major design and
manufacturing facilities located in the United States, Brazil, Canada,
France, Germany and the United Kingdom and a strategic alliance in Japan,
enhancing its strategic geographic position.
- In August 1997, Dura acquired GT Automotive Systems, Inc., a designer and
manufacturer of column-mounted shifter systems and turn signal and tilt
lever assemblies. At the time of the acquisition, GT Automotive had annual
revenues of approximately $70 million and a substantial share of the North
American column-mounted shifter systems market. GT Automotive's strong
position in this market, combined with Dura's existing position in
console-based shifter systems,
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increased Dura's share of the North American shifter market. In addition,
the acquisition added Nissan as a customer.
- In January 1997, Dura acquired the VOFA Group, a manufacturer of shifter
cables, brake cables and other light duty cables for the European
automotive and industrial markets. At the time of the acquisition, VOFA
had annual revenues of approximately $85 million. The acquisition provided
Dura with additional expertise in cables and a strong presence in Europe.
In addition, the acquisition added new customers, such as Mercedes,
Volkswagen and BMW.
- In December 1996, Dura acquired KPI Automotive Group, a manufacturer of
shifter systems, parking brake mechanisms, brake pedals and underbody tire
carriers. At the time of the acquisition, KPI had annual revenues of
approximately $95 million. The acquisition added significant market
penetration in console-based shifter systems, increased platform content
and added a significant new product line in underbody tire carriers.
In addition, Dura has successfully completed six other strategic
acquisitions and two joint ventures since the initial public offering of its
Class A Common Stock in August 1996.
Dura was formed by an investor group organized by Hidden Creek to acquire
the Dura Automotive Hardware and Mechanical Components divisions from Wickes
Manufacturing Company. In August 1994, Dura combined its operations with the
automotive parking brake cable and lever business and light duty cable business
of Alkin Co., which significantly expanded Dura's size and capabilities.
The principal executive offices of Dura are located at 4508 IDS Center,
Minneapolis, Minnesota 55402, and its telephone number is (612) 342-2311.
EXCEL
Excel is a technically innovative tier-one and tier-two supplier to the
automotive, heavy truck, recreational vehicle, and bus industries with
manufacturing operations in North America, South America and Europe. It produces
window, door and seating systems, decorative trims, RV appliances and complex
injection molded parts. Excel has a global commitment to continuous improvement
of quality, cost and delivery of reliable components and systems.
In April 1996, Excel acquired Anderson Industries, Inc. whose primary
operating asset was Atwood. Atwood is a manufacturer of seat adjusters and
recliners for the light vehicle industry, RV appliances, jacks, couplers and
other hardware items for the recreational vehicle industry. Atwood had revenues
of approximately $380 million on an annual basis at the time of acquisition.
Excel acquired, effective July 1, 1998, 70% of Schade GmbH & Co. KG
("Schade"), located in Plettenberg, Germany. Schade's annual revenues
approximate $300 million. Schade supplies door and glass systems, decorative
trims and complex injection molded parts for the European light vehicles market.
Schade's presence in Europe provides Excel with the ability to supply in Europe
its North American customer base.
Excel has 21 manufacturing plants and 4 sales and engineering offices in
North America, and 9 manufacturing plants and 1 sales and engineering office in
Europe. Its primary customers are Ford, DaimlerChrysler, GM, Volkswagen,
Fleetwood, Winnebago and Navistar.
The principal executive offices of Excel are located at 1120 North Main
Street, Elkhart, Indiana 46514 and its telephone number is (219) 264-2131.
WINDOWS ACQUISITION CORPORATION
Windows Acquisition Corporation, a wholly owned subsidiary of Dura, was
formed by Dura solely for the purpose of effecting the Merger. The mailing
address of Windows Acquisition Corporation is 4508 IDS Center, Minneapolis,
Minnesota 55402, and its telephone number is (612) 342-2311.
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THE MERGER
BACKGROUND
The automotive components supply industry is undergoing significant
consolidation and globalization as OEMs have continued to reduce their supplier
base. Seeking to capitalize on these trends, beginning in 1997, Dura broadened
its acquisition scope from its original focus on cable-driven controls to
include other highly engineered automotive components. In furtherance of this
strategy, Dura has completed several acquisitions that have expanded its product
offerings and geographic scope, and has continued to explore acquisition
opportunities.
Dura and Excel have been partners since 1996 in a joint venture formed to
purchase an equity interest in Pollone S.A., a Brazilian manufacturer of
automotive components and mechanical assemblies. As a result of this
partnership, Dura's senior management was familiar with both Excel's operations
and its management. In November 1997, S.A. Johnson, Chairman of the Board of
Dura, contacted James Futterknecht, Jr., Excel's Chairman, President and Chief
Executive Officer, regarding a possible combination of the two companies. From
that time through the first half of 1998, Mr. Johnson, Karl F. Storrie, Dura's
President and Chief Executive Officer, and Mr. Futterknecht had several informal
discussions regarding their respective businesses and the possibility of a
combination of the two companies. On May 26, 1998, Dura retained Robert W. Baird
& Co. Incorporated ("Baird") to serve as its financial advisor in connection
with any transaction with Excel.
At one such meeting, held on June 24, 1998, involving Messrs. Johnson,
Futterknecht, Scott D. Rued, the Executive Vice President and Chief Financial
Officer of Hidden Creek and Joseph A. Robinson, Senior Vice President and Chief
Financial Officer of Excel, the parties entered into a confidentiality agreement
regarding their exchange of confidential information, which agreement remains in
effect. At this meeting, various broad business issues were discussed, and the
parties agreed to exchange forecasts, which they did promptly thereafter.
A meeting was held on July 22, 1998 between Messrs. Johnson, Storrie and
Futterknecht during which the possibility of a combination of the businesses of
the two companies was again discussed, including the possible structure for such
a combination. Based on this meeting, a subsequent meeting was arranged between
additional representatives of Dura and Excel for August 5 and 6, 1998. The
purpose of this meeting was to discuss Dura's and Excel's respective businesses
and the cost savings and synergies that could be produced by combining the two
companies.
Messrs. Futterknecht and Johnson met again on August 12, 1998. At this
meeting, Messrs. Futterknecht and Johnson discussed certain issues relating to
the possible combination of Excel and Dura.
On August 17 and 18, 1998, representatives of Dura visited Excel's
headquarters in Elkhart, Indiana to meet with representatives of Excel,
including Mr. Futterknecht, Mr. Robinson and Michael Paquette, Vice President of
Corporate Human Resources of Excel, to conduct further due diligence regarding
Excel's business.
A meeting of the Dura Board was held on August 20, 1998, at which time
members of Dura's management reported to the Board regarding the status of
discussions with Excel to date and the preliminary results of their due
diligence review.
On August 26, 1998, Messrs. Johnson and Storrie met with Messrs.
Futterknecht and Paquette to discuss Dura's interest in merging the two
companies and the financial terms of the proposed combination. At this meeting,
Mr. Johnson indicated that, based upon Dura's due diligence to date, and taking
into account issues surrounding Excel's seat track business and the uncertainty
regarding market conditions generally and Dura's stock price in particular, that
it would be difficult to agree upon a per share purchase price for Excel's
Common Stock at that time. After this meeting, the parties terminated their
discussions.
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At the October 15, 1998 meeting of the Excel Board, Mr. Futterknecht
recommended, and the Board authorized, meeting with investment bankers to
explore strategic alternatives, including a potential business combination or
merger, which would be beneficial to Excel and increase shareholder value. On
October 26, 1998, representatives of Excel interviewed Morgan Stanley & Co.
Incorporated ("Morgan Stanley") with respect to engagement of Morgan Stanley as
Excel's financial advisor.
On November 18, 1998, Excel engaged Morgan Stanley to work with Excel to
evaluate potential acquisitions, a recapitalization, financings, a merger of
equals and other special corporate transactions with the goal of enhancing
shareholder value. Representatives of Dura contacted Morgan Stanley shortly
thereafter to inquire whether Excel remained interested in a business
combination with Dura.
On December 4, 1998, representatives of Dura attended a presentation by
Excel's management at Excel's headquarters in Elkhart, Indiana. Discussions
regarding the proposed merger continued on December 7 and 8 and representatives
of Dura conducted further due diligence at Excel's Elkhart, Indiana offices.
During this time period, Morgan Stanley contacted a number of potential
acquirors of Excel. Pursuant to confidentiality agreements, confidential
offering memoranda were sent to interested parties.
On December 11, 1998, representatives of Dura and Excel met at Dura's
executive offices in Rochester Hills, Michigan to further discuss the cost
savings and synergies which could result from merging the two companies.
The Dura Board met on December 17, 1998, at which time Dura's management
updated the Board on the status of discussions with Excel and their due
diligence review, and the Board authorized management to proceed with
discussions regarding the terms of the proposed merger.
The Excel Board of Directors also met on December 17, 1998 and was updated
by Excel management and Morgan Stanley regarding the status of discussions with
Dura and contacts with other parties.
At the request of Dura, representatives of Baird met with representatives of
Morgan Stanley on December 18, 1998 to make an initial proposal to Excel
regarding the terms on which Dura would be willing to merge with Excel. Dura's
proposal contemplated that Excel shareholders would receive a value of $25.00
per share and that the consideration to be paid would be paid half in cash and
half in shares of Dura Class A Common Stock.
Negotiations between representatives of Morgan Stanley, on behalf of Excel,
and representatives of Hidden Creek and Baird, on behalf of Dura, continued
between December 18 and December 26. On December 26, representatives of Baird
were informed by representatives of Morgan Stanley that Dura would be permitted
to continue its due diligence and work towards the negotiation of a definitive
agreement.
Negotiations between the companies and their respective legal and financial
advisors regarding a merger agreement, including the Exchange Ratio for the
exchange of Excel Common Stock for Dura Class A Common Stock, commenced on
January 4, 1999 and Excel delivered an initial draft of the merger agreement to
representatives of Dura on January 5, 1999. During the weeks of January 4 and
January 11, 1999, the parties continued their due diligence review of each
other, with representatives of Excel and Morgan Stanley visiting Dura's
operating headquarters in Rochester Hills, Michigan on January 12, 1999.
On January 15 and January 16, negotiations on the final terms of the Merger
Consideration continued. On January 16, the representatives of Dura and Excel
agreed, subject in each case to Board approval, that shareholders of Excel would
have the right to receive for each share either (i) $25.50 in cash, or (ii) 0.8
shares of Dura Class A Common Stock, subject to proration to ensure that 50% of
the Excel Common Stock is converted into Dura Class A Common Stock and 50% of
the Excel Common Stock is exchanged for cash.
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On January 18, 1999, the Dura Board met to consider the proposed merger. At
the meeting, Dura's management and Baird made presentations to the Dura Board
regarding the proposed merger. Representatives of Baird reviewed with the Dura
Board various financial and other information and delivered its opinion to the
effect that, as of January 18, 1999, the consideration to be paid by Dura in
connection with the merger was fair to Dura from a financial point of view.
Thereafter, the Dura Board of Directors unanimously approved the Merger
Agreement, including the issuance of the shares of Dura Class A Common Stock to
Excel shareholders. For a discussion of the factors considered by the Dura Board
and the reasons for the Dura Board's decision, see "--Recommendations of Dura
Board of Directors; Reasons of Dura for the Merger."
On January 18, 1999, Excel's management updated the Excel Board on the
status of the negotiations and the proposed terms of a merger. Representatives
of Morgan Stanley discussed with the Excel Board Morgan Stanley's financial
analyses related to the proposed merger and delivered its opinion that the
consideration to be paid to Excel shareholders in connection with the Merger was
fair to Excel shareholders from a financial point of view. As previously
planned, the Excel Board concluded its meeting with the intention of meeting the
next day to further discuss the merger.
On January 19, 1999, the Excel Board met again and, after discussion,
determined that the Merger contemplated by the Merger Agreement was in the best
interests of Excel and the Excel shareholders and resolved to recommend that the
Excel shareholders vote to approve and adopt the Merger Agreement. For a
discussion of the factors considered by the Excel Board and the reasons for the
Excel Board's decision, see "--Recommendations of Excel Board of Directors;
Reasons of Excel for the Merger."
On January 19, 1999, the Merger Agreement was executed and Dura and Excel
publicly announced the signing of the Merger Agreement.
RECOMMENDATIONS OF DURA BOARD OF DIRECTORS; REASONS OF DURA FOR THE MERGER
At a meeting of the Dura Board of Directors on January 18, 1999, the Dura
Board received and considered the presentations of Dura's management and its
financial and legal advisors regarding the proposed merger and thereafter voted
to approve the Merger Agreement, including the issuance of shares of Dura Class
A Common Stock to Excel shareholders.
In reaching its determination, the Dura Board considered the following
material factors:
- INDUSTRY TRENDS AND CONSOLIDATION. The automotive components supply
industry is undergoing significant consolidation and globalization as OEMs
continue to reduce their supplier base. In order to lower costs and
improve quality, OEMs are awarding sole-source contracts to full-service
suppliers who are able to supply larger portions of a vehicle on a global
basis. OEMs' criteria for supplier selection include not only cost,
quality and responsiveness, but also full-service design, engineering and
program management capabilities. OEMs are seeking suppliers capable of
providing complete systems rather than suppliers who only provide separate
component parts. Dura believes the Merger will allow it to capitalize on
these trends by significantly expanding Dura's product offerings by adding
window, door and seating systems to Dura's existing line of products and
enhancing its ability to supply complete systems to its customers.
- OPPORTUNITIES FOR COST SAVINGS AND EFFICIENCIES. The Dura Board considered
that the Merger would present the companies with a number of opportunities
for increasing profitability through significant cost savings, operational
efficiencies, economies of scale, stronger market position and other
synergies stemming from the combination of the companies. For example,
because there is significant overlap of existing distribution networks
between the two companies, the Merger will allow for the elimination of
redundant operational facilities and of duplicative administrative costs.
- INCREASED CUSTOMER PENETRATION. Dura believes the Merger will provide it
with an enhanced competitive position as one of the leading suppliers of
engineered mechanical components for the global
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automotive industry. Dura believes that the Merger will further strengthen
its customer relationships. In addition, Dura expects its own strength in
the OEM market to immediately benefit Excel's OEM business through
increased penetration of Dura's established OEM customers.
- INCREASED TECHNICAL CAPABILITY. The Merger will provide Dura with a
variety of new and enhanced design and manufacturing technology. Dura
believes that these acquired technologies will provide significant
additional opportunities to serve existing customers and obtain new
business.
- ADDITION OF STRONG MANAGEMENT TEAM. Excel's strong and experienced
management team will be of great assistance in achieving the synergistic
benefits expected to result from the Merger. Dura and Excel have been
partners since 1996 in a joint venture formed to purchase an equity
interest in Pollone S.A., a Brazilian manufacturer of automotive
components and mechanical assemblies. As a result of this partnership,
Dura's management is familiar with Excel's management team and believes
that Excel's management will work together with Dura's existing management
to implement successfully Dura's strategies.
- FINANCIAL CONSIDERATIONS. In evaluating the Merger, the Dura Board of
Directors considered information with respect to the financial condition,
results of operations and businesses of Excel, on both a historical and
prospective basis. Dura believes that the Merger will result in both cost
savings and a significant incremental increase in revenues generated as a
result of the combination, which are expected to have a near term positive
impact on the key criteria used by Dura to measure its financial
performance, including reported earnings per share, return on invested
capital, cash flow generation and balance sheet strength.
- PRO FORMA IMPACT ON DURA. The Dura Board of Directors considered the
effect of the issuance of additional shares of Dura Class A Common Stock
in the Merger and the likely effect of such issuance on Dura's earnings
per share and cash flow per share. While the Dura Board recognized that
the Merger would initially only be slightly accretive with respect to
earnings per share in the year immediately following the Merger, the Dura
Board of Directors also considered the prospect that the Merger should
become more accretive to earnings per share in the future and therefore
provide greater returns to Dura and its stockholders than would be the
case if the Merger were not to occur.
- INCREASED MARKET CAPITALIZATION AND FINANCIAL RESOURCES. The Dura Board of
Directors considered that the market capitalization of Dura will be larger
than Dura's current capitalization, allowing Dura to have additional
access to debt and equity markets.
- FAIRNESS OPINION. The Dura Board of Directors considered as favorable to
its determination the opinion rendered by Baird to the effect that, based
upon and subject to the matters expressed in the opinion, the
consideration to be paid by Dura in connection with the Merger was fair to
Dura from a financial point of view. The written opinion of Baird and the
material analyses and other factors underlying such opinion are summarized
below, and a complete copy of such opinion, setting forth the procedures
followed, the matters considered, the scope of the review undertaken and
the assumptions made by Baird is included as Appendix C to this Joint
Proxy Statement/Prospectus. See "--Opinion of Financial Advisor to Dura."
- TERMS OF THE MERGER AGREEMENT. The Dura Board of Directors took into
consideration the terms of the Merger Agreement, including the
representations, warranties, covenants and conditions contained in the
Merger Agreement, as well as the financial terms of the Merger, which Dura
believes are fair and in the best interests of Dura's stockholders and
consistent with Dura's long-term strategy of enhancing stockholder value
with expansion through selective acquisitions.
In view of the wide variety of factors considered by the Dura Board in
connection with its evaluation of the Merger and the complexity of such matters,
the Dura Board did not consider it practicable to, nor did it attempt to,
quantify, rank or otherwise assign relative weights to the specific factors it
considered in
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reaching its decision. In addition, the Dura Board did not undertake to make any
specific determination as to whether any particular factor (or any aspect of any
particular factor) was determinative to its ultimate conclusion or assign any
particular weight to any factor, but rather conducted a discussion of the
factors described above, including asking questions of Dura's management and
legal and financial advisors, and reached a general consensus that the Merger
was advisable and in the best interests of Dura and Dura's stockholders. In
considering the factors described above, individual members of the Dura Board
may have given different weight to different factors.
BASED ON THE FOREGOING, THE DURA BOARD UNANIMOUSLY RECOMMENDS THAT DURA
STOCKHOLDERS VOTE "FOR" THE ISSUANCE OF DURA CLASS A COMMON STOCK IN
CONNECTION WITH THE MERGER.
OPINION OF FINANCIAL ADVISOR TO DURA
Dura retained Baird to act as its financial advisor in connection with the
Merger and to render Baird's opinion as to the fairness, from a financial point
of view, of the Merger Consideration to Dura. On January 18, 1999, Baird
rendered its opinion to the Dura Board of Directors to the effect that, as of
January 18, 1999 and based upon and subject to the various considerations
described in the opinion, the Merger Consideration was fair, from a financial
point of view, to Dura.
THE FULL TEXT OF BAIRD'S OPINION, DATED JANUARY 18, 1999, WHICH DESCRIBES
THE ASSUMPTIONS MADE, GENERAL PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITATIONS ON THE SCOPE OF REVIEW UNDERTAKEN BY BAIRD IN RENDERING ITS OPINION,
IS ATTACHED AS APPENDIX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED IN THIS DOCUMENT BY REFERENCE. BAIRD'S OPINION IS DIRECTED ONLY TO
THE FAIRNESS, AS OF THE DATE OF THE OPINION AND FROM A FINANCIAL POINT OF VIEW,
OF THE MERGER CONSIDERATION TO DURA AND DOES NOT CONSTITUTE A RECOMMENDATION TO
ANY DURA STOCKHOLDER AS TO HOW THAT STOCKHOLDER SHOULD VOTE WITH RESPECT TO THE
ISSUANCE OF SHARES OF DURA CLASS A COMMON STOCK PURSUANT TO THE TERMS OF THE
AGREEMENT. THE SUMMARY OF BAIRD'S OPINION SET FORTH BELOW IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED AS APPENDIX C.
DURA STOCKHOLDERS ARE URGED TO READ THE OPINION CAREFULLY IN ITS ENTIRETY.
In conducting its investigation and analysis and in arriving at its opinion,
Baird reviewed information and took into account financial and economic factors
it deemed relevant under the circumstances. In that connection, Baird, among
other things:
- reviewed certain internal information, primarily financial in nature,
including projections, concerning the business and operations of Dura and
Excel furnished to Baird for purposes of its analysis;
- reviewed publicly available information including but not limited to
Dura's and Excel's recent filings with the Securities and Exchange
Commission and equity analyst research reports prepared by various
investment banking firms including Baird;
- reviewed the draft Merger Agreement in the form presented to the Dura
Board of Directors;
- compared the historical market prices and trading activity of Dura Class A
Common Stock and Excel Common Stock with those of certain other publicly
traded companies Baird deemed relevant;
- compared the financial position and operating results of Dura and Excel
with those of certain other publicly traded companies Baird deemed
relevant;
- compared the proposed financial terms of the Merger with the financial
terms of certain other business combinations Baird deemed relevant; and
- reviewed certain potential pro forma effects of the Merger.
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Baird held discussions with members of Dura's and Excel's respective senior
managements concerning Dura's and Excel's historical and current financial
condition and operating results, as well as the future prospects of Dura and
Excel. Baird also considered other information, financial studies, analysis and
investigations and financial, economic and market criteria which Baird deemed
relevant for the preparation of its opinion. Dura and Excel determined the
Merger Consideration in arms-length negotiations. Dura did not place any
limitation upon Baird with respect to the procedures followed or factors
considered by Baird in rendering its opinion.
In arriving at its opinion, Baird assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided to Baird by or on behalf of Dura and Excel. Baird was not
engaged to independently verify any of this information. Baird assumed, with
Dura's consent, that:
- all material assets and liabilities (contingent or otherwise, known or
unknown) of Dura and Excel are as set forth in their respective financial
statements;
- the Merger will be accounted for under the purchase method of accounting;
- the cost savings and operating synergies as contemplated by Dura's and
Excel's respective managements to result from the Merger will be realized;
and
- the Merger will be consummated in accordance with the terms of the draft
Merger Agreement in the form presented to the Dura Board of Directors,
without any amendment and without waiver by any of the parties to their
respective obligations under the Merger Agreement.
Baird also assumed that the projections and other financial forecasts
examined by it, including estimates of cost savings and operating synergies
resulting from the Merger developed by Dura's and Excel's senior managements,
were reasonably prepared on bases reflecting the best available estimates and
good faith judgments of Dura's and Excel's senior managements as to future
performance of Dura and Excel. In conducting its review, Baird did not undertake
nor obtain an independent evaluation or appraisal of any of the assets or
liabilities (contingent or otherwise) of Dura or Excel nor did it make a
physical inspection of the properties or facilities of Dura or Excel. Baird's
opinion necessarily was based upon economic, monetary and market conditions as
they existed and could be evaluated on the date of its opinion, and did not
predict or take into account any changes which may occur, or information which
may become available, after the date of Baird's opinion. Furthermore, Baird
expressed no opinion as to the price or trading range at which any of Dura's or
Excel's securities, including, but not limited to, Dura Class A Common Stock and
Excel Common Stock, will trade following the date of Baird's opinion.
The following is a summary of the material financial analyses performed by
Baird in connection with rendering its opinion.
ANALYSIS OF IMPLIED EXCEL MERGER MULTIPLES. Baird calculated the "Implied
Equity Value Per Share" reflected by the terms of the merger to be $26.18 for
each share of Excel Common Stock. The Implied Equity Value Per Share was
obtained by calculating the sum of 50% of the Exchange Ratio of 0.8 multiplied
by the closing price per share of Dura Class A Common Stock of $33.56 on January
15, 1999, plus 50% of the cash consideration of $25.50. Baird calculated the
"Implied Total Equity Value" and "Implied Enterprise Value" of Excel as a result
of the Merger to be $329.7 million and $486.6 million, respectively. The Implied
Total Equity Value was obtained by multiplying the Implied Equity Value Per
Share by the total number of outstanding shares of Excel Common Stock as of
December 31, 1998, plus shares issuable upon exercise of stock options as of
December 31, 1998, less net proceeds from the exercise of those stock options.
The Implied Enterprise Value was obtained by adding Excel's outstanding total
debt and minority interest (as of December 31, 1998, as provided by Excel
management) to, and subtracting Excel's cash and cash equivalents balances (as
of December 31, 1998, as provided by Excel management) from, the Implied Total
Equity Value. In performing its analysis, Baird used, among other items,
operating statistics for Excel's latest twelve months ("LTM") ended September
30, 1998 (on a pro forma basis, as if
36
<PAGE>
the acquisition of Schade took place on October 1, 1997). Baird calculated
multiples of the Implied Total Equity Value to Excel's LTM net income (exclusive
of non-recurring items) and estimated net income for calendar year 1998 and
projected net income for calendar year 1999 (based on Dura management's
estimates and exclusive of non-recurring items). Baird also calculated multiples
of Excel's Implied Enterprise Value to its LTM net sales, earnings before
interest, taxes, depreciation, amortization and non-recurring items ("EBITDA")
and its earnings before interest, taxes and non-recurring items ("EBIT"). The
calculations resulted in multiples of the Implied Total Equity Value to Excel
net income ("P/E Ratios") of 18.9x based on LTM results, 18.1x based on
estimated calendar 1998 results and 14.4x based on projected calendar 1999
results. The ratios of Implied Enterprise Value to Excel's LTM net sales, LTM
EBITDA and LTM EBIT were 0.4x, 6.3x and 15.1x, respectively.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES COMPARABLE TO EXCEL. Baird
reviewed certain publicly available financial information as of the most
recently reported period and stock market information as of January 15, 1999,
for eight publicly traded companies that Baird deemed relevant. These comparable
companies consisted of the following eight automotive parts suppliers:
- Dana Corporation
- Donnelly Corporation
- Dura Automotive Systems, Inc.
- Johnson Controls, Inc.
- Lear Corporation
- Magna International Inc.
- Meritor Automotive, Inc.
- Tower Automotive, Inc.
For each comparable company, Baird calculated multiples as of January 15,
1999 of Enterprise Value (i.e., the total number of outstanding shares of common
stock on a diluted basis, multiplied by the market price of the common stock,
plus outstanding debt and minority interest, minus cash, cash equivalents and
net proceeds from the exercise of outstanding options) to LTM net sales, LTM
EBITDA and LTM EBIT. Baird then compared these multiples to the relevant Excel
multiples based on the Implied Equity Value Per Share. An analysis of the
multiples of Enterprise Value to LTM net sales, LTM EBITDA and LTM EBIT yielded
0.4x, 6.3x and 15.1x, respectively, for Excel compared to ranges of 0.4x to
1.1x, 4.2x to 9.6x and 5.7x to 17.2x, respectively, for the comparable
companies. For Excel and each comparable company, Baird also calculated P/E
Ratios based upon the Implied Total Equity Value Per Share for Excel and closing
stock prices as of January 15, 1999 for the comparable companies and net income
statistics for LTM and for estimated calendar year 1998 and projected calendar
year 1999 (based on Dura management's estimates and exclusive of non-recurring
items for Excel, and on First Call consensus estimates for the comparable
companies). An analysis of the P/E Ratios based on net income for LTM, estimated
calendar year 1998 and projected calendar year 1999 yielded 18.9x, 18.1x and
14.4x, respectively, for Excel compared to ranges of 8.4x to 19.2x, 8.2x to
18.0x, and 7.8x to 14.8x, respectively, for the comparable companies. The table
below summarizes the results of this analysis and is qualified in its entirety
by reference to the other disclosure contained in this section and Appendix C of
this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
COMPARABLE
EXCEL IMPLIED COMPANY
MERGER MULTIPLES MULTIPLES RANGE
----------------- ---------------
<S> <C> <C>
Enterprise Value to LTM Net Sales.................................... 0.4x 0.4x to 1.1x
Enterprise Value to LTM EBITDA....................................... 6.3x 4.2x to 9.6x
Enterprise Value to LTM EBIT......................................... 15.1x 5.7x to 17.2x
LTM P/E Ratio........................................................ 18.9x 8.4x to 19.2x
Calendar Year 1998 P/E Ratio......................................... 18.1x 8.2x to 18.0x
Calendar Year 1999 P/E Ratio......................................... 14.4x 7.8x to 14.8x
</TABLE>
37
<PAGE>
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES COMPARABLE TO DURA. In order
to assess the relative public market valuation of Dura Class A Common Stock to
be used by Dura in exchange for Excel Common Stock, Baird reviewed certain
publicly available financial information as of the most recently reported period
and stock market information as of January 15, 1999, for seven publicly traded
companies that Baird deemed relevant. These comparable companies consisted of
the following seven automotive parts suppliers:
- Dana Corporation
- Donnelly Corporation
- Johnson Controls, Inc.
- Lear Corporation
- Magna International Inc.
- Meritor Automotive, Inc.
- Tower Automotive, Inc.
For each comparable company, Baird calculated multiples as of January 15,
1999 of Enterprise Value to LTM net sales, LTM EBITDA and LTM EBIT. Baird then
compared these multiples to the relevant Dura multiples based on Dura's closing
share price of $33.56 on January 15, 1999, and Dura's LTM operating performance
statistics for the period ended September 30, 1998 (on a pro forma basis, as if
the acquisitions of Universal, Trident and the Hinge Business and the March 1998
sale of the Trust Preferred Securities and the June 1998 Offering took place on
October 1, 1997), as provided by Dura management. An analysis of the multiples
of Enterprise Value to LTM net sales, LTM EBITDA and LTM EBIT yielded 0.9x, 8.6x
and 11.9x, respectively, for Dura compared to ranges of 0.4x to 1.1x, 4.2x to
9.6x and 5.7x to 17.2x, respectively, for the comparable companies. For Dura and
each comparable company, Baird also calculated P/E Ratios based on closing stock
prices as of January 15, 1999 and net income statistics for LTM, estimated
calendar year 1998 and projected calendar year 1999 (based on Dura management's
estimates and exclusive of non-recurring items for Dura, and on First Call
consensus estimates for the comparable companies). An analysis of the P/E Ratios
based on earnings per share for LTM, estimated calendar year 1998 and projected
calendar year 1999 yielded 17.8x, 14.0x and 11.4x, respectively, for Dura
compared to ranges of 8.4x to 19.2x, 8.2x to 18.0x and 7.8x to 14.8x,
respectively, for the comparable companies. The table below summarizes the
results of this analysis and is qualified in its entirety by reference to the
other disclosure contained in this section and Appendix C of this Joint Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
COMPARABLE
EXCEL IMPLIED COMPANY
DURA MULTIPLES MULTIPLES RANGE
--------------- ---------------
<S> <C> <C>
Enterprise Value to LTM Net Sales...................................... 0.9x 0.4x to 1.1x
Enterprise Value to LTM EBITDA......................................... 8.6x 4.2x to 9.6x
Enterprise Value to LTM EBIT........................................... 11.9x 5.7x to 17.2x
LTM P/E Ratio.......................................................... 17.8x 8.4x to 19.2x
Calendar Year 1998 P/E Ratio........................................... 14.0x 8.2x to 18.0x
Calendar Year 1999 P/E Ratio........................................... 11.4x 7.8x to 14.8x
</TABLE>
38
<PAGE>
ANALYSIS OF SELECTED COMPARABLE ACQUISITION TRANSACTIONS. Baird reviewed
fourteen completed acquisition transactions and one pending acquisition
transaction which Baird deemed relevant. These transactions were chosen based on
a review of acquired companies that possessed general business, operating and
financial characteristics representative of companies which manufacture and sell
automotive parts. The fifteen transactions reviewed (the "Comparable
Transactions") were (acquiror / acquired company):
<TABLE>
<S> <C>
- - Borg-Warner Automotive, Inc. / - Dura Automotive Systems, Inc. /
Kuhlman Corporation GT Automotive Systems, Inc.
- - SPX Corporation / General Signal - Oxford Automotive, Inc. /
Corporation Howell Industries, Inc.
- - Dana Corporation / Echlin Inc. - Tomkins PLC / Stant Corporation
- - Dura Automotive Systems, Inc. / - Autoliv AB / Morton Auto Safety
Trident Automotive plc Products
- - Federal-Mogul Corporation / T&N plc - Tower Automotive, Inc. /
Automotive Products Company
- - Federal-Mogul Corporation / - Dura Automotive Systems, Inc. /
Fel-Pro Group KPI Automotive Group
- - BREED Technologies, Inc. / - Magna International Inc. / Douglas &
Allied Signal, Inc. (Safety Lomason Company
Restraint)
- - Adwest Group plc / Heidemann
</TABLE>
Baird noted that none of the Comparable Transactions was identical to the
merger. Accordingly, Baird noted that the analysis of comparable transactions
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of Excel and other factors that would
affect the acquisition value of comparable transactions including, among others,
the general market conditions prevailing in the equity capital markets at the
time of that transaction. For each of the Comparable Transactions, Baird
calculated multiples of Enterprise Value to LTM net sales, LTM EBITDA and LTM
EBIT; calculated P/E Ratios based on LTM net income; and, for the Comparable
Transactions involving publicly traded acquired companies, calculated the
premiums paid for the equity in these transactions over the public market value
of the equity at various times prior to the announcement of these transactions.
Baird then compared those multiples and premiums to the relevant Excel multiples
and premiums. These calculations yielded multiples of Enterprise Value to LTM
net sales, LTM EBITDA and LTM EBIT of 0.4x, 6.3x and 15.1x, respectively, for
Excel, compared to ranges of 0.2x to 1.8x, 6.3x to 13.0x and 10.1x to 19.9x,
respectively, for the Comparable Transactions. An analysis of the P/E Ratios
based on LTM net income yielded 18.9x for Excel, compared to a range of 12.0x to
33.6x for the Comparable Transactions. The table below summarizes the results of
this analysis and is qualified in its entirety by reference to the other
disclosure contained in this section and Appendix C of this Joint Proxy
Statement/ Prospectus.
<TABLE>
<CAPTION>
EXCEL COMPARABLE
IMPLIED TRANSACTION
MERGER MULTIPLES
MULTIPLES RANGE
--------- ---------------
<S> <C> <C>
Enterprise Value to LTM Net Sales.......................................... 0.4x 0.2x to 1.8x
Enterprise Value to LTM EBITDA............................................. 6.3x 6.3x to 13.0x
Enterprise Value to LTM EBIT............................................... 15.1x 10.1x to 19.9x
LTM P/E Ratio.............................................................. 18.9x 12.0x to 33.6x
</TABLE>
An analysis of the Implied Equity Value Per Share of $26.18 to the closing
price of Excel Common Stock one day, 30 days and 90 days prior to January 19,
1999, compared to the prices paid for the equity in
39
<PAGE>
the Comparable Transactions involving publicly traded acquired companies
relative to the market value of equity one day, 30 days and 90 days prior to the
announcement date of those transactions, yielded a one-day premium of 25.4%, a
30-day premium of 50.1% and a 90-day premium of 103.3% for Excel, compared to
premium ranges of 18.7% to 42.9%, 8.3% to 121.4% and 11.6% to 117.5%,
respectively, for the Comparable Transactions involving publicly traded acquired
companies. The table below summarizes the results of this analysis and is
qualified in its entirety by reference to the other disclosure contained in this
section and Appendix C of this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
EXCEL COMPARABLE
IMPLIED TRANSACTION
MERGER PREMIUMS
PREMIUMS RANGE
--------- -------------------
<S> <C> <C>
One-Day Premium........................................................ 25.4% 18.7% to 42.9%
30-Day Premium......................................................... 50.1% 8.3% to 121.4%
90-Day Premium......................................................... 103.3% 11.6% to 117.5%
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS. Baird performed a discounted cash flow
analysis of Excel using projections for calendar 1999 through 2003 developed by
Dura management. In that analysis, Baird assumed terminal value multiples of
10.0x to 12.0x EBIT in calendar year 2003 and discount rates of 11.0% to 13.0%.
That analysis produced implied per share values of Excel common stock ranging
from $30.61 to $41.13.
PRO FORMA MERGER ANALYSIS. Baird prepared a pro forma analysis of the
financial impact of the Merger. In conducting its analysis, Baird assumed, among
other things:
- purchase accounting treatment;
- the Merger Consideration;
- estimates of cost savings and operating synergies resulting from the
Merger, as provided by Dura's and Excel's management; and
- projected earnings estimates for Excel and Dura, as provided by Dura's
management.
Baird compared the earnings per share of Dura Class A Common Stock, on a
stand-alone basis, to the earnings per share of the common stock of the combined
company on a calendar pro forma basis. The results of the pro forma merger
analysis suggested that the Merger would be accretive to Dura on an earnings per
share basis in calendar 1999 and calendar 2000, assuming in each year cost
savings and operating synergies anticipated by Dura's and Excel's managements to
result from the Merger were achieved. The results of the pro forma merger
analysis are not necessarily indicative of future operating results or financial
position. The actual results achieved by the combined company may vary from
projected results and the variations may be material.
The foregoing summary does not purport to be a complete description of the
analyses performed by Baird. The preparation of a fairness opinion is a complex
process and is not susceptible to partial analyses or summary description. Baird
believes that its analyses must be considered as a whole, and that selecting
portions of those analyses without considering all analyses and factors, would
create an incomplete view of the processes underlying its opinion. Baird did not
attempt to assign specific weights to particular analyses. Any estimates
contained in Baird's analyses are not necessarily indicative of actual values,
which may be significantly more or less favorable than as set forth in Baird's
analysis. Estimates of values of companies do not purport to be appraisals or
necessarily to reflect the prices at which companies may actually be sold.
Because these estimates are inherently subject to uncertainty, Baird does not
assume responsibility for their accuracy.
40
<PAGE>
Baird, as part of its investment banking business, is engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements, and
valuations for estate, corporate and other purposes. Dura retained Baird because
of its experience and expertise in the valuation of businesses and their
securities in connection with mergers and acquisitions. In the ordinary course
of business, Baird may from time to time trade equity securities of Dura and
Excel for its own account and for accounts of its customers and, accordingly,
may at any time hold a long or short position in these securities.
Pursuant to an engagement letter dated May 26, 1998 between Dura and Baird,
Dura agreed to pay Baird a fee of $500,000, payable upon delivery of its
opinion, regardless of the conclusions reached by Baird in its opinion. In
addition, Dura has agreed to pay to Baird a transaction fee, payable upon
consummation of the Merger, equal to 0.3% of the aggregate Merger Consideration,
less 50% of the $500,000 fee paid to Baird in connection with the rendering of
its opinion. In the engagement letter, which was negotiated between Dura and
Baird, Dura has also agreed to reimburse Baird for its reasonable out-of-pocket
expenses. Dura has also agreed to indemnify Baird, its affiliates and their
respective directors, officers, partners, employees, agents and controlling
persons against certain liabilities relating to or arising out of its
engagement, including liabilities under the federal securities laws. In the
past, Baird has provided financial advisory services to Dura and certain of its
affiliates, including acting as lead-manager in the March 1998 sale of the Trust
Preferred Securities and co-manager of the June 1998 Offering. Baird may provide
investment banking services to Dura and certain of its affiliates in the future.
RECOMMENDATIONS OF EXCEL BOARD OF DIRECTORS; REASONS OF EXCEL FOR THE MERGER
In reaching its determination to approve and recommend the Merger Agreement,
the Excel Board of Directors considered a number of factors, including:
- SHAREHOLDER VALUE. The Merger Consideration provides Excel shareholders
with a substantial premium in comparison to trading prices for Excel
Common Stock during the period prior to the public announcement that Excel
had engaged Morgan Stanley as its financial advisor to consider strategic
alternatives to benefit Excel and enhance shareholder value. The cash
consideration of $25.50 per share represents a premium of 73.6% over
$14.688, which was the per share price of Excel Common Stock on November
17, 1998 (the day before such public announcement).
- OPPORTUNITY FOR SHAREHOLDERS TO CONTINUE THEIR INVESTMENT. Excel
shareholders who desire to continue their investment will be able to
exchange their shares of Excel Common Stock for shares of Dura Class A
Common Stock at what the Excel Board believes to be a favorable Exchange
Ratio in a transaction which, to the extent shares of Dura Class A Common
Stock are received, is intended to qualify as nontaxable for Federal
income tax purposes.
- EMPLOYEE OPPORTUNITY. The Excel Board was mindful that strong management
is one of the acquisition criteria applied by Dura and that Dura
recognizes that Excel has a strong and experienced management team. Such
recognition on the part of Dura is in part based on having had the
opportunity to work with Excel's management in connection with the joint
venture formed in 1996 to purchase an equity interest in Pollone S.A., a
Brazilian manufacturer of automotive components and mechanical assemblies.
Conversely, Excel management respects the capabilities of Dura management
and, although there are no commitments of continued employment, the Excel
Board believes that Excel's management and other employees will have a
fair opportunity to integrate into the Dura organizational structure.
- INDUSTRY TRENDS AND CONSOLIDATIONS. Like the Dura Board, the Excel Board
recognizes that the automotive components supply industry is undergoing
significant consolidation and globalization as OEM's continue to reduce
their supplier base. This pressure to consolidate was a key factor in the
Excel Board's determination that it should consider engaging an investment
banker to explore strategic alternatives, including a possible business
combination or merger. The Excel Board
41
<PAGE>
recognized that it would be extremely difficult for Excel, on its own, to
achieve the necessary growth to remain competitive in the automotive
components supply industry. The combination of Excel and Dura, on the
other hand, will result in a strong global organization which will have
annual revenues of approximately $2 billion and will be in a much stronger
position than either entity standing alone to achieve the further growth
considered essential to remain competitive in the industry.
- DURA ACQUISITION RECORD. The impressive record of Dura in the consummation
of significant acquisition transactions and its record of achieving its
performance goals in connection with the integration of acquired companies
were favorable factors for the Excel Board.
- EXPLORATORY PROCESS. The process conducted by Excel management and Morgan
Stanley in exploring various strategic options available to Excel,
including in particular possible business combinations or mergers or a
sale of the company, and in determining the potential value that could be
realized by the Excel shareholders in a sale or business combination
transaction was thorough and led to a determination that the proposed
merger was in the best interests of Excel and its shareholders. The
process included (i) contacts with 19 strategic buyers and 18 financial
buyers considered to be the most likely companies to be interested in and
financially and otherwise capable of engaging in a business combination
with or purchase of Excel and (ii) providing each of such entities with an
opportunity to obtain information regarding Excel and to pursue a proposal
for a transaction with Excel. Further, the public announcement on November
18, 1998 concerning the engagement of Morgan Stanley put all other parties
on notice that Excel was engaged in a process to pursue a strategic
transaction. (see "--Background of Merger")
- FAIRNESS OPINION. Excel's financial advisor, Morgan Stanley, is considered
to be extremely knowledgeable and experienced in the worldwide automotive
industry and was familiar with the business of Excel, having served on a
more limited basis as an advisor to Excel before its engagement in
November, 1998 to serve as Excel's financial advisor in pursuing strategic
alternatives. Morgan Stanley advised Excel and the Board of Directors
throughout the exploratory process and with regard to the Merger
Agreement, rendered its written opinion that the consideration to be
received by the holders of Excel Common Stock is fair from a financial
point of view to such holders. The written opinion of Morgan Stanley and
the analysis underlying such opinion are summarized below, and a complete
copy of such opinion, setting forth the procedures followed, the matters
considered, the scope of the review undertaken and the assumptions made by
Morgan Stanley is included as Appendix D to this Joint Proxy
Statement/Prospectus. See "--Opinion of Financial Advisor to Excel."
- TERMS OF THE MERGER AGREEMENT. The Excel Board of Directors took into
consideration the terms of the Merger Agreement, including the
representations, warranties, covenants and conditions contained in the
Merger Agreement, as well as the financial terms of the Merger, which
Excel believes are fair and in the best interests of Excel and Excel's
shareholders.
In view of the wide variety of factors considered by the Excel Board in
connection with its evaluation of the Merger and the complexity of such matters,
the Excel Board did not consider it practicable to, nor did it attempt to,
quantify, rank or otherwise assign relative weights to the specific factors it
considered in reaching its decision. The Excel Board relied on the experience
and expertise of its financial advisors for quantitative analysis of the
financial terms of the Merger. See "--Opinion of Financial Advisor to Excel." In
addition, the Excel Board did not undertake to make any specific determination
as to whether any particular factor (or any aspect of any particular factor) was
determinative to its ultimate conclusion or assign any particular weight to any
factor, but rather conducted a discussion of the factors described above,
including asking questions of Excel's management and legal and financial
advisors, and reached a general consensus that the Merger was advisable and in
the best interests of Excel and Excel's shareholders. In
42
<PAGE>
considering the factors described above, individual members of the Excel Board
may have given different weight to different factors.
BASED ON THE FOREGOING, THE EXCEL BOARD UNANIMOUSLY RECOMMENDS THAT EXCEL
SHAREHOLDERS VOTE "FOR" THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISOR TO EXCEL
In a letter agreement dated November 18, 1998 (the "Engagement Letter"),
Excel engaged Morgan Stanley as exclusive financial advisor to explore strategic
alternatives for Excel, including a potential business combination or strategic
merger. Morgan Stanley was selected by Excel based on Morgan Stanley's
qualifications, expertise and reputation. On January 18, 1999, Morgan Stanley
delivered to the Excel Board of Directors an oral opinion that, on and as of the
date of such opinion, and based on assumptions made, matters considered, and
limits of review, as set forth in the opinion, the consideration to be paid by
Dura pursuant to the Merger Agreement was fair from a financial point of view to
the holders of shares of Excel Common Stock. This opinion was subsequently
confirmed in a written opinion dated January 19, 1999 (the "Morgan Stanley
Opinion").
THE FULL TEXT OF THE MORGAN STANLEY OPINION, DATED JANUARY 19, 1999, WHICH
SETS FORTH, AMONG OTHER THINGS, ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY MORGAN STANLEY IN
RENDERING ITS OPINION, IS ATTACHED AS APPENDIX D TO THIS JOINT PROXY STATEMENT/
PROSPECTUS AND INCORPORATED HEREIN BY REFERENCE. EXCEL SHAREHOLDERS ARE URGED
TO, AND SHOULD, READ THE MORGAN STANLEY OPINION CAREFULLY AND IN ITS ENTIRETY.
THE MORGAN STANLEY OPINION IS DIRECTED TO THE BOARD, ADDRESSES ONLY THE FAIRNESS
OF THE CONSIDERATION PAID BY DURA PURSUANT TO THE MERGER AGREEMENT FROM A
FINANCIAL POINT OF VIEW TO THE HOLDERS OF SHARES OF EXCEL COMMON STOCK AND IT
DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER OR CONSTITUTE A RECOMMENDATION
TO ANY HOLDER OF EXCEL COMMON STOCK AS TO HOW TO VOTE AT THE EXCEL SPECIAL
MEETING. THE FOLLOWING SUMMARY OF THE MORGAN STANLEY OPINION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE MORGAN STANLEY OPINION ATTACHED AS
APPENDIX D TO THIS JOINT PROXY STATEMENT/PROSPECTUS.
In rendering the Morgan Stanley Opinion, Morgan Stanley, among other things:
- reviewed certain publicly available financial statements and other
information of Excel and Dura, respectively;
- reviewed certain internal financial statements and other financial and
operating data concerning Excel and Dura prepared by the managements of
Excel and Dura, respectively;
- analyzed certain financial projections prepared by the managements of
Excel and Dura, respectively;
- discussed the past and current operations and financial condition and the
prospects of Excel, including information relating to certain strategic,
financial and operational benefits anticipated from the Merger, with
senior executives of Excel;
- discussed the past and current operations and financial condition and the
prospects of Dura, including information relating to certain strategic,
financial and operational benefits anticipated from the Merger, with
senior executives of Dura;
- reviewed the pro forma impact of the Merger on Dura's earnings per share,
consolidated capitalization and financial ratios;
- reviewed the reported prices and trading activity for the Excel Common
Stock and for the Dura Class A Common Stock;
43
<PAGE>
- compared the financial performance of Excel and Dura and the prices and
trading activity of the Excel Common Stock and Dura Class A Common Stock
with that of certain other comparable publicly traded companies and their
securities;
- reviewed the financial terms, to the extent publicly available, of certain
comparable acquisition transactions;
- participated in discussions and negotiations among representatives of
Excel and Dura and their financial and legal advisors;
- reviewed the Merger Agreement, and certain related documents; and
- performed such other analyses and considered such other factors as Morgan
Stanley has deemed appropriate.
In rendering the Morgan Stanley Opinion, Morgan Stanley assumed and relied
upon, without independent verification, the accuracy and completeness of the
information reviewed by it for the purposes of the Morgan Stanley Opinion. With
respect to the financial projections, including information relating to certain
financial and operational benefits anticipated from the Merger, Morgan Stanley
assumed that they were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the prospects of Excel and Dura.
Morgan Stanley also relied upon, without independent verification, the
assessment by the managements of Excel and Dura of Excel's and Dura's
technologies and products, the timing and risks associated with the integration
of Excel with Dura, and the validity of, and risks associated with, Excel's and
Dura's existing and future technologies and products. Morgan Stanley did not
make any independent valuation or appraisal of the assets or liabilities of
Excel or Dura, nor was it furnished with any such appraisals. In addition,
Morgan Stanley assumed that the Merger would be consummated in accordance with
the terms set forth in the Merger Agreement. The Morgan Stanley Opinion was
necessarily based on financial, economic, market and other conditions as in
effect on, and the information made available to Morgan Stanley as of, the date
thereof.
The following is a brief summary of certain analyses performed by Morgan
Stanley in preparation of the Morgan Stanley Opinion:
TRANSACTION OVERVIEW. Morgan Stanley noted that, based on (i) the Cash
Consideration, the Conversion Number (each as defined in the Merger Agreement)
and the number of outstanding shares of Excel Common Stock, (ii) a $33.56 price
per share valuation for Dura Class A Common Stock (which was the closing price
of Dura Class A Common Stock on January 15, 1999) and (iii) the assumption that
each holder of Excel Common Stock elected for 50% cash and 50% stock pursuant to
its Stock Election and Cash Election, the Cash Consideration and the Conversion
Number (each as defined in the Merger Agreement), taken together, implied an
equity value of $26.18 per share of Excel Common Stock. Morgan Stanley also
noted that $26.18 per share represented a 25.4% premium to the closing price on
January 15, 1999 (the last full trading day prior to the announcement of the
Merger Agreement) of $20.88 and a 104.3% premium to the "unaffected" closing
price on October 16, 1998 (one month prior to the public announcement of Excel's
engagement of Morgan Stanley to explore strategic alternatives) of $12.81.
DISCOUNTED CASH FLOW ANALYSIS. Morgan Stanley analyzed certain financial
projections prepared by the management of Excel for the fiscal years 1998
through 2001 (the "Management Projections") and performed a discounted cash flow
analysis of Excel based on the Management Projections. Morgan Stanley discounted
the unlevered free cash flows of Excel at a range of discount rates of 9.5% to
10.5%, representing an estimated weighted average cost of capital range for
Excel, and terminal values based on a range of multiples of 3.5 - 5.0 times
estimated 2008 EBITDA to arrive at a range of present values for Excel. Such
present values were then adjusted for Excel's debt (net of cash), preferred
stock, proceeds from the exercise of outstanding options and an estimate of the
value of the 30% of Schade that Excel did not own to arrive at an equity value.
For this purpose, Schade was valued (on an aggregate value basis) at 4.2 times
Schade's 1999 estimated EBITDA, as projected by management in the Management
Projections.
44
<PAGE>
Based on this analysis, Morgan Stanley calculated values representing equity
value per share of Excel Common Stock ranging from approximately $23 to $29.
HISTORICAL PUBLIC MARKET TRADING VALUE. Morgan Stanley reviewed the
historical performance of Excel Common Stock and Dura Class A Common Stock based
on an historical analysis of closing prices and trading volumes from the first
trading day in January 1994 through January 15, 1999 (the last full trading day
considered by Morgan Stanley prior to the delivery of the Morgan Stanley
Opinion) with respect to Excel and from August 15, 1996 (the first trading day
following Dura's initial public offering) through January 15, 1999 (the last
full trading day considered by Morgan Stanley prior to the delivery of the
Morgan Stanley Opinion) with respect to Dura. Morgan Stanley noted that in the
LTM of trading activity through January 15, 1999, the closing price of the Excel
Common Stock ranged from a low of $11.50 per share to a high of $22.63. Morgan
Stanley also noted that, during the period from the first trading day in January
1994 through January 15, 1999, the closing prices of Excel Common Stock ranged
from a low of $10.88 (in 1996) per share to a high of $25.50 (in 1997), with a
median closing price during the period of $16.23 per share.
VALUATION OF PUBLICLY TRADED COMPARABLE COMPANIES. Morgan Stanley reviewed
the current valuation of publicly traded companies in the automotive parts
sector that Morgan Stanley considered to be comparable to Excel. Morgan Stanley
reviewed measures of valuation including historical and projected price to
earnings ratios, historical and projected price to cash flow ratios and
historical and projected aggregate value to EBITDA ratios. Morgan Stanley
observed an aggregate value to 1999 estimated EBITDA multiple range of 4.0 - 5.5
times for comparable publicly traded companies. Based on the forecast of 1999
EBITDA in the Management Projections (adjusted for the 30% of Schade that Excel
does not own), this multiple range implied a range of equity values per share of
Excel Common Stock between $20 and $31. Based on the estimates of 1999 EBITDA
(adjusted for the 30% of Schade that Excel does not own) by recognized research
analysts that cover Excel, this multiple range implied a range of equity values
per share of Excel Common Stock between $15 and $25.
SELECTED PRECEDENT INDUSTRY ACQUISITIONS ANALYSIS. Using publicly available
information, Morgan Stanley reviewed recent precedent transactions involving
companies in the automotive parts sector that Morgan Stanley considered to be
comparable to Excel. Morgan Stanley reviewed publicly available financial
information including the aggregate value to the LTM EBITDA. Morgan Stanley
observed an aggregate value to LTM EBITDA range of approximately 6-7 times for
the precedent transactions. Based on Excel management's forecast for 1998
(adjusted for the 30% of Schade that Excel does not own), this multiple range
implied a range of equity values per share of Excel Common Stock between $22 and
$28.
PRO FORMA ANALYSIS OF THE MERGER. Morgan Stanley reviewed the pro forma
impact of the Merger on Dura's earnings per share for the fiscal years 1998
through 2000. Such analysis was based earnings projections for Excel and Dura
prepared by the managements of Excel and Dura, respectively, and synergies
expected to be realized in the transaction. Morgan Stanley noted that holders of
Excel Common Stock would receive approximately 5 million shares of Dura Class A
Common Stock, representing 25.8% ownership of the pro forma entity on a
fully-diluted basis. Morgan Stanley noted that, based on (i) the assumptions
with respect to Dura forecasts and financing for the Merger provided to Morgan
Stanley by Dura, and (ii) a transaction value per share of Excel Common Stock of
$25.50, the Merger would be dilutive to Dura stockholders in 1998 (pro forma for
the Merger), slightly accretive in 1999 and slightly more accretive in 2000.
In connection with the review of the Merger by the Board, Morgan Stanley
performed a variety of financial and comparative analyses for purposes of the
Morgan Stanley Opinion given in connection herewith. While the foregoing summary
describes the analyses and factors reviewed by Morgan Stanley in connection with
the Morgan Stanley Opinion, it does not purport to be a complete description of
all the analyses performed by Morgan Stanley in arriving at its opinion. The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial analysis or summary description. In arriving at
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the Morgan Stanley Opinion, Morgan Stanley considered the results of all its
analyses as a whole and did not attribute any particular weight to any analysis
or factor considered by it. Furthermore, selecting any portion of its analyses,
without considering all analyses, would create an incomplete view of the process
underlying the Morgan Stanley Opinion. In addition, Morgan Stanley may have
given various analyses and factors more or less weight than other analyses or
factors, and may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting from any
particular analysis described above should not be taken to be Morgan Stanley's
view of the actual value of Excel or Dura. In performing its analyses, Morgan
Stanley made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond the
control of Excel and Dura. Any estimates contained herein are not necessarily
indicative of future results or actual values, which may be significantly more
or less favorable than those suggested by such estimates. The analyses performed
were prepared solely as part of Morgan Stanley's analysis of the fairness of the
considerations to be paid by Dura pursuant to the Merger Agreement from a
financial point of view to the holders of shares of Excel Common Stock and were
conducted in connection with the delivery of the Morgan Stanley Opinion. The
analyses do not purport to be appraisals or to reflect the prices at which Excel
or Dura might actually be sold. Morgan Stanley did not recommend the
consideration to be paid by Dura or that any consideration to be paid by Dura
constituted the only appropriate consideration for the Merger.
In addition, Morgan Stanley's opinion and presentation to the special
committee of the Board was one of the many factors taken into consideration by
the Board in making their determination to recommend approval of the Merger.
Consequently, the Morgan Stanley analyses described above should not be viewed
as determinative of the opinion of the Board with respect to the consideration
paid in connection with the Merger. The consideration to be paid by Dura
pursuant to the Merger Agreement was determined through arm's-length
negotiations between Excel and Dura and was approved by the Board.
Excel engaged Morgan Stanley to advise it on strategic alternatives and to
provide the Morgan Stanley Opinion because of its experience and expertise.
Morgan Stanley is an internationally recognized investment banking and advisory
firm. Morgan Stanley, as part of its investment banking business, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. In the course of its
market-making and other trading activities, Morgan Stanley may, from time to
time, have a long or short position in, and buy and sell, securities of Excel or
Dura. In the past, Morgan Stanley has performed financial advisory and financing
services for both Dura and Excel and has received customary fees for the
provision of such services.
Pursuant to the Engagement Letter, upon the consummation of the Merger,
Morgan Stanley will receive a fee for its services of approximately $3.5
million. In the event the Merger is not consummated, Morgan Stanley will receive
an advisory fee of $300,000. In addition, Morgan Stanley will be reimbursed for
its expenses incurred in connection with the Merger, including outside counsel.
Finally, Excel has agreed to indemnify Morgan Stanley and its affiliates, their
respective directors, officers, agents and employees and each person, if any,
controlling Morgan Stanley, or any of its affiliates against certain liabilities
and expenses, including liabilities under federal securities laws, in connection
with Morgan Stanley's engagement.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
DURA
Certain members of the Dura Board and Dura's management may be deemed to
have certain interests in the Merger that are in addition to their interests as
holders of Dura Common Stock. The Dura Board recognized such interests and
determined that such interests neither supported nor detracted from the fairness
of the Merger to Dura.
Hidden Creek will be paid a fee by Dura of $2.0 million for services
rendered in connection with the Merger. S.A. Johnson, the Chairman of the Dura
Board, is the founder, Chief Executive Officer and President of Hidden Creek and
Messrs. Robert R. Hibbs, a Vice President and Director of Dura, and Scott D.
Rued, a Vice President of Dura, serve as Vice President--Corporate Development
and Executive Vice President and Chief Financial Officer, respectively, of
Hidden Creek. In addition, Messrs. Johnson, Hibbs and Rued are all stockholders
of J2R Corporation ("J2R"), which currently holds an aggregate of 308,211 shares
of Dura Class B Common Stock.
EXCEL
Certain members of the Excel Board and Excel's management may be deemed to
have certain interests in the Merger that are in addition to their interests as
holders of Excel Common Stock. The Excel Board recognized such interests and
determined that such interests neither supported nor detracted from the fairness
of the Merger to Excel's shareholders.
APPOINTMENT TO DURA BOARD OF DIRECTORS. Pursuant to the Merger Agreement,
Dura has agreed to use all authority to cause James O. Futterknecht, Jr., the
Chairman, President and Chief Executive Officer of Excel, and an additional
person to be selected by Mr. Futterknecht and approved by the Chairman of the
Board of Dura to be elected as members of the Dura Board.
STOCK OPTIONS. Pursuant to the Merger Agreement, each outstanding option to
acquire Excel Common Stock (an "Excel Option") will be converted into an option
to acquire shares of Dura Class A Common Stock. The number of shares of Dura
Class A Common Stock for which each converted option will be exercisable will be
equal to the number of shares of Excel Common Stock subject to the original
option immediately prior to the effective time of the Merger multiplied by the
Exchange Ratio at an exercise price per share equal to the per share exercise
price specified in the original option divided by the Exchange Ratio. Following
such conversion, all other terms and conditions governing each converted Excel
Option will continue to apply. The value of such converted options will depend
on the market price of Dura Class A Common Stock following the completion of the
Merger. As of February 16, 1999, the following officers and directors of Excel
held Excel Options exercisable for the following number of shares
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of Excel Common Stock, which are convertible into options to acquire the
following number of shares of Dura Class A Common Stock:
<TABLE>
<CAPTION>
EXCEL DURA
NAME OPTIONS OPTIONS
- ---------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
James O. Futterknecht, Jr......................................................... 20,000 16,000
Joseph A. Robinson................................................................ 9,750 7,800
James E. Crawford................................................................. 11,000 8,800
Louis R. Csokasy.................................................................. 11,000 8,800
Terrance L. Lindberg.............................................................. 11,000 8,800
James M. Krzyzewski............................................................... 8,000 6,400
Michael C. Paquette............................................................... 11,000 8,800
Robert A. Pickering............................................................... 11,000 8,800
Ike K. Eikelberner................................................................ 11,000 8,800
John G. Keane..................................................................... 4,000 3,200
Richard A. Place.................................................................. 4,000 3,200
James K. Sommer................................................................... 4,000 3,200
Ralph R. Whitney, Jr.............................................................. 4,000 3,200
</TABLE>
STOCK ISSUANCES. Pursuant to the Merger Agreement, Excel and Dura have
agreed that Excel will issue up to 68,000 shares of Excel Common Stock prior to
the Effective Time to certain members of Excel's Board of Directors and Excel's
management (the "Non-Compete Payment") in consideration for each such person's
entry into an agreement not to compete with the businesses of Excel for a period
of one year (in the case of Mr. Futterknecht) or six months (in the case of each
other person receiving a Non-Compete Payment) following termination of such
person's employment by Excel. Under the Merger Agreement, Excel has agreed to
take reasonable efforts to cause each person receiving a Non-Compete Payment to
enter into an exchange agreement with Dura, providing for the issuance, in lieu
of the issuance of Excel Common Stock pursuant to the Non-Compete Payment, of a
number of shares of Dura Class A Common Stock equal to the number of shares of
Excel Common Stock that would have been issued to such person multiplied by the
Exchange Ratio. The following officers of Excel are expected to receive the
following number of shares of Dura Class A Common Stock as a result of the
Non-Compete Payment:
<TABLE>
<CAPTION>
SHARES OF DURA
NAME CLASS A COMMON STOCK
- --------------------------------------------------------------------------------- ---------------------
<S> <C>
James O. Futterknecht, Jr........................................................ 12,086
Joseph A. Robinson............................................................... 6,042
James E. Crawford................................................................ 6,042
Louis R. Csokasy................................................................. 6,042
Terrance L. Lindberg............................................................. 6,042
James M. Krzyzewski.............................................................. 6,042
Michael C. Paquette.............................................................. 6,042
Robert A. Pickering.............................................................. 6,042
</TABLE>
EXECUTIVE SEPARATION AGREEMENTS. Pursuant to Executive Separation
Agreements between Excel and each of Messrs. Futterknecht, Robinson, Csokasy,
Crawford, Lindberg, Paquette, Krzyzewski and Eikelberner such executives will be
entitled to receive certain payments if a change in control of Excel occurs,
such as will result from the Merger, and they are terminated within two years
thereafter for any reason other than serious executive misconduct (i.e.,
commission of a felony or an act intended to result in the executive's
enrichment at Excel's expense), death, normal retirement or total and permanent
disability, or if they leave Excel for "good reason." An executive would have
good reason to leave Excel if the executive is assigned to duties inconsistent
with past duties or duties which would result in a diminution of authority or
responsibility, if the executive's base compensation or base formula is reduced
or the executive is transferred. Under these circumstances, these executives
would be entitled to receive a lump sum payment
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equal to 2.95 times the executive's average annual compensation paid by Excel
for the most recent five taxable years or the portion of such five-year period
that such executive performed services for Excel and would be entitled to
continuation of certain retirement and medical insurance benefits for three
years after the termination of the executive's employment by Excel or its
successor.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. Pursuant to the Merger
Agreement, Dura has agreed to provide certain indemnification to the present and
former officers and directors of Excel and has agreed to maintain directors' and
officers' liability insurance for such individuals under certain circumstances.
For further details regarding these indemnification arrangements, see "The
Merger Agreement--Covenants-- Indemnification."
DURA BOARD OF DIRECTORS FOLLOWING THE MERGER
Dura has agreed that, as soon as reasonably practicable after the Merger,
the Dura Board will adopt resolutions increasing the number of members of the
Dura Board from 12 to 14 directors and appointing Mr. Futterknecht and such
additional person who is recommended by Mr. Futterknecht and approved by Dura's
Chairman to fill the vacancies created by such increase in the number of
directors. Each shall serve until the next regularly scheduled annual meeting of
Dura or until their successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Restated Certificate and the Dura By-laws, and each shall be nominated to serve
on the Dura Board at such annual meeting of Dura.
Pursuant to the terms of the Amended and Restated Stockholders Agreement,
Dura, Onex, J2R, Alkin Co. and certain individuals named therein (including
members of Dura's management) agreed to vote their shares of Dura Class A Common
Stock and Dura Class B Common Stock and take any other action necessary to
ensure the Dura Board will be comprised of eleven persons, seven of whom,
including the two independent directors, shall be designated by Onex, J2R and
certain stockholders affiliated with Hidden Creek (collectively, the "MC
Stockholders") and four of whom shall be designated by Alkin Co. (the "Alkin
Stockholders"). This voting provision terminates automatically when the Alkin
Stockholders cease to own at least 10% of the outstanding Common Stock. The
Company expects that the Alkin Stockholders will cease to own at least 10% of
the outstanding Common Stock upon the issuance of the Dura Class A Common Stock
in the Merger.
AMENDMENT OF EXCEL RIGHTS AGREEMENT
Excel entered into an agreement (the "Rights Agreement") with Chase Mellon
Shareholder Services L.L.C. dated December 21, 1995 pursuant to which Excel
issued one right to purchase Series A Junior Participating Preferred Shares of
Excel for each outstanding share of Excel Common Stock. The Excel Rights
Agreement has been amended with the result that neither the execution of the
Merger Agreement by Excel, nor the consummation of the transactions contemplated
thereby, will cause the rights issued pursuant to the Rights Agreement to become
exercisable pursuant to the Rights Agreement or otherwise trigger any effect
under the Rights Agreement.
THE FINANCING
The total amount of funds required by Dura in connection with the Merger and
the Adwest Acquisition and related transactions is expected to be approximately
$1.0608 billion, consisting of (i) with respect to the Merger, (A) up to $157.6
million payable to Excel shareholders who cash in the Merger, (B) approximately
$243.5 million to refinance certain of Dura's existing indebtedness, (C)
approximately $100.0 million to refinance Excel's existing indebtedness, (D)
approximately $9.3 million in prepayment penalties in connection with
refinancing Excel's existing indebtedness and (E) approximately $25.0 million to
pay estimated fees and expenses and (ii) with respect to the Adwest Acquisition,
(A) $210.0 million payable to Adwest's shareholders, (B) $120.0 million to
refinance Adwest's existing indebtedness and (C) approximately $25.0 million to
pay estimated fees and expenses. The proceeds to pay such amounts
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will be obtained from new senior credit facilities (described below) and cash on
hand of Dura, Excel and Adwest of up to $43.5 million.
On February 2, 1999, Bank of America and NMS delivered a Commitment Letter
(the "Commitment Letter") to Dura. Pursuant to the Commitment Letter, but
subject to the conditions set forth therein, Bank of America has agreed to act
as administrative agent (in such capacity, the "Administrative Agent") for a
proposed senior secured term loan and revolving credit facility aggregating up
to approximately $1,150,000,000 (collectively, the "Facilities"), including (a)
a $200.0 million interim term loan (the "Interim Term Loan"), (b) a $275.0
million tranche A term loan (the "Tranche A Term Loan"), (c) a $275.0 million
tranche B term loan (the "Tranche B Term Loan")and (d) a $400.0 million
revolving credit facility (the "Revolving Credit Facility"). Bank of America
intends to syndicate a portion of the Facilities to other banks or financial
institutions (together with Bank of America, the "Lenders") and NMS has agreed
to act as the exclusive lead arranger and book manager in connection with
syndicating the Facilities.
The proceeds of the Facilities will be used (i) to pay up to $157.6 million
to Excel shareholders who receive cash in the Merger, (ii) to pay $210.0 million
to the Adwest shareholders, (iii) to refinance an aggregate of approximately
$463.5 million of outstanding indebtedness of Dura, Adwest and Excel (and pay
penalties in connection therewith of approximately $9.3 million), and (iv) for
working capital and general corporate purposes, including the payment of fees
and expenses incurred by Dura, Adwest and Excel in connection with the Merger,
the Adwest Acquisition and related transactions. Bank of America's and NMS'
obligations under the Commitment Letter are subject to numerous conditions.
The Commitment Letter contemplates that the definitive credit agreement (the
"Credit Agreement") will contain terms and conditions which are customary in
transactions of this type, including, without limitation, the following:
- BORROWERS. The borrowers under the Facilities will be Dura Operating,
Merger Sub, the surviving corporation in the Merger, Dura UK and various
other direct and indirect wholly owned foreign and domestic subsidiaries
of Dura (the "Borrowers").
- TRANCHES. The Facilities will be a multicurrency credit facility
consisting of (i) the Interim Term Loan, (ii) the Tranche A Term Loan,
(iii) the Tranche B Term Loan, and (iv) the Revolving Credit Facility.
- INTEREST RATE. Amounts outstanding under the Facilities will bear
interest, at the option of the Borrowers, at a rate per annum equal to
either: (i) the Eurocurrency interbank offered rate (the "Eurocurrency
Rate") or (ii) the Alternate Base Rate, in each case, plus an Applicable
Margin. The "Alternate Base Rate" is defined as the higher of (x) Bank of
America's reference rate, and (y) 0.50% per annum over the federal funds
rate.
The Applicable Margin for the Tranche A Term Loan and the Revolving Credit
Facility is initially at 2.25% for Eurocurrency Rate loans and 0.75% for
Alternate Base Rate loans. The Applicable Margin for Tranche A Term Loan and the
Revolving Credit Facility will in each case adjust according to a performance
pricing grid based on Dura's ratio of senior debt to EBITDA, ranging from (i)
for Eurocurrency loans, 2.25% to 1.50% and (ii) for Alternate Base Rate loans,
0.75% to 0.00%. The Applicable Margin for the Interim Term Loan is fixed at
2.25% for Eurocurrency loans and 0.75% for Alternate Base Rate loans. The
Applicable Margin for the Tranche B Term Loan is fixed at 2.50% for Eurocurrency
loans and 1.00% for Alternate Base Rate loans.
- TERM. Borrowings under the Interim Term Loan shall be payable in full 18
months from the date of the Credit Agreement. Borrowings under the Tranche
A Term Loan and the Tranche B Term Loan will be amortized, and commitments
with respect to drawings thereunder will be correspondingly reduced, based
upon an agreed upon amortization schedule with final payment of all
amounts outstanding thereunder being due and payable in full in six years
from the date of the Credit Agreement, in the case of Tranche A Term
Loans, and seven years from the date of the Credit
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Agreement, in the case of Tranche B Term Loans. The Revolving Credit
Facility will be available on a revolving basis for a period of six years.
- GUARANTORS. All of the Borrowers' obligations under the Facilities will be
fully and unconditionally guaranteed by all present and future domestic
and foreign subsidiaries, except for certain agreed upon subsidiaries and
any foreign guarantors, if any material tax consequences would result from
such foreign guarantor's guaranty.
- SECURITY. The Facilities will be secured by a first priority security
interest in (i) all existing and after-acquired tangible and intangible
assets of the Borrowers and their subsidiaries, including, without
limitation, intellectual property, real property, all of the capital stock
owned by the Borrowers and each of their subsidiaries and any
inter-company debt obligations (with exceptions for certain foreign
subsidiaries to be mutually agreed).
- CONDITIONS. The effectiveness of the Credit Agreement will be subject to
the satisfaction of customary conditions precedent for leveraged
financings generally, including, without limitation, the following
(collectively, the "Conditions"):
- negotiation, execution and delivery of a definitive Credit Agreement
and related documentation satisfactory to NMS, Bank of America and the
Lenders which shall include but not be limited to, satisfactory
opinions of counsel, receipt of necessary governmental and third party
approvals for the transactions other than (i) certain approvals in
connection with the acquistiion of Adwest, which, pursuant to the terms
of the Adwest offering documents, will be satisfied after the Adwest
Acquisition has closed and (ii) certain approvals the failure to obtain
of which could not reasonably be expected to have a material adverse
effect;
- receipt of all fees and expenses due and owing to the Lenders, the
Administrative Agent and NMS in connection with the Credit Facility;
and
- reasonable satisfaction of the Administrative Agent with the corporate
capital and ownership structure, shareholders agreements and management
of Dura, the Borrowers and their subsidiaries after giving effect to
the Merger and the Adwest Acquisition.
- SPECIFIC CONDITIONS PRECEDENT TO MERGER. The obligations of the Lenders
under the Credit Agreement to provide financing for the Merger will be
subject to the satisfaction of customary conditions precedent for
leveraged transactions generally, including, without limitation, the
following:
- the Conditions shall have been satisfied;
- the Administrative Agent's satisfactory review of the Merger Agreement,
and any related documents for such transaction which shall provide for
(i) the issuance of equity in Dura in exchange for not less than 50% of
the common shares of Excel and for an aggregate purchase price not to
exceed $500.0 million including repayment in full of all indebtedness
of Excel and payment of fees and expenses related to the Merger;
- satisfaction by the Administrative Agent of the consummation of the
Merger in accordance with the Merger Agreement and related documents
and in compliance with applicable laws and regulatory approvals and
existing contractual restrictions;
- receipt by the Administrative Agent of satisfactory evidence that it
has been granted of behalf of the Lenders a perfected, first priority
lien in all collateral including collateral acquired in connection with
the Merger (subject exceptions for foreign subsidiaries), subject to no
other liens except permitted liens to-be-determined;
- the absence of any order, decree, judgment, ruling or injunction which
restrains the consummation of the Merger in the manner contemplated by
the Merger Agreement;
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- the absence of a material adverse change since December 31, 1997 in the
business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of Dura or Excel, in
each case, taken as a whole together with their subsidiaries, or in the
facts and information regarding such entities as represented to date;
and
- the trueness and correctness in all material respects of all
representations and warranties contained in the Credit Agreement and
the absence of any default thereunder.
- SPECIFIC CONDITIONS PRECEDENT TO ADWEST ACQUISITION. The obligations of
the Lenders under the Credit Agreement to provide financing for the Adwest
Acquisition will be subject to the following conditions precedent, among
others:
- the Conditions shall have been satisfied;
- Dura's offer to acquire Adwest shall have been declared unconditional
as to acceptances of at least 75% of the ordinary shares of Adwest,
such offer shall have become or been declared unconditional in all
respects and the offer price for the stock of Adwest shall not exceed
L1.50 per ordinary share;
- receipt of the Adwest offering document and satisfaction of the Lenders
and their counsel with such Adwest offering document and that the
Adwest Acquisition has been consummated in accordance therewith;
- receipt of satisfactory guaranty and pledge documentation and legal
opinions relating thereto evidencing a satisfactory security interest
in the assets and stock of the Borrowers and Adwest and their
subsidiaries (with appropriate exceptions for foreign collateral); and
- any funding of the Adwest Acquisition shall occur prior to or on August
1, 1999.
- COVENANTS AND EVENTS OF DEFAULT. The Credit Agreement will contain
affirmative and negative covenants and events of default, in each case
which are customary for credit facilities of the size, type and purpose of
the Facilities. Such affirmative and negative covenants will, among other
matters, limit certain activities of the Borrowers and require the
Borrowers to satisfy certain ongoing financial requirements. Such events
of default will include, among other matters, a cross-default to other
indebtedness of the Borrowers and their subsidiaries.
- EXPIRATION. The obligations of Bank of America and NMS under the
Commitment Letter will expire and terminate automatically if loan
documentation satisfactory in form and substance to Bank of America and
NMS and their respective counsel is not executed on or before May 28,
1999.
HSR ACT AND OTHER REGULATORY APPROVALS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act") and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), certain acquisition transactions may not be consummated
unless notice has been given and certain information has been furnished to the
Antitrust Division of the Department of Justice (the "DOJ") and the FTC and
specified waiting period requirements have been satisfied. On February 1, 1999,
Dura and Excel filed Pre Merger Notification and Report Forms with the FTC and
the DOJ under the HSR Act. Early termination of the waiting period with respect
to Dura's and Excel's Pre-Merger Notification and Report Forms occurred on
February 12, 1999. At any time before or after the effective time of the Merger,
the FTC or the DOJ could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
Merger or seeking divestiture of substantial assets of Dura or Excel or their
respective subsidiaries. Private parties and state attorneys general may also
bring an action under the antitrust laws under certain circumstances. Based upon
an examination of information available to Dura and Excel relating to the
businesses in which the companies and their respective subsidiaries are engaged,
Dura and Excel believe that the consummation of the Merger will not violate the
antitrust laws. However, there can be no assurance that a challenge to the
Merger on antitrust grounds will not be made or, if such a
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challenge is made, of the result. Completion of the Merger is subject to no
action having been instituted by the DOJ or the FTC that is not withdrawn or
terminated prior to the effective time of the respective transactions.
Under the German Act against Restraints of Competition (GESETZ GEGEN
WETTBEWERBSBESCHRANKUNGEN (GWB)), as amended by the 6th Amendment effective as
from January 1, 1999, certain acquisition transactions may not be consummated
unless clearance has been given by the German Federal Cartel Office
(BUNDESKARTELLARNT; the "BKartA") or the investigation periods have expired. In
mid to late February 1999, Dura and Excel will file pre-merger notification with
the BKartA under the German merger control rules. Unless extended by a letter
from the BKartA (second phase examination), the investigation period for the
Merger will expire one month after notification. If Dura and Excel receive a
letter initiating proceedings with respect to the Merger, the investigation
period for the transaction will expire four months after notification.
Thereafter, the investigation period may be extended only by the consent of the
parties or if the BKartA determines that it has cleared the transaction on the
basis of incorrect information included in the parties' notification. Based upon
an examination of information available to Dura and Excel relating to the
business in which the companies and their respective subsidiaries are engaged,
Dura and Excel believe that the Merger will not create or strengthen a market
dominating position on any German markets and, therefore, will be cleared by the
BKartA within the initial one month period.
DISSENTERS' RIGHTS
Dissenters' rights are not available to Excel shareholders under the Indiana
Business Corporation Law because Excel's Common Stock is listed on a national
securities exchange.
NASDAQ NATIONAL MARKET LISTING OF DURA CLASS A COMMON STOCK
It is expected that the shares of Dura Class A Common Stock to be issued in
connection with the Merger will be quoted and traded on the Nasdaq National
Market under the symbol "DRRA."
DELISTING AND DEREGISTRATION OF EXCEL COMMON STOCK
If the Merger is consummated, the Excel Common Stock will be delisted from
the New York Stock Exchange and deregistered under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
FEDERAL SECURITIES LAW CONSEQUENCES
The shares of Dura Class A Common Stock issuable to holders of Excel Common
Stock upon consummation of the Merger have been registered under the Securities
Act of 1933, as amended (the "Securities Act"). Such securities may be traded
freely without restriction by those stockholders who are not deemed to be
"affiliates" of Dura or Excel, as that term is defined in the rules promulgated
under the Securities Act.
Shares of Dura Class A Common Stock received by those holders of Excel
Common Stock who are deemed to be "affiliates" of Excel at the time of the Excel
Special Meeting may be resold without registration under the Securities Act only
as permitted by Rule 145 under the Securities Act or as otherwise permitted
thereunder. Pursuant to the Merger Agreement, certificates representing shares
of Dura Class A Common Stock issued in exchange for shares of Excel Common Stock
surrendered by any "affiliate" of Excel, shall bear a restrictive legend to the
effect that such shares may be transferred only in accordance with Rule 145,
pursuant to an effective registration statement or upon receipt of an opinion of
counsel reasonably satisfactory to Dura that such transfer is otherwise exempt
from registration under the Securities Act.
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THE MERGER AGREEMENT
The following is a brief summary of certain provisions of the Merger
Agreement, a copy of which is attached as Appendix A to this Joint Proxy
Statement/Prospectus. This summary is qualified in its entirety by reference to
the complete text of the Merger Agreement, which is incorporated herein by
reference.
THE MERGER
Pursuant to the Merger Agreement, upon the satisfaction (or waiver, where
legally permissible) of the conditions contained in the Merger Agreement, Excel
will be merged with and into Merger Sub, with Merger Sub continuing as the
surviving corporation (the "Surviving Corporation"). The parties will cause the
Merger to become effective by filing Articles of Merger with the Secretary of
State of the State of Indiana in accordance with the relevant provisions of the
Indiana Business Corporation Law (the "Effective Time").
At the Effective Time, the Articles of Incorporation and By-laws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the Articles
of Incorporation and By-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law, except that the
name of the Surviving Corporation shall be "Excel Industries, Inc."
CONVERSION OF SECURITIES
As of the Effective Time, by virtue of the Merger and without any action on
the part of Merger Sub, Excel or the holders of any securities of the Merger Sub
or Excel, each share of Excel Common Stock (and each related preferred stock
purchase right) issued and outstanding immediately prior to the Effective Time
shall be converted, at the option of the holder thereof, subject to the
limitations and proration procedures described below and as set forth in the
Merger Agreement, into EITHER: (1) $25.50 in cash (the "Cash Consideration") OR
(2) 0.8 (the "Exchange Ratio") shares of Dura Class A Common Stock
(collectively, the "Merger Consideration"). All shares of Excel Common Stock
that are held in the treasury of Excel or by any wholly owned subsidiary of
Excel shall be canceled and no capital stock of Dura or other consideration
shall be delivered in exchange for such treasury stock.
ELECTIONS
GENERAL. Subject to the election and allocation procedures set forth below
and as set forth in the Merger Agreement, each holder of record of shares of
Excel Common Stock as of the Excel Record Date will, with respect to all or a
portion of such shares, be entitled to (1) make a Stock Election (i.e., to
receive certificates evidencing such number of whole shares of Dura Class A
Common Stock into which such number of shares of Excel Common Stock would be
converted), (2) make a Cash Election (i.e. to elect to receive $25.50 multiplied
by such number of shares of Excel Common Stock), or (3) to make a Non-Election
(i.e., to indicate that such holder has no preference as to the receipt of cash
or shares of Dura Class A Common Stock in exchange for such shares of Excel
Common Stock). Any holder of Excel Common Stock who fails to make an election
and any holder who fails to submit to the Exchange Agent a properly completed
and signed and properly and timely submitted Form of Election shall be deemed to
have made a Non-Election.
Excel shareholders should carefully consider the tax consequences of making
a Stock Election or a Cash Election and are urged to consult with their advisors
to determine the tax consequences to them of the Merger. See "Certain Federal
Income Tax Consequences of the Merger."
LIMITATIONS. Under the terms of the Merger Agreement, no more than 50% of
the outstanding shares of Excel Common Stock may be converted into the right to
receive cash in the Merger (the "Cash Limit"), and no more than 50% of the
outstanding shares of Excel Common Stock may be converted into the right to
receive Dura Class A Common Stock (the "Stock Limit") in the Merger. The Merger
Agreement provides for proration if either of the foregoing limitations is
exceeded, as follows:
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- CASH OVERSUBSCRIPTION. If the aggregate number of shares of Excel Common
Stock with respect to which Cash Elections have been made exceeds the Cash
Limit, all shares of Excel Common Stock with respect to which Stock
Elections have been made and all shares of Excel Common Stock with respect
to which Non-Elections have been made (or have been deemed to have been
made) shall be converted into the right to receive 0.8 of a share of Dura
Class A Common Stock, and all shares of Excel Common Stock with respect to
which Cash Elections have been made will be converted into the right to
receive:
(1) an amount in cash, without interest, equal to the product of $25.50
and a fraction (the "Cash Fraction"), the numerator of which shall be
the Cash Limit and the denominator of which shall be the aggregate
number of shares of Excel Common Stock with respect to which Cash
Elections have been made, PLUS
(2) the number of shares of Dura Class A Common Stock equal to 0.8 of a
share of Excel Common Stock multiplied by a fraction equal to one
minus the Cash Fraction.
- STOCK OVERSUBSCRIPTION. If the number of shares of Excel Common Stock with
respect to which Stock Elections have been made exceeds the Stock Limit,
then each share of Excel Common Stock with respect to which a Cash
Election has been made and each share of Excel Common Stock with respect
to which a Non-Election has been made (or is deemed to have been made)
will be treated as though a Cash Election had been made with respect
thereto and will be converted into the right to receive $25.50, without
interest, and each share of Excel Common Stock with respect to which a
Stock Election has been made will be converted into the right to receive:
(1) the number of shares of Dura Class A Common Stock equal to the
product of 0.8 of a share of Dura Class A Common Stock and a fraction
(the "Stock Fraction"), the numerator of which is the Stock Limit,
and the denominator of which is the sum of the aggregate number of
shares of Excel Common Stock with respect to which Stock Elections
have been made, PLUS
(2) the amount in cash, without interest, equal to $25.50 multiplied by a
fraction equal to one minus the Stock Fraction.
- ELECTIONS UNDERSUBSCRIBED. In the event that neither of the foregoing
limitations has been exceeded, all shares of Excel Common Stock with
respect to which a Cash Election has been made shall be converted into the
right to receive cash, all shares of Excel Common Stock with respect to
which a Securities Election has been made shall be converted into the
right to receive shares of Dura Class A Common Stock, and all shares of
Excel Common Stock with respect to which a Non-Election has been made (or
deemed to have been made), if any, shall be converted into the right to
receive:
(1) the amount in cash, without interest, equal to the product of (i)
$25.50 and (ii) a fraction (the "Non-Election Fraction"), the
numerator of which is the excess of the Cash Limit over the aggregate
number of shares of Excel Common Stock with respect to which a Cash
Election has been made, and the denominator of which is the excess of
(A) the aggregate number of shares of Excel Common Stock outstanding
immediately prior to the Effective Time over (B) the sum of the
aggregate number of shares with respect to which Cash Elections and
Stock Elections have been made, PLUS
(2) the number of shares of Dura Common Stock equal to the product of 0.8
of a share of Dura Common Stock and a fraction equal to one minus the
Non-Election Fraction.
The Exchange Agent shall make all computations contemplated by the
provisions of the Merger Agreement described above and all such computations
shall be binding and conclusive on the holders of Excel Common Stock.
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CONVERSION OF OPTIONS
Each unexpired and unexercised option to purchase shares of Excel Common
Stock (an "Excel Stock Option") will be converted into an option to purchase a
number of shares of Dura Class A Common Stock (a "Dura Stock Option") equal to
the number of shares of Excel Common Stock that could have been purchased under
such Excel Stock Option multiplied by the Exchange Ratio. The price per share of
Dura Class A Common Stock under the option will be equal to the per share option
exercise price specified in such Excel Stock Option divided by the Exchange
Ratio. Such Dura Stock Option shall otherwise be subject to the same terms and
conditions as such Excel Stock Option.
CONVERSION OF WARRANTS
As of the Effective Time, each outstanding warrant to purchase shares of
Excel Common Stock (the "Excel Warrants") will be converted into a warrant to
purchase, at the exercise price stated in the Excel Warrants divided by the
Exchange Ratio, (1) the number of shares of Dura Class A Common Stock equal to
one-half of the number of shares of Excel Common Stock subject to such Excel
Warrant multiplied by the Exchange Ratio and (2) cash in an amount equal to
one-half of the number of shares of Excel Common Stock subject to such Excel
Warrant multiplied by $25.50. The other terms and conditions of the Excel
Warrants, and the agreements under which such Excel Warrants were issued, shall
continue to apply in accordance with their terms.
ELECTION PROCEDURE
Accompanying copies of the Joint Proxy Statement/Prospectus sent to the
Excel shareholders are a Form of Election and Letter of Transmittal (which
includes instructions). All elections must be made on a Form of Election.
Holders of record of shares of Excel Common Stock who hold such shares as
nominees, trustees or in other representative capacities ("Representatives") may
submit multiple Forms of Election, provided that such Representative certifies
that each such Form of Election covers all the shares of Excel Common Stock held
by such Representative for a particular beneficial owner. Elections shall be
made by holders of Excel Common Stock by mailing to the Exchange Agent completed
and signed Forms of Election and Letters of Transmittal, accompanied by the
stock certificates representing the Excel Common Stock for which the election is
being made (the "Certificates"). If the Certificates are not available at the
time the Form of Election is sent to the Exchange Agent, the shareholder may
instead provide a Guarantee of Delivery from a qualified financial institution
(which in effect guarantees to Dura that the Certificates will be delivered to
the Exchange Agent) and must, within three trading days (on the New York Stock
Exchange) thereafter, deliver to the Exchange Agent the Certificates
representing the shares in respect of which an election is being made.
Any Guarantee of Delivery of Certificates must be from a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States, and the Certificates
covered by any Guarantee of Delivery must in fact be delivered to the Exchange
Agent within three trading days (on the New York Stock Exchange) after the date
of execution of the Guarantee of Delivery. Failure to deliver such Certificates
within such three day period will be deemed to invalidate any otherwise properly
made Cash Election or Stock Election.
In order to be effective, a Form of Election and Letter of Transmittal must
be received by the Exchange Agent no later than the close of business on March
22, 1999, the last business day prior to the Effective Time (the "Election
Deadline"). All elections may be revoked until the last business day prior to
the Effective Time. Dura shall have the discretion, which it may delegate in
whole or in part to the Exchange Agent, to determine whether Forms of Election
have been properly completed and signed and properly and timely submitted or
revoked and to disregard immaterial defects in Forms of Election, and any good
faith decision of Dura or the Exchange Agent in such matters shall be binding
and conclusive. Neither Dura nor the Exchange Agent shall be under any
obligation to notify any person of any defect in a
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Form of Election and Letter of Transmittal. Any holder of shares of Excel Common
Stock who fails to make an election and any holder who fails to submit to the
Exchange Agent a properly completed and signed and properly and timely submitted
Form of Election and Letter of Transmittal shall be deemed to have made a
Non-Election. In the event a Form of Election is revoked prior to the Election
Deadline, Dura will, or will cause the Exchange Agent to, cause the Certificates
covered by such Form of Election to be promptly returned without charge to the
person submitting the Form of Election upon written request to that effect from
such person.
Copies of the Form of Election and Letter of Transmittal may also be
obtained from the Exchange Agent at (800) 637-7549.
THE FORM OF ELECTION AND LETTER OF TRANSMITTAL ARE INCLUDED WITH COPIES OF THIS
JOINT PROXY STATEMENT/ PROSPECTUS BEING SENT TO EXCEL'S SHAREHOLDERS AND SHOULD
BE PROPERLY COMPLETED IN ACCORDANCE WITH THEIR INSTRUCTIONS AND RETURNED TO THE
EXCHANGE AGENT PRIOR TO THE ELECTION DEADLINE. YOU SHOULD INCLUDE YOUR
CERTIFICATES OR AN APPROPRIATE GUARANTEE OF DELIVERY OF YOUR CERTIFICATES AS SET
FORTH IN THE FORM OF ELECTION. IF A FORM OF ELECTION IS NOT PROPERLY COMPLETED
AND RETURNED TO THE EXCHANGE AGENT PRIOR THE ELECTION DEADLINE YOU WILL BE
DEEMED TO HAVE MADE A NON-ELECTION WITH RESPECT TO YOUR SHARES, AND THE FORM OF
MERGER CONSIDERATION WHICH YOU WILL BE ENTITLED TO RECEIVE WILL BE DETERMINED BY
THE PROVISIONS OF THE MERGER AGREEMENT.
EXCHANGE OF STOCK CERTIFICATES
EXCHANGE PROCEDURE. As soon as reasonably practicable after the Effective
Time, the Exchange Agent will mail to each person who was, at the Effective
Time, a holder of record of shares of Excel Common Stock and who did not submit
an effective Form of Election prior to the Election Deadline, a Letter of
Transmittal to be used by the holder in effecting the surrender of his or her
Certificates in exchange for the Merger Consideration. Upon the later of the
Effective Time and the surrender to the Exchange Agent of his or her Certificate
or Certificates for cancellation, together with a duly executed Letter of
Transmittal and any other required documents, the holder of such Certificate
shall be entitled to receive (1) the Merger Consideration in respect of the
surrendered shares of Excel Common Stock to which the holder is entitled under
the Merger Agreement, (2) certain dividends and other distributions as provided
in the Merger Agreement and (3) cash in lieu of any fractional share of Dura
Class A Common Stock. Until surrendered, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
surrender the Merger Consideration in respect of the surrendered shares of Excel
Common Stock to which the holder is entitled under the Merger Agreement, certain
dividends and other distributions as provided in the Merger Agreement and cash
in lieu of any fractional share of Dura Class A Common Stock. No interest shall
be paid or will accrue on any cash payable to holders of Certificates.
Any portion of the Dura Class A Common Stock or cash payable pursuant to the
Merger which remains undistributed to the former shareholders of Excel for one
year after the Effective Time shall be delivered to Dura, upon demand of Dura,
and any such former shareholders who have not complied with the exchange
procedures in the Merger Agreement by that time will thereafter have to look to
Dura for payment of their claim for Cash Consideration, Dura Class A Common
Stock, any cash in lieu of fractional shares of Dura Class A Common Stock and
any dividends or distributions with respect to Dura Class A Common Stock.
Neither Dura nor the Surviving Corporation shall be liable to any former holder
of Excel Common Stock for any such Cash Consideration, shares of Dura Class A
Common Stock, cash and dividends and distributions which are delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
DIVIDENDS. Until the holder of a Certificate surrenders such Certificate,
no dividends or other distributions that are declared on or after the Effective
Time on Dura Class A Common Stock, or are payable to the holders of record
thereof on or after the Effective Time, will be paid to such person and no
certificates evidencing Dura Class A Common Stock, the Cash Consideration or any
cash payment in lieu of fractional shares will be paid to any such person.
Following the surrender of the Certificate, subject to
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the effect of applicable law, there shall be paid to each record holder of a new
certificate representing whole shares of Dura Class A Common Stock: (i) at the
time of such surrender or as promptly as practicable thereafter, the amount of
any dividends or other distributions theretofore paid with respect to the shares
of Dura Class A Common Stock represented by such new certificate and having a
record date on or after the Effective Time and a payment date prior to such
surrender; (ii) at the appropriate payment date or as promptly as practicable
thereafter, the amount of any dividends or other distributions payable with
respect to such shares of Dura Class A Common Stock and having a record date on
or after the Effective Time but prior to such surrender and a payment date on or
subsequent to such surrender; and (iii) at the time of such surrender or as
promptly as practicable thereafter, the amount of any cash payable with respect
to a fractional share of Dura Class A Common Stock to which such holder is
entitled. In no event shall the person entitled to receive such dividends or
other distributions be entitled to receive interest on such dividends or other
distributions.
TRANSFER TAXES; WITHHOLDING. If you are the registered holder of a
Certificate and you want cash or certificates representing Dura Class A Common
Stock to be paid or issued to someone other than you, before Dura will make such
payment or issuance, Dura will require that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of certificates for such shares
of Dura Class A Common Stock in a name other than that of the registered holder
of the Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Dura or the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to the Merger Agreement to any holder of shares of
Excel Common Stock such amounts as Dura or the Exchange Agent is required to
deduct and withhold with respect to the making of such payment under the Code or
under any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Dura or the Exchange Agent, such withheld amounts
shall be treated for all purposes of the Merger Agreement as having been paid to
the holder of the shares of Excel Common Stock in respect of which such
deduction and withholding was made by Dura or the Exchange Agent.
NO FRACTIONAL SECURITIES. No certificates or scrip representing fractional
shares of Dura Class A Common Stock shall be issued upon the surrender for
exchange of Certificates, and no Dura dividend or other distribution or stock
split shall relate to any fractional share, and no fractional share shall
entitle the owner thereof to vote or to any other rights of a security holder of
Dura. In lieu of any such fractional share, each holder of Excel Common Stock
who would otherwise have been entitled to a fraction of a share of Dura Class A
Common Stock upon surrender of Certificates for exchange will be paid an amount
in cash (without interest), rounded to the nearest cent, determined by
multiplying (i) the closing price of the Dura Class A Common Stock on the Nasdaq
National Market on the date before the Effective Time by (ii) the fractional
interest to which such holder would otherwise be entitled.
ADJUSTMENT TO CONVERSION NUMBER. In the event of any reclassification,
stock split or stock dividend with respect to Dura Class A Common Stock or Excel
Common Stock, any change or conversion of Dura Class A Common Stock or Excel
Common Stock into other securities, any other dividend or distribution with
respect to the Dura Class A Common Stock or Excel Common Stock other than normal
quarterly cash dividends as the same may be adjusted from time to time pursuant
to the terms of the Merger Agreement (or if a record date with respect to any of
the foregoing should occur) prior to the Effective Time, appropriate and
proportionate adjustments, if any, shall be made to the Exchange Ratio and Cash
Consideration, and all references to the Exchange Ratio and Cash Consideration
in the Merger Agreement will be deemed to be to the Exchange Ratio and Cash
Consideration as so adjusted.
LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond as indemnity against
any claim that may
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be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Cash
Consideration, shares of Dura Class A Common Stock, any cash in lieu of
fractional shares of Dura Class A Common Stock and any dividends or other
distributions to which the holders thereof are entitled pursuant to the Merger
Agreement.
LEGEND. Certificates representing shares of Dura Class A Common Stock
issued in accordance with the terms of the Merger Agreement in exchange for
shares of Excel Common Stock surrendered by any "affiliate" of Excel for
purposes of Rule 145(c) under the Securities Act, and the rules and regulations
promulgated thereunder, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A RULE
145 TRANSACTION, AS THAT TERM IS USED IN RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY BE
OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE ENCUMBERED ONLY (1) PURSUANT TO RULE 145, (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (3) UPON RECEIPT OF AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH
TRANSFER IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE ACT.
REPRESENTATIONS AND WARRANTIES
In the Merger Agreement, each of Dura, Merger Sub and Excel has made various
representations and warranties relating to, among other things, the following:
(1) due organization, existence, good standing, corporate power and similar
corporate matters; (2) capitalization; (3) authorization, execution, delivery
and performance and the enforceability of the Merger Agreement and related
matters; (4) the absence of conflicts, violations and defaults under the
parties' respective organizational documents and certain other agreements and
obligations to which they are bound, and under any applicable federal, state,
local or foreign order, injunction, decree, statute, rule or regulation as a
result of the Merger, subject to certain exceptions; (5) the documents and
reports filed with the Securities and Exchange Commission and the accuracy and
completeness of the information contained therein; (6) the accuracy and
completeness of information included in this Joint Proxy Statement/Prospectus
supplied by each party; (7) the absence of certain material changes or events
since January 1, 1998, subject to certain exceptions; (8) compliance with
certain instruments and laws; (9) compliance with tax obligations; (10) the
absence of pending or threatened investigations or litigation, subject to
certain exceptions; (11) employee benefit plans and their compliance with
applicable laws; (12) the absence of undisclosed liabilities; (13) environmental
and safety matters; (14) ownership and use of intellectual property; (15)
employment and labor matters; (16) certain agreements and the absence of
acceleration provisions in such agreements that would be triggered by the
Merger; (17) the required stockholder vote; (18) the inapplicability of certain
state takeover statutes to the merger and the absence of charter provisions
requiring a supermajority vote; (19) the absence of certain fees arising from
the Merger; (20) the absence of pending governmental investigations; (21)
certain contracts and commitments of each of the parties; (22) real property
owned or leased; and (23) the receipt of a fairness opinion from each party's
financial advisor. In addition, Dura has made certain representations and
warranties relating to, among other things, financing commitments, ownership of
Excel and the ownership and operations of Merger Sub.
All representations and warranties of Dura, Excel and Merger Sub expire on
the closing date of the Merger.
COVENANTS
DURA. Dura has agreed, among other things, that during the period between
the signing of the Merger Agreement and the Effective Time, with certain
exceptions, it shall and shall cause each of its subsidiaries to, in all
material respects, carry on its business in the ordinary course of its business
as
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currently conducted. To the extent consistent therewith, Dura has agreed to use
reasonable good faith efforts to preserve intact its current business
organizations, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. The Merger Agreement places
restrictions on the ability of Dura and its subsidiaries to (other than in
connection with the Adwest Acquisition): (1) declare, set aside or pay any
dividends; (2) split, combine or reclassify any of its capital stock; (3)
purchase, redeem or otherwise acquire any shares of its capital stock or the
capital stock of its subsidiaries; (4) issue, sell, dispose of or otherwise
encumber any shares of its capital stock, other than (a) issuances to employees,
directors or consultants of Dura and subsidiaries consistent with past practice,
(b) the issuance by any wholly owned subsidiary of Dura of its capital stock to
Dura or another wholly owned subsidiary of Dura, and (c) the issuance of no more
than 2,200,000 shares of Dura Class A Common Stock in connection with Dura's
stock plans, the issuance of shares of Dura Class A Common Stock upon conversion
of Dura Class B Common Stock or the Trust Preferred Securities into 7 1/2%
Convertible Subordinated Debentures and the subsequent conversion of the 7 1/2%
Convertible Subordinated Debentures into Dura Class A Common Stock; (5) amend
its Restated Certificate or By-laws; (6) alter its corporate structure or
ownership; (7) incur any indebtedness for borrowed money in excess of $500
million; (8) acquire or agree to acquire any other business with a purchase
price in excess of $100 million; (9) knowingly violate or knowingly fail to
perform any material obligation; (10) take any action other than reasonable and
usual actions in the ordinary course of business consistent with past practice
with respect to accounting policies or procedures; (11) take any action or
knowingly omit to take any action which would cause any of its representations
or warranties contained in the Merger Agreement to be untrue in any material
respect or result in a material breach of any covenant made by it in the Merger
Agreement; and (12) authorize, recommend or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing.
EXCEL. Excel has agreed, among other things, that during the period from
the date of the Merger Agreement through the Effective Time, it shall, and shall
cause each of its subsidiaries to, in all material respects, carry on its
business in the ordinary course of its business as currently conducted. To the
extent consistent therewith, Excel has agreed to use reasonable good faith
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time. The Merger Agreement places certain restrictions on the ability
of Excel to: (1) declare, set aside or pay any dividends (except that if the
merger is not completed by May 28, 1999, Excel may declare a dividend of $0.25
per share in June, payable in July, and may thereafter resume its regular
quarterly dividend); (2) other than in the case of a subsidiary, split, combine
or reclassify any of its capital stock; (3) purchase, redeem or otherwise
acquire any shares of capital stock; (4) issue, sell or otherwise encumber any
shares of its capital stock, except issuances of Excel Common Stock pursuant to
the exercise of stock options granted prior to the date of the Merger Agreement
or as otherwise permitted by the Merger Agreement; (5) amend its Articles of
Incorporation or By-laws; (6) sell, lease or otherwise dispose of any of its
assets, other than transactions that are in the ordinary course of business
consistent with past practice; (7) incur any indebtedness for borrowed money,
except between Excel and its wholly owned subsidiaries; (8) acquire or agree to
acquire any business or acquire any assets outside of the ordinary course of
business; (9) alter its corporate structure; (10) knowingly violate or knowingly
fail to perform any material obligation or duty; (11) enter into or adopt, or
amend any existing severance plan, agreement or arrangement or any employment or
consulting agreement, except one that can be terminated on 30-days' notice
without cost; (12) increase the compensation payable or to become payable to its
officers or employees, except for increases in the ordinary course of business
consistent with past practice; (13) take any action, other than reasonable and
usual actions in the ordinary course of business consistent with past practice,
with respect to accounting policies or procedures; (14) take any action or
knowingly omit to take any action which would cause any of its representations
or warranties contained in the Merger Agreement to be untrue in any material
respect
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or result in a material breach of any covenant made by it in the Merger
Agreement; (15) make any tax election or settle or compromise any material tax
liability; and (16) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
CERTAIN OTHER COVENANTS. The Merger Agreement also contains certain other
agreements relating to the conduct of Dura and Excel prior to the Effective
Time, including those requiring the parties: (1) to call meetings of their
stockholders to be held on the same day and use their reasonable best efforts to
obtain their stockholders' approval (except to the extent doing so would violate
the fiduciary obligations of their respective Boards); (2) to cooperate in the
preparation of this Joint Proxy Statement/Prospectus and the registration
statement of which it forms a part and to use their reasonable best efforts to
have the registration statement declared effective as promptly as practicable;
(3) to afford each other's accountants, counsel, financial advisors and other
representatives reasonable access to their respective properties, books, records
and contracts; (4) to use reasonable good faith efforts to take actions
necessary to consummate the Merger; (5) to consult with each other prior to
issuing any press release or otherwise making any public announcements with
respect to the Merger and prior to making any filings with any third party,
except as may be required by law or any listing requirements; (6) to timely file
all reports required to be field under the Exchange Act; (7) to use their
reasonable best efforts to notify the other parties to the Merger Agreement of
the occurrence or non-occurrence of any event that would cause any
representation or warranty in the Merger Agreement to be untrue or inaccurate in
any material respect or any covenant contained in the Merger Agreement not to be
complied with in all material respects, any notice alleging that the consent of
a third party or governmental authority is required for consummation of the
Merger or any change or event that would reasonably likely to have a material
adverse effect on Dura or Excel, as the case may be; and (8) to use its
reasonable best efforts to obtain from their respective accountants customary
comfort letters.
In addition, Excel has agreed that it will not terminate, amend, modify or
waive any provision of any confidentiality or standstill agreement entered into
in connection with any potential business combination or sale of substantially
all the assets of it or its subsidiaries, unless the Excel Board concludes in
good faith on the basis of the advice of its outside counsel, that the failure
to do so would violate the fiduciary obligations of the Excel Board under
applicable law. Subject to such fiduciary duties, during such period, Excel has
agreed to enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreements.
NO SOLICITATION OF ACQUISITION PROPOSALS. In the Merger Agreement, each of
Dura and Excel has agreed that it will, and will use its best efforts to cause
any of its officers, directors, employees, attorneys, financial advisors, agents
or other representatives and those of any of its subsidiaries not to, directly
or indirectly, invite, solicit, initiate or knowingly encourage any proposal or
offer from any person that constitutes, or may reasonably be expected to lead
to, a Takeover Proposal (as defined below), or engage in or continue discussions
or negotiations relating to a Takeover Proposal. Notwithstanding the foregoing,
prior to the receipt of approval by their respective stockholders, Dura and
Excel may each engage in discussions or negotiations with, or furnish
information concerning itself and its subsidiaries, business, properties or
assets to, any third party which makes an unsolicited, bona fide written
Takeover Proposal if the Board of Directors of Dura or Excel, as applicable,
concludes in good faith on the basis of the written advice of its respective
outside counsel that the failure to take such action would violate the fiduciary
obligations of such Board under applicable law. The Board must conclude in good
faith that such Takeover Proposal includes the necessary financing or
commitments thereof and is reasonably capable of being consummated taking into
account all legal, financial and regulatory aspects of the Takeover Proposal
and, in the case of Excel, that such Takeover Proposal would, if consummated, be
more favorable, from a financial point of view, to the shareholders of Excel
than the Merger.
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As used in the Merger Agreement, "Takeover Proposal" shall mean any proposal
or offer, or any expression of interest by any third party relating to Dura's or
Excel's willingness or ability to receive or discuss a proposal or offer, for
(1) a tender or exchange offer, or other acquisition of beneficial ownership of,
in each case 20% or more of the outstanding voting capital stock of Dura or
Excel, respectively, (2) a merger, consolidation, share exchange,
recapitalization or other business combination involving either Dura or Excel or
any of their respective subsidiaries or (3) any acquisition in any manner of 20%
or more of the assets of either Dura or Excel and their respective subsidiaries,
taken as a whole in one or more of a series of related transactions.
FEES AND EXPENSES. Except as otherwise provided in the Merger Agreement,
whether or not the Merger is consummated, each party will pay its own expenses
in connection with the Merger Agreement and the transactions contemplated
thereby, except that each of Dura and Excel shall bear and pay one-half of the
costs and expenses incurred in connection with the filing under the HSR Act and
the filing, printing and mailing of this Joint Proxy Statement/Prospectus and
the registration statement of which this Joint Proxy Statement/Prospectus forms
a part (including related filing fees).
INDEMNIFICATION. Dura has agreed that, for six years from and after the
Effective Time, Dura agrees to, and to cause the Surviving Corporation to,
indemnify and hold harmless all past and present officers and directors of Excel
and of its subsidiaries to the same extent such persons are indemnified as of
the date of the Merger Agreement by Excel pursuant to Excel's Articles of
Incorporation and By-laws for acts or omissions occurring in their capacities as
a director or officer of Excel at or prior to the Effective Time, including,
without limitation, such acts or omissions occurring in connection with the
approval of the Merger Agreement and the consummation of the transactions
contemplated thereby. Dura shall cause the Surviving Corporation to provide, for
an aggregate period of not more than two years from the Effective Time, Excel's
current directors and officers an insurance and indemnification policy that
provides coverage for events occurring prior to the Effective Time (the "D&O
Insurance") that is no less favorable than Excel's existing policy or, if
substantially equivalent insurance coverage is unavailable, the best available
coverage. Notwithstanding the foregoing, the Surviving Corporation shall not be
required to pay an annual premium for the D&O insurance in excess of 200 percent
of the last annual premium paid by Excel.
BENEFIT PLANS. Dura has agreed to cause the Surviving Corporation to
provide to the current employees of Excel employee benefits (including, without
limitation, health, life and disability insurance, retirement benefits and other
employee benefits) which are no less favorable to such employees than those
provided by either Excel currently or for Dura employees in similar positions.
DIRECTORS. Dura has agreed that, as soon as reasonably practicable after
the Effective Time, the Dura Board will adopt resolutions increasing the number
of members of the Dura Board from 12 to 14 directors and appointing Mr.
Futterknecht and such additional person who is recommended by Mr. Futterknecht
and approved by Dura's Chairman to fill the vacancies created by such increase
in the number of directors. Each shall serve until the next regularly scheduled
annual meeting of Dura or until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with Dura's Restated Certificate and By-laws, and each shall be
nominated to serve on the Dura Board at such annual meeting of Dura.
AMENDMENT OF RIGHTS PLAN. Excel has agreed that the Excel Board shall take
all necessary action to amend Excel's Rights Agreement so that the execution of
the Merger Agreement and the consummation of the Merger will not cause the
rights issued under the Rights Agreement to become exercisable.
FINANCING. Dura has agreed to use its best efforts to obtain the Financing.
In the event the Financing becomes unavailable, Dura will use its best efforts
to obtain alternate debt financing from other commercially reasonable sources on
pricing terms in which the weighted average interest rate (including all
applicable fees) with respect to such alternative financing is not 40% greater
than the weighted average
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interest rate (including all applicable fees) of the proposed Financing and
other non-pricing terms are not materially more restrictive than the proposed
Financing.
CONDITIONS TO THE MERGER
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. The obligations of each of
the parties to consummate the Merger is conditioned upon the satisfaction of
each of the following: (1) the Merger Agreement shall have been duly approved
and adopted by the requisite vote of stockholders of Dura and Excel; (2) the
Dura Class A Common Stock issuable in the Merger shall have been authorized for
listing on the Nasdaq National Market, subject to official notice of issuance;
(3) the waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated; (4) all authorizations, consents, orders, declarations or approvals
of or filings with, or terminations or expirations of waiting periods imposed
by, any governmental entity, which the failure to obtain, make or occur would
have the effect of making the Merger illegal or would have a material adverse
effect on Dura (assuming the Merger had taken place), shall have been obtained,
shall have been made or shall have occurred; (5) no court or other governmental
entity having jurisdiction over Excel or Dura, or any of their respective
subsidiaries, shall have enacted or issued any law, rule, regulation or other
order which is then in effect and has the effect of prohibiting or restricting
the Merger or making the Merger illegal; (6) there shall not be instituted or
pending any suit, action or proceeding by a governmental entity which prohibits
or restricts the Merger or is reasonably likely to have a material adverse
effect on Dura or Excel, as the case may be; (7) either the registration
statement of which this Joint Proxy Statement/Prospectus forms a part shall have
become effective in accordance with the provisions of the Securities Act or
there shall be an effective exemption from the registration requirements of the
Securities Act, and no stop order suspending the effectiveness of the
registration statement shall have been issued.
CONDITIONS TO EXCEL'S OBLIGATIONS. The obligations of Excel to consummate
the Merger are further conditioned on each of the following: (1) each of Dura
and Merger Sub shall have performed in all material respects each of its
agreements contained in the Merger Agreement and each of the representations and
warranties of Dura and Merger Sub contained in the Merger Agreement shall be
true and correct in all material respects and Excel shall have received a
certificate signed on behalf of each of Dura and Merger Sub by its Chief
Executive Officer, its Chief Operating Officer and its Chief Financial Officer
to such effect; (2) the opinion of counsel from Kirkland & Ellis, special
counsel to Dura, issued in connection with the registration statement of which
this Joint Proxy Statement/Prospectus forms a part shall contain a clause
entitling Excel to rely thereon; (3) Excel shall have received an opinion from
Sommer & Barnard, PC, special counsel to Excel, dated as of the closing date,
substantially to the effect that (a) the Merger will qualify as a reorganization
pursuant to Section 368(a) of the Code, (b) no gain or loss will be recognized
by Excel as a result of the Merger, and (c) no gain or loss will be recognized
by an Excel shareholder as a result of the Merger except to the extent of cash
received pursuant to the Merger.
CONDITIONS TO DURA'S OBLIGATIONS. The obligations of Dura to consummate the
Merger are further conditioned on each of the following: (1) Excel shall have
performed in all material respects each of its agreements contained in the
Merger Agreement and each of the representations and warranties of Excel
contained in the Merger Agreement shall be true and correct in all material
respects and Dura shall have received a certificate signed on behalf of Excel by
its Chief Executive Officer, its Chief Operating Officer and its Chief Financial
Officer to such effect; (2) all material third-party consents, except financing
consents, and consents necessary under any shareholder agreements applicable to
Excel and its subsidiaries shall have been obtained; (3) Dura shall have
received an opinion from Dura's counsel, to the effect that (a) the Merger will
qualify as a reorganization pursuant to Section 368(a) of the Code, (b) no gain
or loss will be recognized by Excel as a result of the Merger, and (c) no gain
or loss will be recognized by an Excel shareholder as a result of the Merger
except to the extent of cash received pursuant to the Merger; and (4) Dura shall
have received the proceeds of the Financing necessary to consummate the Merger
in accordance with the Commitment Letter.
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TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time by mutual written consent of Dura and Excel.
In addition, the Merger Agreement may be terminated at any time prior to the
Effective Time by either Dura or Excel: (1) if the other party has failed to
comply in any material respect with any of its covenants or agreements contained
in the Merger Agreement if such failure to comply is not cured within five
business days following receipt by the other party of written notice of such
failure to comply (30 days if the breach is curable by such other party and such
other party is using reasonable best efforts to cure the breach); (2) if there
has been (a) a breach by the other party (in the case of Dura, including any
material breach by Merger Sub) of any representation or warranty that is not
qualified as to materiality which has the effect of making such representation
or warranty not true and correct in all material respects or (b) a breach by the
other party (in the case of Dura, including any material breach by Merger Sub)
of any representation or warranty that is qualified as to materiality, in each
case which breach has not been cured within five business days following receipt
by the breaching party of written notice of the breach (30 days if the breach is
curable by the other party and the other party is using reasonable best efforts
to cure such breach); (3) if there shall be any law or regulation that makes
consummation of the transactions contemplated by the Merger Agreement illegal or
otherwise prohibited or if any order, decree or other order has been entered by
a court or other governmental entity which has the effect of making the Merger
or any of the transactions contemplated by the Merger Agreement illegal; (4) if
the Merger has not been effected on or prior to the close of business on July
31, 1999 (the "Termination Date"); (5) if the Excel shareholders do not approve
the Merger Agreement or if the Dura stockholders do not approve the issuance of
Dura Class A Common Stock as contemplated by the Merger Agreement; (6) if the
other party has breached its obligations described above under
"--Covenants--Non-Solicitation"; and (7) if the other party has failed, as
promptly as practicable after the registration statement of which this Joint
Proxy Statement/Prospectus forms a part is declared effective, to call the Dura
Special Meeting or the Excel Special Meeting, as the case may be, or to mail the
Joint Proxy Statement/Prospectus to its stockholders, or failed to include in
such statement its Board of Directors recommendation of the Merger.
Dura may terminate the Merger Agreement at any time prior to the Effective
Time if (1) the Excel Board has not recommended or has withdrawn, modified or
changed its approval or recommendation of the Merger and the Merger Agreement or
Excel's Board has recommended or accepted any Takeover Proposal, or has resolved
to do any of the foregoing, or (2) any person has become the beneficial owner of
more than 20% of the outstanding shares of Excel Common Stock.
Excel may terminate the Merger Agreement at any time prior to the Effective
Time if (1) the Dura Board has not recommended or has withdrawn, modified or
changed its recommendation with respect to the issuance of Dura Class A Common
Stock as contemplated by the Merger Agreement, or the Dura Board has recommended
or accepted any Takeover Proposal or has resolved to do any of the foregoing,
(2) any person has become the beneficial owner of more than 20% of the
outstanding shares of Dura Class A Common Stock; or (3) (a) the closing price on
the Nasdaq National Market of the Dura Class A Common Stock is less than $24.00
per share on each trading day in any period of five (5) or more consecutive
trading days (the "Measurement Period") beginning seven calendar days after
execution of the Merger Agreement and (b) the closing price of the S&P 400
MidCap Index on the last day of the Measurement Period, as reported in THE WALL
STREET JOURNAL, has not decreased by 20% or more from the closing price of the
S&P 400 MidCap Index as of the date of the Merger Agreement and (c) the average
of the closing prices on the last day of the Measurement Period of the companies
included in Dura's industry peer group as set forth under the heading
Performance Graph in Dura's proxy statement dated April 6, 1998, that are
currently publicly traded (the "Peer Group"), as reported in THE WALL STREET
JOURNAL, has not decreased by 20% or more from average of the closing prices of
the Peer Group as of the date of the Merger Agreement and (d) Excel provides
written notice to Dura of its election to terminate under this
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paragraph of the Merger Agreement by giving notice of such termination within
five (5) trading days after the last day of any such Measurement Period.
TERMINATION FEES
If the Merger Agreement is terminated pursuant to its terms, the Merger
Agreement shall become void and of no effect on the liability on the part of any
except that (1) certain covenants shall survive such termination and (2) such
termination will not relieve any party from any liability for any willful breach
of a representation or warranty contained in the Merger Agreement or the breach
of any covenant contained in the Merger Agreement.
In the event that Dura or Excel terminates the Merger Agreement as a result
of the Excel Board or the Dura Board, as applicable, nor recommending,
modifying, amending or withdrawing its approval or recommendation of the Merger,
the Merger Agreement or its declaration that the Merger is advisable and fair to
and in the best interests of Excel or Dura, as the case may be, or its
shareholders or any person having become the beneficial owner of more than 20%
of the outstanding shares of Excel Common Stock or Dura Class A Common Stock, as
the case may be, then Dura or Excel, as the case may be, shall pay to the other
party a fee of $12.5 million (the "Fee"), plus actual and reasonable out of
pocket expenses (in the case of Dura, including those of Merger Sub) relating to
the transactions contemplated by the Merger Agreement not to exceed $500,000
(the "Expenses"), unless the non-terminating party also had a right to terminate
the Merger Agreement.
In addition, (1) if Excel terminates the Merger Agreement because the Merger
has not occurred before July 31, 1999 and before the date of termination a
Takeover Proposal with respect to Excel was made; or (2) either Dura or Excel
terminates the Merger Agreement at a time when Dura is entitled to terminate the
Merger Agreement because the stockholders of Dura or Excel have not approved the
Merger Agreement and, before the Excel Special Meeting but after the date of the
Merger Agreement, a Takeover Proposal with respect to Excel was made, then, in
each case, Excel shall (without prejudice to any other rights of Dura against
Excel) pay to Dura the Expenses in cash. If within eighteen months after such
termination, an Excel Acquisition Transaction (as defined below) occurs, then in
addition to the Expenses, Excel shall pay the Fee to Dura promptly.
An "Excel Acquisition Transaction" means any of the following events: (1)
any person other than Dura or its affiliates, acquires or becomes the beneficial
owner of 20% or more of the outstanding shares of Excel Common Stock; (2) any
new group is formed which, at the time of formation, beneficially owns 20% or
more of the outstanding shares of Excel Common Stock (other than a group which
includes or may reasonably be deemed to include Dura or any of its affiliates);
(3) Excel enters into an agreement, including, without limitation, an agreement
in principle, providing for a merger, consolidation, share exchange,
recapitalization or other business combination involving Excel or the
acquisition of a 20% interest in, or at least 20% of the assets, business or
operations of, Excel (other than the transactions contemplated by the Merger
Agreement); or (4) any person (other than Dura or its Affiliates) is granted any
option or right, conditional or otherwise, to acquire or otherwise become the
beneficial owner of shares of Excel Common Stock which, together with all shares
of Excel Common Stock beneficially owned by such person, results or would result
in such person being the beneficial owner of 20% or more of the outstanding
shares of Excel Common Stock. For purposes of this definition, the terms "group"
and "beneficial owner" shall be defined by reference to Section 13(d) of the
Exchange Act.
Lastly, (1) if Dura terminates the Merger Agreement because the Merger has
not occurred prior to July 31, 1999 and before the date of termination a
Takeover Proposal with respect to Dura was made; (2) either Dura or Excel
terminate the Merger Agreement at a time when Excel is entitled to terminate the
Merger Agreement because the stockholders of Dura or Excel have not approved the
Merger Agreement and, before the Dura Special Meeting but after the date of the
Merger Agreement, a Takeover Proposal with respect to Dura was made or (3) Dura
terminates the Merger Agreement because it has not received
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the proceeds of the Financing then, in each case, Dura shall (without prejudice
to any other rights of Dura against Excel) pay to Excel the Expenses in cash. If
within eighteen months after such termination, a Dura Acquisition Transaction
(as defined below) occurs, then in addition to the Expenses, Dura shall pay the
Fee to Excel promptly.
A "Dura Acquisition Transaction" means any of the following events: (A) any
person acquires or becomes the beneficial owner of 20% or more of the
outstanding shares of Dura Class A Common Stock and Dura Class B Common Stock in
the aggregate; (B) any new group is formed which, at the time of formation,
beneficially owns 20% or more of the outstanding shares of Dura Class A Common
Stock and Dura Class B Common Stock in the aggregate (other than a group which
includes or may reasonably be deemed to include Dura or any of its affiliates);
(C) Dura enters into an agreement, including, without limitation, an agreement
in principle, providing for a merger, consolidation, share exchange,
recapitalization or other business combination involving Dura (other than the
Merger Agreement) or the acquisition of a 20% interest in, or at least 20% of
the assets, business or operations of, Dura or (D) any person (other than Excel
or its affiliates) is granted any option or right, conditional or otherwise, to
acquire or otherwise become the beneficial owner of shares of Dura Class A
Common Stock and Dura Class B Common Stock in the aggregate which, together with
all shares of Dura Class A Common Stock beneficially owned by such Person,
results or would result in such person being the beneficial owner of 20% or more
of the outstanding shares of Dura Class A Common Stock and Dura Class B Common
Stock in the aggregate.
AMENDMENT AND WAIVER
The Merger Agreement may be amended by the parties by or pursuant to action
taken by their respective Boards of Directors at any time before or after
approval of Merger by the Excel shareholders, but, after any such approval, no
amendment shall be made which by law requires further approval by the Excel
shareholders without such further approval.
At any time prior to the Effective Time, the parties may (1) extend the time
for the performance of any of the obligations or other acts of the other parties
to the Merger Agreement, (2) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant to the Merger
Agreement and (3) waive compliance with any of the agreements or conditions
contained in the Merger Agreement which may legally be waived.
ACCOUNTING TREATMENT
The Merger will be accounted for under the "purchase" method of accounting
in accordance with generally accepted accounting principles. Therefore, the
aggregate consideration paid by Dura in connection with the merger will be
allocated to Excel's assets and liabilities based on their fair market values,
with any excess being treated as goodwill.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of certain material federal income tax
consequences of the Merger to Dura, Excel and the holders of Excel Common Stock
who are citizens or residents of the United States or who are domestic
corporations. This discussion is for general information only and does not
purport to address all tax consequences of the Merger. The summary may not apply
to Excel shareholders in special situations (such as dealers in securities or
currencies, traders in securities, financial institutions, tax-exempt
organizations, insurance companies, persons holding shares of Excel Common Stock
as part of a hedging, "straddle," conversion or other integrated transaction,
non-United States persons, persons whose functional currency is not the United
States dollar or persons who acquired their shares of Excel Common Stock
pursuant to the exercise of employee stock options or warrants, or otherwise as
compensation). The following discussion assumes that the shares of Excel Common
Stock are held as capital assets. In addition,
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no information is provided herein with respect to the tax consequences of the
Merger under applicable foreign, state or local laws.
Neither Excel nor Dura has requested a ruling from the Internal Revenue
Service ("IRS") with regard to any of the federal income tax consequences of the
Merger, and the opinions of counsel to Excel and special counsel to Dura as to
the federal income tax consequences of the Merger to be delivered as conditions
to the Merger will not be binding on the IRS.
TAX OPINION
As conditions to the Merger (which conditions Dura and Excel have agreed may
not be waived), Dura must receive an opinion of Kirkland & Ellis (a partnership
including professional corporations), special counsel to Dura, and Excel must
receive an opinion of Sommer & Barnard, PC, special counsel to Excel, subject to
the assumptions set forth below, to the effect that, based upon present federal
income tax law, the Merger will constitute a reorganization pursuant to Section
368(a) of the Code. Assuming that the Merger is a reorganization, (i) none of
Dura, Excel or Merger Sub will recognize gain or loss as a result of the Merger,
(ii) the Excel shareholders that exchange their shares of Excel Common Stock
solely for shares of Dura Common Stock will not recognize gain or loss in the
Merger, and (iii) the Excel shareholders that exchange their shares of Excel
Common Stock for shares of Dura Class A Common Stock and cash will recognize
gain, if any, in the Merger but not in excess of the amount of cash received.
Such opinions will be based on (i) certain representations and statements of
Dura, Excel and Merger Sub, (ii) the assumption that such representations and
statements will be complete and accurate as of the Effective Time, and (iii) the
assumption that the Merger and related transactions will take place in
accordance with all of the terms of the Merger Agreement and as described in
this Joint Proxy Statement/ Prospectus. In addition, such opinions will not be
provided if, as a result of a decline in value of Dura Class A Common Stock,
substantially less than 50% of the value of the aggregate consideration received
by Excel shareholders in the Merger would consist of Dura Class A Common Stock.
The following discussion addresses certain federal income tax consequences
of the Merger to an Excel shareholder, assuming that the Merger will qualify as
a reorganization.
ONLY SHARES OF DURA CLASS A COMMON STOCK RECEIVED
Except as discussed below with respect to cash received in lieu of a
fractional share of Dura Class A Common Stock, an Excel shareholder that
receives only shares of Dura Class A Common Stock in exchange for such holder's
shares of Excel Common Stock will not recognize gain or loss. The tax basis of
the shares of Dura Class A Common Stock received in the Merger will be the same
as the tax basis of the shares of Excel Common Stock exchanged therefor. The
holding period of the shares of Dura Class A Common Stock received will include
the holding period of shares of Excel Common Stock exchanged therefor.
ONLY CASH RECEIVED
An Excel shareholder that receives solely cash in the Merger in exchange for
such shareholder's shares of Excel Common Stock generally will recognize capital
gain or loss measured by the difference between the amount of cash received with
respect to each share of Excel Common Stock and the tax basis of each such share
of Excel Common Stock exchanged therefor. If, however, any such shareholder
actually or constructively owns shares of Dura Class A Common Stock after the
Merger (as the result of constructive ownership of shares of Excel Common Stock
that are exchanged for shares of Dura Class A Common Stock in the Merger, prior,
actual or constructive ownership of shares of Dura Class A Common Stock, or
otherwise), the cash received by such shareholder may, in certain circumstances,
be taxed as a dividend. The circumstances under which dividend treatment may
apply and the consequences thereof are similar to those discussed below under
"--Shares of Dura Class A Common Stock and Cash Received--
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Treatment of Gain Recognized," except that the amount treated as a dividend
would not be limited to the amount of such shareholder's gain recognized in the
transaction, and it is possible that there would be some variation in the manner
in which the 302 Tests, as defined below, would be applied. See also
"--Effect of Overlapping or Constructive Ownership," for a general discussion of
the effect of a shareholder's overlapping ownership on the dividend/capital gain
issue.
SHARES OF DURA CLASS A COMMON STOCK AND CASH RECEIVED
GENERAL. Except as discussed below with respect to cash received in lieu of
a fractional share of Dura Common Stock, an Excel shareholder that receives both
shares of Dura Class A Common Stock and cash in the Merger in exchange for
shares of Excel Common Stock will not recognize loss in such exchange. However,
under Section 356(a)(1) of the Code, the shareholder will recognize gain (if
any) with respect to each share of Excel Common Stock exchanged (measured by the
sum of the fair market value of the portion of a share of Dura Class A Common
Stock received for such share of Excel Common Stock, plus the amount of any cash
received for such share of Excel Common Stock, minus the tax basis of such share
of Excel Common Stock) but only to the extent of the amount of any cash received
in exchange for such share of Excel Common Stock. An Excel shareholder may
receive both shares of Dura Class A Common Stock and cash as the result of (i)
making a Stock Election and being prorated (if the Stock Election is
oversubscribed), (ii) making a Cash Election and being prorated (if the Cash
Election is oversubscribed) or (iii) failing to make any Election.
TREATMENT OF GAIN RECOGNIZED. Under applicable Supreme Court precedent, any
such gain recognized will be taxed as either (i) gain from the sale or exchange
of stock (i.e., capital gain) or (ii) as a dividend to the extent of the
shareholder's ratable share of earnings and profits (with any remainder treated
as capital gain), based upon whether such shareholder's interest in Dura was
reduced sufficiently so that the cash received has the effect of the receipt of
a dividend under Section 302 of the Code. For purposes of this determination, an
Excel shareholder will be treated as if such shareholder had engaged in a
hypothetical transaction in which such stockholder and all other Excel
shareholders (1) received solely shares of Dura Class A Common Stock in exchange
for all of their shares of Excel Common Stock, and (2) thereafter had a portion
of such shares of Dura Class A Common Stock redeemed for the cash portion of the
Merger Consideration. An Excel shareholder's hypothetical interest in Dura after
step (1) is compared to such shareholder's interest in Dura subsequent to the
deemed redemption in step (2). In each case, subject to limited exceptions,
shares of Dura Class A Common Stock actually or constructively owned (under the
constructive ownership rules described in "--Effect of Overlapping or
Constructive Ownership" below) by such shareholder will be considered owned for
purposes of applying this test, even if such shares of Dura Class A Common Stock
were not received or deemed received in the Merger.
Under Section 302(b) of the Code, a distribution in redemption of stock will
not have the effect of a dividend if (1) such shareholder's interest in Dura is
completely terminated as a result of the transaction, (2) such shareholder's
percentage interest in Dura is less than 50% after the hypothetical redemption
described above and is reduced more than 20% in such hypothetical redemption
(the "20% safe harbor"), or (3) such shareholder's interest was "meaningfully
reduced" by virtue of such hypothetical redemption (such tests, the "302
Tests"). While prong (3) of the 302 Tests requires a determination based on a
shareholder's particular facts and circumstances, the IRS has indicated in
published rulings that a distribution that results in any actual reduction in
interest of a stockholder that holds substantially less than 1% of the
outstanding stock of a publicly held corporation will meaningfully reduce the
stockholder's interest in the corporation if the stockholder exercises no
control with respect to corporate affairs.
APPLICATION OF 302 TESTS. The discussion which follows considers the
application of the 302 Tests to a shareholder that receives a combination of
cash and Dura Class A Common Stock as the result of making a Cash Election or
Stock Election that is oversubscribed (and hence subject to proration).
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The application of the 302 Tests in these cases will depend upon, in
addition to the type of Election made by the shareholder, the extent to which
(i) the cash or stock portion of the Merger Consideration is oversubscribed,
(ii) the shareholder actually or constructively owns after the Merger any shares
of Dura Class A Common Stock which such shareholder did not receive, actually or
constructively, in the Merger (e.g., shares of Dura Class A Common Stock which
it owned actually or constructively before the Merger) and (iii) the shareholder
constructively owns shares of Excel Common Stock immediately prior to the
Effective Time. The discussions, under "--Cash Elections" and "--Stock
Elections," below, do not consider the effect of such constructive or
overlapping ownership, which is, however, discussed below in "--Effect of
Overlapping or Constructive Ownership." Moreover, the statements below relating
to the extent of a shareholder's reduction in interest in Dura under the 302
Tests are based upon certain mathematical assumptions as to the relative values
of the cash portion of the Merger Consideration and the stock portion of the
Merger Consideration, which assumptions may not be completely accurate as of the
Effective Time. Therefore, the Excel shareholders should consult their own tax
advisors as to the risk of dividend characterization with respect to any cash
received in the Merger.
- CASH ELECTIONS. If the cash portion of the Merger Consideration is
oversubscribed (and therefore a portion of the consideration received
under a Cash Election is Dura Class A Common Stock), an Excel shareholder
making a Cash Election will have its interest in Dura reduced for purposes
of the 302 Tests, although, if the Cash Election is heavily
oversubscribed, the reduction may not qualify for the 20% safe harbor. The
treatment of Excel shareholders making Cash Elections where the cash
portion of the Merger Consideration is not oversubscribed is addressed
above in "--Only Cash Received."
- STOCK ELECTIONS. If the stock portion of the Merger Consideration is
oversubscribed (and therefore a portion of the consideration received
under a Stock Election is Cash), an Excel shareholder that makes a Stock
Election will likely be subject to dividend treatment, unless the extent
of such oversubscription is very substantial. The treatment of Excel
shareholders making Stock Elections where the stock portion of the Merger
Consideration is not oversubscribed is addressed above in "--Only Shares
of Dura Class A Common Stock Received."
EFFECT OF OVERLAPPING OR CONSTRUCTIVE OWNERSHIP
An Excel shareholder that (i) actually or constructively owns after the
Merger any shares of Dura Class A Common Stock which such shareholder did not
receive, actually or constructively in the Merger (e.g. shares of Dura Class A
Common Stock which such shareholder owned actually or constructively before the
Merger), or (ii) constructively owns shares of Excel Common Stock immediately
prior to the Effective Time or shares of Dura Class A Common Stock immediately
after the Effective Time, will be required to take such shares into account for
purposes of applying the 302 Tests. Under the applicable constructive ownership
rules of Section 318 of the Code, a shareholder will, in general, be treated as
owning shares owned by certain family members and other related entities, or
that are subject to options owned or deemed owned by such person. The actual or
constructive ownership of such shares of Excel Common Stock may, in some
circumstances, have the effect of causing an Excel shareholder that would
otherwise qualify for capital gain treatment under the 302 Tests to fail to so
qualify and subject such shareholder to dividend treatment on the cash portion
of the Merger Consideration (to the extent of the shareholder's ratable share of
earnings and profits), even if such shareholder receives solely cash in the
Merger. Therefore, Excel shareholders who (1) constructively own shares of Excel
Common Stock or (2) actually or constructively own shares of Dura Class A Common
Stock should consult their tax advisors as to the tax consequences of receiving
cash, whether such shareholder intends to make a Cash Election or Stock
Election.
69
<PAGE>
TREATMENT OF DIVIDENDS TO CORPORATE SHAREHOLDERS
To the extent that cash received in exchange for shares of Excel Common
Stock is treated as a dividend to a corporate shareholder, such shareholder will
be (1) eligible for a dividends received deduction (subject to applicable
limitations) and (2) subject to the "extraordinary dividend" provisions of the
Code. Under Section 1059(e)(1)(B) of the Code, any cash which is treated as a
dividend to a corporate shareholder will constitute an extraordinary dividend,
except as otherwise provided in Treasury regulations which have yet to be
promulgated. Consequently, the non-taxed portion of any such dividend would
reduce a corporate shareholder's adjusted tax basis in the shares of Dura Class
A Common Stock received in the Merger, but not below zero, and would thereafter
be taxable as capital gain.
TAX BASIS AND HOLDING PERIOD OF SHARES OF DURA CLASS A COMMON STOCK RECEIVED IN
THE MERGER
The tax basis of each share of Dura Class A Common Stock received in the
Merger will be the same as the tax basis of the shares of Excel Common Stock
exchanged therefor, increased by the amount of gain recognized on the exchange
with respect to such shares of Excel Common Stock (including any such gain that
is treated as a dividend), decreased by any portion of such shares of Excel
Common Stock which are converted into cash in lieu of receipt of a fractional
share of Dura Class A Common Stock, and further decreased by the amount of cash
received with respect to such shares of Excel Common Stock (other than cash
received in lieu of a fractional share interest). As discussed above, corporate
shareholders are subject to special adjustments with respect to the portion of
any cash received in the Merger which is taxable as a dividend. See "--Treatment
of Dividends to Corporate Shareholders." The holding period of the shares of
Dura Class A Common Stock received will generally include the holding period of
the shares of Excel Common Stock exchanged therefor.
FRACTIONAL SHARES
If an Excel shareholder receives cash in lieu of a fractional share of Dura
Class A Common Stock in the Merger, such cash amount will be treated as received
in exchange for the fractional share of Dura Class A Common Stock. Gain or loss
recognized as a result of that exchange will be equal to the cash amount
received for the fractional share of Dura Class A Common Stock reduced by the
proportion of the stockholder's tax basis in shares of Excel Common Stock
exchanged and allocable to the fractional share of Dura Class A Common Stock.
THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO. THUS,
EXCEL SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN
REPORTING REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FEDERAL, STATE,
LOCAL, AND OTHER APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES
IN THE TAX LAWS.
70
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(GIVING EFFECT TO THE EXCEL MERGER)
The Unaudited Pro Forma Statement of Operations for the year ended December
31, 1997 gives effect to (i) the acquisitions of GT Automotive, Universal,
Trident, the Hinge Business, Excel and Schade, (ii) the March 1998 issuance of
the Trust Preferred Securities, and (iii) the June 1998 Offering, as if such
transactions had occurred on January 1, 1997. The results of operations of
Trident represent Trident's results of operations for its fiscal year ended
March 31, 1998. The results of operations of VOFA, which was acquired in January
1997, are already included in the Company's results of operations for the year
ended December 31, 1997. The results of operations of the Excel Parking Brake
Business prior to its acquisition on May 4, 1997 and those of REOM prior to its
acquisition on December 12, 1997 have not been included in the Company's pro
forma results of operations for the year ended December 31, 1997 because such
results are not material to the Company's results of operations taken as a
whole.
The Unaudited Pro Forma Statement of Operations for the nine months ended
September 30, 1998 gives effect to (i) the acquisitions of Universal, Trident,
the Hinge Business, Excel and Schade, (ii) the March 1998 issuance of the Trust
Preferred Securities, and (iii) the June 1998 Offering, as if such transactions
had occurred on January 1, 1998. The results of operations for GT Automotive are
included in the Company's results of operations for the nine months ended
September 30, 1998. The Unaudited Pro Forma Statement of Operations for the nine
months ended September 30, 1998 excludes an extraordinary loss of $4.5 million,
net of income taxes, that was recorded by the Company during the second quarter
of 1998 representing the write-off of deferred financing fees related to the old
bank credit agreement and the Trident debt.
The Unaudited Pro Forma Balance Sheet as of September 30, 1998 gives effect
to the acquisition of Excel, as if it had occurred on such date. The historical
balance sheet of the Company as of September 30, 1998 already reflects the
acquisitions of GT Automotive, Universal, Trident and the Hinge Business, the
issuance of the Trust Preferred Securities and the June 1998 Offering. The
historical balance sheet of Excel as of September 30, 1998 already reflects the
acquisition of Schade.
The unaudited pro forma financial data presented herein (collectively
referred to as the "Excel Pro Formas") are based on the assumptions and
adjustments described in the accompanying notes. The Unaudited Pro Forma
Statements of Operations do not purport to represent what the Company's results
of operations actually would have been if the events described above had
occurred as of the dates indicated or what such results would be for any future
periods. The Unaudited Pro Forma Financial Statements are based upon assumptions
and adjustments that the Company believes are reasonable. The Unaudited Pro
Forma Financial Statements, and the accompanying notes, should be read in
conjunction with the historical financial statements, including the notes
thereto, included elsewhere or incorporated by reference in this Prospectus.
Dura expects to achieve cost savings and synergies through the integration
of the operations of Excel with those of Dura. The Unaudited Pro Forma Financial
Statements set forth herein do not reflect any of these anticipated cost savings
and synergies.
The acquisitions of GT Automotive, Universal, Trident, the Hinge Business,
Excel and Schade have been accounted for using the purchase method of accounting
and, accordingly, the assets acquired and liabilities assumed have been recorded
at their fair values as of the dates of their respective acquisitions. Except
for GT Automotive, these amounts have been recorded based upon preliminary
estimates as of such dates. Further adjustments to the acquired assets and
assumed liabilities will be reflected as a change in goodwill.
71
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
GIVING EFFECT TO THE EXCEL MERGER
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TRIDENT TRIDENT
APRIL 1, 1997 DECEMBER 13,
THROUGH 1997 THROUGH
GT DECEMBER 12, MARCH 31, HINGE
COMPANY(1) AUTOMOTIVE(2) UNIVERSAL(3) 1997(4) 1998(5) BUSINESS(6) EXCEL(7)
----------- ------------- ------------- ------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $ 449,111 $ 40,641 $ 40,664 $ 211,203 $ 86,342 $ 48,879 $ 962,333
Cost of sales.............. 375,086 37,450 34,376 176,760 71,295 41,636 846,990
----------- ------------- ------------- ------------- ------------- ----------- ---------
Gross profit............. 74,025 3,191 6,288 34,443 15,047 7,243 115,343
Selling, general and
administrative
expenses................. 32,815 2,850 1,345 23,881 8,343 1,412 77,213
Amortization expense....... 3,600 280 -- -- 1,267 -- 2,054
----------- ------------- ------------- ------------- ------------- ----------- ---------
Operating income......... 37,610 61 4,943 10,562 5,437 5,831 36,076
Interest expense........... 9,298 1,693 -- 52 3,887 -- 10,984
Other (income) expense,
net...................... -- -- -- 126 922 -- (1,930)
----------- ------------- ------------- ------------- ------------- ----------- ---------
Income before provision
for income taxes and
minority interest...... 28,312 (1,632) 4,943 10,384 628 5,831 27,022
Provision for income
taxes.................... 11,670 (549) 1,977 4,799 505 2,332 9,458
Minority interest--trust
preferred securities..... -- -- -- -- -- -- --
Minority
interest--Schade......... -- -- -- -- -- -- --
----------- ------------- ------------- ------------- ------------- ----------- ---------
Net income (loss)........ $ 16,642 $ (1,083) $ 2,966 $ 5,585 $ 123 $ 3,499 $ 17,564
----------- ------------- ------------- ------------- ------------- ----------- ---------
----------- ------------- ------------- ------------- ------------- ----------- ---------
Diluted shares outstanding
(16)..................... 8,868 5,078
----------- ---------
----------- ---------
Diluted earnings per share
(16)..................... $ 1.88
-----------
-----------
Basic shares outstanding
(16)..................... 8,808 5,078
----------- ---------
----------- ---------
Basic earnings per share... $ 1.89
-----------
-----------
<CAPTION>
PRO FORMA EXCEL
SCHADE(8) ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
Revenues................... $ 258,005 $ -- $2,097,178
Cost of sales.............. 232,945 (13,119)(9) 1,803,419
----------- ----------- -----------
Gross profit............. 25,060 13,119 293,759
Selling, general and
administrative
expenses................. 13,029 (1,407) 10) 159,481
Amortization expense....... -- 11,963 (11 19,164
----------- ----------- -----------
Operating income......... 12,031 2,563 115,114
Interest expense........... 4,832 15,484 (12 46,230
Other (income) expense,
net...................... -- -- (882)
----------- ----------- -----------
Income before provision
for income taxes and
minority interest...... 7,199 (12,921) 69,766
Provision for income
taxes.................... 1,808 (3,742) 13) 28,258
Minority interest--trust
preferred securities..... -- 2,486 (14 2,486
Minority
interest--Schade......... -- 1,617 (15 1,617
----------- ----------- -----------
Net income (loss)........ $ 5,391 $ (13,282) $ 37,405
----------- ----------- -----------
----------- ----------- -----------
Diluted shares outstanding
(16)..................... 4,789 18,735
----------- -----------
----------- -----------
Diluted earnings per share
(16)..................... $ 2.13
-----------
-----------
Basic shares outstanding
(16)..................... 3,500 17,386
----------- -----------
----------- -----------
Basic earnings per share... $ 2.15
-----------
-----------
</TABLE>
72
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
GIVING EFFECT TO THE EXCEL MERGER
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HINGE
COMPANY(1) UNIVERSAL(3) TRIDENT(5) BUSINESS(6) EXCEL(7)
----------- ------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues........................................................ $ 498,383 $ 7,836 $ 104,555 $ 34,991 $ 758,462
Cost of sales................................................... 413,230 6,593 86,858 31,632 681,584
----------- ------ ----------- ----------- ---------
Gross profit................................................ 85,153 1,243 17,697 3,359 76,878
Selling, general and administrative expenses.................... 33,986 318 15,278 1,400 55,044
Amortization expense............................................ 6,724 -- 1,303 -- 1,113
----------- ------ ----------- ----------- ---------
Operating income.............................................. 44,443 925 1,116 1,959 20,721
Interest expense................................................ 14,185 -- 4,402 -- 8,127
Other (income) expense, net..................................... -- -- 369 -- (1,521)
----------- ------ ----------- ----------- ---------
Income before provision for income taxes and minority
interest.................................................... 30,258 925 (3,655) 1,959 14,115
Provision for income taxes...................................... 12,591 370 (1,033) 784 1,304
Minority interest--trust preferred securities................... 1,297 -- -- -- --
Minority interest--Schade....................................... -- -- -- -- 87
----------- ------ ----------- ----------- ---------
Net income (loss)............................................. $ 16,370 $ 555 $ (2,622) $ 1,175 $ 12,724
----------- ------ ----------- ----------- ---------
----------- ------ ----------- ----------- ---------
Diluted shares outstanding (16)................................. 11,158 5,078
----------- ---------
----------- ---------
Diluted earnings per share (16)................................. $ 1.58
-----------
-----------
Basic shares outstanding (16)................................... 10,160 5,078
----------- ---------
----------- ---------
Basic earnings per share........................................ $ 1.61
-----------
-----------
<CAPTION>
PRO FORMA EXCEL
SCHADE(8) ADJUSTMENTS PRO FORMA
----------- ------------- -----------
<S> <C> <C> <C>
Revenues........................................................ $ 132,779 $ -- $1,537,006
Cost of sales................................................... 117,593 (8,295)(9) 1,329,195
----------- ------------- -----------
Gross profit................................................ 15,186 8,295 207,811
Selling, general and administrative expenses.................... 7,494 -- 113,520
Amortization expense............................................ -- 5,175 (11 14,315
----------- ------------- -----------
Operating income.............................................. 7,692 3,120 79,976
Interest expense................................................ 2,669 7,023 (12 36,406
Other (income) expense, net..................................... -- -- (1,152)
----------- ------------- -----------
Income before provision for income taxes and minority
interest.................................................... 5,023 (3,903) 44,722
Provision for income taxes...................................... 1,419 2,677 (13 18,112
Minority interest--trust preferred securities................... -- 622 (14 1,919
Minority interest--Schade....................................... -- 1,081 (15 1,168
----------- ------------- -----------
Net income (loss)............................................. $ 3,604 $ (8,283) $ 23,523
----------- ------------- -----------
----------- ------------- -----------
Diluted shares outstanding (16)................................. 1,227 17,463
------------- -----------
------------- -----------
Diluted earnings per share (16)................................. $ 1.35
-----------
-----------
Basic shares outstanding (16)................................... 2,139 17,377
------------- -----------
------------- -----------
Basic earnings per share........................................ $ 1.35
-----------
-----------
</TABLE>
73
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(GIVING EFFECT TO THE EXCEL MERGER)
(1) Represents the results of operations of the Company for the period
presented. For the year ended December 31, 1997 also includes the results
of operations of VOFA, the Excel Parking Brake Business, GT Automotive and
REOM from the dates of their respective acquisition. For the nine months
ended September 30, 1998 also includes the results of operations of
Universal, Trident and Hinge Business from their respective dates of
acquisition.
(2) For the year ended December 31, 1997, represents the results of operations
for GT Automotive from January 1, 1997 through the date of acquisition,
August 29, 1997.
(3) For the year ended December 31, 1997, represents the results of operations
for Universal for such period. For the nine months ended September 30,
1998, represents the results of operations of Universal from January 1,
1998 through the date of acquisition, March 8, 1998.
(4) For the year ended December 31, 1997, represents the results of operations
for Trident's predecessor, the FKI Automotive Group (the "FKI Automotive
Group") of FKI plc (together with its subsidiaries, "FKI") for the period
from April 1, 1997 to December 12, 1997. Trident acquired substantially all
the assets and operations of FKI Automotive Group from FKI on December 12,
1997.
(5) For the year ended December 31, 1997, represents the results of operations
for Trident for the period from December 13, 1997 to March 31, 1998.
Trident was formed on September 19, 1997 and had no operations prior to the
acquisition of the FKI Automotive Group on December 12, 1997. For the nine
months ended September 30, 1998, represents the results of operations of
Trident for the period from January 1, 1998 through the date of
acquisition, April 30, 1998.
(6) For the year ended December 31, 1997, represents the results of operations
for the Hinge Business for such period. For the nine months ended September
30, 1998, represents the results of operations for the Hinge Business from
January 1, 1998 through the date of acquisition, August 31, 1998.
(7) Represents the results of operations for Excel for such period. The results
of operations for the nine months ended September 30, 1998 include the
results of operations of Schade from July 1, 1998, the date of its
acquisition, through September 30, 1998.
(8) For the year ended December 31, 1997, represents the results of operations
for Schade for such period. For the nine months ended September 30, 1998,
represents the results of operations of Schade from January 1, 1998 through
the date of its acquisition by Excel, July 1, 1998.
(9) Reflects the change in depreciation expense resulting from adjustments to
the depreciable lives of property, plant and equipment of GT Automotive,
Universal, Trident, the Hinge Business, Excel and Schade to their estimated
useful lives at the time of their acquisition and from adjustments to value
such property, plant and equipment at fair value as of the date of
acquisition as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
(IN THOUSANDS)
<S> <C> <C>
GT Automotive.......................................... $ 21 $ --
Universal.............................................. 200 33
Trident................................................ 4,627 1,543
Hinge Business......................................... 713 474
Excel.................................................. 2,588 1,940
Schade................................................. 4,970 4,305
------- --------
$ 13,119 $ 8,295
------- --------
------- --------
</TABLE>
74
<PAGE>
(10) Reflects adjustments for the period from April 1 to December 12, 1997 to
eliminate the corporate charges to the FKI Automotive Group by FKI of $2.3
million, offset by management's estimate of ongoing corporate costs of $0.9
million.
(11) Represents the additional amortization of goodwill and other intangible
assets for the year ended December 31, 1997 and the nine months ended
September 30, 1998 arising from the acquisitions of GT Automotive,
Universal, Trident, the Hinge Business, Excel and Schade, net of
amortization of goodwill and other intangible assets previously recorded by
GT Automotive, Trident and Excel:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
(IN THOUSANDS)
<S> <C> <C>
Amortization of Goodwill:
GT Automotive........................................ $ 994 $ --
Universal............................................ 522 87
Trident.............................................. 7,040 2,347
Hinge Business....................................... 592 345
Excel................................................ 6,416 4,812
------- --------
15,564 7,591
------- --------
Amortization previously recorded by:
GT Automotive........................................ (280) --
Trident.............................................. (1,267) (1,303)
Excel................................................ (2,054) (1,113)
------- --------
(3,601) (2,416)
------- --------
Net increase....................................... $ 11,963 $ 5,175
------- --------
------- --------
</TABLE>
Goodwill is amortized on a straight-line basis over a forty-year period.
Other intangible assets, principally bank financing fees, are amortized over
the useful life of the related asset.
(12) Represents the change in interest expense for the year ended December 31,
1997 and the nine months ended September 30, 1998 arising from indebtedness
incurred in connection with the acquisitions of GT Automotive, Universal,
Trident, the Hinge Business, Excel and Schade, net of the interest expense
previously recorded by GT Automotive, Trident, Excel and Schade, and net of
the
75
<PAGE>
interest expense reduction arising from the application of the net proceeds
from the offering of the Trust Preferred Securities and the June 1998
Offering as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
----------------- ------------------
(IN THOUSANDS)
<S> <C> <C>
Interest expense arising from the acquisition of:
GT Automotive........................................ $ 2,660 $ --
Universal............................................ 1,300 217
Trident.............................................. 15,420 5,140
Hinge Business....................................... 2,599 1,732
Excel/Schade......................................... 26,152 19,614
------- --------
48,131 26,703
------- --------
Interest expense previously recorded by:
GT Automotive........................................ (1,693) --
Trident.............................................. (3,939) (4,402)
Excel................................................ (10,984) (8,127)
Schade............................................... (4,832) (2,669)
------- --------
(21,448) (15,198)
------- --------
Reduction in interest expense as a result of the
application of the proceeds from:
Trust Preferred Securities........................... (3,681) (1,036)
June 1998 Offering................................... (7,518) (3,446)
------- --------
Net increase........................................... $ 15,484 $ 7,023
------- --------
------- --------
</TABLE>
Pro forma interest expense was calculated using the Company's average
borrowing rate of approximately 7% for the year ended December 31, 1997 and
the nine months ended September 30, 1998.
(13) Adjusts the provision for income taxes on a pro forma basis to reflect the
Company's incremental tax rate of 40.5%.
(14) Represents dividends, net of income taxes, on the Trust Preferred
Securities for the period prior to their issuance in March 1998.
(15) Represents the minority interest in the earnings of Schade.
(16) Basic earnings per share were computed by dividing net income by the
weighted average number of shares of Class A and Class B Stock outstanding
during the year. Diluted earnings per share include the dilutive effects of
outstanding stock options using the treasury stock method and assumes the
conversion of the Trust Preferred Securities into shares of Class A Common
Stock. Pro forma diluted earnings per share for the nine months ended
September 30, 1998 excludes the conversion of the Trust Preferred
Securities (into approximately 1,289,000 shares of Class A Common Stock),
as their effect is anti-dilutive. Pro forma weighted average shares
outstanding include the effects of the shares that will be issued in
connection with the acquisition of Excel.
76
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
GIVING EFFECT TO THE EXCEL MERGER
AS OF SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------- PRO FORMA EXCEL
COMPANY EXCEL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 13,014 $ 15,780 $ (18,794)(1) $ 10,000
Accounts receivable, net.............................. 163,270 196,623 -- 359,893
Inventories........................................... 54,083 61,635 -- 115,718
Other current assets.................................. 43,401 48,052 -- 91,453
---------- ---------- ----------- ------------
Total current assets.............................. 273,768 322,090 (18,794) 577,064
Property, plant and equipment, net...................... 180,776 231,346 412,122
Goodwill, net........................................... 396,886 37,710 (192,353)(3) 598,303
356,060(2)
Other assets, net....................................... 49,026 15,689 8,000(1) 67,815
(4,900)(4)
---------- ---------- ----------- ------------
$ 900,456 $ 606,835 $ 148,013 $ 1,655,304
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Current maturities of debt............................ $ 7,906 $ 27,536 $ (35,442)(1) $ --
Accounts payable...................................... 91,285 119,654 -- 210,939
Accrued liabilities................................... 106,351 61,470 (1,960)(4) 165,861
---------- ---------- ----------- ------------
Total current liabilities......................... 205,542 208,660 (37,402) 376,800
Long-term debt, net..................................... 238,771 153,673 (401,984)(1) 602,708
612,248(1)
Senior subordinated notes............................... 75,000 -- -- 75,000
Other noncurrent liabilities............................ 99,221 45,843 -- 145,064
Minority interests...................................... -- 6,306 -- 6,306
Mandatorily redeemable convertible trust preferred
securities............................................. 55,250 -- -- 55,250
---------- ---------- ----------- ------------
Stockholders' investment
Preferred stock....................................... -- -- -- --
Class A common stock.................................. 90 112,953 51(5) 141
(112,953)(3)
Class B common stock.................................. 33 -- -- 33
Additional paid-in capital............................ 171,252 -- 170,393(5) 341,645
Retained earnings..................................... 54,148 78,667 (78,667)(3) 51,208
(2,940)(4)
Cumulative translation adjustment..................... 1,149 733 (733)(3) 1,149
---------- ---------- ----------- ------------
Total stockholders' investment.................... 226,672 192,353 (24,849) 394,176
---------- ---------- ----------- ------------
$ 900,456 $ 606,835 $ 148,013 $ 1,655,304
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
</TABLE>
77
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(GIVING EFFECT TO THE EXCEL MERGER)
(DOLLARS IN THOUSANDS)
(1) To reflect the financing transactions related to the acquisition of Excel.
The Company financed these acquisitions with cash on hand, borrowings under
the Bank Credit Agreement and the issuance of Class A Common Stock. The
following is a summary of the sources and uses of funds in connection with
the acquisition of Excel:
<TABLE>
<S> <C>
SOURCES:
- --------------------------------------
Dura revolving credit facility........ $ 147,248
Term Loan A........................... 265,000
Term Loan B........................... 200,000
----------
Total long-term sources............. 612,248
----------
Cash on hand.......................... 18,794
Issuance of Class A Common Stock...... 170,444
----------
Total sources......................... $ 801,486
----------
----------
USES:
- --------------------------------------
Purchase equity--Excel................ $ 334,560
Transaction costs..................... 21,500
----------
356,060
Financing fees........................ 8,000
----------
Total long-term uses................ 364,060
----------
Refinance Dura current maturities..... 7,906
Refinance Excel current maturities.... 27,536
----------
Total current debt refinanced....... 35,442
----------
Refinance Dura long-term debt......... 238,771
Refinance Excel debt.................. 153,673
Excel prepayment penalties, net....... 9,540
----------
Total long-term debt refinanced..... 401,984
----------
Total uses............................ $ 801,486
----------
----------
</TABLE>
(2) To reflect the incremental goodwill recognized in connection with the
acquisition of Excel. The adjustment represents the purchase price of the
Excel equity of $334,560 plus transaction costs of $21,500. The goodwill
will be amortized on a straight-line basis over a forty-year period.
(3) To eliminate Excel's historical stockholders' investment.
(4) Represents the write off of deferred financing fees of approximately $4,900
related to the Bank Credit Agreement and the Excel debt, net of tax benefits
of approximately $1,960. The net loss of $2,940 on the write off of the
deferred financing fees will be recorded as an extraordinary loss by the
Company during the second quarter of 1999.
(5) To reflect the issuance of 5,078,412 shares of Class A Common Stock in
connection with the acquisition of Excel.
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UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(GIVING EFFECT TO THE EXCEL MERGER AND THE ADWEST ACQUISITION)
The following Unaudited Pro Forma Statements of Operations for the year
ended December 31, 1997 and the nine months ended September 30, 1998 give effect
to the transactions described in the Excel Pro Formas and the acquisitions of
Adwest and Heidemann Verwaltungs GmbH ("Heidemann") as if they had occurred at
the beginning of the period presented. For the year ended December 31, 1997, the
results of operations of Heidemann represents its results from the beginning of
its fiscal year (February 1, 1997) through the date of its acquisition by Adwest
(September 11, 1997). The results of operations for Heidemann for the month of
January 1997 have been excluded as they are not material to the Company's pro
forma results of operations taken as a whole. Heidemann's results of operations
for the nine months ended September 30, 1998 are already included in Adwest's
results of operations for such period.
The following Unaudited Pro Forma Balance Sheet as of September 30, 1998
gives effect to the transactions described in the Excel Pro Formas and the
acquisition of Adwest as if such transactions had occurred on such date. The
September 30, 1998 balance sheet of Adwest already reflects its acquisition of
Heidemann.
The unaudited pro forma financial data presented herein are based on the
assumptions and adjustments described in the accompanying notes. The Unaudited
Pro Forma Statements of Operations do not purport to represent what the
Company's results of operations actually would have been if the events described
above had occurred as of the dates indicated or what such results would be for
any future periods. The Unaudited Pro Forma Financial Statements are based upon
assumptions and adjustments that the Company believes are reasonable. The
Unaudited Pro Forma Financial Statements, and the accompanying notes, should be
read in conjunction with the historical financial statements, including the
notes thereto, included elsewhere or incorporated by reference in this
Prospectus.
The acquisition of Adwest is presented using the purchase method of
accounting and, accordingly, the assets acquired and liabilities assumed will be
recorded at their estimated fair values. These pro forma amounts have been
reflected based upon preliminary estimates. Further adjustments to the assets to
be acquired and liabilities to be assumed will be reflected as a change in
goodwill.
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UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
GIVING EFFECT TO THE EXCEL MERGER AND THE ADWEST ACQUISITION
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
EXCEL PRO FORMA
PRO FORMAS (1) ADWEST (2) HEIDEMANN (3) ADJUSTMENTS PRO FORMA
-------------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues........................... $ 2,097,178 $ 287,146 $ 89,975 $ -- $ 2,474,299
Cost of sales...................... 1,803,419 235,951 76,837 (3,000 (4) 2,113,207
-------------- ---------- -------------- ------------ ------------
Gross profit..................... 293,759 51,195 13,138 3,000 361,092
Selling, general and administrative
expenses.......................... 159,481 23,938 8,537 -- 191,956
Amortization expense............... 19,164 2,718 -- 2,506(5) 24,388
-------------- ---------- -------------- ------------ ------------
Operating income................. 115,114 24,539 4,601 494 144,748
Interest expense................... 46,230 5,707 1,376 16,777(6) 70,090
Other income, net.................. (882) -- -- -- (882)
-------------- ---------- -------------- ------------ ------------
Income before provision for
income taxes and minority
interest....................... 69,766 18,832 3,225 (16,283) 75,540
Provision for income taxes......... 28,258 6,763 1,607 (4,521 (7) 32,107
Minority interest--trust
convertible preferred
securities........................ 2,486 -- -- -- 2,486
Minority interest.................. 1,617 734 160 -- 2,511
-------------- ---------- -------------- ------------ ------------
Net income....................... $ 37,405 $ 11,335 $ 1,458 $ (11,762) $ 38,436
-------------- ---------- -------------- ------------ ------------
-------------- ---------- -------------- ------------ ------------
Diluted shares outstanding (8)..... 18,735 18,735
-------------- ------------
-------------- ------------
Diluted earnings per share (8)..... $ 2.13 $ 2.18
-------------- ------------
-------------- ------------
Basic shares outstanding (8)....... 17,386 17,386
-------------- ------------
-------------- ------------
Basic earnings per share........... $ 2.15 $ 2.21
-------------- ------------
-------------- ------------
</TABLE>
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UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
GIVING EFFECT TO THE EXCEL MERGER AND THE ADWEST ACQUISITION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
EXCEL PRO FORMA
PRO FORMAS (1) ADWEST (2) ADJUSTMENTS PRO FORMA
-------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues.............................................. $ 1,537,006 $ 202,951 $ -- $ 1,739,957
Cost of sales......................................... 1,329,195 176,188 (1,500)(4) 1,503,883
-------------- ---------- ----------- ------------
Gross profit........................................ 207,811 26,763 1,500 236,074
Selling, general and administrative expenses.......... 113,520 10,849 -- 124,369
Amortization expense.................................. 14,315 1,140 1,472(5) 16,927
-------------- ---------- ----------- ------------
Operating income.................................... 79,976 14,774 28 94,778
Interest expense...................................... 36,406 4,955 6,975(6) 48,336
Other income, net..................................... (1,152) -- -- (1,152)
-------------- ---------- ----------- ------------
Income before provision for income taxes and
minority interest................................. 44,722 9,819 (6,947) 47,594
Provision for income taxes............................ 18,112 3,114 (1,194)(7) 20,032
Minority interest--trust preferred securities......... 1,919 -- -- 1,919
Minority interest..................................... 1,168 427 -- 1,595
-------------- ---------- ----------- ------------
Net income.......................................... $ 23,523 $ 6,278 $ (5,753) $ 24,048
-------------- ---------- ----------- ------------
-------------- ---------- ----------- ------------
Diluted shares outstanding (8)........................ 17,463 1,289 18,752
-------------- ----------- ------------
-------------- ----------- ------------
Diluted earnings per share (8)........................ $ 1.35 $ 1.38
-------------- ------------
-------------- ------------
Basic shares outstanding (8).......................... 17,377 17,377
-------------- ------------
-------------- ------------
Basic earnings per share.............................. $ 1.35 $ 1.38
-------------- ------------
-------------- ------------
</TABLE>
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NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(GIVING EFFECT TO THE EXCEL MERGER AND THE ADWEST ACQUISITION)
(DOLLARS IN THOUSANDS)
(1) Represents the unaudited pro forma results of operations of the Company for
the periods indicated, giving effect to the transactions described in the
Excel Pro Formas.
(2) For the year ended December 31, 1997, includes the results of operations of
Heidemann from September 11, 1997, the date of its acquisition by Adwest.
For the nine months ended September 30, 1998, represents the combined
results of operations of Adwest and Heidemann for the six months ended June
30, 1998. The results of Adwest and Heidemann are included for the six month
period ended June 30, 1998 because Adwest is a United Kingdom public limited
company and has not prepared or publicly released financial information for
the nine months ended September 30, 1998.
(3) For the year ended December 31, 1997, represents the results of operations
for Heidemann from the beginning of its fiscal year (February 1, 1997) to
the date of its acquisition by Adwest (September 11, 1997). The results of
operations for Heidemann for the month of January 1997 have been excluded as
they are not material to the Company's pro forma results of operations taken
as a whole.
(4) Represents the change in depreciation expense resulting from adjustments to
the depreciable lives of property, plant and equipment of Adwest and
Heidemann to their estimated useful lives at the time of the acquisition of
Adwest.
(5) Represents the amortization of goodwill for the year ended December 31, 1997
($5,224) and the six months ended June 30, 1998 ($2,612) arising from the
acquisition of Adwest and Heidemann, net of amortization previously recorded
by Adwest ($2,718 for the year ended December 31, 1997 and $1,140 for the
six months ended June 30, 1998).
(6) Represents the interest expense for the year ended December 31, 1997
($23,860) and the six months ended June 30, 1998 ($11,930) arising from
indebtedness incurred in connection with the acquisition of Adwest, net of
the interest expense previously recorded by Adwest ($7,083 for the year
ended December 31, 1997 and $4,955 for the six months ended June 30, 1998).
(7) Adjusts the provision for income taxes on a pro forma basis to reflect the
Company's incremental European tax rate of 35%.
(8) Basic earnings per share were computed by dividing net income by the
weighted average number of shares of Class A and Class B Stock outstanding
during the year. Diluted earnings per share include the dilutive effects of
outstanding stock options using the treasury stock method and assumes the
conversion of the Trust Preferred Securities into shares of Class A Common
Stock. Pro Forma weighted average shares outstanding include the effects of
the shares that will be issued in connection with the acquisition of Excel.
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<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
(GIVING EFFECT TO THE EXCEL MERGER AND ADWEST ACQUISITION)
AS OF SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
EXCEL AND
EXCEL PRO FORMA ADWEST
PRO FORMAS ADWEST(4) ADJUSTMENTS PRO FORMA
------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 10,000 $ 32,558 $ (15,000)(1) $ 27,558
Accounts receivable, net............................. 359,893 74,227 434,120
Inventories.......................................... 115,718 29,319 145,037
Other current assets................................. 91,453 9,327 100,780
------------- ---------- ----------- ------------
Total current assets............................... 577,064 145,431 (15,000) 707,495
Property, plant and equipment, net..................... 412,122 100,294 512,416
Goodwill, net.......................................... 598,303 106,877 (120,089)(3) 807,291
222,200(2)
Other assets, net...................................... 67,815 16,896 5,000(1) 89,711
------------- ---------- ----------- ------------
$ 1,655,304 $ 369,498 $ 92,111 $ 2,116,913
------------- ---------- ----------- ------------
------------- ---------- ----------- ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Current maturities of debt........................... $ -- $ 16,310 $ (16,310)(1) $ --
Accounts payable..................................... 210,939 62,621 273,560
Accrued liabilities.................................. 165,861 54,567 220,428
------------- ---------- ----------- ------------
Total current liabilities.......................... 376,800 133,498 (16,310) 493,988
Long-term debt, net.................................... 602,708 89,626 (89,626)(1) 920,844
318,136(1)
Senior subordinated notes.............................. 75,000 -- 75,000
Other noncurrent liabilities........................... 145,064 21,018 166,082
Minority interests..................................... 6,306 5,267 11,573
Mandatorily redeemable convertible trust preferred
securities............................................ 55,250 -- 55,250
------------- ---------- ----------- ------------
Stockholders' investment
Preferred stock...................................... -- -- --
Class A common stock................................. 141 34,310 (34,310)(3) 141
Class B common stock................................. 33 -- 33
Additional paid-in capital........................... 341,645 34,728 (34,728)(3) 341,645
Retained earnings.................................... 51,208 52,258 (52,258)(3) 51,208
Cumulative translation adjustment.................... 1,149 (1,207) 1,207(3) 1,149
------------- ---------- ----------- ------------
Total stockholders' investment..................... 394,176 120,089 (120,089) 394,176
------------- ---------- ----------- ------------
$ 1,655,304 $ 369,498 $ 92,111 $ 2,116,913
------------- ---------- ----------- ------------
------------- ---------- ----------- ------------
</TABLE>
83
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(GIVING EFFECT TO THE EXCEL MERGER AND THE ADWEST ACQUISITION)
(DOLLARS IN THOUSANDS)
(1) To reflect the financing transactions related to the acquisition of Adwest.
The acquisition will be financed with borrowings under a Bank Credit
Agreement. The following is a summary of the sources and uses of funds in
connection with the acquisition of Adwest:
<TABLE>
<S> <C>
SOURCES:
- ------------------------------------------
Borrowing under
Bank Credit Agreement................... $318,136
Adwest cash on hand....................... 15,000
----------
Total sources........................... $333,136
----------
----------
USES:
- ------------------------------------------
Purchase Adwest outstanding shares........ $207,200
Transaction costs......................... 15,000
----------
222,200
Financing fees............................ 5,000
Refinance Adwest current maturities....... 16,310
Refinance Adwest long-term debt........... 89,626
----------
Total uses.............................. $333,136
----------
----------
</TABLE>
(2) To reflect the incremental goodwill to be recognized in connection with the
acquisition of Adwest. The goodwill will be amortized on a straight-line
basis over a forty year period.
(3) To eliminate Adwest's historical stockholders' investment.
(4) The balance sheet of Adwest is included as of June 30, 1998 because Adwest
is a United Kingdom public limited company and has not prepared or publicly
released financial information as of September 30, 1998.
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<PAGE>
DESCRIPTION OF DURA CAPITAL STOCK
GENERAL MATTERS
The total amount of authorized capital stock of Dura consists of 30,000,000
shares of Class A Common Stock, par value $0.01 per share, 10,000,000 shares of
Class B Common Stock, par value $0.01 per share and 5,000,000 shares of
Preferred Stock, par value $1.00 per share (the "Preferred Stock"). As of
January 18, 1999, 9,029,085 shares of Class A Common Stock, 3,325,303 shares of
Class B Common Stock and no shares of Preferred Stock were issued and
outstanding. The following summary of certain provisions of Dura's capital stock
describes all material provisions of, but does not purport to be complete and is
subject to, and qualified in its entirety by, the Restated Certificate and the
Dura By-laws that are included as exhibits to the registration statement of
which this Joint Proxy Statement/Prospectus forms a part and by the provisions
of applicable law.
The Restated Certificate and the Dura By-laws contain certain provisions
that are intended to enhance the likelihood of continuity and stability in the
composition of the Board and which may have the effect of delaying, deferring or
preventing a future takeover or change in control of Dura unless such takeover
or change in control is approved by the Board.
CLASS A COMMON STOCK
All of the outstanding shares of Class A Common Stock are, and the shares of
Class A Common Stock to be issued by Dura to Excel shareholders in connection
with the Merger will be, validly issued, fully paid and nonassessable. Subject
to the prior rights of the holders of any Preferred Stock, the holders of
outstanding shares of Class A Common Stock are entitled to receive dividends out
of assets legally available therefor at such time and in such amounts as the
Board may from time to time determine. The shares of Class A Common Stock are
not convertible and the holders thereof have no preemptive or subscription
rights to purchase any securities of Dura. Upon liquidation, dissolution or
winding up of Dura, the holders of Class A Common Stock are entitled to receive
pro rata the assets of Dura which are legally available for distribution, after
payment of all debts and other liabilities and subject to the prior rights of
any holders of Preferred Stock then outstanding. Each outstanding share of Class
A Common Stock is entitled to one vote on all matters submitted to a vote of
stockholders. Except as otherwise required by law or the Restated Certificate,
the Class A Common Stock and Class B Common Stock vote together on all matters
submitted to a vote of the stockholders, including the election of Directors.
The Class A Common Stock is traded on the Nasdaq National Market under the
symbol "DRRA."
CLASS B COMMON STOCK
The issued and outstanding, shares of Class B Common Stock generally have
identical rights to those of the Class A Common Stock except with respect to
voting power and conversion rights. Each share of Class B Common Stock is
entitled to ten votes on all matters submitted to a vote of stockholders, as
compared to one vote for each share of Class A Common Stock. Class B Common
Stock is convertible into Class A Common Stock on a share-for-share basis at the
option of the holder, and mandatorily convertible upon any transfer thereof
(except to affiliates) and at any time that Onex DHC LLC, J2R and certain
stockholders affiliated with Hidden Creek, in the aggregate, do not beneficially
own at least 10% of the total outstanding shares of Common Stock. After giving
effect to the Merger, these stockholders will collectively own approximately 11%
of the total outstanding shares of Common Stock. The Class B Common Stock is not
registered under the Securities Act and is not listed for trading on any
national securities exchange or on the Nasdaq National Market.
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<PAGE>
PREFERRED STOCK
The Board may, without further action by Dura's stockholders, from time to
time, direct the issuance of shares of Preferred Stock in series and may, at the
time of issuance, determine the rights, preferences and limitations of each
series. Satisfaction of any dividend preferences of outstanding shares of
Preferred Stock would reduce the amount of funds available for the payment of
dividends on shares of Class A Common Stock. Holders of shares of Preferred
Stock may be entitled to receive a preference payment in the event of any
liquidation, dissolution or winding-up of Dura before any payment is made to the
holders of shares of Class A Common Stock. Under certain circumstances, the
issuance of shares of Preferred Stock may render more difficult or tend to
discourage a merger, tender offer or proxy contest, the assumption of control by
a holder of a large block of Dura's securities or the removal of incumbent
management. Upon the affirmative vote of a majority of the total number of
Directors then in office, the Board, without stockholder approval, may issue
shares of Preferred Stock with voting and conversion rights which could
adversely affect the holders of shares of Class A Common Stock. Upon
consummation of the Merger, there will be no shares of Preferred Stock
outstanding, and Dura has no present intention to issue any shares of Preferred
Stock. The affirmative vote of two-thirds of the Board is required to issue any
Preferred Stock.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Class A Common Stock is Firstar
Bank Milwaukee, N.A.
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<PAGE>
COMPARISON OF CERTAIN RIGHTS OF
DURA STOCKHOLDERS AND EXCEL SHAREHOLDERS
The rights of Dura stockholders are governed by Dura's Restated Certificate,
the Dura By-laws and the Delaware General Corporation Law ("Delaware Corporate
Law"). The rights of Excel shareholders are governed by Excel's Articles of
Incorporation, as amended (the "Excel Articles"), its Code of By-laws (the
"Excel By-laws") and the Indiana Business Corporation Law ("Indiana Corporate
Law"). After the Merger, the rights of Excel shareholders who become Dura
stockholders will be governed by the Dura Restated Certificate, the Dura By-laws
and the Delaware Corporate Law. The following is a summary of the material
differences between the rights of Dura stockholders and Excel shareholders.
AMENDMENT OF CHARTER DOCUMENTS
DURA. Under Delaware Corporate Law, the amendment of a corporation's
certificate of incorporation requires the affirmative vote of a majority of
votes entitled to be cast thereon, unless a corporation's certificate of
incorporation provides otherwise. The Dura Restated Certificate provides that
Article VIII (prohibition of shareholder action by written consent), IX (rights
of directors) and X (amendment) of the Dura Restated Certificate cannot be
amended or repealed without the approval of 80% of the voting power of the Dura
Class A Common Stock and Dura Class B Common Stock voting together as a single
class.
EXCEL. Under Indiana Corporate Law, the amendment of a corporation's
articles of incorporation requires generally that, if a quorum is present,
action on an amendment is approved if the votes cast favoring the amendment
exceed the votes cast opposing the amendment, unless the articles of
incorporation or the Indiana Corporate Law require a greater number of
affirmative votes. In addition, the amendment must be approved by a majority of
the votes entitled to be cast on the amendment by any voting group with respect
to which the amendment would create dissenters' rights. The Excel Articles do
not provide otherwise.
AMENDMENT OF BY-LAWS
DURA. Under Delaware Corporate Law, holders of a majority of the voting
power of a corporation and, when provided in the certificate of incorporation,
the directors of the corporation, have the power to adopt, amend and repeal the
by-laws of a corporation. The Dura Restated Certificate grants the directors of
Dura the power to make, alter or repeal the Dura By-laws; provided, however,
that Sections 2 (number, election of term of directors), 3 (removal and
resignation of directors), 4 (procedure for filling vacancies on the board of
directors) and 5 (procedures for nominating directors) of Article III and
Article V of the Dura By-laws cannot be amended or repealed by the stockholders
of Dura without the affirmative vote of 80% of the voting power of the Dura's
outstanding Class A Common Stock and Class B Common Stock.
EXCEL. Unless a corporation's articles of incorporation provide otherwise,
under Indiana Corporate Law, only a corporation's board of directors may amend
or repeal a corporation's by-laws. The Excel Articles do not provide otherwise.
PROVISIONS AFFECTING BUSINESS COMBINATIONS
DURA. Section 203 of the Delaware Corporate Law provides generally that a
corporation may not engage in a wide range of "business combinations" with any
person who acquires 15% or more of a corporation's voting stock (thereby
becoming an "interested stockholder") for a period of three years following the
date the person became an interested stockholder, unless (i) the board of
directors of the corporation has approved, prior to that acquisition date,
either the business combination or the transaction that resulted in the person
becoming an interested stockholder, (ii) upon consummation of the transaction
that resulted in the person becoming an interested stockholder, that person owns
at least 85% of the corporation's voting stock outstanding at the time the
transaction commenced (excluding shares owned by
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<PAGE>
persons who are directors and also officers and shares owned by employee stock
plans in which participants do not have the right to determine confidentially
whether shares will be tendered in a tender or exchange offer), or (iii) the
business combination is approved by the board of directors and authorized by the
affirmative vote (at an annual or special meeting and not by written consent) of
at least 66 2/3% of the outstanding voting stock not owned by the interested
stockholder.
EXCEL. Section 23-1-43-18 of the Indiana Corporate Law provides that a
corporation may not engage in any "business combination" with any "interested
shareholder" for a period of five years following the interested shareholder's
share acquisition date unless the business combination or the purchase of shares
made by the interested shareholder is approved by the board of directors of the
corporation before the interested shareholder's share acquisition date. A
"business combination" under Indiana Corporate Law is generally defined as any
of the following transactions involving the corporation and an interested
shareholder thereof: (i) a merger or consolidation; (ii) a sale, lease,
exchange, mortgage, pledge, transfer, or other disposition of 10% or more of
corporation's assets or representing 10% or more of the earning power or net
income of the corporation; (iii) an issuance or transfer of shares of the
corporation's stock representing 5% or more of the aggregate market value of all
of such corporation's outstanding stock; (iv) the adoption of a plan of
liquidation or dissolution proposed by or under agreement with such interested
shareholder; (v) a transaction having the effect of directly or indirectly
increasing the proportionate share of the corporation's stock held by such
interested shareholder; or (vi) any receipt by such interested shareholder of
the benefit of any loans, advances, guarantees, pledges, or other financial
assistance or any tax credits or other tax advantages. An "interested
shareholder" under Indiana Corporate Law is generally defined as any person
owning 10% or more of the voting power of the outstanding voting shares of the
corporation.
CONTROL SHARE ACQUISITION LAWS
Chapter 23-1-42 of the Indiana Corporate Law requires that, unless the
articles or by-laws of a corporation exempt the corporation therefrom (which
Excel's Articles and By-laws do not), any person who proposes to acquire or has
acquired (a "control share acquisition") ownership of (or the power to direct
the voting of) shares representing one-fifth, one-third, or a majority of the
voting power of an issuing public corporation in the election of directors must
provide the corporation with a statement describing such acquisition (an
"acquiring person statement"). If the acquiring person so requests at the time
of delivery of such statement (and undertakes to pay the expenses relating
thereto), the corporation shall cause a special meeting of its shareholders to
be called for the purpose of considering the voting rights to be accorded the
shares acquired in the control share acquisition. The shares so acquired shall
be accorded the same voting rights as were accorded such shares before the
control share acquisition only to the extent granted by resolution of the
shareholders of such corporation. Shares acquired in a control share acquisition
as to which no acquiring person statement has been filed may be redeemed by the
corporation at the fair value thereof under certain circumstances. In the event
that shares acquired in a control share acquisition are accorded full voting
rights and the acquiring person has acquired shares representing a majority or
more of all voting power, the other shareholders will be entitled to appraisal
rights. The Delaware Corporate Law does not contain a comparable provision.
ANTITAKEOVER LAWS
Chapter 23-2-3.1 of the Indiana Corporate Law provides that a person shall
not make a takeover offer unless the following conditions are satisfied: (i) a
statement which consists of each document required to be filed with the
Commission is filed with the Indiana securities commissioner and delivered to
the president of the target company before making the takeover offer; (ii) a
consent to service of process and the requisite filing fee accompanies the
statement filed with the Indiana securities commissioner; (iii) the takeover
offer is made to all offerees holding the same class of equity securities on
substantially equivalent terms; (iv) a hearing is held within 20 business days
after the statement described in clause (i) above is
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<PAGE>
filed; and (v) the Indiana securities commissioner shall have approved the
takeover offer. In addition, such section provides that no offeror may acquire
any equity security of any class of a target company within two years following
the conclusion of a takeover offer with respect to that class, unless the holder
of such equity security is afforded, at the time of that acquisition, a
reasonable opportunity to dispose of such securities to the offeror upon
substantially equivalent terms. A "takeover offer" means an offer to acquire or
an acquisition of any equity security of a target company pursuant to a tender
offer or request or invitation for tenders if, after the acquisition, the
offeror is directly or indirectly a record or beneficial owner of more than ten
percent of any class of the outstanding equity securities of the target company.
A "target company" means an issuer of securities which is organized under the
laws of Indiana, has its principal place of business in Indiana and has
substantial assets in Indiana. Delaware Corporate Law does not contain a
comparable provision.
ANTITAKEOVER PROVISIONS OF THE EXCEL ARTICLES
In addition, the Excel Articles provide that every holder of Excel Common
Stock, other than a "controlling person" or a transferee of a "controlling
person," has the right to cause Excel to redeem its shares in the event that (1)
any person becomes a "controlling stockholder," (2) any "controlling
stockholder" makes a further "unilateral tender offer," or (3) any controlling
stockholder causes or permits the Board of Directors or the management of Excel
to adopt any resolution pursuant to which it is proposed or intended to merge or
consolidate with or to sell the corporation's assets to another corporation or
entity which is or will be controlled by the controlling person. In the event
any person becomes a "controlling person," this provision cannot be amended or
repealed without the consent of 85% of Excel's stockholders. A "controlling
person" shall mean any person who has an ownership interest in 40% or more of
the outstanding Excel Common Stock and who has acquired any such shares by means
of a "unilateral tender offer." A "unilateral tender offer" is any tender offer
to purchase shares, other than tender offers which, prior to being made, have
been expressly recommended by the Board of Directors for acceptance by the
stockholders prior to the expiration of such tender offer (not including tender
offers approved by a Board of Directors controlled by a "controlling person").
The redemption price is equal to the greater of (1) the highest price paid per
share by the controlling person pursuant to any unilateral tender offer and (2)
the highest market price per share during the 18 months prior to the date the
right to redemption arises.
RIGHT TO CALL SPECIAL MEETINGS
DURA. The Dura By-laws provide that a special meeting of the stockholders
may be called only by the chairman of the board of directors, the president or a
majority of the board of directors.
EXCEL. The Excel By-laws provide that a special meeting of the stockholders
of the corporation may be called by the chairman of the board of directors, the
president, the board of directors or by shareholders holding not less than
one-fourth of all outstanding stock of the corporation entitled to vote at such
meeting. Special meetings will also be called by the chairman of the board, the
president or the vice-president at the request of a majority of the board of
directors.
STOCKHOLDER ACTION WITHOUT A MEETING
DURA. The Dura Restated Certificate provides that any action permitted to
be taken at a stockholders' meeting must be effected at an annual or special
meeting of stockholders and may not be effected by written action in lieu of a
meeting.
EXCEL. The Excel Articles provide that any action that can be taken at a
meeting of shareholders can be taken without a meeting if, prior to such action,
a consent in writing signed by all shareholders entitled to vote on such action
and the consent is filed in the corporation's minutes.
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DIVIDENDS AND REPURCHASES
DURA. Under Delaware Corporate Law, a corporation may pay dividends and
repurchase stock out of surplus or, if there is no surplus, out of any net
profits for the fiscal year in which the dividend was declared or for the
preceding fiscal year as long as no payment reduces capital below the amount of
capital represented by all classes of shares having a preference upon the
distribution of assets.
EXCEL. Under Indiana Corporate Law, a corporation may make distributions to
its shareholders as long as the corporation's total assets exceed the sum of its
total liabilities plus any amount that would be needed, if the corporation were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are superior
to those receiving the distribution, debts may be paid as they come due, and the
payment of these distributions is consistent with the corporation's articles of
incorporation.
DISSENTERS' RIGHTS
DURA. Under Delaware Corporate Law, appraisal rights are available to
dissenting stockholders in connection with certain mergers or consolidations.
However, unless the certificate of incorporation otherwise provides, Delaware
Corporate Law does not provide for appraisal rights (1) if the shares of the
corporation are listed on a national securities exchange or designated as a
national market systems security on an interdealer quotations system by the
National Association of Securities Dealers, Inc. or are held of record by more
than 2,000 stockholders (as long as the stockholders receive in the merger
shares of the surviving corporation or of any other corporation the shares of
which are listed on a national securities exchange or designated as a national
market systems security on an interdealer quotations system by the National
Association of Securities Dealers, Inc. or are held of record by more than 2,000
stockholders) or (2) if the corporation is the surviving corporation and no vote
of its stockholders is required for the merger. The Dura Restated Certificate
does not provide otherwise.
EXCEL. Under Indiana Corporate Law, dissenters' rights are unavailable to
holders of shares that are registered on a national securities exchange or
quoted on the Nasdaq National Market on the record date for a meeting of
shareholders at which action on the proposed transaction otherwise subject to
dissenters' rights is to be taken. Because the Excel Common Stock is listed on
the New York Stock Exchange, Excel shareholders are not entitled to exercise
dissenters' rights with respect to the proposed merger.
SIZE OF BOARD
DURA. Delaware Corporate Law provides that unless the certificate of
incorporation specifies the number of directors, a board of directors may change
the authorized number of directors by an amendment to the by-laws if fixed
therein, or in such manner as may be provided therein. If the certificate of
incorporation specifies the number of directors, then that number can be changed
only by amending the certificate of incorporation. The Dura Restated Certificate
provides that the number of directors shall be fixed by the Board of Directors
and shall not be less than one nor more than fifteen. The Dura By-laws provide
that the number of directors shall be eleven and that the number may be changed
from time to time by the board of directors. The current number of directors is
12.
EXCEL. Under Indiana Corporate Law, board of directors must consist of one
or more individuals with the number specified in or fixed in accordance with the
corporation's articles of incorporation or by-laws. The Excel Articles state
that the number of directors may be fixed from time to time by the board of
directors at any number not less than three nor more than fifteen. The current
number of directors is six.
REMOVAL OF DIRECTORS
DURA. Delaware Corporate Law provides that directors may be removed from
office, with or without cause, by the holders of a majority of the voting power
of all outstanding voting stock, unless the
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corporation has a classified board (in which case directors may only be removed
by shareholder vote for cause) or its certificate otherwise provides. The Dura
Restated Certificate provides that, no director may be removed from office
without cause.
EXCEL. Indiana Corporate Law provides that directors may be removed in any
manner provided by a corporation's articles of incorporation and can be removed
with or without cause unless a corporation's articles of incorporation provide
otherwise. The Excel Articles do not provide otherwise. Under Indiana Corporate
Law, a director may be removed by the shareholders only at a meeting called for
the purpose of removing the director.
VACANCIES ON THE BOARD OF DIRECTORS
DURA. Delaware Corporate Law provides that unless the governing documents
of a corporation provide otherwise, vacancies and newly created directorships
resulting from a resignation or any increase in the authorized number of
directors may be filled by a majority of the directors then in office. The Dura
Restated Certificate does not otherwise provide. The Dura By-laws provide that
any vacancy in the board of directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation or removal of a
director, shall be filled for the unexpired portion of the term by a majority
vote of the remaining directors, though less than a quorum, or by the sole
remaining director.
EXCEL. Unless the articles of incorporation of a corporation provide
otherwise, under Indiana Corporate Law, vacancies on the board of directors or,
if the remaining directors constitute less than a quorum, the majority of the
remaining members may fill the vacancy. The Excel Articles do not provide
otherwise.
OTHER CORPORATE CONSTITUENCIES
DURA. Delaware Corporate Law does not contain a specific provision
elaborating on the duties of a board of directors with respect to the best
interests of a corporation. Delaware courts have permitted directors to consider
various constituencies provided that there be some rationally related benefit to
stockholders.
EXCEL. Under Sections 23-1-35-1-(d), (f), and (g) of the Indiana Corporate
Law, in discharging his or her duties to the corporation and in determining what
he or she believes to be in the best interests of the corporation, a director or
officer may, in addition to considering the effects of any action on
shareholders, consider the effects of the action on employees, suppliers,
customers, the communities in which the corporation operates and any other
factors that the director or officer considers pertinent.
DIRECTOR LIABILITY
DURA. Delaware Corporate Law allows a Delaware corporation to include in
its certificate of incorporation, and the Dura Restated Certificate contains, a
provision eliminating the liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except liability for any breach of the director's duty of loyalty to corporation
or its stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, under Section 174 of
Delaware Corporate Law (which deals generally with unlawful payments of
dividends, stock repurchases and redemptions), and for any transaction from
which the director derived an improper personal benefit.
EXCEL. Indiana Corporate Law provides that a director is not liable for any
action taken as a director, or any failure to take any action, unless (i) the
director has breached or failed to perform the duties of the director's office
in compliance with Section 23-1-35-1 of the Indiana Corporate Law (which
requires, among other things, that a director discharge his duties as a director
in good faith, with the care and
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ordinarily prudent person in a like position would exercise under similar
circumstances and in a manner the director reasonably believes to be in the best
interests of the corporation), and (ii) the breach or failure to perform
constitutes willful misconduct or recklessness. Actions taken in connection with
a proposed acquisition of control of transaction by directors in the good faith
exercise of their business judgment are not subject to a different or higher
degree of scrutiny than other actions of the directors. In addition, Excel's
Articles provide that no director or officer of the corporation shall be liable
for any action taken or omitted to be taken by him as a director or officer in
good faith if such person (i) exercised or used the same degree of care and
skill as a prudent man would have exercised or used under the circumstances in
the conduct of his own affairs; (ii) took or omitted to take such action in
reliance upon the advice of counsel for the corporation or upon statements made
or information furnished by officers or employees of the corporation which he
had reasonable grounds to believe, or upon a financial statement of the
corporation prepared by an officer or employee of the corporation in charge of
its accountant or firm of public accounting; or (iii) in good faith considered
the assets to be of their book value or followed what he believed to be sound
accounting and business practice.
INDEMNIFICATION
DURA. Delaware Corporate Law permits a Delaware corporation to indemnify
directors, officers, employees, and agents under certain circumstances and
mandates indemnification under certain circumstances. Delaware Corporate Law
permits a corporation to indemnify an officer, director, employee or agent for
fines, judgments or settlements, as well as expenses in the context of actions
other than derivative actions, if such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation or, in the case of a criminal proceeding, if such person had no
reasonable cause to believe that his or her conduct was unlawful.
Indemnification against expenses incurred by a director, officer, employee, or
agent in connection with a proceeding against such person for actions in such
capacity is mandatory to the extent that such person has been successful on the
merits. If a director, officer, employee, or agent is determined to be liable to
the corporation, indemnification for expenses is not allowable, subject to
limited exceptions when a court deems the award of expenses appropriate.
Delaware Corporate Law grants express power to a Delaware corporation to
purchase liability insurance for its directors, officers, employees, and agents,
regardless of whether any such person is otherwise eligible for indemnification
by the corporation. Advancement of expenses is permitted, but a person receiving
such advances must repay those expenses if it is ultimately determined that he
is not entitled to indemnification.
The Dura By-laws provide that any person who was or is a party, or is
threatened to be made a party to, or is involved in any action, suit or
proceeding, by reason of the fact that he, or a person to whom he is legal
representative, is or was a director or officer of Dura, or is or was a
director, officer, employee, or agent of any corporation, partnership, joint
venture or other enterprise in which he served as such at the request of Dura,
shall be indemnified by Dura to the fullest extent provided by Delaware
Corporate Law against all expense, liability and loss, including reasonable
attorney's fees.
EXCEL. Indiana Corporate Law authorizes Indiana corporations to indemnify
officers and directors for their conduct if such conduct was in good faith and
was in the corporation's best interests or, in the case of directors, was not
opposed to such best interests, and permits the purchase of insurance in this
regard. The indemnification provided by the Indiana Corporate Law is not
exclusive. The corporation may also provide other rights of indemnification in
its articles of incorporation and bylaws, a contract approved by the board of
directors or the shareholders, or any other authorization approved by the
shareholders. Rights of indemnification that may be provided in such documents
are limited only by the terms of such documents and public policy.
The Excel Articles provide that Excel shall indemnify any person against
whom there is instituted or threatened any claim, action, suit or proceeding,
whether civil or criminal, by reason of the fact that he, his testator or
intestate is or was a director, member of an executive committee or officer of
Excel, or of any
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corporation which he served as such at the request of Excel, against any and all
liability, reasonable expenses and costs of any nature (including attorneys'
fees) actually incurred by him in connection with the defense of such claim,
action, suit or proceeding, or in connection with any appeal therein, except in
relation to matters as to which it shall be finally adjudged in such action,
suit or proceeding that such person, his testator or intestate is liable for
gross negligence or willful misconduct in the performance of his duties. Excel
may also reimburse to any such person any amount paid in settlement of any such
claim, action, suit or proceeding, if it shall be found by a majority of a
committee composed of the directors not involved in the matter in controversy
(whether or not a quorum) that it is in the interests of Excel that such
settlement be made and that such person, his testator or intestate was not
guilty of gross negligence or willful misconduct.
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APPROVAL OF THE DURA 1998 STOCK INCENTIVE PLAN
INTRODUCTION
The Dura Board adopted on December 17, 1998 the 1998 Stock Incentive Plan
(the "1998 Plan"), subject to stockholder approval. In 1996, Dura stockholders
approved the 1996 Key Employee Stock Option Plan (the "1996 Plan") in connection
with the initial public offering of Dura's Class A Common Stock. Since that
time, Dura has grown considerably, having completed ten acquisitions and one
joint venture. The Dura Board believes that, as Dura continues to expand its
operation, the 1998 Plan will provide Dura with greater flexibility and permit
Dura to continue to attract and retain the best available personnel, provide
additional incentives for its employees, directors and consultants and promote
the success of Dura's growing business.
A summary of the essential features of the 1998 Plan is provided below, but
is qualified in its entirety by the full text of the 1998 Plan, which is set
forth as Appendix B to this Joint Proxy Statement/Prospectus.
GENERAL
PARTICIPANTS. Directors, officers, consultants (whether or not employees)
and employees of Dura and its subsidiaries, in each case as selected by the
administrator of the 1998 Plan, will be eligible to receive grants pursuant to
the 1998 Plan, except that only employees may receive grants of incentive stock
options. As of January 28, 1999, there were approximately 8,200 persons eligible
to participate in the 1998 Plan.
Set forth in the table below are the number of stock options that have been
granted under the 1998 Plan to (1) Dura's Chief Executive Officer and Dura's
four most highly compensated executive officers as of the end of its last fiscal
year other than its Chief Executive Officer (the "Named Executive Officers"),
(2) all current executive officers as a group; (3) all current directors who are
not executive officers as a group, and (4) all employees, including all officers
who are not executive officers, as a group.
<TABLE>
<CAPTION>
DOLLAR
NAME AND POSITION VALUE(1) NUMBER OF OPTIONS
- ---------------------------------------------------------- -------------- ------------------
<S> <C> <C>
Karl F. Storrie........................................... $ 275,625 90,000
PRESIDENT AND CEO
Joe A. Bubenzer........................................... 91,875 30,000
SENIOR VICE PRESIDENT
Milton D. Kniss........................................... 114,844 37,500
VICE PRESIDENT
Stephen E. K. Graham...................................... 91,875 30,000
VICE PRESIDENT AND CFO
John J. Knappenberger..................................... 91,875 30,000
VICE PRESIDENT
Executive Officers........................................ 834,531 272,500
Non-Executive Directors................................... 199,063 65,000
Non-Executive Employees................................... 772,056 252,100
</TABLE>
- ------------------------
(1) Dollar value calculated as the product of (i) the number of options and (ii)
the difference between the per share price of Dura Class A Common Stock on
January 28, 1999 and the exercise price of such option.
No stock options granted under the 1998 Plan were exercised during Dura's
last completed fiscal year. The number of stock options that will be granted
under the 1998 Plan to the above-named individuals and groups in the future is
not determinable at this time.
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SHARE LIMITATIONS. The maximum aggregate number of shares of Dura Class A
Common Stock which may be issued under the 1998 Plan, subject to adjustment in
the event of a stock split or other reclassification of Dura's outstanding
capital stock, is (a) 1,000,000 shares, plus (b) any shares returned to the 1996
Plan as a result of termination of options under the 1996 Plan, plus (c) an
annual increase to be added on the date of each annual meeting of stockholders
of Dura, beginning with the 1999 annual meeting of stockholders, equal to the
lesser of (i) 500,000 shares, (ii) five percent of the outstanding number of
shares of Dura Class A Common Stock on such date or (iii) a lesser amount
determined by the Dura Board. Such shares may be authorized, but unissued, or
reacquired Dura Class A Common Stock.
As of February 16, 1999, 410,400 shares of Dura Class A Common would have
been available for issuance under the 1998 Plan and 1,050,843 shares were
subject to outstanding and unexercised options under the 1996 Plan. An
additional 257,520 shares will be subject to outstanding and unexercised options
upon completion of the Merger. See "The Merger Agreement--Conversion of
Options." Options outstanding or available for issuance under previous plans
will not be affected by the adoption of the 1998 Plan.
The February 16, 1999 closing price of a share of Dura Class A Common Stock
on the Nasdaq National Market was $30.25.
ADMINISTRATION. The 1998 Plan will be administered by the Dura Board or a
committee of the Dura Board and may be administered by different committees of
the Dura Board with respect to different groups of employees, directors,
officers and consultants. To the extent desirable to qualify any options as
"performance-based compensation" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), or to qualify a
transaction as exempt under Rule 16b-3 under the Securities Act, transactions
under the 1998 Plan will be structured to achieve these goals.
The administrator's decisions, determinations and interpretations with
respect to the 1998 Plan shall be final and binding on all participants. Subject
to the provisions of the 1998 Plan, and in the case of a committee of the Dura
Board, subject to the specific duties delegated by the Dura Board to such
committee, the administrator shall have wide discretion and flexibility to
administer the 1998 Plan in the manner it determines to be in the best interests
of Dura. For example, (i) grants may be made in various combinations and subject
to various conditions, restrictions and limitations, (ii) the terms and
conditions of each grant need not be same with respect to each participant;
(iii) the administrator may provide for the exchange of outstanding options for
options with a lower exercise price; and (iv) the administrator may make all
other determinations deemed necessary or advisable for administering the 1998
Plan. These examples are for illustrative purposes only and do not purport to
constitute an exclusive or comprehensive identification of the manner in which
the administrator may exercise it broad authority in administering the 1998
Plan.
TYPES OF AWARDS
STOCK OPTIONS. Dura may grant both options intended to qualify as incentive
stock options within the meaning of Section 422 of the Code ("incentive
options") and other stock options ("nonstatutory options"), subject to (i) a
maximum award to any one grantee in any fiscal year of Dura of options to
purchase 500,000 shares of Class A Common Stock (not including options to
purchase up to an additional 500,000 shares in connection with a participant's
initial service) and (ii) with respect to grants of incentive options, a maximum
value of $100,000 (determined at the time of grant) of underlying Class A Common
Stock for which any participant's incentive options first become exercisable in
any calendar year.
The exercise price of any option will be determined by the administrator in
its discretion, provided that (1) in the case of incentive options and
nonstatutory options intended to qualify as "performance-based compensation,"
the exercise price of any option may not be less than 100% of the fair market
value of a share of Dura Class A Common Stock on the date of grant of the
option, and (2) in the case of incentive options, the exercise price of an
incentive option awarded to a person who owns stock
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constituting more than 10% of Dura's voting power may not be less than 110% of
such fair market value on such date. Notwithstanding the foregoing, options may
be granted with a per share exercise price less than 100% of the fair market
value of a share of Dura Class A Common Stock on the date of grant in connection
with a merger or other corporate transaction.
The administrator shall determine the acceptable form of consideration for
exercising an option, which may consist of cash, a check, a promissory note, the
delivery of shares of Dura Class A Common Stock with a fair market value equal
to the exercise price, consideration received by Dura under a cashless exercise
program, a reduction in the amount of any liability of Dura to the optionee, or
any combination of these methods of payment.
The term of each option will be established by the administrator, subject to
a maximum term of ten years from the date of grant in the case of any incentive
option and of five years from the date of grant in the case of an incentive
option granted to a person who owns stock constituting more than 10% of Dura's
voting power. In addition, the 1998 Plan provides that all options generally
cease vesting on the date on which a grantee ceases to be a director, officer or
employee of, or to otherwise perform services for, Dura or its subsidiaries.
Options generally terminate 90 days after such date.
There are, however, certain exceptions depending upon the circumstances of
cessation. In the case of a grantee's disability or death, unless otherwise
stated in the agreement between the optionee and Dura (the "Option Agreement"),
all options cease vesting on the date on which the optionee is terminated and
vested options remain exercisable for a period of twelve months following the
grantee's termination. In the event of voluntary retirement after the age of
59.5 years, unless otherwise stated in the Option Agreement, all options cease
vesting on the date on which the optionee is terminated and vested options
remain exercisable for a period of twelve months following the grantee's
termination provided that the optionee does not engage in conduct that is
detrimental to Dura, as determined by a committee of the Dura Board of Directors
in its good faith judgment. If there is a change in control of Dura, if provided
in the Option Agreement, the administrator may direct Dura to cash out all
existing options as of the date of the change of control or such other date as
the administrator may determine.
STOCK PURCHASE RIGHTS. The administrator may grant stock purchase rights
alone or in tandem with other awards under the 1998 Plan and/or with cash awards
made outside of the 1998 Plan. After the administrator determines that it will
offer stock purchase rights under the 1998 Plan, it will advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of shares that the offeree shall be entitled to purchase,
the price to be paid, and the time within which the offeree must accept such
offer. The offer shall be accepted by execution of a Restricted Stock Purchase
Agreement in the form determined by the administrator. Unless the administrator
determines otherwise, the Restricted Stock Purchase Agreement shall grant Dura a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with Dura for any reason (including death or
disability). The purchase price for shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to Dura. The repurchase option shall lapse at a rate determined by the
administrator.
TRANSFERABILITY
Unless determined otherwise by the administrator, an option or stock
purchase right may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the optionee, only by
the optionee. If the administrator makes an option or stock purchase right
transferable, such option or stock purchase right shall contain such additional
terms and conditions as the administrator deems appropriate.
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AMENDMENT AND TERMINATION OF THE 1998 PLAN
The Dura Board of Directors may amend or terminate the 1998 Plan in its
discretion, except that no amendment will become effective without prior
approval of Dura's stockholders if such approval is necessary for continued
compliance with applicable laws, including any stock exchange listing
requirements. Furthermore, any termination may not materially and adversely
affect any outstanding rights or obligations under the 1998 Plan without the
affected participant's consent.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
If a grantee disposes of the shares of Dura Class A Common Stock acquired
pursuant to the exercise of an incentive option before the expiration of the
required holding periods (a "Disqualifying Disposition"), the difference between
the exercise price of such shares and the lesser of (i) the fair market value of
such shares upon the date of exercise (the fair market value on the exercise
date or six months after the option grant date, whichever is later, is likely to
govern in the case of a 16b-3(d)(3) Person) or (ii) the selling price, will
constitute compensation taxable to the grantee as ordinary income. Dura is
allowed a corresponding tax deduction equal to the amount of compensation
taxable to the grantee. If the selling price of the stock exceeds the fair
market value on the exercise date (or six months after the option grant date, if
later, in the case of a 16b-3(d)(3) Person), the excess will be taxable to the
grantee as capital gain (long-term or short-term, depending upon whether the
grantee held the stock for more than one year). Dura is not allowed a deduction
with respect to any such capital gain recognized by the grantee.
USE OF SHARES TO PAY OPTION PRICE. If a grantee delivers previously
acquired shares of Dura Class A Common Stock, however acquired, in payment of
all or any part of the exercise price of a non-qualified option, the grantee
will not, as a result of such delivery, be required to recognize as taxable
income or loss any appreciation or depreciation in the value of the previously
acquired shares after their acquisition date. The grantee's tax basis in, and
holding period for, the previously acquired shares surrendered carries over to
an equal number of the option shares received on a share-for-share basis. The
fair market value of the shares received in excess of the fair market value of
the shares surrendered constitutes compensation taxable to the grantee as
ordinary income (reduced by any portion of the option price paid other than by
delivering previously acquired shares). Such income is recognized and such fair
market value is determined on the date of exercise, except in the case of
16b-3(d)(3) Persons as discussed above. The tax basis for such shares is equal
to their fair market value as so determined, and such shares' holding period
begins on the date on which the fair market value of such shares is determined.
Dura is entitled to a tax deduction equal to the compensation recognized by the
grantee.
If a grantee delivers previously acquired Dura Class A Common Stock (other
than stock acquired upon exercise of an incentive option and not held for the
required holding periods) in payment of all or part of the option price of an
incentive option, the grantee will not be required to recognize as taxable
income or loss any appreciation or depreciation in the value of the previously
acquired Dura Class A Common Stock after its acquisition date. The grantee's tax
basis in, and holding period (for capital gain, but not Disqualifying
Disposition, purposes) for the previously acquired stock surrendered carries
over to an equal number of the option shares received on a share-for-share
basis. Shares received in excess of the shares surrendered have a tax basis
equal to the amount paid (if any) in excess of the previously acquired shares
used to pay the exercise price, and such shares' holding period will begin on
the date of exercise (with the possible exception of 16b-3(d)(3) Persons).
Proposed regulations provide that when an incentive option is exercised using
previously acquired stock, a later Disqualifying Disposition of the shares
received will be deemed to have been a disposition of the shares having the
lowest basis first.
If a grantee pays the exercise price of an incentive option in whole or in
part with previously acquired Dura Class A Common Stock that was acquired upon
the exercise of an incentive option and that has not been held for the required
holding periods, the grantee will recognize ordinary income (but not capital
gain) under the rules applicable to Disqualifying Dispositions. Dura will be
entitled to a corresponding
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deduction. The grantee's basis in the shares received in exchange for the shares
surrendered will be increased by the amount of ordinary income the grantee
recognizes.
ONE MILLION DOLLAR COMPENSATION LIMIT. The annual deduction a publicly held
company may take for compensation paid to its chief executive officer or any of
its four other highest compensated officers is limited to $1,000,000 per year,
excluding for this purpose compensation that is "performance-based" within the
meaning of Code Section 162(m). Dura intends that compensation realized upon the
exercise of an option or SAR granted under the 1998 Plan be regarded as
"performance-based" under Code Section 162(m) and that such compensation be
deductible without regard to the limits imposed by Code Section 162(m) on
compensation that is not "performance-based."
VOTE REQUIRED
Approval of the 1998 Plan will require the affirmative vote of a majority of
votes entitled to be cast on this proposal, with the holders of Dura Class A
Common Stock and Dura Class B Common Stock voting together as a single class.
THE DIRECTORS RECOMMEND A VOTE FOR THE APPROVAL AND ADOPTION OF THE 1998 PLAN.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation packages for the years ended
December 31, 1998, 1997 and 1996 for Dura's chief executive officer and the four
other executive officers of Dura who were the most highly compensated officers
of Dura for the year ended December 31, 1998 (the "Named Executive Officers").
Other than the 1996 Plan and the 1998 Plan, Dura currently does not maintain any
long-term compensation plans.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ -------------
SALARY BONUS OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(1) COMPENSATION($)(2) GRANTED(#) COMPENSATION($)(3)
- ---------------------------------- --------- ---------- ---------- ------------------ ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Karl F. Storrie................... 1998 $ 400,000 $ 550,000 $ 12,715 90,000 $ 6,906
President and Chief 1997 345,833 425,000 13,917 30,000 6,856
Executive Officer 1996 294,168 400,000 10,872 80,000 3,725
Joe A. Bubenzer................... 1998 239,000 160,000 -- 30,000 5,322
Senior Vice President 1997 187,083 150,000 7,218 12,500 5,322
1996 168,000 140,000 10,424 10,000 2,637
Milton D. Kniss................... 1998 200,000 190,000 3,493 37,500 5,724
Vice President 1997 167,917 150,000 3,981 12,500 5,724
1996 144,000 135,000 5,082 10,000 4,512
John J. Knappenberger............. 1998 175,000 130,000 6,652 30,000 5,664
Vice President 1997 147,500 120,000 5,852 10,000 5,614
1996 135,000 110,000 47,156(4) 27,373 3,375
Stephen E. K. Graham.............. 1998 175,000 125,000 8,378 30,000 5,082
Vice President and Chief 1997 92,548 140,000 8,776 25,000 5,082
Financial Officer(5)
</TABLE>
- ------------------------
(1) Includes amounts deferred by employees under Dura's 401(k) employee savings
plan, pursuant to Section 401(k) of the Internal Revenue Code.
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(2) Includes the value of personal benefits and perquisites.
(3) The amounts disclosed in this column include amounts contributed by Dura to
Dura's 401(k) employees savings plan and profit sharing plan and dollar
value of premiums paid by Dura for term life insurance on behalf of the
named executive officers.
(4) Includes $39,263 for reimbursement of relocation costs.
(5) Mr. Graham became an employee of Dura in June 1997.
OPTION GRANT TABLE
The following table shows all grants of options to acquire shares of Dura
Class A Common Stock granted to the Named Executive Officers under the 1996 Plan
and the 1998 Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES % OF TOTAL ASSUMED ANNUAL RATES OF STOCK PRICE
UNDERLYING OPTIONS GRANTED EXERCISE APPRECIATION FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES IN PRICE (PER EXPIRATION ------------------------------------
NAME GRANTED(#)(1) FISCAL YEAR SHARE) DATE 5% 10%
- ------------------------ ------------- ----------------- ----------- ----------- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
K.F. Storrie............ 90,000 14.3% $ 29.00 12/17/08 $ 1,641,415 $ 4,159,668
J.A. Bubenzer........... 30,000 4.8% 29.00 12/17/08 547,138 1,386,556
S.E.K. Graham........... 30,000 4.8% 29.00 12/17/08 547,138 1,386,556
M.D. Kniss.............. 37,500 5.9% 29.00 12/17/08 683,923 1,733,195
J.J. Knappenberger...... 30,000 4.8% 29.00 12/17/08 547,138 1,386,556
</TABLE>
- ------------------------
(1) These options vest ratably over four years commencing one year from the date
of grant.
(2) Amounts reflect certain assumed rates of appreciation set forth in the
executive compensation disclosure rules of the Securities and Exchange
Commission. Actual gains, if any, on stock option exercises depend on future
performance of Dura's Class A Common Stock and overall stock market
conditions. No assurances can be made that the amounts reflected in these
columns will be achieved.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table shows aggregate exercise of options in the year ended
December 31, 1998 by the Named Executive Officers and the aggregate value of
unexercised options held by each Named Executive Officer as of December 31,
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
YEAR-END(#) YEAR-END($)
---------------- ----------------------
SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------- ------------------- ---------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
K.F. Storrie..................... 5,000 $ 83,063 82,500/112,500 $ 1,544,063/$677,813
J.A. Bubenzer.................... -- -- 8,125/44,375 96,953/310,859
S.E.K. Graham.................... -- -- 6,250/48,750 42,656/281,719
M.D. Kniss....................... -- -- 8,125/51,875 96,953/349,297
J.J. Knappenberger............... -- -- 27,373/40,000 496,570/259,375
</TABLE>
99
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of Dura's Compensation Committee are W.H. Clement, Robert E.
Brooker, Jr. and Jack K. Edwards.
DIRECTOR COMPENSATION
Directors who are not employees of Dura or any of its affiliates each
receive an annual fee of $16,000 for serving as a director of Dura. In addition,
each non-employee director receives $1,000 for each Board of Directors meeting
attended, $500 for each committee meeting attended and reimbursement of out-of-
pocket expenses incurred to attend such meetings.
100
<PAGE>
STOCKHOLDER PROPOSALS
DURA. Stockholder proposals intended to be presented at the Annual Meeting
of Stockholders in 1999 would have had to have been received by the assistant
secretary of Dura not later than December 9, 1998 to be considered for inclusion
in Dura's 1999 Proxy materials. As of December 9, 1998, no proposals to be
presented at the 1999 Annual Meeting had been received by Dura.
EXCEL. Shareholder proposals intended to be presented at the annual meeting
of Excel shareholders in 1999 would have had to be received by November 11, 1998
to be considered for inclusion of Excel's 1999 proxy materials. Excel expects
that its annual meeting will be delayed from its customary date to the extent
permitted under the Indiana Corporate Law and will not be held if the Merger is
consummated prior to the scheduled date of the 1999 annual meeting.
LEGAL MATTERS
Certain legal matters with respect to the Dura Class A Common Stock will be
passed upon for Dura by Kirkland & Ellis (a partnership that includes
professional corporations), Chicago, Illinois. Certain United States federal
income tax matters related to the merger will be passed upon for Dura by
Kirkland & Ellis, Chicago, Illinois and for Excel will be passed upon by Sommer
& Barnard, PC. See "Certain Federal Income Tax Consequences of the Merger."
EXPERTS
The consolidated financial statements of Dura as of December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997, the
consolidated financial statements of GT Automotive Systems, Inc. as of December
31, 1996 and for the six months ended December 31, 1996, and the consolidated
financial statements of Trident as of March 31, 1998 and for the period from
inception (September 19, 1997) to March 31, 1998 and FKI Automotive Group for
the period from April 1, 1997 to December 12, 1997, each incorporated by
reference in this Joint Proxy Statement/Prospectus, were audited by Arthur
Andersen LLP, independent public accountants, as set forth in its reports
thereon, incorporated herein by reference, and are included therein in reliance
upon the authority of said firm as an expert in auditing and accounting.
Representatives of Arthur Andersen LLP will be present at the Dura Special
Meeting to make a statement, if they desire, and to respond to appropriate
questions from Dura stockholders.
The consolidated financial statements of Adwest as of June 30, 1998 and 1997
and for each of the three years in the period ended June 30, 1998, incorporated
by reference in this Joint Proxy Statement/ Prospectus, have been so
incorporated in reliance upon the reports of KPMG Audit Plc, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of Excel as of December 27, 1997 and
December 28, 1996 and for each of the three years in the period ended December
27, 1997, incorporated by reference in this Joint Proxy Statement/Prospectus,
have been so incorporated in reliance upon the reports of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting. Representatives of PricewaterhouseCoopers LLP will be
present at the Excel Special Meeting to make a statement, if they desire, and to
respond to appropriate questions from Excel shareholders.
The consolidated financial statements of Schade as of June 30, 1998, and for
the year then ended, incorporated by reference in this Joint Proxy
Statement/Prospectus were audited by WRT Revision and Truehand GmbH
Wirtschaftsprufungsgesellschaft Steuerberatungsgesellschaft, a firm of German
accountants, as set forth in their report thereon, incorporated herein by
reference, and are included herein in reliance on the authority of said firm as
an expert in accounting and auditing.
101
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report............................................................................... F-2
Profit and loss account.................................................................................... F-3
Balance sheet.............................................................................................. F-4
Cash flow statement........................................................................................ F-5
Statement of total recognised gains and losses............................................................. F-7
Reconciliation of movements in shareholders' funds......................................................... F-7
Notes...................................................................................................... F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF ADWEST AUTOMOTIVE PLC
We have audited the accompanying consolidated balance sheets of Adwest
Automotive Plc and its subsidiaries at 30 June 1998 and 1997, and the related
consolidated profit and loss accounts, statements of movements in shareholders'
equity and consolidated cash flow statements for each of the years in the three
year period ended 30 June 1998. These consolidated financial statements are the
responsibility of the management of Adwest Automotive Plc. Our responsibility is
to express an opinion on these consolidated financial statements based on our
audit.
We conducted our audits in accordance with auditing standards generally
accepted in the United Kingdom, which are substantially consistent with those of
the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Adwest
Automotive Plc and its subsidiaries at 30 June 1998 and 1997, and the results of
their operations and their cash flows for each of the years in the three year
period ended 30 June 1998, in conformity with generally accepted accounting
principles in the United Kingdom.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted in
the United States of America. Application of accounting principles generally
accepted in the United States would have affected net profit for the two years
ended 30 June 1998 and shareholders' equity at 30 June 1998 and 1997, to the
extent summarised in Note 31 to the consolidated financial statements.
<TABLE>
<S> <C>
London, England KPMG Audit Plc
7 September 1998 Chartered Accountants
Registered Auditor
</TABLE>
F-2
<PAGE>
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
NOTES 1998 L000 1997 L000 1996 L000
----- --------- --------- ---------
<S> <C> <C> <C> <C>
TURNOVER.................................................................
Continuing operations.................................................. 149,166 150,842 127,345
Acquisitions........................................................... 73,024 -- --
--------- --------- ---------
TOTAL CONTINUING OPERATIONS.............................................. 222,190 150,842 127,345
Discontinued operations................................................ 24,680 40,570 96,305
Discontinued acquisitions.............................................. 2,983 -- --
--------- --------- ---------
2 249,853 191,412 223,650
--------- --------- ---------
OPERATING PROFIT
Continuing operations.................................................. 13,586 14,602 10,221
Acquisitions........................................................... 4,937 -- --
--------- --------- ---------
TOTAL CONTINUING OPERATIONS.............................................. 18,523 14,602 10,221
Discontinued operations................................................ 2,959 3,411 4,729
Discontinued acquisitions.............................................. (124) -- --
--------- --------- ---------
2 21,358 18,013 14,950
EXCEPTIONAL ITEMS........................................................ 3
Continuing operations.................................................. -- -- (3,130)
Discontinued operations................................................ -- -- (1,835)
--------- --------- ---------
OPERATING PROFIT AFTER EXCEPTIONAL ITEMS................................. 4 21,358 18,013 9,985
Associated undertakings................................................ 21 21 86
Profit less losses on disposal of interests in associates.............. -- -- 53
Profit/(losses) and provision for losses on disposal of subsidiaries... 4,051 (791) (9,096)
Goodwill written off on disposal of subsidiaries....................... (17,552) -- (20,173)
6 (13,501) (791) (29,269)
--------- --------- ---------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE INTEREST..................... 7,878 17,243 (19,145)
Net interest charge...................................................... 7 (5,199) (2,892) (3,852)
--------- --------- ---------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION..................... 2,679 14,351 (22,997)
Taxation credit (charge)................................................. 8 (4,529) (4,527) 2,082
--------- --------- ---------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION...................... (1,850) 9,824 (25,079)
Minority interests--equity............................................... (505) (400) (263)
--------- --------- ---------
(LOSS)/PROFIT FOR THE FINANCIAL YEAR..................................... (2,355) 9,424 (25,342)
Dividends................................................................ 9 (6,442) (6,428) (6,400)
--------- --------- ---------
RETAINED PROFIT/(LOSS)................................................... 24 (8,797) 2,996 (31,742)
--------- --------- ---------
--------- --------- ---------
EARNINGS PER SHARE
(Loss)/earnings per share................................................ 10 (2.8)p 11.4p (30.7)p
</TABLE>
F-3
<PAGE>
CONSOLIDATED BALANCE SHEET
AT 30 JUNE
<TABLE>
<CAPTION>
NOTES 1998 L000 1997 L000
--------- --------- ---------
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets................................................................... 12 61,545 37,336
Investments....................................................................... 14 755 805
--------- ---------
62,300 38,141
--------- ---------
CURRENT ASSETS
Stock and work in progress........................................................ 15 18,969 15,387
Debtors (see note below).......................................................... 16 59,646 45,840
Bank and cash balances............................................................ 19,732 22,272
--------- ---------
98,347 83,499
--------- ---------
CREDITORS: DUE WITHIN ONE YEAR
Bank loans and overdrafts......................................................... 19 9,885 821
Creditors......................................................................... 17 72,159 43,266
Proposed final dividend........................................................... 4,545 4,536
--------- ---------
86,589 48,623
--------- ---------
NET CURRENT ASSETS................................................................ 11,758 34,876
--------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES............................................. 74,058 73,017
CREDITORS: DUE AFTER MORE THAN ONE YEAR:
Borrowings........................................................................ 18 54,319 33,061
Others............................................................................ 18 8,375 6,320
--------- ---------
62,694 39,381
PROVISIONS FOR LIABILITIES AND CHARGES............................................ 21 (74) 1,533
--------- ---------
NET ASSETS........................................................................ 2 11,438 32,103
--------- ---------
--------- ---------
CAPITAL AND RESERVES
Called up share capital........................................................... 23 20,794 20,746
Share premium account............................................................. 23 486 355
Revaluation reserve............................................................... 24 761 876
Special reserve................................................................... 25 20,561 20,561
Profit and loss account........................................................... 24 38,885 47,235
--------- ---------
EQUITY SHAREHOLDERS' FUNDS BEFORE GOODWILL........................................ 81,487 89,773
Goodwill on acquisition........................................................... 26 73,241 60,322
--------- ---------
SHAREHOLDERS' FUNDS--EQUITY....................................................... 8,246 29,451
MINORITY EQUITY INTERESTS......................................................... 3,192 2,652
--------- ---------
11,438 32,103
--------- ---------
--------- ---------
</TABLE>
Debtors include amounts recoverable after more than one year of L8,655,000
(1997:L7,671,000).
F-4
<PAGE>
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
1998 1997 1996
NOTES L000 L000 L000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES................................ 28A 26,353 25,201 15,769
--------- --------- ---------
DIVIDENDS FROM ASSOCIATES................................................ 5 5 4
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received........................................................ 427 400 538
Interest paid on loans................................................... (4,961) (3,235) (4,079)
Interest paid on finance leases.......................................... (434) (285) (329)
Dividends paid to minority interest...................................... -- -- (122)
--------- --------- ---------
Net cash outflow from returns on investments and servicing of finance.... (4,968) (3,120) (3,992)
--------- --------- ---------
TAXATION PAID............................................................ (5,762) (3,459) (4,679)
--------- --------- ---------
CAPITAL EXPENDITURE
Purchase of tangible fixed assets........................................ (18,554) (6,708) (9,830)
Disposal of fixed assets................................................. 1,817 792 811
--------- --------- ---------
Net cash outflow from capital expenditure................................ (16,737) (5,916) (9,019)
--------- --------- ---------
ACQUISITIONS AND DISPOSALS
Receipts from sale of subsidiaries and businesses........................ 28F 21,141 12,373 28,445
Overdrafts and cash balances transferred as part of sale of
subsidiaries........................................................... -- 1,191 (44)
Receipts from sale of interest in associated undertaking................. -- -- 1,221
Purchase of subsidiary undertakings...................................... 28G (35,172) (1,809) (34,282)
Cash acquired with subsidiary acquired................................... 28G 2,697 -- 508
Additional investment in associate....................................... (38) -- --
--------- --------- ---------
Net cash flow from acquisitions and disposals............................ (11,372) 11,755 (4,152)
--------- --------- ---------
EQUITY DIVIDENDS PAID.................................................... (6,440) (6,418) (6,398)
--------- --------- ---------
MANAGEMENT OF LIQUID RESOURCES
Cash withdrawn from/(paid into) short term deposits...................... 12,811 (12,811) --
Monies paid into escrow account.......................................... (1,822) -- --
--------- --------- ---------
Net cash flow from management of liquid resources........................ 10,989 (12,811) (12,467)
--------- --------- ---------
NET CASH FLOW BEFORE FINANCING........................................... (7,932) 5,237 (12,467)
--------- --------- ---------
FINANCING
Receipts from issue of ordinary share capital............................ 179 188 352
Additional capital contribution from minority interest................... -- -- 1,346
New loans................................................................ 34,813 -- --
Repayment of loans....................................................... (23,951) (9,853) (1,455)
Finance lease capital repayments......................................... (875) (344) (321)
Movement on loan with associated undertaking............................. -- -- 420
--------- --------- ---------
Net cash flow from financing............................................. 10,166 (10,009) 342
--------- --------- ---------
Increase/(decrease) in cash.............................................. 28B 2,234 (4,772) (12,125)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-5
<PAGE>
CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
1998 1997 1996
NOTES L000 L000 L000
--------- --------- --------- ---------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (NOTE 28D)
<S> <C> <C> <C> <C>
Increase/(decrease) in cash in the year.................................. 2,234 (4,772) (12,125)
Cash outflow from reduction in debt and lease financing.................. 24,826 10,369 1,732
Cash inflow from new loans............................................... (34,813) (172) --
Cash flow from (decrease)/increase in liquid resources................... (10,989) 12,811 --
--------- --------- ---------
Change in net debt resulting from cash flows............................. (18,742) 18,236 (10,393)
--------- --------- ---------
Finance leases sold with subsidiaries.................................... 435 -- --
Loans and finance leases acquired with subsidiaries...................... (15,297) -- (537)
New finance leases....................................................... (1,840) (4,641) (78)
Translation difference................................................... 1,266 2,607 --
--------- --------- ---------
Movement in net debt in the year......................................... (34,178) 16,202 (11,008)
Net debt at 1 July....................................................... (17,959) (34,161) (23,153)
--------- --------- ---------
Net debt at 30 June...................................................... (52,137) (17,959) (34,161)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-6
<PAGE>
STATEMENT OF CONSOLIDATED RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
(Loss)/profit for the financial year.............................................. (2,355) 9,424 (25,342)
Unrealised deficit on revaluation of properties................................... -- -- (50)
Currency translation differences on net investments............................... 332 (2,219) (462)
--------- --------- ---------
TOTAL RECOGNISED (LOSSES)/GAINS FOR THE FINANCIAL YEAR............................ (2,023) 7,205 (25,854)
--------- --------- ---------
--------- --------- ---------
</TABLE>
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
<S> <C> <C> <C>
(Loss)/profit for the financial year.............................................. (2,355) 9,424 (25,342)
Ordinary dividends................................................................ (6,442) (6,428) (6,400)
--------- --------- ---------
Retained (loss)/profit for the year............................................... (8,797) 2,996 (31,742)
Goodwill on disposal of subsidiaries included in the profit and loss account for
the year but previously written off............................................. 17,552 -- 20,173
Other recognised gains and losses................................................. 332 (2,219) (512)
New share capital issued.......................................................... 179 188 352
Goodwill in the year on acquisitions (see note 26)................................ (30,471) (1,329) (29,289)
--------- --------- ---------
Net reductions to shareholders' funds............................................. (21,205) (364) (41,018)
--------- --------- ---------
Shareholders' funds brought forward............................................... 29,451 29,815 70,833
--------- --------- ---------
Shareholders' funds carried forward............................................... 8,246 29,451 29,815
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-7
<PAGE>
NOTES TO THE ACCOUNTS
1 PRINCIPAL ACCOUNTING POLICIES
(a) The financial statements have been prepared under the historical cost
convention modified by the revaluation of certain properties, the Companies
Act 1985 and in accordance with applicable accounting standards.
(b) The consolidated accounts incorporate the accounts of the holding company
and its subsidiaries, together with the group's share of the results of its
associated undertakings.
Results of subsidiaries acquired are included from the effective date of
acquisition. Results of subsidiary and business disposals are included up to
the effective date of disposal.
(c) Premiums for goodwill and discounts on the acquisition of businesses,
subsidiary and associated undertakings are dealt with through reserves at
the time of purchase. The profit or loss on disposal of previously acquired
businesses reflects the attributable amount of premium or discount on
acquisition relating to that business.
(d) Depreciation and amortisation of fixed assets is on a straight line basis
calculated at the annual rates set out below which are estimated to write
off each asset over the term of its useful life to its residual value.
<TABLE>
<S> <C>
Freehold buildings.............. 2-2 1/2% Plant and equipment............... 10-15%
Long leasehold property........... 2 1/2% Vehicles............................. 25%
Short leasehold property.... over term of
lease
</TABLE>
(e) Deferred taxation is calculated using the liability method in respect of the
taxation effect of all timing differences to the extent that it is probable
that provisions will crystallise in the foreseeable future.
(f) Assets held under finance leases are capitalised as tangible fixed assets
and depreciated in line with group policy. The corresponding liability, net
of interest charges, is categorised under creditors due within one year and
after one year, as appropriate.
The interest element of the lease instalments is allocated over the life of
each lease so as to produce a constant periodic rate of charge.
(g) Operating leases are accounted for by charging the instalments as an expense
in the profit and loss account, on a straight line basis.
(h) Exchange rates
(i) Transactions denominated in foreign currencies are recorded at the rate
of exchange ruling at the date of the transaction. Balances denominated
in foreign currencies are translated into sterling at the exchange rate
ruling on the balance sheet date. Differences on exchange are dealt with
through the profit and loss account.
(ii) Exchange differences on translation of the net investment in overseas
subsidiaries and associated undertakings are taken to reserves. To the
extent that such net investment is matched by a corresponding currency
borrowing, the matching exchange difference is also taken to reserves.
(iii) Profits and losses of overseas subsidiaries are translated at average
rates of exchange during the year. The adjustment to financial year end
rates is taken to reserves.
(i) Research and development expenditure is charged to the profit and loss
account as incurred.
(j) Estimated current pension scheme surpluses are spread over the expected
average working lifetime of current pension scheme members after deducting
the regular cost of providing pension benefits.
F-8
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
1 PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
(k) Stock and work in progress
(i) Stock and work in progress is stated at the lower of cost, including
factory overheads, and net realisable value.
(ii) Any significant pre-production costs on new products which are not
pre-funded by the customer are carried forward in work in progress. These
costs are then written off on a unit of production basis over the life of
the contract with the customer.
2 SEGMENTAL ANALYSIS
Turnover of the group, operating profit and net assets are analysed as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
CLASS OF BUSINESS
TURNOVER
Automotive:
UK............................................................................... 79,696 77,347 45,649
Rest of Europe................................................................... 134,384 65,315 70,871
USA.............................................................................. 8,110 8,180 10,825
--------- --------- ---------
Continuing operations............................................................ 222,190 150,842 127,345
Discontinued operations.......................................................... 27,663 40,570 96,305
--------- --------- ---------
249,853 191,412 223,650
--------- --------- ---------
--------- --------- ---------
OPERATING PROFIT
Automotive:
UK............................................................................... 7,281 6,637 3,827
Rest of Europe................................................................... 11,864 7,547 2,242
USA.............................................................................. (622) 418 1,022
--------- --------- ---------
Continuing operations............................................................ 18,523 14,602 7,091
Discontinued operations.......................................................... 2,835 3,411 2,894
--------- --------- ---------
21,358 18,013 9,985
--------- --------- ---------
--------- --------- ---------
NET ASSETS
Automotive continuing operations................................................. 62,545 35,028
Discontinued operations.......................................................... (501) 13,704
--------- ---------
62,044 48,732
--------- ---------
--------- ---------
</TABLE>
F-9
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
2 SEGMENTAL ANALYSIS (CONTINUED)
<TABLE>
<CAPTION>
TURNOVER BY DESTINATION TURNOVER BY ORIGIN
------------------------------- -------------------------------
1998 1997 1996 1998 1997 1996
L000 L000 L000 L000 L000 L000
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
GEOGRAPHICAL SEGMENTS
United Kingdom.................................. 76,193 84,583 98,189 79,696 91,895 112,316
Rest of Europe.................................. 140,542 72,736 64,905 137,367 65,315 81,697
USA............................................. 29,627 31,167 39,003 32,790 34,202 29,637
Rest of the World............................... 3,491 2,926 21,553 -- -- --
--------- --------- --------- --------- --------- ---------
249,853 191,412 223,650 249,853 191,412 223,650
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT NET ASSETS
------------------------------- --------------------
1998 1997 1996 1998 1997
L000 L000 L000 L000 L000
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
GEOGRAPHICAL SEGMENTS
United Kingdom............................................. 7,281 7,397 5,348 26,708 24,570
Rest of Europe............................................. 11,740 7,547 2,242 28,964 9,209
USA........................................................ 2,337 3,069 2,395 6,372 14,953
Rest of the World.......................................... -- -- -- -- --
--------- --------- --------- --------- ---------
21,358 18,013 9,985 62,044 48,732
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
RECONCILIATION OF CONSOLIDATED NET ASSETS
Net assets as shown above.................................................................... 62,044 48,732
Associated undertaking....................................................................... 114 81
Proposed dividend............................................................................ (4,545) (4,536)
Net borrowings............................................................................... (44,472) (11,610)
Net taxation payable and deferred taxation................................................... (1,703) (564)
--------- ---------
Net assets per consolidated balance sheet.................................................... 11,438 32,103
--------- ---------
--------- ---------
</TABLE>
3 EXCEPTIONAL ITEMS
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
ONGOING ACTIVITIES:
Reorganisation and redundancy costs within the Automotive Division including
reduction of French Productive capacity................................................ -- -- 3,130
DISCONTINUED AND TO BE DISCONTINUED ACTIVITIES
Reorganisation and redundancy cost re Power Systems Division............................. -- -- 607
Redundancy, disruption and related costs with US electronics following
cancellation of customer order......................................................... -- -- 1,228
--------- --------- ---------
-- -- 4,965
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-10
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
4 OPERATING PROFIT
Operating profit can be analysed as follows:
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
<S> <C> <C> <C>
Turnover....................................................................... 249,853 191,412 223,650
Cost of sales.................................................................. (210,178) (156,799) 188,046
---------- ---------- ---------
Gross profit................................................................... 39,675 34,613 35,604
Distribution costs............................................................. (6,197) (4,404) (7,274)
Administration expenses........................................................ (12,120) (12,196) (18,345)
---------- ---------- ---------
Operating profit after exceptional items....................................... 21,358 18,013 9,985
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
Included above in 1996 is cost of sales of L670,000 and administration costs of
L4,295,000 relating to exceptional items.
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
OPERATING PROFIT IS AFTER CREDITING
Rents receivable..................................................................... 378 127 2,437
Pension credit (note 5).............................................................. 1,200 1,050 876
Industrial development government grant.............................................. 36 68 80
AND AFTER CHARGING:
Hire of plant and machinery.......................................................... 269 125 560
Other operating leases............................................................... 428 220 1,937
Depreciation of fixed assets--owned.................................................. 9,193 7,481 8,691
Depreciation of fixed assets held under finance leases............................... 402 174 159
Auditors' remuneration--audit........................................................ 257 274 358
Auditors' remuneration--other........................................................ 79 142 438
Research and development............................................................. 4,283 3,988 4,140
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-11
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
5 EMPLOYEES OF THE GROUP AND PENSIONS COST
<TABLE>
<CAPTION>
1998 1997 1996
NUMBER NUMBER NUMBER
----------- ----------- -----------
<S> <C> <C> <C>
THE AVERAGE NUMBER OF PERSONS EMPLOYED BY THE GROUP WAS AS FOLLOWS:
Production.......................................................................... 3,270 2,290 3,219
Distribution........................................................................ 85 49 106
Administration...................................................................... 418 398 446
----------- ----------- -----------
3,773 2,737 3,771
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
----------- ----------- -----------
<S> <C> <C> <C>
THE AGGREGATE PAYROLL COSTS OF THESE PERSONS WERE AS FOLLOWS:
Wages and salaries.................................................................. 55,506 40,207 53,413
Social security costs............................................................... 11,149 7,950 9,711
Pension costs....................................................................... 138 70 278
----------- ----------- -----------
66,793 48,227 63,402
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The Adwest Group 1988 Pension and Assurance Plan is a defined benefit scheme for
employees of the company and its UK subsidiaries who qualify for membership. The
assets of the scheme are held in separate trustee administered funds. Other
small pension schemes exist in certain subsidiaries.
Pension costs are determined in accordance with the recommendations of
independent actuaries using the projected unit method, so as to spread the cost
of pensions over employees' working lives with the group. Actuarial valuations
are completed every three years, the most recent being at 6 April 1995. The
assumptions which have the most significant effect on the results of the
valuation are those relating to the rate of return on investments and the rates
of increase in salaries and pensions. It was assumed that the average investment
return would exceed by 2% per annum the average rate of salary increase and that
present and future pensions would increase at a rate of 4% per annum.
At 6 April 1995 the assets of the plan amounted to L36,646,000, with investments
taken at market value. At that date, the actuarial value of the assets was
sufficient to cover 128% of the benefits that had accrued to members, after
allowing for expected future increases in earnings and pensions. Accordingly,
the actuaries have indicated that no company contributions were required and
therefore the Trustees have not called for, and the group has not paid, any
contributions during the year. The actuaries are currently carrying out a
valuation of the Plan as at 6 April 1998.
Using the same assumptions as in previous years, the credit to profits for the
year in respect of pensions would have been L1,600,000. In the light of recent
changes to tax credits available to exempt funds and until the actuarial
valuation at 6 April 1998 is available, it has been decided based on actuarial
advice, to limit the effect of pensions on the profit and loss account for the
year to a credit of L1,200,000 (1997: L1,050,000, 1996: L876,000). This credit
represents the amortisation of surpluses over the expected average working
lifetime of the current membership less the regular cost of providing pension
benefits.
The consolidated balance sheet recognises a prepayment of L7,948,000 (1997:
L6,748,000) representing the excess of the amortisation of surpluses over the
accumulated regular cost of providing benefits.
F-12
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
6 DISPOSALS
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
Discontinued:
Property Division.................................................................... (689) -- (1,574)
Automotive Division.................................................................. -- -- 15
UK Power Systems..................................................................... (558) (791) (5,742)
Profit on disposal of US Electronics before goodwill write off....................... 5,891 -- --
Loss on disposal of Heidemann Oberflachentechnik GmbH................................ (593) -- --
Cost of disposal..................................................................... -- -- (1,795)
--------- --- ---------
4,051 (791) (9,096)
Goodwill on disposal................................................................. (17,552) -- (20,173)
--------- --- ---------
(13,501) (791) (29,269)
--------- --- ---------
--------- --- ---------
</TABLE>
7 NET INTEREST CHARGE
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
Payable on bank loans and overdrafts repayable within five years...................... (4,250) (2,390) (1,991)
Payable on loans repayable after more than five years................................. (916) (852) (2,162)
Payable on finance leases............................................................. (434) (309) (329)
--------- --------- ---------
(5,600) (3,551) (4,482)
Bank and other interest receivable.................................................... 401 659 630
--------- --------- ---------
(5,199) (2,892) (3,852)
--------- --------- ---------
--------- --------- ---------
</TABLE>
8 TAXATION ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
TAXATION OF PROFITS ON ORDINARY ACTIVITIES IS MADE UP AS FOLLOWS:
UK corporation tax at 31% (1997:32.5%; 1996:33%)........................................ 2,901 1,258 1,906
Overseas taxation....................................................................... 1,994 2,112 1,320
Associated undertakings (including overseas taxation of L2,000 (1997: L8,000, 1996:
L12,000))............................................................................. 2 8 31
Deferred taxation (note 21)............................................................. (332) 1,133 (1,878)
Prior year adjustments.................................................................. (36) 16 (297)
ACT written off......................................................................... -- -- 1,000
--------- --------- ---------
4,529 4,527 2,082
--------- --------- ---------
--------- --------- ---------
</TABLE>
Total loss on disposals included in the Profit and Loss account, including
goodwill, is L13.5 million (1997 L791,000, 1996 L29.3 million) and the related
taxation charge is nil (1997 nil, 1996 nil).
F-13
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
9 DIVIDENDS
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
Interim paid 2.3p per share.............................................................. 1,897 1,892 1,877
Final proposed 5.5p per share............................................................ 4,545 4,536 4,523
--------- --------- ---------
6,442 6,428 6,400
--------- --------- ---------
--------- --------- ---------
</TABLE>
Shareholders holding 468,009 (1997: 533,792, 1996: 554,678) shares at 30 June
1998 have waived their entitlement to dividends and have been paid no dividends
during the year.
10 EARNINGS PER SHARE
(Loss)/earning per share are based on losses of L2,355,000 (1997 earnings of
L9,424,000, 1996 losses of L25,342,000) and on 83,057,054 (1997: 82,863,578,
1996: 82,504,902) ordinary shares in issue in the year weighted on a time basis.
11 NOTE OF HISTORICAL COST PROFITS/(LOSSES)
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
Profit/(loss) on ordinary activities before taxation................................ 2,679 14,351 (22,997)
Realisation of property revaluation gains of prior years............................ -- 433 14,845
Difference between the historical cost depreciation charge and the actual
depreciation for the year calculated on the revalued amount....................... 100 75 21
--------- --------- ---------
Historical cost profit/(loss) on ordinary activities before taxation................ 2,779 14,859 (8,131)
--------- --------- ---------
Historical cost (loss)/profit retained after taxation, minority interest and
dividends......................................................................... (8,697) 3,504 (16,876)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-14
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
12 FIXED ASSETS: TANGIBLE ASSETS
<TABLE>
<CAPTION>
ASSETS IN
LAND AND PLANT VEHICLES COURSE
BUILDINGS AND EQUIPMENT OF CONSTRUCTION TOTAL
L000 L000 L000 L000
----------- --------------- --------------- ---------
<S> <C> <C> <C> <C>
COST OR VALUATION
At 1 July 1997............................................. 11,155 62,758 2,763 76,676
Exchange rate adjustments.................................. (966) (2,462) -- (3,428)
Additions.................................................. 2,353 17,639 -- 19,992
Disposals.................................................. (2,192) (7,334) -- (9,526)
Transfers between categories............................... 3,255 (492) (2,763) --
Acquisition of subsidiaries................................ 12,267 35,277 -- 47,544
Disposal of fixed assets with subsidiaries sold............ (1,206) (6,162) -- (7,368)
----------- ------ ------ ---------
At 30 June 1998............................................ 24,666 99,224 -- 123,890
----------- ------ ------ ---------
DEPRECIATION
At 1 July 1997............................................. 2,403 36,937 -- 39,340
Exchange rate adjustments.................................. (146) (1,816) -- (1,962)
Disposals.................................................. (692) (5,936) -- (6,628)
Transfer between categories................................ 158 (158) -- --
Acquisition of subsidiaries................................ 1,406 24,738 -- 26,144
Disposal of subsidiaries................................... (945) (3,199) -- (4,144)
Charge for the year........................................ 671 8,924 -- 9,595
----------- ------ ------ ---------
At 30 June 1998............................................ 2,855 59,490 -- 62,345
----------- ------ ------ ---------
NET BOOK VALUES AT 30 JUNE 1998............................ 21,811 39,734 -- 61,545
----------- ------ ------ ---------
Net book values at 30 June 1997............................ 8,752 25,821 2,763 37,336
----------- ------ ------ ---------
----------- ------ ------ ---------
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OTHER
PROPERTIES PROPERTIES TOTAL
L000 L000 L000
------------- ----------- ---------
<S> <C> <C> <C>
ANALYSIS OF LAND AND BUILDINGS
BY TENURE AT NET BOOK VALUE:
Freehold........................................................................ -- 19,103 19,103
Long lease...................................................................... 434 -- 434
Short lease..................................................................... 137 2,137 2,274
----- ----------- ---------
571 21,240 21,811
----- ----------- ---------
----- ----------- ---------
BY COST OR VALUATION:
Cost............................................................................ -- 23,014 23,014
Professional valuation--1989 to 1997............................................ -- 1,050 1,050
Directors' valuation--1998...................................................... 602 -- 602
----- ----------- ---------
602 24,064 24,666
----- ----------- ---------
----- ----------- ---------
</TABLE>
F-15
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
12 FIXED ASSETS: TANGIBLE ASSETS (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
HISTORICAL COST OF LAND AND BUILDINGS:
Cost........................................................................................... 23,843 10,276
Depreciation................................................................................... 2,793 2,400
--------- ---------
21,050 7,876
--------- ---------
--------- ---------
</TABLE>
The net book value for the group included L6,578,000 (1997: L4,462,000) in
respect of land and buildings and assets in the course of construction and
L1,222,000 (1997: L551,000) in respect of plant, vehicles and equipment held
under finance leases. The depreciation included above in respect of these assets
is L402,000 (1997: L174,000).
The net book value of land and buildings includes amounts of L571,000 (1997:
L1,945,000) relating to investment properties and L1,110,000 (1997: L486,000)
relating to the value of land in other freehold property on which no
depreciation is charged.
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
CAPITAL COMMITMENTS:
Contracts placed......................................................................... 3,298 3,494 2,718
--------- --------- ---------
--------- --------- ---------
</TABLE>
13 SHARE OPTION TRUST
As at 30 June 1998, the total market value of own shares within the share
option trust was L62,000 below the original total cost. The directors do not
consider this diminution in value to be permanent and therefore no provision has
been made.
At 30 June 1998 the nominal value of own shares with the share option trust
was L114,392 (1997: L133,448).
14 INVESTMENTS
<TABLE>
<CAPTION>
1998 1997
L000 L000
----- -----
<S> <C> <C>
Investment in associated undertaking................................................................ 114 81
Investment in own shares............................................................................ 641 724
--- ---
755 805
--- ---
--- ---
</TABLE>
F-16
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
14 INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
L000 L000
----- -----
<S> <C> <C>
THE GROUP'S INVESTMENTS IN ASSOCIATED UNDERTAKING IS AS FOLLOWS:
Investments in shares of associated undertaking at cost
Share of post acquisition retained profits.......................................................... 53 15
Share of net assets................................................................................. 61 66
--
---
114 81
--
--
---
---
</TABLE>
<TABLE>
<CAPTION>
UNLISTED SHARES
L000
-----------------
<S> <C>
At July 1997...................................................................................... 81
Exchange differences.............................................................................. (19)
Share of profit before taxation................................................................... 21
Share of taxation................................................................................. (2)
Dividends......................................................................................... (5)
Additional investments in year.................................................................... 38
---
At 30 June 1998................................................................................... 114
---
---
</TABLE>
The results included for the associate are for the year ended 31 March 1998, the
latest available audited accounts.
Details of associated undertakings are set out in note 30.
15 STOCK AND WORK IN PROGRESS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Raw materials.................................................................................. 7,756 5,866
Work in progress............................................................................... 8,709 6,142
Finished goods................................................................................. 2,504 3,379
--------- ---------
18,969 15,387
--------- ---------
--------- ---------
</TABLE>
16 DEBTORS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Trade debtors.................................................................................. 38,384 32,925
Other debtors.................................................................................. 7,738 2,843
Taxation recoverable........................................................................... 1,395 923
Prepayments and accrued income................................................................. 12,129 9,149
--------- ---------
59,646 45,840
--------- ---------
--------- ---------
</TABLE>
Included in group prepayments is a sum of L7,948,000 (1997: L6,748,000)
attributable to advanced pension contributions extending beyond one year (note
5).
F-17
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
16 DEBTORS (CONTINUED)
Taxation recoverable in the group includes advanced corporation tax recoverable
after more than one year of L502,000 (1997: L923,000) which is expected to be
offset against mainstream corporation tax.
17 CREDITORS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Trade creditors................................................................................ 37,952 26,077
Finance lease obligations (note 20)............................................................ 891 643
Other creditors................................................................................ 11,505 1,702
PAYE and social security....................................................................... 4,553 3,543
Taxation payable............................................................................... 3,551 3,158
Accruals and deferred income................................................................... 13,707 8,143
--------- ---------
72,159 43,266
--------- ---------
--------- ---------
</TABLE>
Taxation payable in the Group includes advance corporation tax amounting to
L1,136,000 (1997: L1,132,000) attributable to the proposed final dividend.
18 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Borrowings (note 19)........................................................................... 54,319 33,061
Finance lease obligations (note 20)............................................................ 6,774 5,706
Retirement indemnity provision................................................................. 1,601 614
--------- ---------
62,694 39,381
--------- ---------
--------- ---------
</TABLE>
19 BORROWINGS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Bank overdrafts................................................................................ 6,842 298
Bank and other loans repayable within one year................................................. 3,043 523
--------- ---------
9,885 821
--------- ---------
Bank and other loans repayable:
Between one and two years.................................................................... 14,503 150
Between two and five years................................................................... 25,358 23,292
In five years or more........................................................................ 14,458 9,619
--------- ---------
54,319 33,061
--------- ---------
--------- ---------
</TABLE>
In 1998, loans repayable after one year represent:
/ / Loans from two financial institutions totalling US $40,000,000. These US
notes are repayable in six annual instalments commencing in March 2000 and
bear interest at a fixed rate of 8.6%.
F-18
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
19 BORROWINGS (CONTINUED)
/ / A FF 85,000,000 loan from a UK bank, which is repayable in December 1999
and bears interest at a fixed rate of 4.99%.
/ / A DM 30,000.000 loan from a UK bank, which bears interest at a fixed rate
of 5.51%, and is repayable in five annual instalments commencing in October
1998.
/ / A DM 20,000,000 loan which bears interest at a fixed rate of 5.47%, and is
repayable in January 2003.
/ / A DM 20,000,000 loan which bears interest at a fixed rate of 5.84%, and is
repayable in twenty quarterly instalments commencing in March 2003.
Other bank borrowing bear interest at fluctuating rates, linked to the London
Inter-Bank Market rate.
There are no borrowings in the associated undertaking.
At 30 June 1998, the Group had forward contracts outstanding in Japanese Yen
amounting to the equivalent of L1,124,798 (1997: L1,415,000).
20 OBLIGATIONS UNDER FINANCE LEASES
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
THE FUTURE FINANCE LEASES PAYMENTS, TO WHICH THE GROUP WERE COMMITTED
AT 30 JUNE, WERE AS FOLLOWS:
Within one year.................................................................................. 891 643
Between one and five years....................................................................... 2,810 3,599
Over five years.................................................................................. 3,964 2,107
--------- ---------
7,665 6,349
--------- ---------
--------- ---------
</TABLE>
F-19
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
21 PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
PROVISION FOR LOSS ON
DISPOSAL OF REORGANISATION DEFERRED
SUBSIDIARIES PROVISION TAXATION TOTAL
L000 L000 L000 L000
--------------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
At 1 July 1997........................................... 400 2,804 (1,671) 1,533
Exchange rate adjustments................................ -- (26) (32) (58)
Acquisition of subsidiaries.............................. -- -- 17 17
Charge to profit and loss account........................ -- 279 (332) (53)
Provisions utilised...................................... (300) (1,895) -- (2,195)
Advance corporation tax and other movements.............. -- -- 867 867
Disposal of subsidiaries and business.................... -- (883) 698 (185)
--- ------ ----------- ---------
At 30 June 1998.......................................... 100 279 (453) (74)
--- ------ ----------- ---------
--- ------ ----------- ---------
</TABLE>
<TABLE>
<CAPTION>
AMOUNTS AMOUNTS
NOT PROVIDED FOR PROVIDED FOR
IN THESE ACCOUNTS IN THESE ACCOUNTS
-------------------- --------------------
1998 1997 1998 1997
L000 L000 L000 L000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCES FOR THE PROVISION OF DEFERRED TAXATION ARE ANALYSED AS
FOLLOWS:
Accelerated capital allowances................................. -- -- (1,650) 2,097
Other timing differences....................................... 349 163 1,432 (1,247)
--------- --------- --------- ---------
349 163 (218) 850
Advanced corporation tax recoverable........................... -- -- (235) (2,521)
--------- --------- --------- ---------
349 163 (453) (1,671)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
F-20
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
22 LEASE OBLIGATIONS
<TABLE>
<CAPTION>
LAND AND BUILDINGS
OTHER
-------------------- ------------------------
1998 L000 1997 L000 1998 L000 1997 L000
--------- --------- ----- -----
<S> <C> <C> <C> <C>
OPERATING LEASE RENTALS PAYABLE WITHIN ONE YEAR RELATING TO
COMMITMENTS EXPIRING:
Within one year.............................................................. -- 77 271 121
Within two and five years.................................................... 97 384 443 475
After five years............................................................. 945 884 -- --
--------- --------- --- ---
1,042 1,345 714 596
--------- --------- --- ---
--------- --------- --- ---
</TABLE>
23 SHARE CAPITAL AND SHARE PREMIUM ACCOUNT
<TABLE>
<CAPTION>
CALLED UP AND FULLY
AUTHORISED PAID
-------------------- --------------------
1998 L000 1997 L000 1998 L000 1997 L000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Ordinary shares of 25p each.......................................... 25,000 25,000 20,794 20,746
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
NOMINAL VALUE SHARE PREMIUM
NUMBER L000 L000
------------ ------------- -----------------
<S> <C> <C> <C>
At 1 July 1997...................................................... 82,983,820 20,746 355
Shares issued under option schemes.................................. 190,088 48 131
------------ ------ ---
At 30 June 1998..................................................... 83,173,908 20,794 486
------------ ------ ---
------------ ------ ---
</TABLE>
24 RESERVES
<TABLE>
<CAPTION>
PROFIT AND LOSS
REVALUATION COMPANY AND PROFIT AND LOSS PROFIT AND
RESERVE SUBSIDIARIES ASSOCIATED LOSS TOTAL
L000 L000 UNDERTAKING L000 L000
------------- --------------- ----------------- -----------
<S> <C> <C> <C> <C>
At 1 July 1997........................................... 876 47,169 66 47,235
Retained (loss)/profit for the year...................... -- (8,811) 14 (8,797)
Exchange rate adjustments................................ (15) 366 (19) 347
Depreciation on revalued assets.......................... (100) 100 -- 100
--
--- ------ -----------
At 30 June 1998.......................................... 761 38,824 61 38,885
--
--
--- ------ -----------
--- ------ -----------
</TABLE>
25 SPECIAL RESERVE
The special reserve was created on 31 January 1996 when court permission was
obtained for the cancellation of the share premium account, which had a value at
that date of L20,561,000. The special reserve is non distributable.
F-21
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
26 GOODWILL
<TABLE>
<CAPTION>
1998 L000 1997 L000 1996 L000
--------- --------- ---------
<S> <C> <C> <C>
At start of year................................................................... 60,322 58,993 49,877
Purchase of Conversion Devices Inc................................................. -- -- 3,498
Purchase of Rearsby Automotive Limited............................................. -- -- 25,539
Transferred to profit and loss account on disposal of subsidiaries................. (17,552) -- (20,173)
Additional goodwill re Conversion Devices Inc...................................... -- 734 --
Additional goodwill re Rearsby Automotive Limited.................................. -- 595 --
Purchase of Heidemann Verwatungsgesellschaft mit beschranker Haftung............... 29,318 -- --
Other adjustments.................................................................. 1,153 -- 252
--------- --------- ---------
At end of year..................................................................... 73,241 60,322 58,993
--------- --------- ---------
--------- --------- ---------
</TABLE>
27 DIRECTORS' EMOLUMENTS AND SHARE INTERESTS
<TABLE>
<CAPTION>
1998 L000 1997 L000 1996 L000
----- ----- -----
<S> <C> <C> <C>
TOTAL DIRECTORS' EMOLUMENTS:
Fees and benefits to non-executive directors................................................. 99 121 130
Remuneration (including pension contributions)............................................... 621 498 622
Performance related emoluments............................................................... 95 217 100
--- --- ---
815 836 852
--- --- ---
--- --- ---
</TABLE>
28 CONSOLIDATED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
1998 L000 1997 L000 1996 L000
--------- --------- ---------
<S> <C> <C> <C>
(A) RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM
OPERATING ACTIVITIES
Operating profit................................................................ 21,358 18,013 9,985
Depreciation.................................................................... 9,595 7,655 8,850
Loss/(profit) on disposal of fixed assets....................................... 247 (86) --
Acquisition provisions utilised................................................. -- -- (272)
(Increase)/decrease in stocks................................................... (3,688) 5,241 (2,093)
(Increase)/decrease in creditors................................................ (3,726) (1,145) (2,102)
Increase/(decrease) in creditors................................................ 2,567 (4,477) 1,401
--------- --------- ---------
Net cash flow from operating activities......................................... 26,353 25,201 15,769
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-22
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
SHARE CAPITAL SHARE PREMIUM
CASH L000 L000 L000
--------- ------------- -----------------
<S> <C> <C> <C>
(B) ANALYSIS OF CHANGES IN CASH AND FINANCING DURING THE YEAR
At 1 July 1996........................................................... 12,073 20,695 218
Non-cash movements....................................................... 3,000 -- --
Exchange movements....................................................... (1,138) -- --
Net cash inflows......................................................... (4,772) 51 137
--------- ------ ---
Change in the year....................................................... (2,910) 51 137
--------- ------ ---
At 1 July 1997........................................................... 9,163 20,746 355
Exchange movements....................................................... (305) -- --
Net cash inflows......................................................... 2,234 48 131
--------- ------ ---
Change in the year....................................................... 1,929 48 131
--------- ------ ---
At 30 June 1998.......................................................... 11,092 20,794 486
--------- ------ ---
--------- ------ ---
</TABLE>
<TABLE>
<CAPTION>
1998 L000 1997 L000
--------- ---------
<S> <C> <C>
(C) ANALYSIS OF CASH
Cash at bank and in hand.................................................................... 17,934 9,461
Bank overdrafts............................................................................. (6,842) (298)
--------- ---------
11,092 9,163
--------- ---------
--------- ---------
</TABLE>
F-23
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
ACQUISITION OTHER NON
AT 1 JULY (EXCL CASH & CASH DISPOSAL OF EXCHANGE
1996 CASH FLOW OVERDRAFTS) MOVEMENTS SUBSIDIARIES MOVEMENT
L000 L000 L000 L000 L000 L000
---------- ---------- ----------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
(D) RECONCILIATION OF NET DEBT
Cash at bank and in hand...................... 13,515 (2,864) -- -- -- (1,190)
Bank overdrafts............................... (1,442) (1,908) -- 3,000 -- 52
----------
(4,772)
Borrowings due after one year................. (26,572) 263 -- (9,489) -- 2,737
Borrowings due within one year................ (16,741) 9,590 -- 6,489 -- 139
Finance leases................................ (2,921) 344 -- (4,641) -- 869
----------
10,197
Current asset investments..................... -- 12,811 -- -- -- --
--
---------- ---------- ----------- ----- -----------
(34,161) 18,236 -- (4,641) -- 2,607
--
--
---------- ---------- ----------- ----- -----------
---------- ---------- ----------- ----- -----------
<CAPTION>
AT 30 JUNE
1997
L000
-----------
<S> <C>
(D) RECONCILIATION OF NET DEBT
Cash at bank and in hand...................... 9,461
Bank overdrafts............................... (298)
Borrowings due after one year................. (33,061)
Borrowings due within one year................ (523)
Finance leases................................ (6,349)
Current asset investments..................... 12,811
-----------
(17,959)
-----------
-----------
</TABLE>
Current asset investments at 30 June 1997 represent cash balances on one month
and three months deposit.
<TABLE>
<CAPTION>
ACQUISITION
(EXCL CASH OTHER NON
AT 1 JULY & CASH DISPOSAL OF EXCHANGE
1997 CASH FLOW OVERDRAFTS) MOVEMENTS SUBSIDIARIES MOVEMENT
L000 L000 L000 L000 L000 L000
----------- ----------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand.............. 9,461 8,897 -- -- -- (514)
Bank overdrafts....................... (298) (6,753) -- -- -- 209
-----------
2,234
Borrowings due after one year......... (33,061) (9,453) (13,152) 83 -- 1,264
Borrowings due within one year........ (523) (1,409) (1,129) (83) -- 101
Finance leases........................ (6,349) 875 (1,016) (1,840) 435 230
-----------
(9,987)
Current asset investments............. 12,811 (10,989) -- -- -- (24)
----------- ----------- ----------- ----------- --- -----------
(17,959) (18,742) (15,297) (1,840) 435 1,266
----------- ----------- ----------- ----------- --- -----------
----------- ----------- ----------- ----------- --- -----------
<CAPTION>
AT 30 JUNE
1998
L000
-----------
<S> <C>
Cash at bank and in hand.............. 17,934
Bank overdrafts....................... (6,842)
Borrowings due after one year......... (54,319)
Borrowings due within one year........ (3,043)
Finance leases........................ (7,665)
Current asset investments............. 1,798
-----------
(52,137)
-----------
-----------
</TABLE>
Current asset investments at 30 June 1998 represent part of the sale proceeds
from the sale of the US Electronics companies, which are being held in an escrow
account until May 2001.
F-24
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
(E) MAJOR NON-CASH TRANSACTIONS
During 1998 the Group entered into finance lease arrangements in respect of
assets with a total capital value at the inception of the leases of L1,840,000
(1997:L4,641,000).
<TABLE>
<CAPTION>
US ELECTRONICS
COMPANIES
L000
<S> <C>
(F) SALE OF SUBSIDIARY UNDERTAKINGS
Net assets sold excluding cash:
Fixed assets...................................................................................... 3,224
Stock............................................................................................. 8,157
Other working capital............................................................................. 3,741
------
Total net assets sold............................................................................. 15,122
Disposal costs paid out in cash................................................................... 1,937
Disposal costs accrued............................................................................ 128
Profit on sale.................................................................................... 5,891
------
23,078
------
------
SATISFIED BY:
Receipt of cash................................................................................... 21,256
Receipt of escrow monies.......................................................................... 1,822
------
Net inflow of cash................................................................................ 23,078
------
------
</TABLE>
The US Electronics subsidiaries sold during the year contributed L1,432,000 to
the group's net operating cash flows, paid L715,000 in respect of net returns on
investments and serving of finance, paid L731,000 in respect of taxation and
utilised L815,000 for capital expenditure.
F-25
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
FAIR VALUE
ADJUSTMENTS
HEIDEMANN ACCOUNTING POLICY FAIR VALUE
COMPANIES REVALUATIONS ADJUSTMENTS OTHER ADJUSTMENTS BALANCE SHEET
L000 L000 L000 L000 L000
----------- ------------- ------------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
(G) PURCHASE OF SUBSIDIARY
UNDERTAKINGS
Provisional net assets acquired:
Fixed assets...................... 22,549 (1,149) -- -- 21,400
Stock............................. 9,122 -- (316) -- 8,806
Other working capital............. (11,716) -- -- -- (11,716)
Provisions........................ -- -- (101) (562) (663)
Net borrowings.................... (14,281) -- -- -- (14,281)
----------- ------ --- --- -------------
5,674 (1,149) (417) (562) 3,546
Provisional goodwill (note 26).... 29,318
-------------
32,864
-------------
-------------
SATISFIED BY:
Purchase consideration............ 31,127
Acquisition costs................. 3,217
Cash acquired..................... (2,733)
-------------
Net outflow of cash (i)........... 31,611
Purchase consideration accrued.... 1,253
-------------
32,864
-------------
-------------
</TABLE>
The net assets acquired above exclude 5% of the net assets of Adwest Heidemann
Iberica SA which are held by a third party.
Certain fixed assets have been written down in the revaluation column to reflect
their value based upon current earnings and cash generation. The accounting
policy adjustments are to bring stock, warranty and repairs and maintenance
provisions in line with UK GAAP requirements. Other adjustments represent
provisions in respect of potential environmental liabilities at the time of
acquisition.
F-26
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
PURCHASE OF
SUBSIDIARY CASH ACQUIRED WITH
UNDERTAKINGS SUBSIDIARY ACQUIRED TOTAL
L000 L000 L000
------------ ------------------- ---------
<S> <C> <C> <C>
Net cash outflow of cash as above (i)................................ (34,344) 2,733 (31,611)
Minority interest in Adwest Heidemann Iberica SA cash................ -- (36) (36)
Deferred consideration re Electronics Division....................... (767) -- (767)
Other................................................................ (61) -- (61)
------------ ----- ---------
Per cash flow statement.............................................. (35,172) 2,697 (32,475)
------------ ----- ---------
------------ ----- ---------
</TABLE>
Heidemann Verwaltungsgesellschaft mit beschranker Haftung and its subsidiary
undertakings were acquired on 11 September 1997, and have been accounted for
using the acquisition method.
The subsidiary undertakings acquired during the year contributed L2,963,000 to
the group's net operating cash flows, paid L1,425,000 in respect of net returns
on investments and servicing of finance, received L372,000 in respect of
taxation and utilised L6,620,000 for capital expenditure.
In the year ended 31 January 1997, the latest available statutory accounts
before acquisition, the Heidemann group of companies had profit after tax of
L1,073,000 and minority interests of L281,000.
In the period 1 February 1997 to 11 September 1997 -- the date of acquisition by
Adwest, the unaudited results for the company showed the following.
<TABLE>
<CAPTION>
L000
<S> <C>
Turnover................................................................................................. 54,530
Operating profit......................................................................................... 2,788
Profit before taxation................................................................................... 1,954
Taxation charge.......................................................................................... 974
Minority interests....................................................................................... 97
---------
---------
</TABLE>
There were no material recognised gains or losses, other than the results for
the period shown above.
F-27
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
29 PRINCIPAL SUBSIDIARY UNDERTAKINGS
<TABLE>
<S> <C> <C> <C>
Adwest Steering Ltd. Woodley Power steering gears, precision UK
plastic parts
Adwest Bowden TSK Ltd. Llanelli Control cables, gearshifters UK
Adwest Bowden France SA Cauvigny, Boynes Control cables, gearshifters, France
handbrakes, jacks
Adwest Dauphinoise Thomson SA Grenoble Engine thermostats, wax element France
regulators
Adwest OCI SA La Talaudiere Gearshifters France
Adwest Driver Systems Ltd. Rearsby Pedal boxes, gearshifters, UK
handbrakes, suspension links
Adwest Western Automotive Inc. Michigan Precision tubular components and USA
engine thermostats
Adwest Western Thomson Ltd. Woodley, Chard Engine thermostats, radiator UK
caps
Adwest Heidemann Einbeck GmbH Einbeck Gearshifters, steering columns, Germany
tubular structures
Adwest Heidemann Rotenburg Rotenburg Valve spring retainers, fine Germany
GmbH blanked parts, tubular
structures
Adwest Heidemann Iberica SA Valencia, Pamplona Gearshifters, steering columns Spain
Adwest Kohler GmbH Lippstadt Fuel caps, precision pressed Germany
parts
Adwest Heidemann do Brasil Curitiba Gearshifters Brazil
</TABLE>
The Company owns 100% of the ordinary share capital of all subsidiaries, with
the exception of Adwest Bowden TSK Ltd of which 35% of the ordinary share
capital is owned by Nippon Cable Systems Inc. (TSK), a Japanese company, and
Adwest Heidemann Iberica SA, of which 5% of the ordinary share capital is owned
by local management.
The subsidiaries operate principally in the country in which they are
incorporated.
A full list of subsidiaries will be included within the next annual return.
30 ASSOCIATED UNDERTAKING
<TABLE>
<CAPTION>
ISSUED SHARE CAPITAL ACTIVITIES HOLDING INCORPORATED
------------------------------ ------------------- ----------- ---------------
<S> <C> <C> <C> <C>
Western Thomson (India) Ltd. (1) 295,878 shares (10 rupees p.s) Engine thermostats 49% India
</TABLE>
- --------------------------
(1) Held by Adwest Western Thomson Ltd. and located in Madras, India.
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The Group's accounts are prepared in conformity with generally accepted
accounting principles applicable in the United Kingdom (UK GAAP), which differ
in certain significant respects from those applicable in
F-28
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
the United States (US GAAP). These differences, together with the approximate
effects of the adjustments on net profit and shareholders' funds, relate
principally to the items set out below:
GOODWILL AND OTHER INTANGIBLE ASSETS
Under UK GAAP goodwill arising on acquisition has been charged to reserves.
Under US GAAP goodwill is capitalised and amortised by charges against income
over the period, not to exceed 40 years, over which the benefit arises. For US
GAAP, goodwill has been amortised by the Group over 40 years.
Under UK GAAP the profit and loss on the disposal of all or part of a previously
acquired business has been calculated after taking account of the gross amount
of any goodwill previously charged to reserves. Under US GAAP an adjustment to
profit or loss on disposal is required in respect of goodwill previously
amortised.
CUMULATIVE EXCHANGE LOSS ON SALE OF FOREIGN SUBSIDIARIES
Under UK GAAP gains or loss arising on the sale or liquidation of a foreign
subsidiary does not include the related cumulative exchange gain or loss,
previously recorded as a separate component of shareholders' equity for that
investment. Under US GAAP, the gain or loss on sale or liquidation includes the
related cumulative exchange gain or loss.
DIVIDENDS
Under UK GAAP dividends proposed after the end of an accounting period in
respect of that accounting period are deducted in arriving at retained earnings
for that period. Under US GAAP such dividends are not deducted until declared.
DEFERRED TAXATION
Under UK GAAP provision is made for deferred taxation only to the extent that it
is probable that an actual liability or asset will crystallise in the
foreseeable future. US GAAP requires full provision for deferred income taxes
under the liability method on all temporary differences and, if required, a
valuation allowance is established to reduce gross deferred taxation assets to
the amount which is more likely than not to be realised.
Deferred taxation also arises in relation to the tax effect of other US GAAP
differences.
PENSION COSTS
Under UK GAAP, the cost of providing pensions is charged against profits on a
systematic basis, with pension surpluses and deficits being amortised over the
expected remaining service lives of current employees. Under US GAAP, costs and
surpluses are similarly spread over the expected remaining service lives but
based on prescribed actuarial assumptions, allocation of costs and valuation
methods, which differ in certain respects from those used for UK GAAP.
DEFERRED PROFIT ON SALE OF PROPERTY
In 1996, properties were disposed of which had previously been revalued under UK
GAAP. No profit arose on this transaction under UK GAAP. A profit arises under
US GAAP on the basis that US GAAP does not permit the revaluation of property.
Under US GAAP, the element of the profit in respect of property
F-29
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
subsequently leased back on an operating lease basis is amortised in equal
instalments over the life of the lease.
EMPLOYEE SHARE TRUST ARRANGEMENTS
Employee share trusts have been established in order to hedge obligations in
respect of options issued under certain employee share option schemes. Under UK
GAAP the Company's ordinary shares held by the employee share trusts are
included at cost in fixed asset investments. Dividends receivable on such shares
are included in the statement of income. Under US GAAP, such shares and
dividends receivable from those shares are treated as treasury stock and
included in shareholders' equity. \
REVALUATION OF FIXED ASSETS
Under UK GAAP the Group has revalued certain fixed assets. This is not permitted
under US GAAP.
PRE-PRODUCTION COSTS
Under UK GAAP, certain significant pre-production costs on new products which
are not prefunded by the customer are carried forward in work in progress. These
costs are then written off on a unit of production basis over the life of the
contract with the customer. Under US GAAP these costs are generally expensed as
incurred.
CURRENT ASSETS AND LIABILITIES
Under UK GAAP current assets include amounts which fall due after more than one
year. Under US GAAP such assets would be reclassified as non-current assets.
Also under UK GAAP provisions for liabilities and charges include amounts due
within one year which would be reclassified to current liabilities under US
GAAP.
EARNINGS PER ORDINARY SHARE
Under UK GAAP earnings per share is based on profit for the financial year and
computed using the weighted average number of Ordinary Shares in issue during
the year. Under US GAAP basic earnings per share is based on net income and
computed using the weighted average number of Ordinary Shares in issue during
the year. US GAAP also requires the presentation of diluted earnings per share
which is based upon net income, as adjusted, computed using the weighted average
shares and the effect of other dilutive instruments.
CASH FLOWS
The principal difference between UK GAAP and US GAAP is in respect of
classification. Under UK GAAP, the Group presents its cash flows for operating
activities, returns on investments and servicing of finance, taxation, capital
expenditures and financial investments, acquisition and disposals, equity
dividends paid, management of liquid resources, and financing. US GAAP requires
only three categories of cash flow activities which are operating, investing and
financing.
Cash flows arising from taxation and returns on investments and servicing of
finance under UK GAAP would, with the exception of dividends paid, be included
as operating activities under US GAAP; dividend payments would be included as a
financing activity under US GAAP. In addition, capital expenditures and
F-30
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
financial investment, acquisition and disposals, and management of liquid
resources under UK GAAP would be presented as investing activities under US
GAAP.
UK GAAP defines cash as cash in hand and deposits repayable on demand. Short
term deposits which are readily convertible into cash into known amounts of cash
at, or close to, their carrying value are classified as liquid resources. US
GAAP defines cash and cash equivalents as cash in hand and short term highly
liquid investments with original maturities of three months or less. Cash flows
in respect of short term deposits with original maturities exceeding three
months are included in investing activities under US GAAP and are included in
capital expenditure and financial investment under UK GAAP.
Under US GAAP, the following amounts would be reported:
<TABLE>
<CAPTION>
1998 1997
L'000 L'000
--------- ---------
<S> <C> <C>
Net cash provided by operating activities.................................................... 15,628 18,627
Net cash used in investing activities........................................................ (29,931) 5,839
Net cash provided by/(used in) financing activities.......................................... 10,479 (14,519)
Effect of changes in exchange rate........................................................... (514) (1,190)
--------- ---------
Net (decrease)/increase in cash and cash equivalents......................................... (4,338) 8,757
Cash and cash equivalents at beginning of year............................................... 22,272 13,515
--------- ---------
Cash and cash equivalents at end of year..................................................... 17,934 22,272
--------- ---------
--------- ---------
</TABLE>
Effect on (loss)/profit attributable to shareholders of differences between UK
and US GAAP
<TABLE>
<CAPTION>
1998 1997
L'000 L'000
--------- ---------
<S> <C> <C>
(Loss)/profit attributable to shareholders as reported under UK GAAP......................... (2,355) 9,424
US GAAP adjustments:
Goodwill................................................................................... (1,377) (1,467)
Impact of goodwill previously amoritised on sale of subsidiary............................. 2,905 --
Cumulative exchange loss on sale of foreign subsidiaries................................... (1,182) --
Pension costs.............................................................................. 16 331
Deferred taxation--full provision.......................................................... (143) (168)
Tax effect of other US GAAP reconciling items.............................................. (30) (266)
Fixed asset revaluations................................................................... 100 508
Deferred profit on sale of property........................................................ 303 303
Pre-production costs....................................................................... (1,200) --
Other...................................................................................... 21 (16)
Minority interests......................................................................... -- (5)
--------- ---------
Net (loss)/income under US GAAP.............................................................. (2,942) 8,644
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
PENCE PER SHARE PENCE PER SHARE
1998 1997
----------------- -----------------
<S> <C> <C>
Basic and diluted earnings per share under US GAAP...............................
Continuing..................................................................... 7.3 7.2
Discontinued................................................................... (10.9) 3.3
----- ---
(3.6) 10.5
----- ---
----- ---
</TABLE>
F-31
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
Effect on shareholders' funds of differences between UK and US GAAP
<TABLE>
<CAPTION>
1998 1997
L'000 L'000
--------- ---------
<S> <C> <C>
Shareholders' funds as reported under UK GAAP.................................................. 8,246 29,451
US GAAP adjustments:
Goodwill..................................................................................... 64,744 52,109
Pension costs................................................................................ 4,930 4,913
Deferred taxation--full provision............................................................ (310) (168)
Tax effect of other US GAAP reconciling items................................................ (1,285) (1,283)
Fixed asset revaluations..................................................................... (761) (876)
Proposed dividends........................................................................... 4,545 4,536
Deferred profit on sale of property.......................................................... (4,127) (4,430)
Pre-production costs......................................................................... (1,200) --
Employee share trust arrangements............................................................ (641) (724)
Other........................................................................................ 99 86
Minority interests........................................................................... (149) (146)
--------- ---------
Shareholders' funds under US GAAP.............................................................. 74,091 83,468
--------- ---------
--------- ---------
</TABLE>
NEW US ACCOUNTING STANDARDS AND PRONOUNCEMENTS NOT YET ADOPTED
SFAS 133--In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities". This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognise
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
Management has not determined the effect of the adoption of SFAS 133.
SOP 98-1--During January 1998, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position 98-1 ACCOUNTING FOR THE COSTS
OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE ("SOP 98-1") which
becomes effective for all fiscal years beginning after December 15, 1998. Under
SOP 98-1, computer software costs that are incurred in the preliminary project
stage are expensed as incurred. Once specific capitalisation criteria have been
met, external direct costs of materials and service consumed in developing or
obtaining internal-use computer software, certain personnel costs, and interest
costs incurred when developing computer software for internal use are
capitalised. Training costs and data conversion costs are generally expensed as
incurred. Such capitalised costs are amortised over the estimated useful life of
the software. The company is evaluating the effect of the pronouncement.
NEW UK ACCOUNTING STANDARDS NOT YET ADOPTED
FRS 10 - Goodwill and Intangible Assets: In December 1997, the Accounting
Standard Board in the United Kingdom issued Financial Reporting Standard No. 10
"Goodwill and Intangible Assets" (FRS 10). FRS 10 requires that purchased
goodwill and intangible assets should be capitalised as assets and amortised
over the life of the assets. Goodwill and intangible assets need not be
amortised if it can be demonstrated that the current market value of the
goodwill or intangible is not below its carrying value. FRS 10 is effective for
accounting periods ending on or after 23 December 1998. The standard does not
require reinstatement of goodwill previously eliminated against retained
surplus.
FRS 11--Impairment of fixed assets and goodwill: In July 1998, the Accounting
Standards Board in the United Kingdom issued Financial Reporting Standard No. 11
"Impairment of fixed assets and goodwill"
F-32
<PAGE>
NOTES TO THE ACCOUNTS (CONTINUED)
(FRS 11). The standard requires that any impairment in the carrying value of
fixed assets should be recognised in the profit and loss account in the current
period and requires that impairment reviews be undertaken when there is some
indication of impairment. The review should be performed on individual income
generating units based on discounted cash flows. FRS 11 covers not only tangible
fixed assets, intangible fixed assets and goodwill but also investments in
subsidiaries, associates and joint ventures to the extent that they are not
covered by other standards. FRS 11 is effective for accounting periods ending on
or after 23 December 1998.
FRS 12--Provisions, contingent liabilities and contingent assets: In September
1998, the Accounting Standard Board in the United Kingdom issued Financial
Reporting Standard No. 12 "Provisions, contingent liabilities and contingent
assets" (FRS 12). The principal feature of the standard is that it requires that
a provision is recognised when there is a legal or constructive obligation
arising from past events and it is probable (ie, more likely than not) that
there will be an outflow of benefits and the amount can be reliably estimated.
FRS 12 is effective for accounting periods ending on or after 23 March 1999.
FRS 13--Derivatives and other financial instruments--disclosures: In September
1998, the Accounting Standards Board in the United Kingdom issued Financial
Reporting Standard No. 13 "Derivatives and other financial instruments:
disclosures" (FRS 13). FRS 13 is concerned only with disclosure and the
requirements comprise both narrative and numerical disclosures. FRS 13 is
effective for accounting periods ending on or after 23 March 1999.
FRS 14--Earnings per share: In October 1998, the Accounting Standards Board in
the United Kingdom issued Financial Reporting Standard No. 14 "Earnings per
share" (FRS 14). The standard applies to all entities whose ordinary or
potential ordinary shares are currently publicly traded, or are in the process
of becoming so, and to any other entity providing earnings per share (eps)
information voluntarily. FRS 14 is effective for accounting periods ending on or
after 23 December 1998.
COMPANIES ACT 1985
These consolidated financial statements do not constitute "statutory accounts"
within the meaning of the Companies Act 1985 of Great Britain for any of the
periods presented. Statutory accounts for the years ended 30 June 1997 and 30
June 1998 have been filed with the United Kingdom's Registrar of Companies. The
auditor has reported on these accounts. The reports were unqualified and did not
contain statements under Section 237 (2) or (3) of the Act.
These consolidated financial statements exclude certain parent company
statements and other information required by the Companies Act 1985, however,
they include all material disclosures required by generally accepted accounting
principles in the United Kingdom including those Companies Act 1985 disclosures
relating to the statement of income and balance sheet items.
F-33
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
DURA AUTOMOTIVE SYSTEMS, INC.
AND
WINDOWS ACQUISITION CORPORATION
AND
EXCEL INDUSTRIES, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
ARTICLE 1.
THE MERGER............................................................................................. A-1
SECTION 1.1 The Merger..................................................................... A-1
SECTION 1.2 Effective Time................................................................. A-1
SECTION 1.3 Effects of the Merger.......................................................... A-1
SECTION 1.4 Articles and Bylaws............................................................ A-1
SECTION 1.5 Conversion of Securities....................................................... A-2
SECTION 1.6 Parent to Make Certificates Available.......................................... A-5
SECTION 1.7 Dividends; Transfer Taxes; Withholding......................................... A-5
SECTION 1.8 No Fractional Securities....................................................... A-6
SECTION 1.9 Return of Exchange Fund........................................................ A-6
SECTION 1.10 Adjustment of Conversion Number................................................ A-6
SECTION 1.11 No Further Ownership Rights in Company Common Stock............................ A-7
SECTION 1.12 Closing of Company Transfer Books.............................................. A-7
SECTION 1.13 Lost Certificates.............................................................. A-7
SECTION 1.14 Legend......................................................................... A-7
SECTION 1.15 Further Assurances............................................................. A-7
SECTION 1.16 Directors and Officers......................................................... A-8
SECTION 1.17 Closing........................................................................ A-8
SECTION 1.18 Tax Treatment.................................................................. A-8
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB....................................................... A-8
SECTION 2.1 Organization, Standing and Power............................................... A-8
SECTION 2.2 Capital Structure.............................................................. A-8
SECTION 2.3 Authority...................................................................... A-9
SECTION 2.4 Consents and Approvals; No Violation........................................... A-9
SECTION 2.5 SEC Documents and Other Reports................................................ A-10
SECTION 2.6 Registration Statement and Prospectus.......................................... A-11
SECTION 2.7 Absence of Certain Changes or Events........................................... A-11
SECTION 2.8 Permits and Compliance......................................................... A-12
SECTION 2.9 Tax Matters.................................................................... A-12
SECTION 2.10 Actions and Proceedings........................................................ A-13
SECTION 2.11 Certain Agreements............................................................. A-13
SECTION 2.12 ERISA.......................................................................... A-13
SECTION 2.13 Compliance with Certain Laws................................................... A-14
SECTION 2.14 Liabilities.................................................................... A-14
SECTION 2.15 Labor Matters.................................................................. A-14
SECTION 2.16 Intellectual Property.......................................................... A-14
SECTION 2.17 Environmental Matters.......................................................... A-14
SECTION 2.18 Operations of Sub.............................................................. A-15
SECTION 2.19 Financing...................................................................... A-15
SECTION 2.20 Brokers........................................................................ A-16
SECTION 2.21 Required Vote of Shareholders.................................................. A-16
SECTION 2.22 Ownership of Shares............................................................ A-16
SECTION 2.23 State Takeover Statutes and Shareholder Rights Plan............................ A-16
SECTION 2.24 Investigations; Litigation..................................................... A-16
SECTION 2.25 Contracts and Commitments...................................................... A-16
SECTION 2.26 Real Estate Leases............................................................. A-17
SECTION 2.27 Real Property.................................................................. A-17
SECTION 2.28 Opinion of Financial Advisor................................................... A-18
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................... A-18
SECTION 3.1 Organization, Standing and Power............................................... A-18
SECTION 3.2 Capital Structure.............................................................. A-18
SECTION 3.3 Authority...................................................................... A-19
SECTION 3.4 Consents and Approvals: No Violation........................................... A-19
SECTION 3.5 SEC Documents and Other Reports................................................ A-20
SECTION 3.6 Absence of Certain Changes or Events........................................... A-20
SECTION 3.7 Registration Statement and Joint Proxy Statement............................... A-21
SECTION 3.8 Permits and Compliance......................................................... A-21
SECTION 3.9 Tax Matters.................................................................... A-22
SECTION 3.10 Actions and Proceedings........................................................ A-22
SECTION 3.11 Certain Agreements............................................................. A-23
SECTION 3.12 ERISA.......................................................................... A-23
SECTION 3.13 Compliance with Certain Laws................................................... A-24
SECTION 3.14 Liabilities.................................................................... A-24
SECTION 3.15 Labor Matters.................................................................. A-24
SECTION 3.16 Intellectual Property.......................................................... A-24
SECTION 3.17 Environmental Matters.......................................................... A-24
SECTION 3.18 Required Vote of Company Shareholders.......................................... A-25
SECTION 3.19 Brokers........................................................................ A-25
SECTION 3.20 State Takeover Statutes and Shareholder Rights Plan............................ A-25
SECTION 3.21 Investigations; Litigation..................................................... A-26
SECTION 3.22 Contracts and Commitments...................................................... A-26
SECTION 3.23 Real Estate Leases............................................................. A-27
SECTION 3.24 Real Property.................................................................. A-27
SECTION 3.25 Opinion of Financial Advisor................................................... A-27
ARTICLE 4.
COVENANTS RELATING TO CONDUCT OF BUSINESS.............................................................. A-27
SECTION 4.1 Conduct of Business Pending the Merger......................................... A-27
SECTION 4.2 No Solicitation................................................................ A-30
SECTION 4.3 Third Party Standstill Agreements.............................................. A-31
ARTICLE 5.
ADDITIONAL AGREEMENTS.................................................................................. A-31
SECTION 5.1 Shareholder Meetings........................................................... A-31
SECTION 5.2 Preparation of the Registration Statement and the Joint Proxy Statement........ A-32
SECTION 5.3 Access to Information.......................................................... A-32
SECTION 5.4 Fees and Expenses.............................................................. A-32
SECTION 5.5 Reasonable Good Faith Efforts.................................................. A-33
SECTION 5.6 Securities Filings............................................................. A-33
SECTION 5.7 Indemnification................................................................ A-33
SECTION 5.8 Employee Benefits.............................................................. A-34
SECTION 5.9 State Takeover Laws............................................................ A-34
SECTION 5.10 Notification of Certain Matters................................................ A-34
SECTION 5.11 Designation of Directors....................................................... A-34
SECTION 5.12 Letters of Parent's and the Company's Accountants.............................. A-34
SECTION 5.13 Amendment of Rights Agreement.................................................. A-35
SECTION 5.14 Financing...................................................................... A-35
ARTICLE 6.
CONDITIONS PRECEDENT TO THE MERGER..................................................................... A-35
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SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger..................... A-35
SECTION 6.2 Conditions to Obligation of the Company to Effect the Merger................... A-36
SECTION 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger............... A-36
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER...................................................................... A-37
SECTION 7.1 Termination.................................................................... A-37
SECTION 7.2 Effect of Termination.......................................................... A-39
SECTION 7.3 Amendment...................................................................... A-39
SECTION 7.4 Waiver......................................................................... A-39
SECTION 7.5 Fees on Termination............................................................ A-39
ARTICLE 8.
GENERAL PROVISIONS..................................................................................... A-41
SECTION 8.1 Non-Survival of Representations, Warranties and Agreements..................... A-41
SECTION 8.2 Notices........................................................................ A-41
SECTION 8.3 Interpretation................................................................. A-42
SECTION 8.4 Counterparts................................................................... A-42
SECTION 8.5 Entire Agreement; No Third-Party Beneficiaries................................. A-42
SECTION 8.6 Governing Law.................................................................. A-42
SECTION 8.7 Assignment..................................................................... A-43
SECTION 8.8 Severability................................................................... A-43
SECTION 8.9 Enforcement of this Agreement.................................................. A-43
SECTION 8.10 Litigation Costs............................................................... A-43
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 19, 1999 (this
"Agreement"), among DURA AUTOMOTIVE SYSTEMS, INC., a Delaware corporation
("Parent"), WINDOWS ACQUISITION CORPORATION, an Indiana corporation and a
wholly-owned subsidiary of Parent ("Sub"), and EXCEL INDUSTRIES, INC., an
Indiana corporation (the "Company") (Sub and the Company being hereinafter
collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable the merger of Sub and the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding share of Common Stock, no par value, of the
Company ("Company Common Stock") will be converted, at the option of the holder
thereof, into either (i) cash in the amount of $25.50 per share of Company
Common Stock, (ii) 0.8 shares of Parent Class A Common Stock, par value $0.01
per share ("Parent Common Stock") or (iii) a combination thereof as hereinafter
provided;
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies, is in the best interests of
corporation and is in the best interests of their respective shareholders; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization pursuant to Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE 1.
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof and in accordance with Indiana law, the Company shall be merged with and
into Sub at the Effective Time (as hereinafter defined). Following the Merger,
the separate corporate existence of the Company shall cease and Sub shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all of the rights and obligations of the Company in
accordance with Indiana law.
SECTION 1.2 Effective Time. The merger shall become effective when the
articles of merger (the "Articles of Merger"), executed in accordance with the
relevant provisions of Indiana law, are duly filed with the Secretary of State
of the State of Indiana (the "Secretary"). Upon issuance of a certificate of
merger by the Secretary in accordance with the relevant provisions of Indiana
law, the Merger shall be effected (the time of such issuance of a certificate of
merger being referred to as the "Effective Time"). The filing of the Articles of
Merger by the Company and the Sub shall be made on the date of the Closing (as
defined in Section 1.17), or as promptly thereafter as practicable.
SECTION 1.3 Effects of the Merger. The effect of the merger shall be as
provided by Indiana law.
SECTION 1.4 Articles and Bylaws. At the Effective Time, the Articles of
Incorporation of Sub, as in effect immediately prior to the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law, except
the name of the Surviving Corporation shall be "Excel Industries, Inc." At the
Effective Time, the Bylaws of Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by the Articles of
Incorporation of the Surviving Corporation or by applicable law.
<PAGE>
SECTION 1.5 Conversion of Securities. As of the Effective Time, by virtue
of the Merger and without any action on the part of Sub, the Company or the
holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, no par value, of
Sub shall be converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation and shall constitute the
only outstanding shares of capital stock of the Surviving Corporation.
(b) All shares of Company Common Stock that are held in the treasury of
the Company or by any wholly-owned Subsidiary of the Company shall be
canceled and no capital stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) (i) Subject to the provisions of Sections 1.8 and 1.10 hereof, each
share of Company Common Stock (and each related preferred stock purchase
right) issued and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 1.5(b)) shall be
converted, at the option of the holder thereof, into the right to receive
either (A) $25.50 in cash (the "Cash Consideration"), (B) 0.8 (such number
being the "Conversion Number") validly issued, fully paid and nonassessable
shares of Parent Common Stock or (C) a combination of cash and Parent Common
Stock, determined in accordance with Sections 1.5(c)(iv), (v) and (vi) below
(collectively, the "Merger Consideration"). All such shares of Company
Common Stock (and such preferred stock purchase rights), when so converted,
shall no longer be outstanding and shall automatically be canceled and
retired and each holder of a certificate formerly representing any such
shares shall cease to have any rights with respect thereto, except the right
to receive any dividends and other distributions in accordance with Section
1.7, certificates representing the shares of Parent Common Stock into which
such shares are converted and any cash, without interest, in lieu of
fractional shares to be issued or paid pursuant to Section 1.8, or the Cash
Consideration, in consideration therefor upon the surrender of such
certificate in accordance with Section 1.6.
(ii) Subject to the election and allocation procedures set forth in this
Section 1.5, each holder of record of shares of Company Common Stock as of
the record date for the meeting of shareholders of the Company referred to
in Section 5.1 will with respect to all or a portion of such shares be
entitled to (A) elect to receive certificates evidencing such number of
whole shares of Parent Common Stock into which such number of shares of
Company Common Stock would be converted in accordance with the Conversion
Number (a "Securities Election"), (B) elect to receive the Cash
Consideration multiplied by such number of shares of Company Common Stock (a
"Cash Election"), or (C) indicate that such holder has no preference as to
the receipt of cash or shares of Parent Common Stock in exchange for such
shares of Company Common Stock (a "Non-Election"). All such elections shall
be made on a form designed for that purpose and mutually acceptable to the
Company and Parent (a "Form of Election") and mailed to holders of record of
shares of Company Common Stock as of the record date for the meeting of
shareholders of the Company referred to in Section 5.1. Holders of record of
shares of Company Common Stock who hold such shares as nominees, trustees or
in other representative capacities ("Representatives") may submit multiple
Forms of Election, provided that such Representative certifies that each
such Form of Election covers all the shares of Company Common Stock held by
such Representative for a particular beneficial owner entitled to so elect
pursuant to the first sentence of this Section 1.5(c)(ii). Elections shall
be made by holders of Company Common Stock by mailing to the Exchange Agent
(as defined in Section 1.6) properly completed and signed Forms of Election.
In order to be effective, a Form of Election must be received by the
Exchange Agent no later than the close of business on the last business day
prior to the Effective Time. All elections may be revoked until the last
business day prior to the Effective Time. Parent shall have the discretion,
which it may delegate in whole or in part to the Exchange Agent, to
determine whether Forms of Election have been properly completed and signed
and properly and timely submitted or revoked and to disregard immaterial
defects in Forms of Election, and any good faith
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decision of Parent or the Exchange Agent in such matters shall be binding
and conclusive. Neither Parent nor the Exchange Agent shall be under any
obligation to notify any person of any defect in a Form of Election. Any
holder of shares of Company Common Stock who fails to make an election and
any holder who fails to submit to the Exchange Agent a properly completed
and signed and properly and timely submitted Form of Election shall be
deemed to have made a Non-Election.
(iii) The aggregate number of shares of Company Common Stock to be
converted into the right to receive cash in the Merger (the "Cash Election
Number") shall be equal to 50.0% of the number of shares of Company Common
Stock outstanding immediately prior to the Effective Time, and the aggregate
number of shares of Company Common Stock to be converted into the right to
receive shares of Parent Common Stock in the Merger (the "Securities
Election Number") shall be equal to 50.0% of the number of shares of Company
Common Stock outstanding immediately prior to the Effective Time.
(iv) If the aggregate number of shares of Company Common Stock with
respect to which Cash Elections have been made (the "Cash Election Shares")
exceeds the Cash Election Number, all shares of Company Common Stock with
respect to which Securities Elections have been made (the "Securities
Election Shares") and all shares of Company Common Stock with respect to
which Non-Elections have been made (the "Non-Election Shares") shall be
converted into the right to receive shares of Parent Common Stock in
accordance with Section 1.5(c)(i) above, and the Cash Election Shares shall
be converted into the right to receive shares of Parent Common Stock and
cash in the following manner:
each Cash Election Share shall be converted into the right
to receive (i) an amount in cash, without interest, equal
to the product of (x) the Cash Consideration and (y) a
fraction (the "Cash Fraction"), the numerator of which
shall be the Cash Election Number and the denominator of
which shall be the total number of Cash Election Shares
and (ii) a number of shares of Parent Common Stock equal
to the product of (x) the Conversion Number and (y) a
fraction equal to one minus the Cash Fraction.
(v) If the aggregate number of Securities Election Shares exceeds the
Securities Election Number, all Cash Election Shares and all Non-Election
Shares shall be converted into the right to receive cash in accordance with
Section 1.5(c)(i) above, and all Securities Election Shares shall be
converted into the right to receive shares of Parent Common Stock and cash
in the following manner:
each Securities Election Share shall be converted into the
right to receive (i) a number of shares of Parent Common
Stock equal to the product of (x) the Conversion Number
and (y) a fraction (the "Securities Fraction"), the
numerator of which shall be the Securities Election Number
and the denominator of which shall be the total number of
Securities Election Shares and (ii) an amount in cash,
without interest, equal to the product of (x) the Cash
Consideration and (y) a fraction equal to one minus the
Securities Fraction.
(vi) In the event that neither Section 1.5(c)(iv) nor Section 1.5(c)(v)
above is applicable, all Cash Election Shares shall be converted into the
right to receive cash in accordance with Section 1.5(c)(i) above, all
Securities Election Shares shall be converted into the right to receive
shares of Parent Common Stock in accordance with Section 1.5(c)(i) above,
and the Non-Election Shares, if any, shall be converted into the right to
receive shares of Parent Common Stock, and cash in the following manner:
each Non-Election Share shall be converted into the right
to receive (i) an amount in cash, without interest, equal
to the product of (x) the Cash Consideration and (y) a
fraction (the "Non-Election Fraction"), the numerator of
which shall be the excess of the Cash Election Number over
the total
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number of Cash Election Shares and the denominator of
which shall be the excess of (A) the number of shares of
Company Common Stock outstanding immediately prior to the
Effective Time over (B) the sum of the total number of
Cash Election Shares and the total number of Securities
Election Shares, and (ii) a number of shares of Parent
Common Stock equal to the product of (x) the Conversion
Number and (y) a fraction equal to one minus the
Non-Election Fraction.
(vii) The Exchange Agent shall make all computations contemplated by this
Section 1.5 and all such computations shall be binding and conclusive on the
holders of Company Common Stock.
(d) Each unexpired and unexercised option to purchase shares of Company
Common Stock (a "Company Stock Option") under the Company Stock Option Plans
(as hereinafter defined)(excluding Company Stock Options which as of the
Effective Time have not yet been granted under the Company Stock Option
Plans) will be assumed by Parent as hereinafter provided. Pursuant to
Section 4.4 of each Company Stock Option Plan, each Company Stock Option
will be automatically converted into an option (the "Parent Stock Option")
to purchase a number of shares of Parent Common Stock equal to the number of
shares of Company Common Stock that could have been purchased under such
Company Stock Option multiplied by the Conversion Number, at a price per
share of Parent Common Stock equal to the per share option exercise price
specified in the Company Stock Option divided by the Conversion Number. Such
Parent Stock Option shall otherwise be subject to the same terms and
conditions as such Company Stock Option. At the Effective Time, (i) the
Company Stock Option Plans shall be amended so that all references in the
Company Stock Option Plans, the applicable stock option or other awards
agreements issued thereunder shall be deemed to refer to Parent; (ii) Parent
shall assume the Company Stock Option Plans and all of the Company's
obligations thereunder with respect to the Company Stock Options; (iii)
Parent shall issue to each holder of an outstanding Company Stock Option a
document evidencing the foregoing assumption by Parent and (iv) the Company
Stock Option Plans shall be terminated. If required by law in addition to
the existing Parent Registration Statement on Form S-8 relating to such
Parent Stock Options, as soon as practicable following the Effective Time of
the Merger, Parent shall use its best efforts to file a registration
statement on Form S-8 with the Securities and Exchange Commission (the
"SEC") with respect to the Company Stock Options that have been converted
into Parent Stock Options.
(e) As of the Effective Time (i) each outstanding warrant to purchase
shares of Company Common Stock (the "Company Warrants") shall be converted
into a warrant (an "Adjusted Company Warrant") to (A) purchase the number of
shares of Parent Common Stock equal to one-half of the number of shares of
Company Common Stock subject to such Company Warrant multiplied by the
Conversion Number and (B) receive cash in an amount equal to one-half of the
number of shares of Company Common Stock subject to such Company Warrant
multiplied by the Cash Consideration, (ii) all references in each such
Company Warrant to the Company shall be deemed to refer to Parent and (iii)
Parent shall assume the obligations of the Company under the Company
Warrant. The other terms of each Adjusted Company Warrant (including the
aggregate exercise price contained therein), and the agreements under which
they were issued, shall continue to apply in accordance with their terms.
The date of grant of each Adjusted Company Warrant shall be the date on
which the corresponding Company Warrant was granted. Prior to the Effective
Time, the Company shall use its reasonable best efforts to obtain any
consents from holders of Company Warrants that are necessary to give effect
to the transactions contemplated by this Section 1.5(e).
(f) After the date hereof, the Company will not grant any further awards
under the Company's 1997 Long Term Incentive Plan (the "LTIP"). Prior to the
Effective Time, the Company will take all action necessary to amend the LTIP
to provide that the LTIP shall be terminated as of the Effective Time and
all obligations shall be extinguished thereunder. The Company shall amend
the Excel Industries Inc. Stock Purchase Plan to provide that (i) no
participant contributions may be made
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<PAGE>
thereto on and after March 31, 1999, (ii) no participant may increase his
level of contributions from the level in effect immediately prior to the
date hereof, and (iii) all purchases of Company Stock with respect to
contributions made prior such date shall be made as soon as practicable, but
in no event later than one day prior to the Effective Time.
SECTION 1.6 Parent to Make Certificates Available.
(a) Exchange of Certificates. Parent shall authorize a commercial bank
reasonably acceptable to the Company (or such other person or persons as
shall be acceptable to Parent and the Company) to act as Exchange Agent
hereunder (the "Exchange Agent"). As soon as practicable after the Effective
Time, Parent shall deposit with the Exchange Agent, in trust for the holders
of shares of Company Common Stock converted in the Merger, the total Cash
Consideration, certificates representing the shares of Parent Common Stock
issued pursuant to Section 1.5(c) in exchange for outstanding certificates
representing shares of Company Common Stock and cash required to make
payments in lieu of any fractional shares pursuant to Section 1.8 (such
total Cash Consideration, cash and shares of Parent Common Stock, together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Cash Consideration and certificates
representing the Parent Common Stock contemplated to be delivered pursuant
to Section 1.5(c) out of the Exchange Fund. Except as contemplated by
Sections 1.6, 1.8 and 1.9, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As soon as practicable after the Effective
Time, Parent shall use its reasonable best efforts to cause the Exchange
Agent to mail to each record holder of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock converted in the Merger (the "Certificates") a letter
of transmittal (which shall be in customary form, shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates to the Exchange
Agent, and shall contain instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration and cash in lieu
of fractional shares). Upon surrender for cancellation to the Exchange Agent
of a Certificate, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor either (i) the Cash Consideration, or (ii) a certificate
representing that number of whole shares of Parent Common Stock into which
the shares represented by the surrendered Certificate shall have been
converted at the Effective Time pursuant to this Article I, cash in lieu of
any fractional share in accordance with Section 1.8 and certain dividends
and other distributions in accordance with Section 1.7. Until surrendered as
contemplated by this Section 1.6 hereof, each Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive
upon such surrender the Merger Consideration, which the holder thereof has
the right to receive in respect of such Certificate pursuant to the
provisions of this Article 1, certain dividends or other distributions in
accordance with Section 1.7 hereof and cash in lieu of any fractional share
of Parent Common Stock in accordance with Section 1.8 hereof. No interest
shall be paid or will accrue on any cash payable to holders of Certificates
pursuant to the provisions of this Article 1.
SECTION 1.7 Dividends; Transfer Taxes; Withholding. No dividends or other
distributions that are declared on or after the Effective Time on Parent Common
Stock, or are payable to the holders of record thereof on or after the Effective
Time, will be paid to any person entitled by reason of the Merger to receive the
Merger Consideration and no certificates evidencing Parent Common Stock, Cash
Consideration or cash payment in lieu of fractional shares will be paid to any
such person pursuant to Section 1.8 until such person surrenders the related
Certificate or Certificates, as provided in Section 1.6. Following the surrender
of the Certificate, subject to the effect of applicable law, there shall be paid
to each record holder of a new certificate representing whole shares of Parent
Common Stock: (i) at the time of such surrender or as promptly as practicable
thereafter, the amount of any dividends or other distributions theretofore paid
with respect to the shares of Parent Common Stock represented by such new
certificate and having a record date on or after the Effective Time and a
payment date prior to such surrender; (ii) at the appropriate payment
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<PAGE>
date or as promptly as practicable thereafter, the amount of any dividends or
other distributions payable with respect to such shares of Parent Common Stock
and having a record date on or after the Effective Time but prior to such
surrender and a payment date on or subsequent to such surrender; and (iii) at
the time of such surrender or as promptly as practicable thereafter, the amount
of any cash payable with respect to a fractional share of Parent Common Stock to
which such holder is entitled pursuant to Section 1.8. In no event shall the
person entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions. If any cash or
certificate representing shares of Parent Common Stock is to be paid to or
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
issuance of certificates for such shares of Parent Common Stock in a name other
than that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable. Parent or the Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of shares of Company Common Stock such amounts as Parent or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Code or under any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Parent or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by Parent or the
Exchange Agent.
SECTION 1.8 No Fractional Securities. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article I, and no Parent
dividend or other distribution or stock split shall relate to any fractional
share, and no fractional share shall entitle the owner thereof to vote or to any
other rights of a security holder of Parent. In lieu of any such fractional
share, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
(i) the closing price of the Parent Common Stock on the Nasdaq Stock Market
("Nasdaq") on the date before the Effective Time by (ii) the fractional interest
to which such holder would otherwise be entitled. As promptly as practicable
after the determination of the amount of cash, if any, to be paid to holders of
fractional share interests, the Exchange Agent shall so notify the Parent, and
the Parent shall deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional share interests
subject to and in accordance with the terms of Section 1.7 and this Section 1.8.
SECTION 1.9 Return of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the former shareholders of the Company for one
year after the Effective Time shall be delivered to Parent, upon demand of
Parent, and any such former shareholders who have not theretofore complied with
this Article I shall thereafter look only to Parent for payment of their claim
for Cash Consideration, Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock and any dividends or distributions with respect to
Parent Common Stock. Neither Parent nor the Surviving Corporation shall be
liable to any former holder of Company Common Stock for any such Cash
Consideration, shares of Parent Common Stock, cash and dividends and
distributions held in the Exchange Fund which is delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
SECTION 1.10 Adjustment of Conversion Number. In the event of any
reclassification, stock split or stock dividend with respect to Parent Common
Stock or Company Common Stock, any change or conversion of Parent Common Stock
or Company Common Stock into other securities, any other dividend or
distribution with respect to the Parent Common Stock or Company Common Stock
other than normal quarterly cash dividends as the same may be adjusted from time
to time pursuant to the terms of this
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Agreement (or if a record date with respect to any of the foregoing should
occur) prior to the Effective Time, appropriate and proportionate adjustments,
if any, shall be made to the Conversion Number and Cash Consideration, and all
references to the Conversion Number and Cash Consideration in this Agreement
shall be deemed to be to the Conversion Number and Cash Consideration as so
adjusted.
SECTION 1.11 No Further Ownership Rights in Company Common Stock. All Cash
Consideration and shares of Parent Common Stock issued pursuant to the terms
hereof (including any cash paid pursuant to Section 1.8) shall be deemed to have
been issued in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented by such Certificates.
SECTION 1.12 Closing of Company Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock shall thereafter be made on the records of the Company. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, the Exchange Agent or the Parent, such Certificates shall be
canceled and exchanged as provided in this Article I.
SECTION 1.13 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct (but consistent with
the practices the Parent applies to its own shareholders), as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Cash Consideration, shares of Parent Common Stock, any cash in
lieu of fractional shares of Parent Common Stock to which the holders thereof
are entitled pursuant to Section 1.8 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 1.7.
SECTION 1.14 Legend. Certificates representing shares of Parent Common
Stock issued in accordance with the terms of this Agreement in exchange for
shares of Company Common Stock surrendered by any "affiliate" of the Company for
purposes of Rule 145(c) under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A RULE 145
TRANSACTION, AS THAT TERM IS USED IN RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY BE OFFERED FOR SALE,
SOLD, TRANSFERRED ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE ENCUMBERED ONLY
(1) PURSUANT TO RULE 145, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR (3) UPON RECEIPT OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE ACT.
SECTION 1.15 Further Assurances. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) 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, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either of the Constituent Corporations, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation's
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
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SECTION 1.16 Directors and Officers. The persons who are directors of Sub
immediately prior to the Effective Time, shall, after the Effective Time,
comprise the Board of Directors of the Surviving Corporation. At the Effective
Time, the officers of the Surviving Corporation shall consist of the officers of
Sub immediately prior to the Effective Time. Each of such directors and officers
of the Surviving Corporation shall hold office until their respective successors
have been duly elected or appointed and qualified or as otherwise provided in
the Articles of Incorporation of the Surviving Corporation, the Bylaws of the
Surviving Corporation or by law.
SECTION 1.17 Closing. Unless this Merger Agreement shall have been
terminated pursuant to the provisions of Article 7 hereof the closing of the
transactions contemplated by this Agreement (the "Closing") and all actions
specified in this Agreement to occur at the Closing shall take place on or
before the business day immediately after all of the conditions set forth in
Article VI of this Agreement have been satisfied or waived, as the case may be,
or such other date as may be mutually agreed to by the parties (the "Closing
Date"); provided, however, that if any of the conditions provided for in Article
6 hereof shall not have been satisfied or waived in accordance with the terms
hereof by the Closing Date, then either party to this Merger Agreement shall be
entitled to postpone the Closing by notice to the other party until such
condition or conditions shall have been met or waived.
SECTION 1.18 Tax Treatment. Each of Parent, Sub, and the Company shall use
reasonable best efforts to cause the Merger to qualify as a reorganization
pursuant to Section 368(a) of the Code.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the Company as
follows:
SECTION 2.1 Organization, Standing and Power. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authority to carry on its
business as now being conducted. Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Indiana and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each Subsidiary of Parent is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized and
has the requisite corporate power and authority to carry on its business as now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power or authority would not, individually or in
the aggregate, have a Material Adverse Effect (as hereinafter defined) on
Parent. Parent and each of its Subsidiaries are duly qualified to do business,
and are in good standing, in each jurisdiction where the character of their
properties owned or held under lease or the nature of their activities makes
such qualification necessary, except where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect on Parent.
For purposes of this Agreement (a) "Material Adverse Change" or "Material
Adverse Effect" means, when used with respect to Parent or the Company, as the
case may be, any change or effect that is materially adverse to the assets,
liabilities, results of operation or financial condition of Parent and its
Subsidiaries, taken as a whole, or the Company and its Subsidiaries, taken as a
whole, as the case may be, and (b) "Subsidiary" means any corporation,
partnership, joint venture or other legal entity of which Parent or the Company,
as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation,
partnership, joint venture or other legal entity.
SECTION 2.2 Capital Structure. As of the Effective Time, the authorized
capital stock of Parent will consist of 30,000,000 shares of Parent Common
Stock, 10,000,000 shares of Class B Common Stock, par value $0.01 per share (the
"Parent Class B Common Stock") and 5,000,000 shares of Preferred Stock, par
value $1.00 per share (the "Parent Preferred Stock"). At the close of business
on January 18, 1999,
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(i) 9,029,085 shares of Parent Common Stock were issued and outstanding, all of
which were validly issued, fully paid and nonassessable and free of preemptive
rights; (ii) 2,200,000 shares of Parent Common Stock were reserved for future
issuance pursuant to Parent's 1996 Key Employee Stock Option Plan, Employee
Discount Stock Purchase Plan, Independent Director Stock Option Plan and 1998
Stock Incentive Plan (collectively, "Parent Stock Plans"). All of the shares of
Parent Common Stock issuable in exchange for Company Common Stock at the
Effective Time in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights. As of the date of this Agreement, except for (a) this Agreement, (b)
stock options covering 1,092,697 shares of Parent Common Stock (collectively,
the "Parent Stock Options"), and (c) 3,325,303 shares of Parent Common Stock
reserved for issuance upon the conversion of the Parent Class B Common Stock and
1,289,000 shares of Parent Common Stock reserved for issuance upon the
conversion of the 7 1/2% Trust Preferred Securities into the Parent's 7 1/2%
Convertible Subordinated Debentures and the subsequent conversion of the 7 1/2%
Convertible Subordinated Debentures into Parent Common Stock, there are no
options, warrants, calls, rights or agreements to which Parent or any of its
Subsidiaries is a party or by which any of them is bound obligating Parent or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Parent or any of its
Subsidiaries or obligating Parent or any of its Subsidiaries to grant, extend or
enter into any such option, warrant, call, right or agreement. Each outstanding
share of capital stock of each Subsidiary of Parent is duly authorized, validly
issued, fully paid and nonassessable and, except as disclosed in the Parent SEC
Documents (as hereinafter defined), each such share is owned by Parent or
another Subsidiary of Parent, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever.
SECTION 2.3 Authority. The respective Boards of Directors of Parent and
Sub have on or prior to the date of this Agreement (a) declared the Merger
advisable and duly approved and adopted this Agreement in accordance with the
applicable law, (b) resolved to recommend the approval by Parent's shareholders
of the matters covered by the Parent Shareholder Approvals (as hereinafter
defined) and (c) directed that this Agreement and the other matters subject to
Parent Shareholder Approvals be submitted to Parent's shareholders for approval.
Each of Parent and Sub has all requisite corporate power and authority, and no
other corporate proceeding on the part of Parent or Sub is necessary, to enter
into this Agreement and subject to (y) the Parent Shareholders' Approvals and
(z) the filing of appropriate Merger documents as required by Indiana law, to
issue the Parent Common Stock in connection with the Merger (the "Share
Issuance"), to pay the total Cash Consideration and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub, subject to the filing of appropriate Merger
documents as required by Indiana law. This Agreement has been duly executed and
delivered by Parent and Sub and (assuming the valid authorization, execution and
delivery of this Agreement by the Company) this Agreement constitutes the valid
and binding obligation of Parent and Sub enforceable against each of them in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to judicial discretion. The Share Issuance and
the filing of a registration statement on Form S-4 with the SEC by Parent under
the Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), for the purpose of registering
the shares of Parent Common Stock (together with any amendments or supplements
thereto, whether prior to or after the effective date thereof, the "Registration
Statement") have been duly authorized by Parent's Board of Directors.
SECTION 2.4 Consents and Approvals; No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this Section
2.4 have been obtained and all filings and obligations described in this Section
2.4 have been made, except as set forth on Schedule 2.4 of the disclosure
schedule delivered contemporaneously herewith (the "Disclosure Schedule") the
execution and
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delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Parent or any of its Subsidiaries under,
any provision of (i) the Charter or Bylaws of Parent, (ii) any provision of the
comparable charter or organization documents of any of Parent's Subsidiaries,
(iii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to Parent or any of its Subsidiaries, or (iv) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (iii) or (iv), any such violations, defaults, rights, liens,
security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent, or prevent the
consummation of any of the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Entity") is
required by or with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Parent or Sub or is
necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement, except for (i) in connection, or in compliance,
with the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the Securities Act and the Securities Exchange Act
of 1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"), and the anti-trust laws of the European Union
and its members (the "European Union Laws"), (ii) the filing of Articles of
Merger with the Secretary and appropriate documents with the relevant
authorities of other states in which the Company or any of its Subsidiaries is
qualified to do business, (iii) such filings and consents as may be required
under any environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or by the
transactions contemplated by this Agreement, (iv) such filings and consents as
may be required under any state or foreign laws pertaining to debt collection,
the issuance of payment instruments or money transmission, (v) applicable
requirements, if any, of state securities or "blue sky" laws (the "Blue Sky
Laws") and Nasdaq, and (vi) such other consents, orders authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on Parent, or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
SECTION 2.5 SEC Documents and Other Reports. Parent has, since December
31, 1996, filed all documents and reports which it is required to file with the
SEC, including, without limitation, an Annual Report on Form 10-K for each of
the fiscal years ended December 31, 1996 and December 31, 1997, and a Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed
(and as amended through the date hereof), none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted 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
consolidated financial statements (including, in each case, any notes thereto)
of Parent included in the Parent SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles (except, in the case of
the unaudited statements, as permitted by Form 10-Q) applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented in all material respects the consolidated
financial position of Parent and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to any other adjustments described therein and normal
year-end audit adjustments which would not in the aggregate be material in
amount or effect).
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Except as disclosed in the Parent SEC Documents or as required by generally
accepted accounting principles, Parent has not, since January 1, 1998, made any
change in the accounting principles, practices, methods or policies applied in
the preparation of financial statements.
SECTION 2.6 Registration Statement and Prospectus. None of the information
to be supplied by Parent or Sub for inclusion or incorporation by reference in
the Registration Statement or the joint proxy statement/prospectus included
therein (together with any amendments or supplements thereto, the "Joint Proxy
Statement") relating to the Company Shareholder Meeting will (i) in the case of
the Registration Statement, at the time it is filed, when it is supplemented or
amended and when it becomes effective, 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 not misleading or (ii) in
the case of the Joint Proxy Statement, at the time of the mailing of the Joint
Proxy Statement, the time of the Company Shareholder Meeting, and 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 are made,
not misleading. If at any time prior to the Effective Time any event with
respect to Parent, its officers and directors or any of its Subsidiaries shall
occur which is required to be described in the Joint Proxy Statement or the
Registration Statement, such event shall be so described, and an appropriate
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the shareholders of the Company. The Registration Statement
will comply (with respect to Parent) as to form in all material respects with
the provisions of the Securities Act. At the time of the filing of any
disclosure document filed after the date hereof pursuant to the Securities Act,
the Exchange Act or any state securities law (each a "Parent Disclosure
Document") other than the Registration Statement or Joint Proxy Statement, at
the time of any distribution thereof and throughout the remaining pendency of
the Merger each such Parent Disclosure Document (as supplemented or amended)
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 2.7 Absence of Certain Changes or Events. Except as disclosed in
Schedule 4.1 or Schedule 2.7 of the Disclosure Schedule, or the Parent SEC
Documents filed with the SEC prior to the date of this Agreement, since January
1, 1998, (A) Parent and its Subsidiaries have not entered into any material oral
or written agreement or other transaction, that is not in the ordinary course of
business or that would result in a Material Adverse Effect on Parent, excluding
any changes and effects resulting from changes in economic, regulatory or
political conditions or changes in conditions generally applicable to the
industries in which Parent and Subsidiaries of Parent are involved and except
for any such changes or effects resulting from this Agreement, the transactions
contemplated hereby or the announcement thereof; (B) Parent and its Subsidiaries
have not sustained any loss or interference with their business or properties
from fire, flood, windstorm, accident or other calamity (whether or not covered
by insurance) that has had a Material Adverse Effect on Parent; (C) other than
any indebtedness incurred by Parent after the date hereof as permitted by
Section 4.l(a)(v), there has been no material change in the consolidated
indebtedness of Parent and its Subsidiaries, and no dividend or distribution of
any kind declared, paid or made by Parent on any class of its stock; (D) there
has been no event causing, or reasonably likely to cause, a Material Adverse
Effect on Parent, excluding any changes and effects resulting from changes in
economic, regulatory or political conditions or changes in conditions generally
applicable to the industries in which Parent and Subsidiaries of Parent are
involved and except for any such changes or effects resulting from this
Agreement, the transactions contemplated hereby or the announcement thereof; and
(E) except as permitted by this Agreement, there has been no direct or indirect
redemption, purchase or other acquisition of any shares of the Parent's capital
stock, or any declaration, setting aside or payment of any dividend or other
distribution by the Parent in respect of the Parent's capital stock, or any
issuance of any shares of capital stock of the Parent, or any granting to any
person of any option to purchase or other right to acquire shares of capital
stock of the Parent or any stock split or other change in the Parent's
capitalization; (F) neither the Parent nor any Subsidiary has entered into or
agreed to enter into any new or amended contract with any labor unions
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representing employees of the Parent or any Subsidiary; and (G) except as
disclosed in the Parent SEC Documents, neither the Parent nor any Subsidiary has
entered into or agreed to enter into any amendment of any material term of any
outstanding security of the Parent or any Subsidiary.
SECTION 2.8 Permits and Compliance. Each of Parent and its Subsidiaries is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity which, to the Knowledge of Parent (as hereinafter
defined), are necessary for Parent or any of its Subsidiaries to own, lease and
operate its properties or to carry on its business as it is now being conducted
(the "Parent Permits"), except where the failure to have any of the Parent
Permits would not, individually or in the aggregate, have a Material Adverse
Effect on Parent, and, as of the date of this Agreement, no suspension or
cancellation of any of the Parent Permits is pending or, to the Knowledge of
Parent, threatened, except where the suspension or cancellation of any of the
Parent Permits would not, individually or in the aggregate, have a Material
Adverse Effect on Parent. Neither Parent nor any of its Subsidiaries is in
violation of (A) its Charter, Bylaws or other organizational documents, (B) any
applicable law, ordinance, administrative or governmental rule or regulation or
(C) any order, decree or judgment of any Governmental Entity having jurisdiction
over Parent or any of its Subsidiaries, except, in the case of clauses (B) and
(C), for any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on Parent. Except as disclosed in the Parent SEC
Documents filed prior to the date of this Agreement there is no contract or
agreement that is material to the business, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole. Except as set forth
in the Parent SEC Documents, prior to the date of this Agreement, no event of
default or event that, but for the giving of notice or the lapse of time or
both, would constitute an event of default exists or, upon the consummation by
Parent of the transactions contemplated by this Agreement, will exist under any
indenture, mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for borrowed money
or any lease, contractual license or other agreement or instrument to which
Parent or any of its Subsidiaries is a party or by which Parent or any such
Subsidiary is bound or to which any of the properties, assets or operations of
Parent or any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent. Set forth on Schedule 2.8 of the Disclosure Schedule is a description of
any material changes to the amount and terms of the indebtedness of the Parent
and its Subsidiaries as described on Parent's Annual Report on Form 10-K.
"Knowledge of Parent" means the actual knowledge of any of the Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer of the Parent.
SECTION 2.9 Tax Matters. Except as disclosed on Schedule 2.9:
(a) Each of Parent and its Subsidiaries has filed all Tax Returns
required to have been filed (or extensions have been duly obtained) and has
paid all Taxes required to have been paid by it, except where failure to
file such Tax Returns or pay such Taxes would not, in the aggregate, have a
Material Adverse Effect on Parent. All such Tax Returns are correct and
complete in all material respects.
(b) Each of the Parent and its Subsidiaries has paid all Taxes which
have become due and payable, except where the failure to pay such Taxes
would not have a Material Adverse Effect. Each of the Parent and its
Subsidiaries has made adequate provision in reserves established in its
financial statements and accounts for all Taxes which have accrued but are
not yet due and payable.
(c) There is no action, suit, taxing authority proceeding or audit now
in progress or pending with respect to the Parent or any of its
Subsidiaries. Neither the Parent nor any of its Subsidiaries has waived or
extended, or requested any waiver of extension of, any limitation period for
audit or assessment of any Tax liability.
(d) No deficiency for any amount of Tax has been asserted or assessed
against the Parent or any of its Subsidiaries which either (i) has not been
paid, settled or adequately provided for through reserves established in the
financial statements and accounts or (ii) would have a Material Adverse
Effect if required to by paid.
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(e) No election under Section 341(f) of the Code has been made to treat
the Parent or any of its Subsidiaries as a consenting corporation (as
defined in Section 341(f) of the Code). Neither the Parent nor any of its
Subsidiaries is a U.S. real property holding corporation within the meaning
of Section 897(c)(2) of the Code.
For purposes of this Agreement: (i) "Tax" (and, with correlative meaning,
"Taxes") means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, 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 governmental authority and (ii) "Tax Return" means any return, report or
similar statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
SECTION 2.10 Actions and Proceedings. Except as set forth in the Parent
SEC Documents or Schedule 2.24 of the Disclosure Schedule, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving Parent or any of its Subsidiaries, as
such, any of its properties, assets or business or any Parent Plan (as
hereinafter defined) that, individually or in the aggregate, would have a
Material Adverse Effect on Parent. As of the date of this Agreement, there are
no actions, suits or claims or legal administrative or arbitrative proceedings
or investigations pending or, to the Knowledge of Parent, threatened against or
involving Parent or any of its Subsidiaries, any of its properties, assets or
business or any Parent Plan that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect on Parent. As of the date
hereof there are no actions, suits, labor disputes or other litigation, legal or
administrative proceedings or governmental investigations pending or, to the
Knowledge of Parent, threatened against or affecting Parent or any of its
Subsidiaries, any of its properties, assets or business relating to the
transactions contemplated by this Agreement.
SECTION 2.11 Certain Agreements. As of the date of this Agreement, neither
Parent nor any of its Subsidiaries is a party to any oral or written agreement
or plan, including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
SECTION 2.12 ERISA. Each Parent Plan complies in all material respects
with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
the Code and all other applicable statutes and governmental rules and
regulations, including but not limited to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), and (i) no "reportable event"
(within the meaning of Section 4043 of ERISA) has occurred with respect to any
Parent Plan, (ii) neither Parent nor any of its ERISA Affiliates (as hereinafter
defined) has withdrawn from any Parent Multi-employer Plan (as hereinafter
defined) or instituted, or is currently considering taking, any action to do so,
(iii) no action has been taken, or is currently being considered, to terminate
any Parent Plan subject to Title IV of ERISA, and (iv) Parent and its ERISA
Affiliates have complied in all material respects with the continued medical
coverage requirements of COBRA. No Parent Plan, nor any trust created
thereunder, has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived. With respect to the Parent Plans,
no event has occurred in connection with which Parent or any ERISA Affiliate
would be subject to any liability under the terms of such Parent Plans, ERISA,
the Code or any other applicable law which would have a Material Adverse Effect
on Parent. All Parent Plans that are intended to be qualified under Section
401(a) of the Code have been determined by the Internal Revenue Service to be so
qualified, and to the Knowledge of Parent, there is no reason why any Parent
Plan is not so qualified in operation. Except as set forth on Schedule 2.12,
neither Parent nor any of its ERISA Affiliates has been notified by any Parent
Multi-employer Plan that such Parent Multi-employer Plan is currently in
reorganization or insolvency under and within the meaning of Section 4241 or
4245 of ERISA or that such Parent Multi-employer
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Plan intends to terminate or has been terminated under Section 4041A of ERISA.
Neither Parent nor any of its ERISA Affiliates has any liability or obligation
under any welfare plan to provide benefits after termination of employment to
any employee or dependent other than as required by ERISA or as disclosed in the
Parent SEC Documents. As used herein, (i) "Parent Plan" means a "pension plan"
(as defined in Section 3(2) of ERISA (other than a Parent Multi-employer Plan))
or a "welfare plan" (as defined in Section 3(1) of ERISA) established or
maintained by Parent or any of its ERISA Affiliates or as to which Parent or any
of its ERISA Affiliates has contributed or otherwise may have any liability,
(ii) "Parent Multi-employer Plan" means a "Multi-employer plan" (as defined in
Section 4001(a)(3) of ERISA) to which Parent or any of its ERISA Affiliates is
or has been obligated to contribute or otherwise may have any liability, and
(iii) with respect to any person, "ERISA Affiliate" means any trade or business
(whether or not incorporated) which is under common control or would be
considered a single employer with such person pursuant to Section 414(b), (c),
(m) or (o) of the Code and the regulations promulgated under those sections or
pursuant to Section 4001(b) of ERISA and the regulations promulgated thereunder.
SECTION 2.13 Compliance with Certain Laws. To the Knowledge of Parent, the
properties, assets and operations of Parent and its Subsidiaries are in
compliance in all material respects with all applicable federal, state, local
and foreign laws, rules and regulations, orders, decrees, judgments, permits and
licenses relating to public and worker health and safety (collectively, "Worker
Safety Laws"), except for any violations that, individually or in the aggregate,
would not have a Material Adverse Effect on the Parent.
SECTION 2.14 Liabilities. Except as fully reflected or reserved against in
the financial statements included in the Parent SEC Documents or incurred after
the date of such financial statements in the ordinary course of business
consistent with past practices, or expressly disclosed in the footnotes thereto,
Parent and its Subsidiaries have no liabilities (including, without limitation,
Tax liabilities and workmen's compensation liabilities), absolute or contingent,
other than liabilities that, individually or in the aggregate, would not have a
Material Adverse Effect on the Parent, and, to the Knowledge of Parent, have no
liabilities (including, without limitation, Tax liabilities) that were not
incurred in the ordinary course of business other than liabilities that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Parent.
SECTION 2.15 Labor Matters. Neither Parent nor any of its Subsidiaries is
a party to any collective bargaining agreement or labor contract except as set
forth on Schedule 2.15 of the Disclosure Schedule. To the Knowledge of Parent,
neither Parent nor any of its Subsidiaries has engaged in any unfair labor
practice with respect to any persons employed by or otherwise performing
services primarily for Parent or any of its Subsidiaries (the "Parent Business
Personnel"), and there is no unfair labor practice complaint or grievance
against Parent or any of its Subsidiaries by the National Labor Relations Board
or any comparable state agency pending or, to the Knowledge of Parent,
threatened in writing with respect to the Parent Business Personnel, except
where such unfair labor practice, complaint or grievance would not have a
Material Adverse Effect on Parent. There is no labor strike, dispute, slowdown
or stoppage pending or, to the Knowledge of Parent, threatened against or
affecting Parent or any of its Subsidiaries which may interfere with the
respective business activities of Parent or any of its Subsidiaries, except
where such dispute, strike or work stoppage would not have a Material Adverse
Effect on Parent.
SECTION 2.16 Intellectual Property. Parent and its Subsidiaries own or
have a valid license to use all patents, trademarks, trade names, service marks,
trade secrets, copyrights and other proprietary intellectual property rights
(collectively, "Intellectual Property Rights") that are used in connection with
the business of the Parent and its Subsidiaries, taken as a whole, except where
the failure to have such Intellectual Property Rights would not have a Material
Adverse Effect on the Parent. To the Knowledge of the Parent, neither the Parent
nor any of its Subsidiaries has infringed any Intellectual Property Rights of
any third party other than any infringements that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
SECTION 2.17 Environmental Matters.
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Except as disclosed on Schedule 2.17 of the Disclosure Schedule:
(a) Each of the Parent and its Subsidiaries has complied with, and is in
compliance with, all Environmental and Safety Requirements (including all
permits, licenses and other authorizations required thereunder), except for
any such noncompliance which, individually or in the aggregate, would not
reasonably be expected to result in liabilities in excess of $250,000.
(b) Neither the Parent nor any of its Subsidiaries has received any
notice, report or other information regarding any actual or alleged
violation of Environmental and Safety Requirements, or any actual or
potential liability, including any investigatory, remedial or corrective
obligation, relating to any of them or its facilities arising under
Environmental and Safety Requirements, except for any notice, report or
information, the subject of which, would not reasonably be expected to
result in liabilities in excess of $250,000.
(c) None of the Parent or any of its Subsidiaries, or their respective
predecessors has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including
without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by
any such substance) in a manner that has given or would reasonably be
expected to give rise to liabilities pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act, the Solid Waste
Disposal Act, or any other Environmental and Safety Requirements, except for
any such liabilities which, individually or in the aggregate, would not
reasonably be expected to exceed $250,000.
(d) Neither this Agreement nor the transaction that is the subject of
this Agreement will result in any obligations for environmental disclosure,
investigation or cleanup, or notification to or consent of government
agencies or third parties, with respect to any of the properties or
facilities of the Parent or any of its Subsidiaries, pursuant to any
so-called so-called "property transfer" Environmental and Safety
Requirements.
(e) Neither the Parent nor any of its Subsidiaries has assumed,
undertaken or otherwise become subject to any liability, including without
limitation any obligation for corrective or remedial action, of any other
person or entity relating to Environmental and Safety Requirements, except
for any such liabilities which, individually or in the aggregate, would not
reasonably be expected to result in liabilities in excess of $250,000.
(f) No capital expenditures relating the facilities or operations of the
Parent or any of its Subsidiaries are anticipated to be required within
three years after the Closing Date in order to comply with current or future
Environmental and Safety Requirements, except for such expenditures that,
individually or in the aggregate, are not reasonably expected to exceed
$250,000.
For purposes of this Agreement, "Environmental and Safety Requirements" shall
mean all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations, and all
common law concerning occupational health and safety, pollution or protection of
the environment, including without limitation all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
SECTION 2.18 Operations of Sub. Sub is a direct, wholly-owned subsidiary
of Parent, was formed solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
SECTION 2.19 Financing. The Company has received copies of a commitment
letter dated January 18, 1999 from Bank of America National Trust and Savings
Association and Nationsbanc
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Montgomery Securities LLC (the "Financing Commitment Letter"), pursuant to which
the foregoing has committed, subject to the terms and conditions set forth
therein, to enter into one or more credit agreements providing for loans to
Parent and its subsidiaries of up to $ 700,000,000 (the "Financing"). The
aggregate commitments under the Financing are in an amount sufficient to pay the
cash portion of the Merger Consideration, and to pay related fees and expenses.
As of the date hereof, the Financing Commitment Letter relating to the Financing
has not been withdrawn and Parent does not know of any facts or circumstances
that may reasonably be expected to result in any of the conditions set forth in
the Financing Commitment Letter relating to the Financing not being satisfied.
SECTION 2.20 Brokers. Except as set forth on Schedule 2.20 of the
Disclosure Schedule, no broker, investment banker or other person is entitled to
any broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent.
SECTION 2.21 Required Vote of Shareholders. The affirmative vote of a
majority of the votes of the shareholders of the Sub is required to approve this
Agreement. The affirmative vote of a majority of the quorum of the Parent's
stockholders is required to approve the Share Issuance. No other vote of the
stockholders of Parent is required by law, the Charter or By-Laws of Parent or
otherwise in order for Parent to consummate the Merger and the transactions
contemplated hereby. The requisite votes for the approval of this Agreement and
for approval of the Share Issuance are, collectively, the "Parent Shareholders'
Approvals."
SECTION 2.22 Ownership of Shares. Neither Parent nor any of its
Subsidiaries (i) "Beneficially Owns" or is the "Beneficial Owner" of (as such
terms are defined in the Company's Rights Agreement (as herein after defined)),
or (ii) "owns," any Shares of Company Common Stock.
SECTION 2.23 State Takeover Statutes and Shareholder Rights Plan. Assuming
the accuracy of the Company's representations and warranties contained in
Section 3.20 (Ownership of Shares), as of the date hereof, no state takeover
statutes or supermajority Charter provisions are applicable to the Merger, this
Agreement and the transactions contemplated hereby.
SECTION 2.24 Investigations; Litigation.
(a) Except as described in Schedule 2.24, and other than reviews
pursuant to the HSR Act, there are, no pending investigations, reviews or
inquiries by any Governmental Entity (an "Investigation") with respect to
Parent or any Subsidiary or with respect to the activities of any officer,
director or employee of Parent, nor to the Knowledge of Parent is an
Investigation threatened, nor has any Governmental Entity indicated to
Parent or any executive officer of Parent an intention to conduct an
Investigation, other than Investigations which, if the resolution thereof
were adverse, would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as described in Schedule 2.24 hereto, (i) there are no
actions or proceedings pending or, to the Knowledge of Parent, threatened
against Parent or any Subsidiary before any court or before any
administrative agency or administrative officer or executive, whether
federal, state, local or foreign, which seek to enjoin the Merger or which
if adversely determined would, individually or in the aggregate, have a
Material Adverse Effect, (ii) there are no outstanding domestic or foreign
judgments, decrees or orders against Parent or any Subsidiary enjoining any
of them in respect of, or the effect of which is to prohibit, any business
practice or the acquisition of any property or the conduct of business in
any area that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect and (iii) there are no actions
pending, or to the Knowledge of Parent, threatened against the directors or
any director of Parent alleging a breach of such directors' or director's
fiduciary duties.
SECTION 2.25 Contracts and Commitments.
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Except as disclosed on Schedule 2.25 to the Disclosure Schedule:
(a) Parent is not nor is any Subsidiary, with respect to its business, a
party to any oral or written contract:
(i) that prohibits Parent or any of its Subsidiaries from freely
engaging or competing in its line of business anywhere in the world;
(ii) that is not on arms-length terms;
(iii) pursuant to which Parent or any of its Subsidiaries has
incurred or accrued losses;
(iv) that commits Parent or any of its Subsidiaries to purchase or
sell any properties or assets outside of the ordinary course of business
for consideration in excess of $100,000;
(v) that involves an unfulfilled obligation, individually or in the
aggregate, in excess of $100,000 and is not terminable by Parent or any
of its Subsidiaries upon less than 60 calendar days' notice for a cost of
not less than $100,000;
(b) Since December 31, 1997, none of Parent's or any of its
Subsidiaries' significant customers, suppliers, outside service providers or
sources of referral has indicated that it will stop or materially decrease
the rate of business done with or referred to either Parent or any such
Subsidiary.
(c) To the Knowledge of Parent, neither Parent nor any of its
Subsidiaries is obligated to (i) purchase any property or services at a
price greater than the prevailing market price, (ii) sell any property or
services at a price less than the prevailing market price, (iii) pay rentals
or royalties at a rate greater than the prevailing market price or (iv) act
as lessor or licensor at a rate less than the prevailing market price.
(d) The Company has been supplied with a true and correct copy of all
written contracts which are referred to on Schedule 2.25, together with all
amendments, exhibits, attachments, waivers or other changes thereto.
SECTION 2.26 Real Estate Leases. Schedule 2.26 hereto sets forth a list of
(a) all leases and subleases under which Parent and its Subsidiaries is lessor
or lessee of any real property together with all amendments, supplements,
nondisturbance agreements and other agreements pertaining thereto, (b) all
options held by Parent and its Subsidiaries or contractual obligations on the
part of Parent and its Subsidiaries to purchase or acquire any interest in real
property and (c) all options granted by Parent and its Subsidiaries or
contractual obligations on the part of Parent and its Subsidiaries to sell or
dispose of any interest in real property. To Parent's knowledge, there is not
any lien, claim, option, charge, security interest, limitation, encumbrance or
restriction of any kind (any of the foregoing being a "Lien") on any of the
leasehold interests set forth on Schedule 2.26 hereto except for (a) Liens
reflected in the balance sheet included in Parent's SEC Documents, (b) Liens of
record consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of real property which do not
materially detract from the value of, or a materially impair the use of, such
property by Parent and its Subsidiaries in the operation of their respective
businesses, (c) Liens for current taxes, assessments or governmental charges or
levies on property not yet delinquent or being contested in good faith and for
which appropriate reserves have been established in accordance with United
States generally acceptable accounting principles (which contested levies are
described on Schedule 2.26), and (d) Liens imposed by law, such as
materialman's, mechanic's, carrier's, workers' and repairmen's Liens securing
obligations not yet delinquent or being contested in good faith and for which
appropriate reserves have been established in accordance with United States
generally acceptable accounting principles or securing obligations not being
paid in the ordinary course of business in accordance with customary and
commercially reasonable practice (collectively, "Permitted Liens").
SECTION 2.27 Real Property. Schedule 2.27 hereto lists all real property
owned by Parent and its Subsidiaries. Each of Parent and its Subsidiaries has
good and marketable title in fee simple to its
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respective real properties set forth on Schedule 2.27 hereto, in each case, to
Parent's knowledge, free and clear of all Liens, except for Permitted Liens.
SECTION 2.28 Opinion of Financial Advisor. Parent has received the opinion
of Robert W. Baird & Co. Incorporated, dated January 18, 1999, to the effect
that, as of such date, the Merger Consideration to be paid in the Merger by
Parent is fair to Parent from a financial point of view, a copy of which opinion
will be delivered to the Company promptly after the execution and delivery of
this Agreement.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 3.1 Organization, Standing and Power. The Company is a corporation
duly organized and validly existing under the laws of the State of Indiana and
has the requisite corporate power and authority to carry on its business as now
being conducted. Each Subsidiary of the Company is duly organized, validly
existing and in good standing (where applicable) under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
SECTION 3.2 Capital Structure. As of the Effective Time, the authorized
capital stock of the Company will consist of 20,000,000 shares of Company Common
Stock and 1,000,000 shares of Preferred Stock (the "Company Preferred Stock").
At the close of business on January 18, 1999, (i) 12,179,031 shares of Company
Common Stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable and free of preemptive rights; (ii) 473,550 shares
of Company Common Stock were reserved for future issuance pursuant to the
Company's 1994 Stock Compensation Plan, (iii) 500,000 shares of Company Common
Stock were reserved for future issuance pursuant to the Company's 1997 Long Term
Incentive Plan, (iv) 251,659 shares of Company Common Stock were reserved for
issuance under the Company's Employee Stock Purchase Plan; 381,000 shares of
Company Common Stock were reserved for issuance upon exercise of the Company
Warrants granted in connection with the acquisition of Anderson Industries, Inc.
by the Company and (vi) no shares of the Company Preferred Stock were issued or
outstanding. As of the date of this Agreement, except for (a) this Agreement,
(b) stock options covering 321,900 shares of Company Common Stock (collectively,
the "Company Stock Options"), (c) 202,500 shares subject to issuance pursuant to
grants under the LTIP, (d) shares reserved for issuance upon exercise of the
Company Warrants and (e) the Company Rights Plan (as hereinafter defined), there
are no options, warrants, calls, rights or agreements to which the Company or
any of its Subsidiaries is a party or by which any of them is bound obligating
Company or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of the Company or
any of its Subsidiaries or obligating the Company or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, right or agreement.
Each outstanding share of capital stock of each Subsidiary of the Company is
duly authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the Company SEC Documents (as hereinafter defined), each such share
is owned by the Company or another Subsidiary of the Company, free and clear of
all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever.
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SECTION 3.3 Authority. The Board of Directors of the Company has on or
prior to the date of this Agreement (a) duly approved and adopted this Agreement
in accordance with Indiana law and declared it to be in the best interests of
the Company, (b) resolved to recommend the approval of this Agreement by the
Company's shareholders and (c) directed that this Agreement be submitted to the
Company's shareholders for approval. The Company has all requisite corporate
power and authority, and no other corporate proceeding on the part of the
Company is necessary, to enter into this Agreement and, subject to approval by
the shareholders of the Company of this Agreement, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to (x) approval of this Agreement by the
shareholders of the Company and (y) the filing of appropriate Merger documents
as required by Indiana law. This Agreement has been duly executed and delivered
by the Company and (assuming the valid authorization, execution and delivery of
this Agreement by Parent and Sub) constitutes the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws relating to creditors rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to judicial discretion.
SECTION 3.4 Consents and Approvals: No Violation. Assuming that all
consents, approvals, authorizations and other actions described in this Section
3.4 have been obtained and all filings and obligations described in this Section
3.4 have been made, except as set forth on Schedule 3.4 of the Disclosure
Schedule, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any violation of or default (with or
without notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries under, any provision of (i) the Articles of
Incorporation or Bylaws of the Company, (ii) any provision of the comparable
charter or organization documents of any of the Company's Subsidiaries, (iii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
the Company or any of its Subsidiaries (iv) any shareholder agreement, or (v)
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (iii), (iv) or (v), any
such violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company, or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or is necessary for the
consummation of the Merger and the other transactions contemplated by this
Agreement, except for (i) in connection, or in compliance, with the provisions
of the HSR Act, the Exchange Act and the European Union Laws, (ii) the filing of
the Articles of Merger with the Secretary and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) such filings and consents as may
be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Merger or by the transactions contemplated by this Agreement, (iv) such filings
and consents as may be required under any state or foreign laws pertaining to
debt collection, the issuance of payment instruments or money transmission, (v)
applicable requirements, if any, of Blue Sky Laws and the New York Stock
Exchange (the "NYSE"), and (vi) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on the Company or prevent the consummation of any of the transactions
contemplated hereby.
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SECTION 3.5 SEC Documents and Other Reports. The Company has, since
December 28, 1996, filed all documents and reports which it is required to file
with the SEC including, without limitation, an Annual Report on Form 10-K for
the fiscal years ended December 28, 1996 and December 27, 1997 and a Quarterly
Report on Form 10-Q for the quarter ended September 26, 1998 (the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed
(and as amended through the date hereof), none of the Company SEC Documents
contained any untrue statement of a material fact or omitted 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
consolidated financial statements (including, in each case, any notes thereto)
of the Company included in the Company SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles (except, in the case of
the unaudited statements, as permitted by Form 10-Q) applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to any adjustments described therein and to adjustments
for inventories, receivables and other normal year-end audit adjustments
consistent with past practices). Except as disclosed in the Company SEC
Documents or as required by generally accepted accounting principles, the
Company has not, since December 27, 1997, made any change in the accounting
principles, practices, methods or policies applied in the preparation of
financial statements.
SECTION 3.6 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.6 of the Disclosure Schedule, since December 27, 1997, (A) the
Company and its Subsidiaries have not entered into any material oral or written
agreement or other transaction, that is not in the ordinary course of business
or that would result in a Material Adverse Effect on the Company, excluding any
changes and effects resulting from changes in economic, regulatory or political
conditions or changes in conditions generally applicable to the industries in
which the Company and Subsidiaries of the Company are involved and except for
any such changes or effects resulting from this Agreement, the transactions
contemplated hereby or the announcement thereof; (B) the Company and its
Subsidiaries have not sustained any loss or interference with their business or
properties from fire, flood, windstorm, accident or other calamity (whether or
not covered by insurance) that has had a Material Adverse Effect on the Company;
(C) other than any indebtedness incurred by the Company after the date hereof as
permitted by Section 4. l(b)(v), there has been no material change in the
consolidated indebtedness of the Company and its Subsidiaries, and no dividend
or distribution of any kind declared, paid or made by the Company on any class
of its stock; (D) there has been no event causing, or reasonably likely to
cause, a Material Adverse Effect on the Company, excluding any changes and
effects resulting from changes in economic, regulatory or political conditions
or changes in conditions generally applicable to the industries in which the
Company and Subsidiaries of the Company are involved and except for any such
changes or effects resulting from this Agreement, the transactions contemplated
hereby or the announcement thereof; (E) except as permitted by this Agreement,
there has been no direct or indirect redemption, purchase or other acquisition
of any shares of the Company's capital stock, or any declaration, setting aside
or payment of any dividend or other distribution by the Company in respect of
the Company's capital stock, or any issuance of any shares of capital stock of
the Company, or any granting to any person of any option to purchase or other
right to acquire shares of capital stock of the Company or any stock split or
other change in the Company's capitalization; (F) neither the Company nor any
Subsidiary has entered into or agreed to enter into any new or amended contract
with any labor unions representing employees of the Company or any subsidiary;
(G) neither the Company nor any Subsidiary has entered into or agreed to enter
into any new or amended contract with any of the officers thereof or otherwise
increased the compensation payable to the officers or
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directors of any such entity; (H) except as disclosed in the Company SEC
Documents, neither the Company nor any Subsidiary has entered into or agreed to
enter into any amendment of any material term of any outstanding security of the
Company or any Subsidiary; and (I) except as disclosed in the Company SEC
Documents, neither the Company nor any Subsidiary has entered into or agreed to
enter into (i) any severance grant or termination pay to any director, officer
or employee of the Company or any Subsidiary, (ii) any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company or any
Subsidiary, (iii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements or (iv) increase in
compensation, bonus or other benefits payable to directors, officers or
employees of the Company or any Subsidiary, other than in the ordinary course of
business consistent with past practice.
SECTION 3.7 Registration Statement and Joint Proxy Statement. None of the
information to be supplied by the Company for inclusion or incorporation by
reference in the Registration Statement or the Joint Proxy Statement will (i) in
the case of the Registration Statement, at the time it is filed, when it is
supplemented or amended and when it becomes effective, 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 not
misleading or (ii) in the case of the Joint Proxy Statement, at the time of the
mailing of the Joint Proxy Statement, the time of the Company Shareholder
Meeting, and 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 are made, not misleading. If at any time prior to the Effective
Time any event with respect to the Company, its officers and directors or any of
its Subsidiaries shall occur which is required to be described in the Joint
Proxy Statement or the Registration Statement, such event shall be so described,
and an appropriate amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the shareholders of the Company. The
Registration Statement will comply (with respect to the Company) as to form in
all material respects with the provisions of the Securities Act. At the time of
the filing of any disclosure document filed after the date hereof pursuant to
the Securities Act, the Exchange Act or any state securities law (each a
"Company Disclosure Document") other than the Joint Proxy Statement, at the time
of any distribution thereof and throughout the remaining pendency of the Merger
each such Company Disclosure Document (as supplemented or amended) will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 3.8 Permits and Compliance. Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity which, to the Knowledge of the
Company (as hereinafter defined), are necessary for the Company or any of its
Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits") except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and, as of the date of
this Agreement, no suspension or cancellation of any of the Company Permits is
pending or, to the Knowledge of the Company threatened, except where the
suspension or cancellation of any of the Company Permits would not, individually
or in the aggregate, have a Material Adverse Effect on Company. Neither the
Company nor any of its Subsidiaries is in violation of (A) its Articles of
Incorporation, Bylaws or other organizational document, (B) any applicable law,
ordinance, administrative or governmental rule or regulation or (C) any order,
decree or judgment of any Governmental Entity having jurisdiction over the
Company or any of its Subsidiaries, except, in the case of clauses (B) and (C),
for any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement, as of the date hereof there
is no contract or agreement that is material to the business, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole. Except as set forth in the Company SEC Documents and Schedule 3.8 of
the Disclosure Schedule, prior to the date of this Agreement, no event of
default or event that, but for the
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giving of notice or the lapse of time or both, would constitute an event of
default exists or, upon the consummation by the Company of the transactions
contemplated by this Agreement, will exist under any indenture, mortgage, loan
agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease,
contractual license or other agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any such Subsidiary is
bound or to which any of the properties, assets or operations of the Company or
any such Subsidiary is subject, other than any defaults that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. Set
forth on Schedule 3.8 to this Agreement is a description of any material changes
to the amount and terms of the indebtedness of the Company and its Subsidiaries
as described in the Company's Annual Report on Form 10-K. "Knowledge of the
Company" means the actual knowledge of any of the Chief Executive Officer and
Chief Financial Officer of the Company.
SECTION 3.9 Tax Matters. Except as set forth on Schedule 3.9:
(a) Each of the Company and its Subsidiaries has filed all Tax Returns
required to have been filed (or extensions have been duly obtained) and has
paid all Taxes required to have been paid by it, except where failure to
file such Tax Returns or pay such Taxes would not, in the aggregate, have a
Material Adverse Effect on the Company. All such Tax Returns are correct and
complete in all material respects.
(b) Each of the Company and its Subsidiaries has paid all Taxes which
have become due and payable, except where the failure to pay such Taxes
would not have a Material Adverse Effect. Each of the Company and its
Subsidiaries has made adequate provision in reserves established in its
financial statements and accounts for all Taxes which have accrued but are
not yet due and payable.
(c) There is no action, suit, taxing authority proceeding or audit now
in progress or pending with respect to the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries has waived or
extended, or requested any waiver of extension of, any limitation period for
audit or assessment of any Tax liability.
(d) No deficiency for any amount of Tax has been asserted or assessed
against the Company or any of its Subsidiaries which either (i) has not been
paid, settled or adequately provided for through reserves established in the
financial statements and accounts or (ii) would have a Material Adverse
Effect if required to by paid.
(e) No election under Section 341(f) Code has been made to treat the
Company or any of its Subsidiaries as a consenting corporation (as defined
in Section 341(f) of the Code). Neither the Company nor any of its
Subsidiaries is a U.S. real property holding corporation within the meaning
of Section 897(c)(2) of the Code.
(f) Neither the Company nor any of its Subsidiaries is a party to any
agreement, contract, arrangement, or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of Section 280G of the Code (or any similar
provision of state, local or foreign law) as a result of the transactions
contemplated by this Agreement.
SECTION 3.10 Actions and Proceedings. Except as set forth on the Company
SEC Documents, there are no outstanding orders, judgments, injunctions, awards
or decrees of any Governmental Entity against or involving the Company or any of
its Subsidiaries, that, individually or in the aggregate, would have a Material
Adverse Effect on the Company. Except as set forth on Schedule 3.10 of the
Disclosure Schedule, as of the date of this Agreement, there are no actions,
suits or claims or legal, administrative or arbitrative proceedings or
investigations pending or, to the Knowledge of the Company, threatened against
or involving the Company or any of its Subsidiaries or any of its properties,
assets or business or any Company Plan that, individually or in the aggregate,
would have a Material Adverse Effect on the Company. As of the date hereof there
are no actions, suits, labor disputes or other litigation, legal or
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administrative proceedings or governmental investigations pending or, to the
Knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of its properties, assets or business relating to the
transactions contemplated by this Agreement.
SECTION 3.11 Certain Agreements. As of the date of this Agreement, except
as set forth on Schedule 3.11 of the Disclosure Schedule, neither the Company
nor any of its Subsidiaries is a party to any oral or written agreement or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. No holder of any option to
purchase shares of Company Common Stock, or shares of Company Common Stock
granted in connection with the performance of services for the Company or its
Subsidiaries, is or will be entitled to receive cash from the Company or any
Subsidiary in lieu of or in exchange for such option or shares as a result of
the transactions contemplated by this Agreement. Neither the Company nor any
Subsidiary is a party to any termination benefits agreement or severance
agreement or employment agreement one trigger of which would be the consummation
of the transactions contemplated by this Agreement, except as set forth on
Schedule 3.11 of the Disclosure Schedule.
SECTION 3.12 ERISA. Each Company Plan complies in all material respects
with the Code and all other applicable statutes and governmental rules and
regulations, including but not limited to COBRA, and (i) no "reportable event"
(within the meaning of Section 4043 of ERISA) has occurred with respect to any
Company Plan, (ii) neither the Company nor any of its ERISA Affiliates has
withdrawn from any Company Multi-employer Plan or instituted, or is currently
considering taking, any action to do so, (iii) no action has been taken, or is
currently being considered, to terminate any Company Plan subject to Title IV of
ERISA, and (iv) the Company and its ERISA Affiliates have complied in all
material respects with the continued medical coverage requirements of COBRA. No
Company Plan, nor any trust created thereunder, has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA, whether or not waived.
With respect to the Company Plans, no event has occurred in connection with
which Company or any ERISA Affiliate would be subject to any liability under the
terms of such Company Plans, ERISA, the Code or any other applicable law which
would have a Material Adverse Effect on Company. All Company Plans that are
intended to be qualified under Section 401(a) of the Code have been determined
by the Internal Revenue Service to be so qualified, and to the Knowledge of
Company, there is no reason why any Company Plan is not so qualified in
operation. Except as set forth on Schedule 3.12, neither Company nor any of its
ERISA Affiliates has been notified by any Company Multi-employer Plan that such
Company Multi-employer Plan is currently in reorganization or insolvency under
and within the meaning of Section 4241 or 4245 of ERISA or that such Company
Multi-employer Plan intends to terminate or has been terminated under Section
4041A of ERISA. Neither Company nor any of its ERISA Affiliates has any
liability or obligation under any welfare plan to provide benefits after
termination of employment to any employee or dependent other than as required by
ERISA or as disclosed in the Company SEC Documents. Except as set forth on
Schedule 3.12, none of the Company Plans or any other agreement, commitment or
arrangement obligates the Company to pay any separation, severance, termination
or similar benefit as a result of the transaction contemplated by this Agreement
or solely as a result of a change in control or ownership within the meaning of
Section 280G of the Code. As used herein, (i) "Company Plan" means a "pension
plan" (as defined in Section 3(2) of ERISA (other than a Company Multi-employer
Plan)) or a "welfare plan" (as defined in Section 3(1) of ERISA) established or
maintained by Company or any of its ERISA Affiliates or as to which Company or
any of its ERISA Affiliates has contributed or otherwise may have any liability
and (ii) "Company Multi-employer Plan" means a "Multi-employer plan" (as defined
in Section 4001(a)(3) of ERISA) to which Company or any of its ERISA Affiliates
is or has been obligated to contribute or otherwise may have any liability. No
action has been taken by the Company to accelerate the vesting of or accural of
any benefits or obligations under the
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LTIP and, as of the Effective Time, no participant shall be vested with any
benefit under the LTIP and the Company shall have no obligation to any
participant under the LTIP.
SECTION 3.13 Compliance with Certain Laws. To the Knowledge of the
Company, the properties, assets and operations of the Company and its
Subsidiaries are in compliance in all material respects with all applicable
Worker Safety Laws, except for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
SECTION 3.14 Liabilities. Except as fully reflected or reserved against in
the financial statements included in the Company SEC Documents or incurred after
the date of such financial statements in the ordinary course of business
consistent with past practices, or expressly disclosed in the footnotes thereto,
the Company and its Subsidiaries have no liabilities (including, without
limitation, Tax liabilities and workmen's compensation liabilities), absolute or
contingent, other than liabilities that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company, and, to the Knowledge of the
Company, have no liabilities (including, without limitation, Tax liabilities)
that were not incurred in the ordinary course of business other than liabilities
that, individually or in the aggregate, would not have a Material Adverse Effect
on the Company.
SECTION 3.15 Labor Matters. Except as set forth on Schedule 3.15 of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement or labor contract. To the Knowledge of
the Company, neither the Company nor any of its Subsidiaries has engaged in any
unfair labor practice with respect to any persons employed by or otherwise
performing services primarily for the Company or any of its Subsidiaries (the
"Company Business Personnel"), and there is no unfair labor practice complaint
or grievance against the Company or any of its Subsidiaries by the National
Labor Relations Board or any comparable state agency pending or, to the
Knowledge of the Company, threatened in writing with respect to the Company
Business Personnel, except where such unfair labor practice, complaint or
grievance would not have a Material Adverse Effect on the Company. There is no
labor strike, dispute, slowdown or stoppage pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
which may interfere with the respective business activities of the Company or
any of its Subsidiaries, except where such dispute, strike or work stoppage
would not have a Material Adverse Effect on the Company.
SECTION 3.16 Intellectual Property. The Company and its Subsidiaries own
or have a valid license to use all Intellectual Property Rights that are used in
connection with the business of the Company and its Subsidiaries, taken as a
whole, except where the failure to have such Intellectual Property Rights would
not have a Material Adverse Effect on the Company. To the Knowledge of the
Company, neither the Company nor any of its Subsidiaries has infringed any
Intellectual Property Rights of any third party other than any infringements
that, individually or in the aggregate, would not have a Material Adverse Effect
on the Company.
SECTION 3.17 Environmental Matters.
Except as disclosed on Schedule 3.17 of the Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has complied with, and is
in compliance with, all Environmental and Safety Requirements (including all
permits, licenses and other authorizations required thereunder), except for
any such noncompliance which, individually or in the aggregate, would not
reasonably be expected to result in liabilities in excess of $250,000.
(b) Neither the Company nor any of its Subsidiaries has received any
notice, report or other information regarding any actual or alleged
violation of Environmental and Safety Requirements, or any actual or
potential liability, including any investigatory, remedial or corrective
obligation, relating to any of them or its facilities arising under
Environmental and Safety Requirements, except for any notice, report or
information, the subject of which, would not reasonably be expected to
result in liabilities in excess of $250,000.
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(c) None of the Company or any of its Subsidiaries, or their respective
predecessors has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including
without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by
any such substance) in a manner that has given or would reasonably be
expected to give rise to liabilities pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act, the Solid Waste
Disposal Act, or any other Environmental and Safety Requirements, except for
any such liabilities which, individually or in the aggregate, would not
reasonably be expected to exceed $250,000.
(d) Neither this Agreement nor the transaction that is the subject of
this Agreement will result in any obligations for environmental disclosure,
investigation or cleanup, or notification to or consent of government
agencies or third parties, with respect to any of the properties or
facilities of the Company or any of its Subsidiaries, pursuant to any
so-called so-called "property transfer" Environmental and Safety
Requirements.
(e) Neither the Company nor any of its Subsidiaries has assumed,
undertaken or otherwise become subject to any liability, including without
limitation any obligation for corrective or remedial action, of any other
person or entity relating to Environmental and Safety Requirements, except
for any such liabilities which, individually or in the aggregate, would not
reasonably be expected to result in liabilities in excess of $250,000.
(f) The Company has furnished to Parent all material environmental, and
all material occupational health and safety, audits, reports and other
documents relating to the Parent, its Subsidiaries, and any of their
properties or facilities, that are in the possession, custody, or control of
the Company or any of its Subsidiaries.
(g) No capital expenditures relating the facilities or operations of the
Company or any of its Subsidiaries are anticipated to be required within
three years after the Closing Date in order to comply with current or future
Environmental and Safety Requirements, except for such expenditures that,
individually or in the aggregate, are not reasonably expected to exceed
$250,000.
SECTION 3.18 Required Vote of Company Shareholders. The affirmative vote
of the holders of not less than a majority of the outstanding shares of Company
Common Stock is required to approve the transactions contemplated by this
Agreement. No other vote of the shareholders of the Company is required by law,
the Articles of Incorporation or By-laws of the Company or otherwise in order
for the Company to consummate the Merger and the transactions contemplated
hereby.
SECTION 3.19 Brokers. Except as set forth on Schedule 3.19 of the
Disclosure Schedule, no broker, investment banker or other person is entitled to
any broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The fees and commissions relating to the disclosures
set forth on Schedule 3.19, together with the legal and accounting fees and
expenses arising in connection with the transactions contemplated hereby, shall
not exceed $4.5 million.
SECTION 3.20 State Takeover Statutes and Shareholder Rights Plan.
(a) Assuming the accuracy of Parent's representations and warranties
contained in Section 2.22 (Ownership of Shares), as of the date hereof, no
state takeover statute including, without limitation, any business
combination act or control share acquisition act, are applicable to the
Merger, this Agreement or the transactions contemplated hereby.
(b) The Company has taken all necessary action so that, as of the
Effective Time, (i) the Company will have no additional obligations and
Parent will have no obligations under the rights to purchase Company Common
Stock (the "Rights") issued pursuant to the Rights Agreement between the
Company and Chase Mellon Shareholder Services LLC Bank, dated as of December
21, 1995 (the
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"Rights Agreement") (the Rights and Rights Agreement collectively are the
"Company Rights Plan") or the Rights Agreement and (ii) the holders of the
Rights will have no additional rights under the Rights or the Rights
Agreement, in each case as a result of the transactions contemplated by this
Agreement. Execution and delivery of this Agreement does not, and compliance
with the provisions hereof will not, cause the holders of the Rights to have
any rights under the Rights or the Rights Agreement.
SECTION 3.21 Investigations; Litigation.
(a) Except as described in Schedule 3.21, and other than reviews
pursuant to the HSR Act, there are, no pending Investigations with respect
to the Company or any Subsidiary or with respect to the activities of any
officer, director or employee of the Company, nor to the Knowledge of the
Company is an Investigation threatened, nor has any Governmental Entity
indicated to the Company or any executive officer of the Company an
intention to conduct an Investigation, other than Investigations which, if
the resolution thereof were adverse, would not, individually or in the
aggregate, a Material Adverse Effect.
(b) Except as described in Schedule 3.21 hereto, (i) there are no
actions or proceedings pending or, to the Knowledge of the Company,
threatened against the Company or any Subsidiary before any court or before
any administrative agency or administrative officer or executive, whether
federal, state, local or foreign, which seek to enjoin the Merger or which
if adversely determined would, individually or in the aggregate, have a
Material Adverse Effect, (ii) there are no outstanding domestic or foreign
judgments, decrees or orders against the Company or any Subsidiary enjoining
any of them in respect of, or the effect of which is to prohibit, any
business practice or the acquisition of any property or the conduct of
business in any area that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect and (iii) there are
no actions pending, or to the Knowledge of the Company, threatened against
the directors or any director of the Company alleging a breach of such
directors' or director's fiduciary duties.
SECTION 3.22 Contracts and Commitments.
Except as disclosed on Schedule 3.22 of the Disclosure Schedule:
(a) The Company is not nor is any Subsidiary, with respect to its
business, a party to any oral or written contract:
(i) that prohibits the Company or any of its Subsidiaries from
freely engaging or competing in its line of business anywhere in the
world;
(ii) that is not on arms-length terms;
(iii) pursuant to which the Company or any of its Subsidiaries has
incurred or accrued losses;
(iv) that by its terms may be terminated upon a change in control of
the Company or any of its Subsidiaries;
(v) that commits the Company or any of its Subsidiaries to purchase
or sell any properties or assets outside of the ordinary course of
business for consideration in excess of $100,000;
(vi) that involves an unfulfilled obligation, individually or in the
aggregate, in excess of $100,000 and is not terminable by the Company or
any of its Subsidiaries upon less than 60 calendar days' notice for a
cost of not less than $100,000;
(b) Since December 31, 1997, none of the Company's or any of its
Subsidiaries' significant customers, suppliers, outside service providers or
sources of referral has indicated that it will stop or materially decrease
the rate of business done with or referred to either the Company or any such
Subsidiary.
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(c) To the Knowledge of the Company, neither the Company nor any of its
Subsidiaries is obligated to (i) purchase any property or services at a
price greater than the prevailing market price, (ii) sell any property or
services at a price less than the prevailing market price, (iii) pay rentals
or royalties at a rate greater than the prevailing market price or (iv) act
as lessor or licensor at a rate less than the prevailing market price.
(d) Parent has been supplied with a true and correct copy of all written
contracts which are referred to on Schedule 3.22, together with all
amendments, exhibits, attachments, waivers or other changes thereto.
SECTION 3.23 Real Estate Leases. Schedule 3.23 hereto sets forth a list of
(a) all leases and subleases under which the Company and its Subsidiaries is
lessor or lessee of any real property together with all amendments, supplements,
nondisturbance agreements and other agreements pertaining thereto, (b) all
options held by the Company and its Subsidiaries or contractual obligations on
the part of the Company and its Subsidiaries to purchase or acquire any interest
in real property and (c) all options granted by the Company and its Subsidiaries
or contractual obligations on the part of the Company and its Subsidiaries to
sell or dispose of any interest in real property. To the Company's knowledge,
there is not any lien, claim, option, charge, security interest, limitation,
encumbrance or restriction of any kind (any of the foregoing being a "Lien") on
any of the leasehold interests set forth on Schedule 3.23 hereto except for (a)
Liens reflected in the balance sheet included in the Company's SEC Documents,
(b) Liens of record consisting of zoning or planning restrictions, easements,
permits and other restrictions or limitations on the use of real property which
do not materially detract from the value of, or a materially impair the use of,
such property by the Company and its Subsidiaries in the operation of their
respective businesses, (c) Liens for current taxes, assessments or governmental
charges or levies on property not yet delinquent or being contested in good
faith and for which appropriate reserves have been established in accordance
with United States generally acceptable accounting principles (which contested
levies are described on Schedule 3.23), and (d) Liens imposed by law, such as
materialman's, mechanic's, carrier's, workers' and repairmen's Liens securing
obligations not yet delinquent or being contested in good faith and for which
appropriate reserves have been established in accordance with United States
generally acceptable accounting principles or securing obligations not being
paid in the ordinary course of business in accordance with customary and
commercially reasonable practice (collectively, "Permitted Liens").
SECTION 3.24 Real Property. Schedule 3.24 hereto lists all real property
owned by the Company and its Subsidiaries. Each of the Company and its
Subsidiaries has good and marketable title in fee simple to its respective real
properties set forth on Schedule 3.24 hereto, in each case, to the Company's
knowledge, free and clear of all Liens, except for Permitted Liens.
SECTION 3.25 Opinion of Financial Advisor. The Company has received the
opinion of Morgan Stanley & Co. Incorporated, dated the date hereof, to the
effect that, as of such date, the Merger Consideration to be received in the
Merger by the Company's shareholders is fair to the Company's shareholders from
a financial point of view, a copy of which opinion will be delivered to Parent
promptly after the execution of this Agreement.
ARTICLE 4.
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 CONDUCT OF BUSINESS PENDING THE MERGER.
(a) Actions by Parent. Except in connection with the transactions
described on Schedule 4.1 or as expressly permitted by clauses (i) through
(x) of this Section 4.1(a), during the period from the date of this
Agreement through the Effective Time, Parent shall, and shall cause each of
its Subsidiaries to, in all material respects, carry on its business in the
ordinary course of its business as currently conducted and, to the extent
consistent therewith, use reasonable good faith efforts to preserve intact
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its current business organizations, keep available the services of its
current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that its goodwill and ongoing business shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, and except in
connection with the transactions described on Schedule 4.1 or as otherwise
expressly contemplated by or necessary to effect this Agreement, Parent
shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of the Company:
(i) (w) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any of
its capital stock, or otherwise make any payments to its shareholders in
their capacity as such (other than dividends and other distributions by
Subsidiaries), (x) other than in the case of any Subsidiary, split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (y) purchase, redeem or
otherwise acquire any shares of capital stock of Parent or any other
securities thereof or those of any Subsidiary or any other securities
thereof or any rights, warrants or options to acquire any such shares or
other securities;
(ii) issue, deliver, sell pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire any such shares, voting securities, equity equivalent
or convertible securities, other than (A) the issuance of stock options
and shares of Parent Common Stock to employees, directors or consultants
of Parent or any of its Subsidiaries in the ordinary course of business
consistent with past practice, (B) the issuance by any wholly-owned
Subsidiary of Parent of its capital stock to Parent or another
wholly-owned Subsidiary of Parent, (C) the issuance of no more than
2,200,000 shares of Parent Common Stock in connection with the Parent's
Stock Plans, the issuance of shares of Parent Common Stock upon
conversion of Parent Class B Common Stock and shares of Parent Common
Stock upon the conversion of the 7 1/2% Trust Preferred Securities into
the 7 1/2% Convertible Subordinated Debentures and the subsequent
conversion of the 7 1/2% Convertible Subordinated Debentures into Parent
Common Stock;
(iii) amend its Charter or Bylaws;
(iv) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Parent;
(v) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person in excess of $500,000,000, other
than (A) in the ordinary course of business consistent with past
practice, (B) indebtedness, loans, advances, capital contributions and
investments between Company and any of its wholly-owned Subsidiaries or
between any of such wholly-owned Subsidiaries (C) in connection with the
consummation of the transactions contemplated hereby, and (D) as
necessary in connection with any acquisition permitted in Section
4.1(a)(vi) hereof;
(vi) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of or equity in, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, unless (i) the entering
into a definitive agreement relating to or the consummation of such
acquisition, merger, consolidation or purchase would not (A) impose any
material delay in the obtaining of, or significantly increase the risk of
not obtaining, any authorizations, consents, orders, declarations or
approvals of any Governmental Entity necessary to consummate the Merger
or the expiration or termination of any applicable waiting period, (B)
significantly increase the risk of any Governmental Entity entering an
order prohibiting the consummation of the Merger or (C) significantly
increase the risk of not being able to remove any such order on appeal or
otherwise, and (ii) in the case of any acquisitions, mergers,
consolidations or purchases, the asset purchase price or equity purchase
price for which
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Parent is responsible does not exceed $100 million in the aggregate and
which does not materially change the ratio of debt to total
capitalization of Parent;
(vii) knowingly violate or knowingly fail to perform any material
obligation or duty imposed upon it or any Subsidiary by any applicable
material federal, state or local law, rule, regulation, guideline or
ordinance;
(viii) take any action, other than reasonable and usual actions in the
ordinary course of business consistent with past practice, with respect
to accounting policies or procedures (other than actions required to be
taken by generally accepted accounting principles);
(ix) take any action or knowingly omit to take any action which
would cause any of its representations or warranties contained in this
Agreement to be untrue in any material respect or result in a material
breach of any covenant made by it in this Agreement; or
(x) authorize, recommend or announce an intention to do any of the
foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(b) Actions by the Company. Except as expressly permitted by clauses (i)
through (xiv) of this Section 4.l(b), during the period from the date of
this Agreement through the Effective Time, the Company shall, and shall
cause each of its Subsidiaries to, in all material respects, carry on its
business in, the ordinary course of its business as currently conducted and,
to the extent consistent therewith, use reasonable good faith efforts to
preserve intact its current business organizations, keep available the
services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time. Without limiting the generality of the
foregoing, and except as otherwise expressly contemplated by or necessary to
effect this Agreement, the Company shall not, and shall not permit any of
its Subsidiaries to, without the prior written consent of Parent:
(i) (w) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any of
its capital stock, or otherwise make any payments to its shareholders in
their capacity as such; provided, however, that if the transactions
contemplated by this Agreement have not closed by May 28, 1999, the
Company may declare a dividend of $0.25 per share in June, payable in
July, and may thereafter resume its regular quarterly dividend, (x) other
than in the case of any Subsidiary, split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (y) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire any such shares, voting securities, equity equivalent
or convertible securities, except issuances of Company Common Stock (A)
pursuant to the exercise of a Company Stock Option granted prior to the
date hereof, (B) pursuant to the Company Warrant, and (C) in accordance
with Schedule 3.6; provided that no additional options shall be granted
after the date hereof;
(iii) amend its Articles of Incorporation or Bylaws;
(iv) sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any of its assets, other than transactions that are
in the ordinary course of business consistent with past practice and not
material to the Company and its Subsidiaries taken as a whole;
(v) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other
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than (A) in the ordinary course of business consistent with past
practice, and (B) indebtedness, loans, advances, capital contributions
and investments between Company and any of its wholly-owned Subsidiaries
or between any of such wholly-owned Subsidiaries;
(vi) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of or equity in, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets outside of the ordinary
course of business;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or
ownership of the Company or any Subsidiary;
(viii) knowingly violate or knowingly fail to perform any material
obligation or duty imposed upon it or any Subsidiary by any applicable
material federal, state or local law, rule, regulation, guideline or
ordinance;
(ix) enter into or adopt, or amend any existing, severance plan,
agreement or arrangement or enter into or amend any Company Plan or
employment or consulting agreement, except one that can be terminated on
30-days' notice without cost, the payment of any penalty, or termination
fee, other than as required by law;
(x) increase the compensation payable or to become payable to its
officers or employees, except for increases in the ordinary course of
business consistent with past practice in salaries or wages of employees
of the Company or any of its Subsidiaries who are not officers of the
Company or any of its Subsidiaries, or, except pursuant to existing plans
or policies, grant any severance or termination pay to, or enter into any
employment or severance agreement with, any employee of the Company or
any of its Subsidiaries, or establish, adopt, enter into, or, except as
may be required to comply with applicable law, amend or take action to
enhance or accelerate any rights or benefits under, any labor, collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(xi) take any action, other than reasonable and usual actions in the
ordinary course of business consistent with past practice, with respect
to accounting policies or procedures (other than actions required to be
taken by generally accepted accounting principles);
(xii) take any action or knowingly omit to take any action which
would cause any of its representations or warranties contained in this
Agreement to be untrue in any material respect or result in a material
breach of any covenant made by it in this Agreement;
(xiii) make any Tax election or settle or compromise any material
federal, state, local or foreign income Tax liability; or
(xiv) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
SECTION 4.2 No Solicitation. From and after the date hereof, neither
Parent nor the Company will, and each will use its best efforts to cause any of
its officers, directors, employees, attorneys, financial advisors, agents or
other representatives and those of any of its Subsidiaries not to, directly or
indirectly, (a) invite, solicit, initiate or knowingly encourage (including by
way of furnishing non-public information or assistance) any proposal or offer
from any person that constitutes, or may reasonably be expected to lead to, a
Takeover Proposal (as hereinafter defined), or (b) engage in or continue
discussions or negotiations relating to a Takeover Proposal; provided, however,
that prior to the receipt of approval by their respective shareholders, the
Company and the Parent may engage in discussions or negotiations with, or
furnish information concerning itself and its Subsidiaries, business, properties
or assets to, any third party which
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makes an unsolicited, bona fide written Takeover Proposal (as hereinafter
defined) if the Board of Directors of the Company or the Parent, as applicable,
(i) concludes in good faith on the basis of the written advice of its respective
outside counsel (in the case of the Company, Sommer & Barnard, PC and in the
case of the Parent, Kirkland & Ellis) that the failure to take such action would
violate the fiduciary obligations of such Board under applicable law, and (ii)
concludes in good faith that such Takeover Proposal includes the necessary
financing or commitments thereof and is reasonably capable of being consummated
taking into account all legal, financial and regulatory aspects of the Takeover
Proposal and, in the case of the Company, that such Takeover Proposal would, if
consummated, be more favorable, from a financial point of view, to the
shareholders of the Company than the Merger (any such more favorable Takeover
Proposal satisfying all of the conditions set forth herein being referred to as
a "Superior Proposal") and the Company enters into an appropriate
confidentiality agreement with such third party (which agreement shall be no
less favorable to the Company than the Confidentiality Agreement), a copy of
which will be delivered to Parent promptly after execution thereof. Each of
Parent and the Company will promptly (but in no case later than 24 hours) notify
(and if in writing, provide a copy to) the other party of any Takeover Proposal
or amendment or modification thereof, including the material terms and
conditions thereof. As used in this Agreement, "Takeover Proposal" shall mean
any proposal or offer, or any expression of interest by any third party relating
to Parent's or the Company's willingness or ability to receive or discuss a
proposal or offer, for (A) a tender or exchange offer, or other acquisition of
beneficial ownership of, in each case 20% or more of the outstanding voting
capital stock of Parent or the Company, respectively, (B) a merger,
consolidation, share exchange, recapitalization or other business combination
involving either Parent or the Company or any of their respective Subsidiaries
or (C) any acquisition in any manner of 20% or more of the assets of, either
Parent or the Company and their respective Subsidiaries, taken as a whole in one
or more of a series of related transactions.
SECTION 4.3 Third Party Standstill Agreements. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement, entered into in connection with any potential business
combination, sale of all or substantially all of the assets, merger or
transaction of comparable character involving the Company or any of its
Subsidiaries, to which the Company or any of its Subsidiaries is a party (other
than any involving Parent), unless the Board of Directors of the Company
concludes in good faith on the basis of the advice of its outside counsel (who
may be its regularly engaged outside counsel), that the failure to terminate,
amend, modify or waive any such confidentiality or standstill agreement would
violate the fiduciary obligations of the Board under applicable law. Subject to
such fiduciary duties, during such period, the Company agrees to enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreements, including, but not limited to, obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States or any state thereof having
jurisdiction.
ARTICLE 5.
ADDITIONAL AGREEMENTS
SECTION 5.1 SHAREHOLDER MEETINGS. Except to the extent legally required
for the discharge by the board of directors of its fiduciary duties as advised
in writing by its respective outside counsel, the Company and Parent each shall
call a meeting of its shareholders (respectively, the "Company Shareholder
Meeting" and the "Parent Shareholder Meeting" and, collectively, the
"Shareholder Meetings") to be held on the same day and as promptly as
practicable after the date on which the Registration Statement becomes effective
for the purpose of considering the approval of this Agreement and the
transactions contemplated hereby (in the case of the Company) and the Parent
Shareholders' Approvals (in the case of Parent). The Company and Parent will,
through their respective Boards of Directors, recommend to their respective
shareholders approval of such matters and shall not withdraw such recommendation
and shall use their reasonable best efforts to obtain their respective
shareholders' approval of such matters;
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provided, however, that a Board of Directors shall not be required to make, and
shall be entitled to withdraw, such recommendation if such Board concludes in
good faith on the basis of the written advice of Sommer & Barnard, PC in the
case of the Company and Kirkland & Ellis in the case of Parent that the making
of, or the failure to withdraw, such recommendation would violate the fiduciary
obligations of such Board under applicable law. The Boards of Directors of the
Company, Parent and Sub will not rescind their respective declarations that the
Merger is advisable, fair to and in the best interest of such company and its
shareholders unless, in any such case, any such Board concludes in good faith on
the basis of the written advice of Sommer & Barnard, PC in the case of the
Company and Kirkland & Ellis in the case of Parent that the failure to rescind
such determination would violate the fiduciary obligations of such Board under
applicable law.
SECTION 5.2 Preparation of the Registration Statement and the Joint Proxy
Statement. The Company and Parent shall promptly prepare and file with the SEC
the Joint Proxy Statement and Parent shall prepare and file with the SEC the
Registration Statement, in which the Joint Proxy Statement will be included as a
prospectus. Each of Parent and the Company shall use its reasonable best efforts
to have the Registration Statement declared effective under the Securities Act
as promptly as practicable after such filing. As promptly as practicable after
the Registration Statement shall have become effective, each of Parent and the
Company shall mail the Joint Proxy Statement to its respective shareholders.
Parent shall also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be taken under any
applicable federal or state securities laws in connection with the issuance of
Parent Common Stock in the Merger, and the Company shall furnish all information
concerning the Company and the holders of Company Common Stock as may be
reasonably requested in connection with any such action. No amendment or
supplement to the Joint Proxy Statement or the Registration Statement will be
made by Parent or the Company without the providing the other party the
opportunity to review and comment thereon. Parent and the Company each will
advise the other, promptly after it receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment
has been filed, of the issuance of any stop order, of the suspension of the
qualification of the Parent Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or of any request by the SEC for
amendment of the Joint Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
If at any time prior to the Effective Time any information relating to the
Company or Parent, or any of their respective affiliates, officers or directors,
should be discovered by the Company or Parent which should be set forth in an
amendment or supplement to any of the Registration Statement or the Joint Proxy
Statement, so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other party hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of the Company and Parent.
SECTION 5.3 Access to Information. Subject to currently existing
contractual and legal restrictions (including the maintenance of the
attorney-client privilege) applicable to Parent or to the Company or any of
their Subsidiaries, each of Parent and the Company shall, and shall cause each
of its Subsidiaries to, afford to the accountants, counsel, financial advisors
and other representatives of the other party hereto reasonable access to, and
permit them to make such inspections and copies as they may reasonably require
of, during normal business hours during the period from the date of this
Agreement through the Effective Time, all their respective properties, books,
contracts, commitments and records. All such information obtained by the parties
pursuant to this Section 5.1 shall be subject to the terms of the
Confidentiality Agreement between the Company and the Parent (the
"Confidentiality Agreement").
SECTION 5.4 Fees and Expenses. Except as otherwise provided herein,
whether or not the transactions contemplated herein shall be consummated, each
party shall pay its own expenses in
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connection with this Agreement and the transactions contemplated herein, except
that each of Parent and the Company shall bear and pay one-half of the costs and
expenses incurred in connection with the filing under the HSR Act and the
filing, printing and mailing of the Registration Statement and the Joint Proxy
Statement (including related filing fees).
SECTION 5.5 Reasonable Good Faith Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use reasonable good faith efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including, but not limited to: (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from all Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and
the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental
Entity (including those in connection with the HSR Act and State Takeover
Approvals, if any), (ii) the obtaining of all necessary consents, approvals
or waivers from third parties, (iii) the obtaining of any requisite
shareholder vote, or other necessary corporate approvals, and (iv) the
execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement; provided, however, that the
Company shall not, without Parent's prior written consent, and Parent shall
not be required to, divest or hold separate or otherwise take or commit to
take any other similar action with respect to any assets, businesses or
product lines of Parent, the Company or any of their respective
Subsidiaries. No party to this Agreement shall consent to any voluntary
delay of the consummation of the Merger at the behest of any Governmental
Entity without the consent of the other parties to this Agreement, which
consent shall not be unreasonably withheld.
(b) Public Announcements. The initial press release relating to this
Agreement shall be a joint press release and thereafter the Company and
Parent each shall consult with the other prior to issuing any press releases
or otherwise making public announcements with respect to the Merger and the
other transactions contemplated by this Agreement and prior to making any
filings with any third party and/or any Governmental Entity with respect
thereto, except as may be required by law or by obligations pursuant to any
listing agreement with or rules of the NYSE and Nasdaq.
SECTION 5.6 Securities Filings. From the date hereof to the Effective Time
and thereafter, each of Parent and Company shall timely file all reports
required to be filed by it under the Exchange Act, including, without
limitation, the timely filing of Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K.
SECTION 5.7 Indemnification. For six years from and after the Effective
Time, Parent agrees to, and to cause the Surviving Corporation to, indemnify and
hold harmless all past and present officers and directors of the Company and of
its Subsidiaries to the same extent such persons are indemnified as of the date
of this Agreement by the Company pursuant to the Company's Articles of
Incorporation and By-Laws in existence on the date hereof for acts or omissions
occurring in their capacities as a director or officer at or prior to the
Effective Time, including, without limitation, such acts or omissions occurring
in connection with the approval of this Agreement and the consummation of the
transactions contemplated hereby. Parent shall cause the Surviving Corporation
to provide, for an aggregate period of not more than two years from the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring prior to the
Effective Time (the "D&O Insurance") that is no less favorable than the
Company's existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that the Surviving
Corporation shall not be required to pay an annual premium for the D&O Insurance
in excess of 200 percent of the last annual premium paid prior to the date
hereof.
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SECTION 5.8 Employee Benefits. Parent agrees to cause the Surviving
Corporation to provide to the current employees of the Company employee benefits
(including, without limitation, health, life and disability insurance,
retirement benefits and other employee benefits) which are no less favorable to
such employees than those provided by either (i) the Company currently or (ii)
the Parent for employees in similar positions, as such employee benefits may be
provided generally from time to time, the choice of which set of benefits to be
in Parent's sole discretion.
SECTION 5.9 State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby,
Parent and the Company and their respective Boards of Directors shall use their
reasonable best efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
SECTION 5.10 Notification of Certain Matters. Parent shall use its
reasonable best efforts to give prompt written notice to the Company, and the
Company shall use its reasonable best efforts to give prompt written notice to
Parent, of: (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which it is aware and which would be reasonably likely to
cause (x) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied in
all material respects, (ii) any failure of Parent or the Company, as the case
may be, to comply in a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, (iii) any change or
event which would be reasonably likely to have a Material Adverse Effect on
Parent or the Company, as the case may be, (iv) any notice or other
communication from any person alleging that the consent of such person is or may
be required in connection with the transactions contemplated by this Agreement,
(v) any notice or other communication from any governmental or regulatory agency
or authority in connection with the transactions contemplated by this Agreement,
or (vi) any actions, suits, claims, investigations or proceedings commenced or,
to the best of its knowledge threatened against, relating to or involving or
otherwise affecting the Company or any Subsidiary, on the one hand, or Parent or
Sub, on the other hand, which relate to the consummation of the transactions
contemplated by this Agreement; provided, however, that the delivery of any
notice pursuant to this Section 5.10 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
SECTION 5.11 Designation of Directors. As soon as reasonably practicable
after the Effective Time, the Board of Directors of Parent shall adopt
resolutions increasing the number of members of the Board from 12 to 14
directors and to appoint James O. Futterknecht and such additional person who is
recommended by Mr. Futterknecht and approved by the Chairman of the Parent
(which approval shall not be unreasonably withheld) to fill the vacancies
created by such increase in the number of directors, effective upon such
increase. Each shall serve until the next regularly scheduled annual meeting of
Parent or until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Charter and By-Laws, and each shall be nominated to serve on the Board
at such annual meeting of Parent.
SECTION 5.12 Letters of Parent's and the Company's Accountants. The
Company shall use its reasonable best efforts to cause to be delivered to
Parent, and Parent shall use its reasonable best efforts to cause to be
delivered to the Company, two letters from the their respective independent
accountants, one dated a date within two business days before the date on which
the Registration Statement shall become effective and one dated a date within
two business days before the Closing Date, each addressed to the other party, in
form and substance reasonably satisfactory to the other party and customary in
scope and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement.
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SECTION 5.13 Amendment of Rights Agreement. The Board of Directors of the
Company shall take all necessary action to amend the Rights Agreement so that
none of the execution or delivery of this Agreement, the exchange of the shares
of Company Common Stock for the shares of Parent Common Stock and cash in
accordance with Article I will cause (A) the Rights issued pursuant to the
Rights Agreement to become exercisable under the Rights Agreement, (B) Parent or
Sub to be deemed an "Acquiring Person" (as defined in the Rights Agreement), or
(C) the "Shares Acquisition Date" (as defined in the Rights Agreement) to occur
upon any such event.
SECTION 5.14 Financing. Parent shall use its best efforts to obtain the
Financing. In the event that any portion of such Financing becomes unavailable,
regardless of the reason therefor, Parent will use its best efforts to obtain
alternative debt financing from other commercially reasonable sources on pricing
terms in which the weighted average interest rate (including all applicable
fees) with respect to such alternative financing is not 40% greater than the
weighted average interest rate (including all applicable fees) of the proposed
Financing and other non-pricing terms are not materially more restrictive than
the proposed Financing.
ARTICLE 6.
CONDITIONS PRECEDENT TO THE MERGER
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approval. This Agreement shall have been duly approved
and adopted by the requisite vote of shareholders of the Company in
accordance with applicable law and the Articles of Incorporation and By-Laws
of the Company, and the Parent Shareholders' Approvals shall have been
obtained by the requisite vote of the shareholders of Parent in accordance
with applicable rules of the Nasdaq, applicable law, and the Charter and
By-Laws of Parent.
(b) Listing on the Nasdaq. The Parent Common Stock issuable in the
Merger shall have been authorized for listing on the Nasdaq, subject to
official notice of issuance.
(c) HSR and Other Approvals.
(i) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(ii) All authorizations, consents, orders, declarations or approvals
of or filings with, or terminations or expirations of waiting periods
imposed by, any Governmental Entity (including State Takeover Approvals,
if any), which the failure to obtain, make or occur would have the effect
of making the Merger or any of the transactions contemplated hereby
illegal or would have a Material Adverse Effect on Parent (assuming the
Merger had taken place), shall have been obtained, shall have been made
or shall have occurred.
(d) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect
and has the effect of prohibiting or restricting the Merger or making the
Merger or any of the transactions contemplated hereby illegal; provided,
however, subject to the proviso to Section 5.5(a) hereof, that the party
seeking to terminate this Agreement pursuant to this Section 6.1(d) shall
have used its reasonable best efforts to remove such injunction or overturn
such action.
(e) Litigation. There shall not be instituted or pending any suit,
action or proceeding by a Governmental Entity as a result of this Agreement
or any of the transactions contemplated herein
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which prohibits or restricts the Merger or is reasonably likely to have a
Material Adverse Effect on the Parent or the Company, as the case may be.
(f) Registration Statement or Exemption. Either the Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act or there shall be an effective exemption from the
registration requirements of the Securities Act. If the Registration
Statement shall have become effective, no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated or, to the
Knowledge of Parent or the Company, threatened by the SEC. All necessary
state securities or blue sky authorizations shall have been received.
SECTION 6.2 Conditions to Obligation of the Company to Effect the
Merger. The obligations of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Performance of Obligations; Representations and Warranties. Each
of Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior
to the Effective Time, each of the representations and warranties of Parent
and Sub contained in this Agreement shall be true and correct in all
material respects (except to the extent qualified as to materiality
(including a "Material Adverse Effect"), in which case such representations
and warranties shall be true and correct in all respects) on and as of the
Effective Time as if made on and as of such date (other than representations
and warranties which address matters only as of a certain date which shall
be true and correct in all material respects as of such certain date), in
each case except as contemplated or permitted by this Agreement, and the
Company shall have received a certificate signed on behalf of each of Parent
and Sub by its Chief Executive Officer, its Chief Operating Officer and its
Chief Financial Officer to such effect.
(b) Legal Opinions.
(i) The opinion of Kirkland & Ellis, counsel to Parent, issued in
connection with the Registration Statement shall contain a clause
entitling the Company to rely thereon.
(ii) The Company shall have received an opinion from Sommer &
Barnard, PC, dated as of the Closing Date, substantially to the effect
that (i) the Merger will qualify as a reorganization pursuant to Section
368(a) of the Code, (ii) that no gain or loss will be recognized by the
Company as a result of the Merger, and (iii) no gain or loss will be
recognized by a shareholder of the Company as a result of the Merger
except to the extent of cash received pursuant to the Merger. In
rendering such opinion, Sommer & Barnard, PC shall be entitled to rely
upon usual and customary representations of shareholders and officers of
Parent, the Company and others.
SECTION 6.3 Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Performance of Obligations; Representations and Warranties. The
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time and, each of the representations and warranties of the
Company contained in this Agreement shall be true and correct in all
material respects (except to the extent qualified as to materiality
(including a "Material Adverse Effect"), in which case such representations
and warranties shall be true and correct in all respects) on and as of the
Effective Time as if made on and as of such date (other than representations
and warranties which address matters only as of a certain date which shall
be true and correct in all material respects as of such certain date), in
each case except as contemplated or permitted by this Agreement, and Parent
shall have received a certificate signed on behalf of the Company by its
Chief Executive Officer, its Chief Operating Officer and its Chief Financial
Officer to such effect.
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(b) Consents. All material third-party consents, except financing
consents, and consents necessary under any shareholder agreements applicable
to the Company and its Subsidiaries shall have been obtained.
(c) Legal Opinion. Parent shall have received an opinion from Parent's
counsel, dated as of the Closing Date, substantially to the effect that (i)
the Merger will qualify as a reorganization pursuant to Section 368(a) of
the Code, (ii) that no gain or loss will be recognized by the Company as a
result of the Merger, and (iii) no gain or loss will be recognized by a
shareholder of the Company as a result of the Merger except to the extent of
cash received pursuant to the Merger. In rendering such opinion, Parent's
counsel shall be entitled to rely upon usual and customary representations
of shareholders and officers of Parent, the Company and others.
(d) Financing. Parent shall have received the proceeds of the
Financing necessary to consummate the Merger in accordance with the
Financing Commitment Letter.
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the shareholders of the Company or
Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party shall have failed
to comply in any material respect with any of its covenants or agreements
contained in this Agreement required to be complied with prior to the date
of such termination, which failure to comply has not been cured within five
business days following receipt by such other party of written notice of
such failure to comply; provided, however, that if any such breach is
curable by the breaching party through the exercise of the breaching party's
best efforts and for so long as the breaching party shall be so using its
best efforts to cure such breach, the non-breaching party may not terminate
this Agreement pursuant to this paragraph unless such breach remains uncured
30 days following such written notice;
(c) by either Parent or the Company if there has been (i) a breach by
the other party (in the case of Parent, including any material breach by
Sub) of any representation or warranty that is not qualified as to
materiality which has the effect of making such representation or warranty
not true and correct in all material respects or (ii) a breach by the other
party (in the case of Parent, including any material breach by Sub) of any
representation or warranty that is qualified as to materiality, in each case
which breach has not been cured within five business days following receipt
by the breaching party of written notice of the breach; provided, however,
that if any such breach is curable by the breaching party through the
exercise of the breaching party's best efforts and for so long as the
breaching party shall be so using its best efforts to cure such breach, the
non-breaching party may not terminate this Agreement pursuant to this
paragraph unless such breach remains uncured 30 days following such written
notice;
(d) by the Parent or the Company if there shall be any law or regulation
that makes consummation of the transaction contemplated herein illegal or
otherwise prohibited or if any order, decree or other order has been entered
by a court or other Governmental Entity which has the effect of making the
Merger or any of the transactions contemplated hereby illegal;
(e) by Parent or the Company if the Merger has not been effected on or
prior to the close of business on July 31, 1999 (the "Termination Date");
provided, however, that the right to terminate this Agreement pursuant to
this Section 7.l(e) shall not be available to any party whose failure to
fulfill
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any of its obligations contained in this Agreement has been the cause of or
resulted in, the failure of the Merger to have occurred on or prior to the
aforesaid date;
(f) by Parent or the Company if the shareholders of the Company do not
approve this Agreement at the Company Shareholder Meeting or at any
adjournment or postponement thereof;
(g) by Parent or the Company if the Parent Shareholders' Approvals are
not obtained at the Parent Shareholder Meeting or any adjournment or
postponement thereof;
(h) by Parent if (i) the Board of Directors of the Company (the
"Company's Board") shall not have recommended, or shall have resolved not to
recommend, or shall have modified, amended or withdrawn its approval or
recommendation of the Merger, this Agreement or declaration that the Merger
is advisable and fair to and in the best interests of the Company, its
shareholders, or the Company's Board shall have recommended or accepted any
Takeover Proposal, or shall have resolved to do any of the foregoing, (ii)
Parent shall request that the Company's Board reaffirm its approval or
recommendation of this Agreement or the Merger and the Company's Board shall
fail to do so within 10 business days after such request, (iii) any
corporation, partnership, person, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act) shall have become the beneficial owner
of more than 20% of the outstanding shares of Company Common Stock, (iv) the
Company shall have breached its obligations set forth in Section 4.2 above,
or (v) the Company shall have failed, as promptly as practicable after the
Registration Statement is declared effective, to call the Company
Shareholder Meeting or to mail the Joint Proxy Statement to its
shareholders, or failed to include in such statement the Company's Board
recommendation of the Merger;
(i) by the Company if (i) the Board of Directors of Parent (the
"Parent's Board") shall not have recommended, or shall have resolved not to
recommend, or shall have modified, amended or withdrawn its approval or
recommendation of the Share Issuance or that the Share Issuance under this
Agreement is advisable and fair and in the best interests of the Parent and
its stockholders, or the Parent's Board shall have recommended or accepted
any Takeover Proposal or shall have resolved to do any of the foregoing,
(ii) the Company shall request that the Parent's Board reaffirm its approval
or recommendation of this Agreement or the Merger and the Parent's Board
shall fail to do so within 10 business days after such request, (iii) any
corporation, partnership, person, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act) shall have become the beneficial owner
of more than 20% of the outstanding shares of Parent Common Stock, (iv)
Parent shall have breached its obligations set forth in Section 4.2 above,
or (v) Parent shall have failed, as promptly as practicable after the
Registration Statement is declared effective, to call the Parent Shareholder
Meeting or to mail the Joint Proxy Statement to its shareholders, or failed
to include in such statement the Board of Directors recommendation of the
Merger; or
(j) by the Company if (i) the closing price on Nasdaq of the Parent
Common Stock is less than $24.00 per share on each trading day in any period
of five (5) or more consecutive trading days (the "Measurement Period")
beginning seven calendar days after execution of this Agreement and (ii) the
closing price of the S&P MidCap Index on the last day of the Measurement
Period, as reported in The Wall Street Journal, has not decreased by 20% or
more from the closing price of the S&P MidCap Index as of the date of this
Agreement and (iii) the average of the closing prices on the last day of the
Measurement Period of the companies included in the Parent's industry peer
group as set forth under the heading Performance Graph in the Parent's proxy
statement dated April 6, 1998, that are currently publicly traded (the "Peer
Group"), as reported in The Wall Street Journal, has not decreased by 20% or
more from average of the closing prices of the Peer Group as of the date of
this Agreement and (iv) the Company provides written notice to Parent of its
election to terminate under this paragraph (j) by giving notice of such
termination pursuant to Section 8.2 hereof within five (5) trading days
after the last day of any such Measurement Period.
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SECTION 7.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 7.1, this
Agreement shall forthwith terminate and there shall be no liability hereunder on
the part of the Company, Parent, Sub or their respective officers or directors
(except for Section 5.4, 7.5, Article 8 and the obligations of the parties under
the Confidentiality Agreement which shall survive the termination); provided,
however, that nothing contained in this Section 7.2 shall relieve any party
hereto from any liability for any willful breach of a representation or warranty
contained in this Agreement or the breach of any covenant contained in this
Agreement.
SECTION 7.3 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 7.4 Waiver. At any time prior to the Effective Time, the parties
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
SECTION 7.5 Fees on Termination.
(a) (i) If any event referred to in Section 7.1(h) occurs at a time when
the Company does not have a right to terminate under Section 7.1(j), this
Agreement is terminated thereafter by the Company or Parent (whether or not
pursuant to such clause), then the Company shall (without prejudice to any
other rights of Parent against the Company) pay to Parent a fee of $12.5
million (the "Fee"), plus actual and reasonable out of pocket expenses of
Parent and Sub relating to the transactions contemplated by this Agreement
(including, but not limited to, reasonable fees and expenses of Parent's
counsel, accountants, financing sources and financial advisors) not to
exceed $500,000 (the "Expenses"), in cash, such payment to be made promptly,
but in no event later than the second business day following such
termination.
(ii) If at a time when the Company does not have a right to
terminate under Section 7.1(j):
(A) this Agreement is terminated by the Company pursuant to
Section 7.1(e) where prior to the date of termination a Takeover
Proposal with respect to the Company was made; or
(B) (x) this Agreement is terminated by the Company or Parent at
a time when Parent is entitled to terminate this Agreement pursuant
to Section 7.1(f) or 7.1(g), and (y) prior to the Company Shareholder
Meeting but after the date of this Agreement a Takeover Proposal with
respect to the Company was made;
then, in each case, the Company shall (without prejudice to any other rights
of Parent against the Company) pay to Parent the Expenses in cash, such
payment to be made promptly, but in no event later than the second business
day following such termination. If within eighteen months after such
termination, a Company Acquisition Transaction occurs, then in addition to
the Expenses, Company shall pay the Fee promptly, but in no event later than
the second business day following the closing of the Company Acquisition
Transaction. Regardless of the circumstances giving rise to termination, the
Fee plus Expenses will be the maximum amount payable under clauses (a)(i)
and (a)(ii).
The Company acknowledges that the agreements contained in this Section
7.5 are an integral part of the transactions contemplated by this Agreement.
Accordingly, if the Company shall fail to pay
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<PAGE>
when due any amounts which shall become due under Section 7.5 hereof, the
Company shall in addition thereto pay to Parent all costs and expenses
(including feeds and disbursements of counsel) incurred in collecting such
overdue amounts, together with interest on such overdue amounts from the
date such payment was required to be made until the date such payment is
received at a rate per annum equal to the "prime rate" as announced from
time to time by Bank of America.
A "Company Acquisition Transaction" means any of the following events:
(A) any Person other than Parent or its Affiliates, acquires or becomes the
beneficial owner of 20% or more of the outstanding shares of Company Common
Stock; (B) any new group is formed which, at the time of formation,
beneficially owns 20% or more of the outstanding shares of Company Common
Stock (other than a group which includes or may reasonably be deemed to
include Parent or any of its Affiliates); (C) the Company enters into an
agreement, including, without limitation, an agreement in principle,
providing for a merger, consolidation, share exchange, recapitalization or
other business combination involving the Company or the acquisition of a 20%
interest in, or at least 20% of the assets, business or operations of, the
Company (other than the transactions contemplated by this Agreement); or (D)
any Person (other than Parent or its Affiliates) is granted any option or
right, conditional or otherwise, to acquire or otherwise become the
beneficial owner of shares of Company Common Stock which, together with all
shares of Company Common Stock beneficially owned by such Person, results or
would result in such Person being the beneficial owner of 20% or more of the
outstanding shares of Company Common Stock. For purposes of this Section
7.5, the terms "group" and "beneficial owner" shall be defined by reference
to Section 13(d) of the Exchange Act.
(b) (i) If any event referred to in Section 7.1(i) occurs, this
Agreement is terminated thereafter by the Company or Parent (whether or not
pursuant to such clause) Parent shall (without prejudice to any other rights
of Company against Parent) pay to the Company a fee of $12.5 million (the
"Company Fee"), plus actual and reasonable out of pocket expenses of the
Company relating to the transactions contemplated by this Agreement
(including, but not limited to, reasonable fees and expenses of Company's
counsel, accountants, financing sources and financial advisors) not to
exceed $500,000 (the "Company Expenses") in cash, such payment to be made
promptly, but in no event later than the second business day following such
termination.
(ii) If:
(A) this Agreement is terminated by Parent pursuant to Section
7.1(e) where prior to the date of termination a Takeover Proposal
with respect to the Parent was made;
(B) (x) this Agreement is terminated by the Company or Parent at
a time when the Company is entitled to terminate this Agreement
pursuant to Section 7.1(f) or 7.1(g), and (y) prior to the date of
termination but after the date of this Agreement a Takeover Proposal
with respect to Parent was made;
(C) this Agreement is terminated by the Parent pursuant to
Section 7.1(e) solely as a result of the failure of the condition set
forth in Section 6.3(d);
then, in each case, Parent shall (without prejudice to any other rights of
the Company against Parent) pay to the Company the Company Expenses in cash,
such payment to be made promptly, but in no event later than the second
business day following such termination. In addition, if the termination
occurs under clause (C) above, or if a Parent Acquisition Transaction occurs
within eighteen months following the termination in clauses (A) and (B),
then Parent shall pay to the Company the Company Fee, in addition to the
Company Expenses, in cash promptly, but in no event later than the second
business day following (1) such termination under clause (C) or (2) the
closing the Parent Acquisition Transaction under clauses (A) and (B).
Regardless of the circumstances giving rise to termination, the Company Fee,
plus Company Expenses will be the maximum amount payable under clauses
(b)(i) and (b)(ii).
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<PAGE>
Parent acknowledges that the agreements contained in this Section 7.5
are an integral part of the transactions contemplated by this Agreement.
Accordingly, if Parent shall fail to pay when due any amounts which shall
become due under Section 7.5 hereof, Parent shall in addition thereto pay to
the Company all costs and expenses (including feeds and disbursements of
counsel) incurred in collecting such overdue amounts, together with interest
on such overdue amounts from the date such payment was required to be made
until the date such payment is received at a rate per annum equal to the
"prime rate" as announced from time to time by Bank of America.
A "Parent Acquisition Transaction" means any of the following events:
(A) any Person acquires or becomes the beneficial owner of 20% or more of
the outstanding shares of Parent Common Stock and Parent Class B Common
Stock in the aggregate; (B) any new group is formed which, at the time of
formation, beneficially owns 20% or more of the outstanding shares of Parent
Common Stock and Parent Class B Common Stock in the aggregate (other than a
group which includes or may reasonably be deemed to include Parent or any of
its Affiliates); (C) Parent enters into an agreement, including, without
limitation, an agreement in principle, providing for a merger,
consolidation, share exchange, recapitalization or other business
combination involving Parent (other than this Agreement) or the acquisition
of a 20% interest in, or at least 20% of the assets, business or operations
of, Parent or (D) any Person (other than the Company or its Affiliates) is
granted any option or right, conditional or otherwise, to acquire or
otherwise become the beneficial owner of shares of Parent Common Stock and
Parent Class B Common Stock in the aggregate which, together with all shares
of Parent Common Stock beneficially owned by such Person, results or would
result in such Person being the beneficial owner of 20% or more of the
outstanding shares of Parent Common Stock and Parent Class B Common Stock in
the aggregate.
ARTICLE 8.
GENERAL PROVISIONS
SECTION 8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
7.1, as the case may be, except that the agreements set forth in Article I,
Sections 5.3, 5.4, 5.7, 5.8, and 5.11, this Article 8 and the Confidentiality
Agreement shall survive the Effective Time, and those set forth in Section 5.4,
7.5, this Article 8 and the Confidentiality Agreement shall survive termination.
SECTION 8.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, three days
after mailing by United States certified mail, return receipt requested, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub:
Dura Automotive Systems, Inc.
2791 Research Drive
Rochester Hills, Michigan 48309
Attn: Karl F. Storrie
Facsimile Number: (248) 299-7501
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<PAGE>
with copies to:
Hidden Creek Industries
4508 IDS Center
Minneapolis, Minnesota 55402
Attn: Scott D. Rued
Carl E. Nelson
Facsimile Number: (612) 332-2012
and
Kirkland & Ellis
200 East Randolph Street
Chicago, Illinois 60601
Attn: Jeffrey C. Hammes, PC
John A. Schoenfeld, Esquire
Facsimile Number: (312) 861-2200
(b) if to the Company:
Excel Industries, Inc.
1120 North Main Street
Elkhart, Indiana 46514
Attn: James O. Futterknecht
Facsimile Number: (219) 264-2136
with copies to:
Sommer & Barnard, PC
4000 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Attn: James K. Sommer, Esquire
Facsimile Number: (317) 236-9802
SECTION 8.3 Interpretation. When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation. "
SECTION 8.4 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
SECTION 8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, including the Exhibits and Schedules attached hereto or referred to
herein, and the Confidentiality Agreement constitute the entire agreement of the
parties and supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof. This
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
SECTION 8.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Indiana, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
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SECTION 8.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties.
SECTION 8.8 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
SECTION 8.9 Enforcement of this Agreement. 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. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions 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, such remedy being in addition to any
other remedy to which any party is entitled at law or in equity. Each party
hereto irrevocably waives right to trial by jury.
SECTION 8.10 Litigation Costs. In the event it becomes necessary for any
party hereto to initiate litigation for the purpose of enforcing any of its
rights hereunder or for the purpose of seeking damages for any violation hereof
then, in addition to any and all other judicial remedies that may be granted,
the prevailing party shall be entitled to recover attorneys' fees and all other
costs sustained by it in connection with such litigation.
[REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
DURA AUTOMOTIVE SYSTEMS, INC.
By: /s/ CARL E. NELSON
- --------------------------------------
Carl E. Nelson
Its: Vice President
- --------------------------------------
WINDOWS ACQUISITION CORPORATION
By: /s/ DAVID J. HULS
- --------------------------------------
David J. Huls
Its: Vice President
- --------------------------------------
EXCEL INDUSTRIES, INC.
By: /s/ JAMES O. FUTTERKNECHT, JR.
- --------------------------------------
James O. Futterknecht, Jr.
Its: Chairman of the Board, President
and Chief Executive Officer
<PAGE>
APPENDIX B
DURA AUTOMOTIVE SYSTEMS, INC.
1998 STOCK INCENTIVE PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Incentive Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws
of any foreign country or jurisdiction where Options or Stock Purchase
Rights are, or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means the occurrence of any of the following:
(i) When any "person" as defined in Section 3(a)(9) of the Exchange
Act and as used in Sections 13(d) and 14(d) thereof, including a "group"
as defined in Section 13(d) of the Exchange Act but excluding the Company
and any Subsidiary and any employee benefit plan sponsored or maintained
by the Company or any Subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act, as amended from
time to time), after the effective date of the Plan, of securities of the
Company representing 20 percent or more of the combined voting power of
the Company's then outstanding securities;
(ii) When, during any period of 24 consecutive months during the
existence of the Plan, the individuals who, at the beginning of such
period, constitute the Board (the "INCUMBENT DIRECTORS") cease for any
reason other than death to constitute at least a majority thereof,
provided, however, that a director who was not a director at the
beginning of such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such director was
elected by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning of such
24-month period) or by prior operation of this provision; or
(iii) The approval by the stockholders of the Company of a
transaction involving the acquisition of the Company by an entity other
than the Company or a Subsidiary through purchase of assets, by merger,
or otherwise.
(e) "Class B Common" means the Class B Common Stock, par value $0.01 per
share of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.
<PAGE>
(h) "Common Stock" means the Class A Common Stock, par value $0.01 per
share, of the Company.
(i) "Company" means Dura Automotive Systems, Inc., a Delaware
corporation.
(j) "Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.
(k) "Director" means a member of the Board.
(l) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(m) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between locations
of the Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety days, unless reemployment upon expiration of such leave is guaranteed
by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, on the 181st day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes
as a Nonstatutory Stock Option. Neither service as a Director nor payment of
a Director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of
determination, as reported in THE WALL STREET JOURNAL or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in THE WALL STREET JOURNAL
or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the
Administrator.
(p) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(q) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
(r) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.
(s) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "Option" means a stock option granted pursuant to the Plan.
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<PAGE>
(u) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(v) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(w) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(x) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(y) "Parent" means a parent corporation, whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(z) "Plan" means this 1998 Stock Incentive Plan.
(aa) "Restricted Stock" means shares of Common Stock acquired pursuant
to a grant of Stock Purchase Rights under Section 11 of the Plan.
(bb) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted
Stock Purchase Agreement is subject to the terms and conditions of the Plan
and the Notice of Grant.
(cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.
(dd) "Section 16(b)" means Section 16(b) of the Exchange Act.
(ee) "Service Provider" means an Employee, Director or Consultant.
(ff) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(gg) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(hh) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. SHARES SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is (a) 1,000,000 Shares, plus (b) any Shares returned to the 1996
Key Employee Stock Option Plan (the "1996 Plan") as a result of termination of
options under the 1996 Plan, plus (c) an annual increase to be added on the date
of each annual meeting of the stockholders of the Company, beginning with the
1999 annual meeting of the stockholders, equal to the lesser of (i) 500,000
Shares, (ii) five percent (5%) of the outstanding Shares on such date or (iii) a
lesser amount determined by the Board. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); PROVIDED, HOWEVER, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Stock Purchase Right, shall not
be returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
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4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. The Plan may be administered by
different Committees with respect to different groups of Service
Providers.
(ii) SECTION 162(M). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of
the Code, the Plan shall be administered by a Committee of two or more
"outside directors" within the meaning of Section 162(m) of the Code.
(iii) RULE 16B-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption
under Rule 16b-3.
(iv) OTHER ADMINISTRATION. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be covered
by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights
may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase Right or
the shares of Common Stock relating thereto, based in each case on such
factors as the Administrator, in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was
granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right (subject
to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than
is otherwise provided for in the Plan;
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<PAGE>
(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld.
The Fair Market Value of the Shares to be withheld shall be determined on
the date that the amount of tax to be withheld is to be determined. All
elections by an Optionee to have Shares withheld for this purpose shall
be made in such form and under such conditions as the Administrator may
deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock Purchase
Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or advisable
for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. ELIGIBILITY. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
6. LIMITATIONS.
(a) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For
purposes of this Section 6(a), Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of
the Shares shall be determined as of the time the Option with respect to
such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of the
Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 500,000
Shares which shall not count against the limit set forth in subsection
(i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described
in Section 13.
(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a
transaction described in Section 13), the canceled Option will be counted
against the limits set forth in subsections (i) and (ii) above. For this
purpose, if the exercise price of an Option is reduced, the transaction
will be treated as a cancellation of the Option and the grant of a new
Option.
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<PAGE>
7. TERM OF PLAN. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of
grant.
(B) granted to any Employee other than an Employee described in
paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per
Share exercise price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the
time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;
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<PAGE>
(v) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement. Unless the
Administrator provides otherwise, vesting of Options granted hereunder shall
be tolled during any unpaid leave of absence. An Option may not be exercised
for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by
the Administrator and permitted by the Option Agreement and the Plan. Shares
issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue
(or cause to be issued) such Shares promptly after the Option is exercised.
No adjustment will be made for a dividend or other right for which the
record date is prior to the date the Shares are issued, except as provided
in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period
of time as is specified in the Option Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as
to his or her entire Option, the Shares covered by the unvested portion of
the Option shall revert to the Plan. If, after termination, the Optionee
does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise
his or her Option within such period of time as is specified in the Option
Agreement to the extent the Option is vested on the date of termination (but
in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee's termination. If, on the date of termination, the
Optionee
B-7
<PAGE>
is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in
the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's
estate or by a person who acquires the right to exercise the Option by
bequest or inheritance, but only to the extent that the Option is vested on
the date of death. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee's termination. If, at the time of death, the Optionee
is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately revert to the Plan. The
Option may be exercised by the executor or administrator of the Optionee's
estate or, if none, by the person(s) entitled to exercise the Option under
the Optionee's will or the laws of descent or distribution. If the Option is
not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) RETIREMENT OF OPTIONEE. If an Optionee ceases to be a Service
Provider as a result of the Optionee's voluntary retirement, the Optionee
may exercise his or her Option within such period of time as is specified in
the Option Agreement to the extent the Option is vested on the date of
retirement (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee's retirement. If, on the date of
retirement, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the
Plan. If, after retirement, the Optionee does not exercise his or her Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan. This Section 10(e) shall
only apply to an Optionee who voluntarily retires from the Company or a
Subsidiary on or after the date on which such Optionee has attained the age
of 59 1/2. Notwithstanding anything in this Section 10(e) or an Option
Agreement to the contrary, if the Committee determines in the good faith
exercise of its judgment that any Optionee who has retired engages in any
conduct detrimental to the Company, upon such determination by the
Committee, such Option shall immediately and without further action on the
part of the Company, expire and become unexercisable. No notice of such
determination need to be given to any Optionee in such circumstance.
(f) CHANGE IN CONTROL. In the event of a Change in Control, only if
provided in the Option Agreement, any Option awarded under this Plan to the
extent not previously exercisable shall immediately become fully
exercisable. The Administrator in its sole discretion may direct the Company
to cash out all outstanding Options as of the date a Change in Control
occurs or such other date as the Administrator may determine prior to the
Change in Control.
(g) BUYOUT PROVISIONS. The Administrator may at any time offer to buy
out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
11. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of
Grant, of the terms, conditions and restrictions related to the offer,
including the number of Shares that the offeree shall be entitled to
purchase, the price to be paid, and the time within which the offeree must
accept such offer. The offer
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<PAGE>
shall be accepted by execution of a Restricted Stock Purchase Agreement in
the form determined by the Administrator.
(b) REPURCHASE OPTION. Unless the Administrator determines otherwise,
the Restricted Stock Purchase Agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate
determined by the Administrator.
(c) OTHER PROVISIONS. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) RIGHTS AS A STOCKHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as
provided in Section 13 of the Plan.
12. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares
of Common Stock which have been authorized for issuance under the Plan but
as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common
Stock covered by each such outstanding Option or Stock Purchase Right, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company; PROVIDED,
HOWEVER, that conversion of any convertible securities of the Company
(including shares of Class B Common) shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made
by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option or Stock Purchase Right.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Administrator in its discretion may provide for an
Optionee to have the right to exercise his or her Option until ten (10) days
prior to such transaction as to all of the Optioned Stock covered thereby,
including Shares as to which the Option would not otherwise be
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<PAGE>
exercisable. In addition, the Administrator may provide that any Company
repurchase option applicable to any Shares purchased upon exercise of an
Option or Stock Purchase Right shall lapse as to all such Shares, provided
the proposed dissolution or liquidation takes place at the time and in the
manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the
event that the successor corporation refuses to assume or substitute for the
Option or Stock Purchase Right, the Optionee shall fully vest in and have
the right to exercise the Option or Stock Purchase Right as to all of the
Optioned Stock, including Shares as to which it would not otherwise be
vested or exercisable. If an Option or Stock Purchase Right becomes fully
vested and exercisable in lieu of assumption or substitution in the event of
a merger or sale of assets, the Administrator shall notify the Optionee in
writing or electronically that the Option or Stock Purchase Right shall be
fully vested and exercisable for a period of fifteen (15) days from the date
of such notice, and the Option or Stock Purchase Right shall terminate upon
the expiration of such period. For the purposes of this paragraph, the
Option or Stock Purchase Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase
or receive, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); PROVIDED, HOWEVER, that if
such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator
may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right, to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the merger or sale of assets.
14. DATE OF GRANT. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) STOCKHOLDER APPROVAL. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company. Termination of the Plan shall not affect the
Administrator's ability to exercise the powers granted to it hereunder with
respect to Options granted under the Plan prior to the date of such
termination.
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16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent and warrant at
the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required.
17. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
18. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board. Such stockholder approval shall be obtained in the manner
and to the degree required under Applicable Laws. The Plan shall terminate in
the event that it is not approved by the stockholders of the Company within the
time period set forth herein. In addition, all of the Options and/or Stock
Purchase Rights granted under this Plan prior to its approval by the
stockholders of the Company shall be granted subject to, and conditioned upon,
such approval and shall automatically terminate in the event that the Plan has
not been approved by the stockholders within the time period set forth herein.
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DURA AUTOMOTIVE SYSTEMS, INC.
1998 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
<TABLE>
<CAPTION>
<S> <C>
Number of Options Granted
----------------------------------------------
Date of Grant
----------------------------------------------
Vesting Commencement Date
----------------------------------------------
Exercise Price per Share $ --------------------------------------------
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date:
----------------------------------------------
Vesting Schedule:
</TABLE>
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
[SUBJECT TO BOARD DISCRETION.]
Termination Period:
This Option may be exercised for 30 days after Optionee ceases to be a
Service Provider. Upon the death or Disability of the Optionee, this Option may
be exercised for 6 months after Optionee ceases to be a Service Provider. Upon
the voluntary retirement of the Optionee (provided that the Optionee at the time
of such retirement has obtained the age of 59 1/2), this Option may be exercised
for one year after the Optionee ceases to be a Service Provider. In no event
shall this Option be exercised later than the Term/ Expiration Date as provided
above.
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<PAGE>
AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant attached as Part I of this Agreement
(the "Optionee") an option (the "Option") to purchase the number of Shares, as
set forth in the Notice of Grant, at the exercise price per share set forth in
the Notice of Grant (the "Exercise Price"), subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 15(c)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option under Section
422 of the Code. However, if this Option is intended to be an Incentive Stock
Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d)
it shall be treated as a Nonstatutory Stock Option ("NSO").
1. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. This Option
shall immediately become fully exercisable upon a Change in Control (as
defined in the Plan).
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares
in respect of which the Option is being exercised (the "Exercised Shares"),
and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be
completed by the Optionee and delivered to the Chief Financial Officer of
the Company. The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares (as permitted by Section
3 hereof). This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check; or
(c) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
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<PAGE>
6. TAX CONSEQUENCES. Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION.
(i) NONSTATUTORY STOCK OPTION. The Optionee may incur regular
federal income tax liability upon exercise of a NSO. The Optionee will be
treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate
Exercise Price. If the Optionee is an Employee or a former Employee, the
Company will be required to withhold from his or her compensation or
collect from Optionee and pay to the applicable taxing authorities an
amount in cash equal to a percentage of this compensation income at the
time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time
of exercise.
(ii) INCENTIVE STOCK OPTION. If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise
Price will be treated as an adjustment to alternative minimum taxable
income for federal tax purposes and may subject the Optionee to
alternative minimum tax in the year of exercise. In the event that the
Optionee ceases to be an Employee but remains a Service Provider, any
Incentive Stock Option of the Optionee that remains unexercised shall
cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option on the date three (3) months and
one (1) day following such change of status.
(b) DISPOSITION OF SHARES.
(i) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for
federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any,
of the lesser of (A) the difference between the Fair Market Value of the
Shares acquired on the date of exercise and the aggregate Exercise Price,
or (B) the difference between the sale price of such Shares and the
aggregate Exercise Price. Any additional gain will be taxed as capital
gain, short-term or long-term depending on the period that the ISO Shares
were held.
(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO
on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in
cash or out of the current earnings paid to the Optionee.
7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's
B-14
<PAGE>
interest except by means of a writing signed by the Company and Optionee. This
agreement is governed by the internal substantive laws, but not the choice of
law rules, of Michigan.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
<TABLE>
<CAPTION>
<S> <C>
OPTIONEE: DURA AUTOMOTIVE SYSTEMS, INC.
- -------------------------------------------------------- --------------------------------------------------------
Signature By
- -------------------------------------------------------- --------------------------------------------------------
Print Name Title
- --------------------------------------------------------
Residence Address
- --------------------------------------------------------
</TABLE>
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<PAGE>
EXHIBIT A
1998 STOCK INCENTIVE PLAN
EXERCISE NOTICE
Dura Automotive Systems, Inc.
2791 Research Drive
Rochester Hills, Michigan 48309
Attention: Chief Financial Officer
1. EXERCISE OF OPTION. Effective as of today, , , the
undersigned ("Purchaser") hereby elects to purchase shares (the "Shares")
of the Common Stock of Dura Automotive Systems, Inc. (the "Company") under and
pursuant to the 1998 Stock Incentive Plan (the "Plan") and the Stock Option
Agreement dated , (the "Option Agreement"). The purchase price
for the Shares shall be $ , as required by the Option Agreement.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. RIGHTS AS STOCKHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be
<PAGE>
modified adversely to the Purchaser's interest except by means of a writing
signed by the Company and Purchaser. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of Michigan.
<TABLE>
<CAPTION>
<S> <C>
Submitted by: Accepted by:
PURCHASER: DURA AUTOMOTIVE SYSTEMS, INC.
- -------------------------------------------------------- --------------------------------------------------------
Signature By
- -------------------------------------------------------- --------------------------------------------------------
Print Name Its
Address: Address:
2791 Research Drive
- --------------------------------------------------------
Rochester Hills, Michigan 48309
- --------------------------------------------------------
- --------------------------------------------------------
Date Received
</TABLE>
<PAGE>
APPENDIX C
[LOGO]
January 18, 1999
Board of Directors
Dura Automotive Systems, Inc.
4508 IDS Center
Minneapolis, MN 55402
Gentlemen:
Dura Automotive Systems, Inc. ("Parent") proposes to enter into an Agreement
and Plan of Merger (the "Agreement") with Excel Industries, Inc. (the "Company")
and Windows Acquisition Corporation, a wholly owned subsidiary of Parent
("Sub"). Pursuant to the Agreement, at the Effective Time (as defined in the
Agreement), the Company shall be merged with and into Sub (the "Merger") and
each issued and outstanding share of common stock, no par value ("Company Common
Stock"), of the Company (other than shares held in the treasury of the Company
or by any wholly owned subsidiary of the Company) will be converted solely into
the right to receive the Merger Consideration (as hereinafter defined).
The "Merger Consideration" means, at the election of the holder of Company
Common Stock (and subject to the terms and conditions of Section 1.5 of the
Agreement), either (i) cash in the amount of $25.50, (ii) 0.8 shares of Class A
common stock, par value $0.01 per share ("Parent Common Stock"), of Parent, or
(iii) a combination thereof determined in accordance with Sections 1.5(c)(iv),
(v) and (vi) of the Agreement.
You have requested our opinion as to the fairness, from a financial point of
view, of the Merger Consideration to Parent.
Robert W. Baird & Co. Incorporated ("Baird"), as part of its investment
banking business, is engaged in the evaluation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.
In conducting our investigation and analysis and in arriving at our opinion
herein, we have reviewed such information and taken into account such financial
and economic factors as we have deemed relevant under the circumstances. In that
connection, we have, among other things: (i) reviewed certain internal
information, primarily financial in nature, including projections, concerning
the business and operations of Parent and the Company furnished to us for
purposes of our analysis, as well as publicly available information including
but not limited to Parent's and the Company's recent filings with the Securities
and Exchange Commission and equity analyst research reports prepared by various
investment banking firms including Baird; (ii) reviewed the draft Agreement in
the form presented to Parent's Board of Directors; (iii) compared the historical
market prices and trading activity of Parent Common Stock and Company Common
Stock with those of certain other publicly traded companies we deemed relevant;
(iv) compared the financial position and operating results of Parent and the
Company with those of other publicly traded companies we deemed relevant; (v)
compared the proposed financial terms of the Merger with the financial terms of
certain other business combinations we deemed relevant; and (vi) reviewed
certain potential pro forma effects of the Merger. We have held discussions with
members of Parent's and the Company's respective senior managements concerning
Parent's and the Company's historical and current
[LOGO]
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<PAGE>
financial condition and operating results, as well as the future prospects of
Parent and the Company, respectively. We have also considered such other
information, financial studies, analysis and investigations and financial,
economic and market criteria which we deemed relevant for the preparation of
this opinion.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided us by or on behalf of Parent and the Company, and have not
been engaged to independently verify any such information. We have assumed, with
your consent, that: (i) all material assets and liabilities (contingent or
otherwise, known or unknown) of Parent and the Company are as set forth in their
respective financial statements, (ii) the Merger will be accounted for under the
purchase method of accounting, (iii) the cost savings and operating synergies
currently contemplated by Parent's and the Company's respective senior
managements to result from the Merger will be realized, and (iv) the Merger will
be consummated in accordance with the terms of the draft Agreement in the form
presented to Parent's Board of Directors, without any amendment and without
waiver by any of the parties to their respective obligations thereunder. We have
also assumed that the financial forecasts examined by us were reasonably
prepared on bases reflecting the best available estimates and good faith
judgments of Parent's and the Company's respective senior managements as to
future performance of Parent and the Company, respectively. In conducting our
review, we have not undertaken nor obtained an independent evaluation or
appraisal of any of the assets or liabilities (contingent or otherwise) of
Parent or the Company nor have we made a physical inspection of the properties
or facilities of Parent or the Company. Our opinion necessarily is based upon
economic, monetary and market conditions as they exist and can be evaluated on
the date hereof, and does not predict or take into account any changes which may
occur, or information which may become available, after the date hereof.
Furthermore, we express no opinion as to the price or trading range at which any
of Parent's or the Company's securities (including Parent Common Stock and
Company Common Stock) will trade following the date hereof.
Our opinion has been prepared at the request and for the information of the
Board of Directors of Parent, and shall not be used for any other purpose or
disclosed to any other party without the prior written consent of Baird;
provided, however, that this letter may be reproduced in full in the Joint Proxy
Statement/Prospectus to be provided to Parent's stockholders in connection with
the approval of the issuance of shares of Parent Common Stock pursuant to the
terms of the Agreement. This opinion does not address the relative merits of the
Merger and any other potential transactions or business strategies considered by
Parent's Board of Directors, and does not constitute a recommendation to any
stockholder of Parent as to how any such stockholder should vote with respect to
the issuance of shares of Parent Common Stock pursuant to the terms of the
Agreement. Baird will receive a fee for rendering this opinion. In the past, we
have provided investment banking and financial advisory services to Parent and
certain of its affiliates, including acting as lead-manager of the public
offering of Parent's Convertible Trust Preferred Securities in 1998 and
co-manager of the secondary offering of Parent Common Stock in 1998, for which
we received our customary compensation.
In the ordinary course of our business, we may from time to time trade the
securities of Parent or the Company for our own account or the accounts of our
customers and, accordingly, may at any time hold long or short positions in such
securities.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Merger Consideration is fair, from a financial point of
view, to Parent.
Very truly yours,
ROBERT W. BAIRD & CO. INCORPORATED
C-2
<PAGE>
APPENDIX D
[LETTERHEAD OF MORGAN STANLEY & CO. INCORPORATED]
January 19, 1999
Board of Directors
Excel Industries, Inc.
1120 North Main Street
Elkhart, IN 46514
Members of the Board:
We understand that Excel Industries, Inc. ("Excel" or the "Company"), Dura
Automotive Systems, Inc. ("Dura") and Windows Acquisition Corporation, a wholly
owned subsidiary of Dura ("Acquisition Sub"), propose to enter into an Agreement
and Plan of Merger dated January 19, 1999 (the "Merger Agreement"), which
provides, among other things, for the merger (the "Merger") of the Company with
and into Acquisition Sub. Pursuant to the Merger, Excel will become a wholly
owned subsidiary of Dura, and each outstanding share of common stock, no par
value per share, (the "Excel Common Stock") of Excel, other than shares held in
treasury or held by Dura or any affiliate of Dura, will be converted into the
right to receive, at the election of the holder, and is subject to the
allocation procedures set forth in the Merger Agreement, either (i) $25.50 in
cash (ii) 0.8 shares of common stock, par value $0.01 per share, of Dura (the
"Dura Common Stock") or (iii) a combination thereof. The terms and conditions of
the Merger are more fully set forth in the Merger Agreement. You have asked for
our opinion as to whether the consideration to be received by holders of shares
of Excel Common Stock pursuant to the Merger Agreement is fair from a financial
point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of Excel and Dura, respectively;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning Excel and Dura prepared by the managements of
Excel and Dura, respectively;
(iii) analyzed certain financial projections prepared by the managements
of Excel and Dura, respectively;
(iv) discussed the past and current operations and financial condition
and the prospects of Excel, including information relating to certain
strategic, financial and operational benefits anticipated from the Merger,
with senior executives of Excel;
(v) discussed the past and current operations and financial condition
and the prospects of Dura, including information relating to certain
strategic, financial and operational benefits anticipated from the Merger,
with senior executives of Dura;
(vi) reviewed the pro forma impact of the Merger on Dura's earnings per
share, consolidated capitalization and financial ratios;
(vii) reviewed the reported prices and trading activity for the Excel
Common Stock and for the Dura Common Stock;
(viii) compared the financial performance of Dura and Excel and the prices
and trading activity of the Dura Common Stock and the Excel Common Stock
with that of certain other comparable publicly-traded companies and their
securities;
(ix) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
D-1
<PAGE>
(x) participated in discussions and negotiations among representatives
of Excel and Dura and their financial and legal advisors;
(xi) reviewed the Merger Agreement, and certain related documents; and
(xii) performed such other analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, including information
relating to certain financial and operational benefits anticipated from the
Merger, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the prospects
of Excel and Dura. We have also relied upon, without independent verification,
the assessment by the managements of Excel and Dura of Excel's and Dura's
technologies and products, the timing and risks associated with the integration
of Excel with Dura, and the validity of, and risks associated with, Excel's and
Dura's existing and future technologies and products. We have not made any
independent valuation or appraisal of the assets or liabilities of Excel or
Dura, nor have we been furnished with any such appraisals. In addition, we have
assumed the Merger will be consummated in accordance with terms set forth in the
Merger Agreement. Our opinion is necessarily based on financial, economic,
market and other conditions as in effect on, and the information made available
to us as of, the date hereof.
We have acted as financial advisor to Excel in connection with this
transaction and will receive a fee for our services. In the past, Morgan Stanley
& Co. Incorporated and its affiliates have provided financial advisory services
to Excel and have received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of Excel, except that this opinion may be included in its entirety in
any filing made by Excel in respect of the transaction with the Securities and
Exchange Commission. In addition, this opinion does not in any manner address
the prices at which Dura Common Stock will trade following consummation of the
Merger and Morgan Stanley expresses no opinion or recommendation as to how the
shareholders of Excel should vote at the shareholders' meeting held in
connection with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of Excel Common
Stock pursuant to the Merger Agreement is fair from a financial point of view to
such holders.
<TABLE>
<S> <C> <C>
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ T. SANDS THOMPSON
-----------------------------------------
T. Sands Thompson
PRINCIPAL
</TABLE>
D-2
<PAGE>
<TABLE>
<S> <C> <S> <C> <C> <S>
[LOGO] & [LETTERHEAD]
</TABLE>
<PAGE>
PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20: INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Dura is incorporated under the laws of the State of Delaware. Section 145 of
the General Corporation Law of the State of Delaware ("Section 145") provides
that a Delaware corporation may indemnify any persons who are, or are threatened
to be made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
Article Eleven of the Amended and Restated Certificate of Incorporation of
Dura provides that no director of the corporation shall be liable to the
corporation or its stockholders for monetary damages arising from a breach of
fiduciary duty owed to the corporation or its stockholders to the fullest extent
permitted by the Delaware General Corporation Law.
Article V of Dura's Amended and Restated By-laws (the "Dura By-laws")
provides that each person who was or is made a party or is threatened to be made
a party to or is otherwise involved (including involvement as a witness) in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he or she is or was a director or
officer of the corporation, is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any other
capacity while serving as a director or officer, against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith and such indemnification shall continue
as to an indemnitee who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided below with respect
to proceedings to enforce rights to indemnification, the corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors. The right to indemnification is a contract
right and includes the right to be paid by the corporation the expenses incurred
in defending any such proceeding in advance of its final disposition
(advancement of expenses); provided, however, that, if and to the extent that
the Delaware General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the corporation of an undertaking
II-1
<PAGE>
by or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal than such indemnitee is not entitled to be indemnified
for such expenses.
Article V of the Dura By-laws further provides that any person serving as a
director, officer, employee or agent of a subsidiary of Dura shall be
conclusively presumed to be serving in such capacity at the request of Dura and,
hence, subject to indemnification by Dura.
Article V of the Dura By-laws further provides that persons who after the
date of the adoption of Article V become or remain directors or officers of the
corporation or who, while a director or officer of the corporation, become or
remain a director, officer, employee or agent of a subsidiary, shall be
conclusively presumed to have relied on the rights to indemnity, advancement of
expenses and other rights contained in Article V in entering into or continuing
such service. The rights to indemnification and to the advancement of expenses
conferred in Article V shall apply to claims made against a indemnitee arising
out of acts or omissions which occurred or occur both prior and subsequent to
the adoption hereof. The rights to indemnification and to the advancement of
expenses conferred in Article V shall not be exclusive of any other right which
any person may have or hereafter acquire under the Amended and Restated
Certificate of Incorporation or under any statute, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
All of the directors and officers of Dura are covered by insurance policies
maintained and held in effect by such corporation against certain liabilities
for actions taken in such capacities, including liabilities under the Securities
Act of 1933.
II-2
<PAGE>
ITEM 21. EXHIBITS.
(a) The following exhibits are filed as part of this Registration Statement or
incorporated by reference herein:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of January 19, 1999, among Dura, Excel Industries, Inc. and
Windows Acquisition Corporation, incorporated by reference to Exhibit 2.1 to Dura's Current Report
on Form 8-K, dated January 22, 1999.
4.1 Amended and Restated Certificate of Incorporation of Dura, incorporated by reference to Exhibit 3.1
to Dura's Registration Statement on Form S-1 (Registration No. 33-06601) (the "S-1").
4.2 Amended and Restated By-laws of Dura, incorporated by reference to Exhibit 3.2 of the S-1.
4.3 Amended and Restated Stockholders Agreement, dated as of August 13, 1996, by and among Dura, Onex
U.S. Investments, Inc., J2R, Alkin, the HCI Stockholders (as defined therein) and the Management
Stockholders (as defined therein), incorporated by reference to Exhibit 10.30 of the S-1.
4.4 Registration Agreement, dated as of August 31, 1994, among Dura, Alkin and the MC Stockholders (as
defined therein), incorporated by reference to Exhibit 4.3 of the S-1.
4.5 Amendment to Registration Agreement, dated May 17, 1995, by and between Dura, the MC Stockholders (as
defined therein) and Alkin, incorporated by reference to Exhibit 4.4 of the S-1.
4.6 Amended and Restated Investor Stockholder Agreement, dated as of August 13, 1996, by and among Dura,
Onex U.S. Investments, Inc., J2R and certain other stockholders party thereto, incorporated by
reference to Exhibit 10.31 of the S-1.
4.7 Form of certificate representing Class A Common Stock of Dura, incorporated by reference to Exhibit
4.6 of the S-1.
4.8 Amendment No. 1 to Amended and Restated Stockholders Agreement, dated as of August 13, 1996, by and
between Dura, Onex DHC LLC, J2R, Akin and the HCI Stockholders (as defined therein) and the
Management Stockholders (as defined therein), incorporated by reference to Exhibit 4.1 of Dura's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
*5.1 Opinion of Kirkland & Ellis regarding the legality of the securities offered hereby.
*8.1 Opinion of Kirkland & Ellis regarding federal income tax considerations.
*23.1 Consent of Arthur Andersen LLP, Minneapolis, Minnesota.
*23.2 Consent of Arthur Andersen LLP, Grand Rapids, Michigan.
*23.3 Consent of Arthur Andersen LLP, Stamford, Connecticut.
*23.4 Consent of PricewaterhouseCoopers LLP.
*23.5 Consent of WRT Revision und Treuhand GmbH.
*23.6 Consent of KPMG Audit Plc.
*23.7 Consents of Kirkland & Ellis (included in Exhibits 5.1 and 8.1).
*99.1 Form of Election and Letter of Transmittal.
*99.2 Form of Proxy for use at Dura Special Meeting.
*99.3 Form of Proxy for use at Excel Special Meeting.
</TABLE>
- ------------------------
* Filed herewith.
(b) No financial statement schedules are required to be filed herewith pursuant
to this Item.
II-3
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Dura's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered, therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Dura pursuant to the provisions, or otherwise, Dura has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Dura of expenses
incurred or paid by a directors, officer or controlling person of Dura in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, Dura will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail
or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and Dura
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura duly caused
this Amendment No. 1 to Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in City of Minneapolis,
State of Minnesota, on the 17th day of February, 1999.
<TABLE>
<S> <C> <C>
DURA AUTOMOTIVE SYSTEMS, INC.
By: /s/ S.A. JOHNSON
-----------------------------------------
S.A. Johnson
CHAIRMAN
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 17TH DAY OF
FEBRUARY, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ S.A. JOHNSON
- ------------------------------ Chairman
S.A. Johnson
President, Chief Executive
* Officer (Principal
- ------------------------------ Executive Officer) and
Karl F. Storrie Director
*
- ------------------------------ Vice President and
Robert R. Hibbs Director
*
- ------------------------------ Director
Robert E. Brooker, Jr.
*
- ------------------------------ Director
W.H. Clement
*
- ------------------------------ Director
Jack K. Edwards
*
- ------------------------------ Director
J. Richard Jones
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
*
- ------------------------------ Director
John C. Jorgensen
*
- ------------------------------ Director
James L. O'Loughlin
*
- ------------------------------ Director
Robert J. Orscheln
*
- ------------------------------ Director
William L. Orscheln
*
- ------------------------------ Director
Eric J. Rosen
Vice President and Chief
* Financial Officer
- ------------------------------ (Principal Accounting
Stephen E. K. Graham Officer)
</TABLE>
* The undersigned, by signing his name hereto, does hereby sign and execute
this Amendment No. 1 to Registration Statement on behalf of the above name
officers and directors of Dura pursuant to the Power of Attorney executed by
such officers and directors and previously filed with the Securities and
Exchange Commission.
<TABLE>
<S> <C> <C> <C>
/s/ S.A. JOHNSON
-------------------------
S.A. Johnson
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of January 19, 1999, among Dura, Excel Industries, Inc. and
Windows Acquisition Corporation, incorporated by reference to Exhibit 2.1 to Dura's Current Report
on Form 8-K, dated January 22, 1999.
4.1 Amended and Restated Certificate of Incorporation of Dura, incorporated by reference to Exhibit 3.1
to Dura's Registration Statement on Form S-1 (Registration No. 33-06601) (the "S-1").
4.2 Amended and Restated By-laws of Dura, incorporated by reference to Exhibit 3.2 of the S-1.
4.3 Amended and Restated Stockholders Agreement, dated as of August 13, 1996, by and among Dura, Onex
U.S. Investments, Inc., J2R, Alkin, the HCI Stockholders (as defined therein) and the Management
Stockholders (as defined therein), incorporated by reference to Exhibit 10.30 of the S-1.
4.4 Registration Agreement, dated as of August 31, 1994, among Dura, Alkin and the MC Stockholders (as
defined therein), incorporated by reference to Exhibit 4.3 of the S-1.
4.5 Amendment to Registration Agreement, dated May 17, 1995, by and between Dura, the MC Stockholders (as
defined therein) and Alkin, incorporated by reference to Exhibit 4.4 of the S-1.
4.6 Amended and Restated Investor Stockholder Agreement, dated as of August 13, 1996, by and among Dura,
Onex U.S. Investments, Inc., J2R and certain other stockholders party thereto, incorporated by
reference to Exhibit 10.31 of the S-1.
4.7 Form of certificate representing Class A Common Stock of Dura, incorporated by reference to Exhibit
4.6 of the S-1.
4.8 Amendment No. 1 to Amended and Restated Stockholders Agreement, dated as of August 13, 1996, by and
between Dura, Onex DHC LLC, J2R, Akin and the HCI Stockholders (as defined therein) and the
Management Stockholders (as defined therein), incorporated by reference to Exhibit 4.1 of Dura's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
*5.1 Opinion of Kirkland & Ellis regarding the legality of the securities offered hereby.
*8.1 Opinion of Kirkland & Ellis regarding federal income tax considerations.
*23.1 Consent of Arthur Andersen LLP, Minneapolis, Minnesota.
*23.2 Consent of Arthur Andersen LLP, Grand Rapids, Michigan.
*23.3 Consent of Arthur Andersen LLP, Stamford, Connecticut.
*23.4 Consent of PricewaterhouseCoopers LLP.
*23.5 Consent of WRT Revision und Treuhand GmbH.
*23.6 Consent of KPMG Audit Plc.
*23.7 Consents of Kirkland & Ellis (included in Exhibits 5.1 and 8.1).
*99.1 Form of Election and Letter of Transmittal.
*99.2 Form of Proxy for use at Dura Special Meeting.
*99.3 Form of Proxy for use at Excel Special Meeting.
</TABLE>
- ------------------------
* Filed herewith.
<PAGE>
KIRKLAND & ELLIS
PARTNERSHIPS INCLUDING PROFESSIONAL CORPORATIONS
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
To Call Writer Directly: Facsimile:
(312) 861-2000 (312) 861-2200
February 17, 1999
EXHIBIT 5.1
Dura Automotive Systems, Inc.
4508 IDS Center
Minneapolis, Minnesota 55402
Excel Industries, Inc.
1120 North Main Street
Elkhart, Indiana 46514
Re: Dura Automotive Systems, Inc.
Registration Statement on Form S-4
(Registration No. 333-71483)____
Dear Ladies & Gentlemen:
We are acting as special counsel to Dura Automotive Systems, Inc., a
Delaware corporation (the "Company"), in connection with the proposed
registration of 5,335,932 shares (the "Shares") of its Class A Common Stock, par
value $.01 per share (the "Class A Common Stock") pursuant to a Registration
Statement on Form S-4, originally filed with the Securities and Exchange
Commission (the "Commission") on January 29, 1999 under the Securities Act of
1933, as amended (the "Act") (such Registration Statement, as amended or
supplemented, is hereinafter referred to as the "Registration Statement"). The
Shares are to be issued to the shareholders of Excel Industries, Inc., an
Indiana corporation ("Excel"), pursuant to an Agreement and Plan of Merger,
dated as of January 19, 1999, among the Company, Excel and Windows Acquisition
Corporation, a Delaware corporation (the "Merger Agreement").
In that connection, we have examined such corporate proceedings, documents,
records and matters of law as we have deemed necessary to enable us to render
this opinion.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
document submitted to us as copies and the authenticity of the originals of all
documents submitted to us as copies. We have also assumed the legal capacity of
all natural persons, the genuineness of the signatures of persons signing all
documents in connection with which this opinion is rendered, the authority of
such persons signing on behalf of the parties thereto other than the Company and
the due authorization, execution and delivery of all documents by the parties
thereto other than the Company. As to any facts material to the opinions
expressed herein, we have relied upon the statements and representations of
officers and other representatives of the Company and others. For purposes of
numbered paragraph 1, we have relied exclusively upon certificates issued by
governmental authorities in the relevant jurisdictions and such opinion is not
intended to provide any conclusion or assurance beyond that conveyed by such
certificates.
Our opinion expressed below is subject to the qualifications that we express
no opinion as to the applicability of, compliance with, or effect of any laws
except the internal laws of the State of Illinois, the General Corporation Law
of the United State of Delaware (the "DGCL") and the federal law of the United
States of America.
<PAGE>
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, we hereby advise you
that in our opinion:
(1) The Company is a corporation existing and in good standing under the laws of
the State of Delaware; and
(2) The Shares have been duly authorized and approved for issuance by the Board
of Directors of the Company in accordance with the terms of the Merger
Agreement, and when (i) the Registration Statement becomes effective under
the Act, (ii) the stockholders of the Company have taken all necessary
action to approve the issuance of the Shares, (iii) the Shares have been
issued in accordance with the terms of the Merger Agreement and delivered to
the shareholders of Excel in exchange for their shares of common stock of
Excel, and (iv) certificates representing the Shares have been duly executed
and delivered on behalf of the Company and duly registered by the Company's
transfer agent/registrar, the Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. We also consent to the reference to
our firm under the heading "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission.
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the securities
or "Blue Sky" laws of the various states to the issuance and sale of the Shares.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the State of Illinois, the DGCL or the federal law of the United States
be changed by legislative action, judicial decision or otherwise.
This opinion is furnished to the Company pursuant to the applicable rules
and regulations promulgated under the Act in connection with the filing of the
Registration Statement. This opinion is furnished to Excel pursuant to Section
6.2(b)(1) of the Merger Agreement.
Very truly yours,
/s/ Kirkland & Ellis
KIRKLAND & ELLIS
<PAGE>
KIRKLAND & ELLIS
PARTNERSHIPS INCLUDING PROFESSIONAL CORPORATIONS
200 East Randolph Drive
Chicago, Illinois 60601
To Call Writer Direct: Facsimile:
312 861-2000 312 861-2200
February 17, 1999
Dura Automotive Systems, Inc.
4508 IDS Center
Minneapolis, Minnesota 55402
Re: Dura Automotive Systems, Inc., Registration Statement on Form S-4
(Registration No. 333-71483)
Ladies and Gentlemen:
In connection with the preparation of the Registration Statement (as
defined below) for the registration under the Securities Act of 1933, as amended
(the "Act"), of 5,335,932 shares of the Class A Common Stock, par value $0.01
per share (the "Common Stock"), of Dura Automotive Systems, Inc. (the
"Company"), to be issued to shareholders of Excel Industries, Inc., an Indiana
corporation ("Excel"), in connection with the merger (the "Merger") of Excel
with and into Windows Acquisition Corporation, a Delaware corporation and wholly
owned subsidiary of the Company ("Merger Sub"), you have requested our opinion
concerning certain statements set forth in the Form S-4 Registration Statement
filed with the Securities and Exchange Commission under the Act (the
"Registration Statement").
Based on the foregoing, we hereby confirm to you that the statements of
law and legal conclusions set forth in the Registration Statement under the
caption "Certain Federal Income Tax Consequences of the Merger" regarding the
tax consequences of the Merger to the Company, Merger Sub, Excel and the
shareholders of Excel represent, subject to the qualifications and
limitations set forth therein, the opinion of Kirkland & Ellis, counsel to
the Company.
The opinions set forth therein are based on the applicable provisions of
the Internal Revenue Code of 1986, as amended; the Treasury Regulations
promulgated or proposed thereunder; current positions of the Internal Revenue
Service (the "IRS") contained in published revenue rulings, revenue
procedures and announcements; existing judicial decisions; and other
applicable authorities.
In conclusion, we should note that unlike a ruling from the IRS, opinions
of counsel are not binding on the IRS. Hence, no assurance can be given that
the opinion stated in this letter will not be successfully challenged by the IRS
or rejected by a court. We express no opinion concerning any Federal income tax
matter other than that discussed therein.
Very truly yours,
/s/ Kirkland & Ellis
----------------------
KIRKLAND & ELLIS
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
February 17, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Grand Rapids, Michigan,
February 17, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Stamford, Connecticut,
February 17, 1999
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-4 of Dura
Automotive Systems, Inc. of our report dated February 19, 1998 appearing on page
16 of Excel Industries, Inc.'s Annual Report on Form 10-K for the year ended
December 27, 1997. We also consent to the incorporation by reference of our
report on the Financial Statement Schedule, which appears on page 39 of such
Annual Report on Form 10-K. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Indianapolis, Indiana
February 12, 1999
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
of Dura Automotive Systems, Inc. on Form S-4 of our report dated August 13,
1998, on our audit of the consolidated financial statements of Schade GmbH & Co
KG as of June 30, 1998 and for the fiscal year then ended which report was
included in Form 8-K/A of Excel Industries, Inc. dated November 12, 1998.
WRT Revision und Treuhand GmbH
Wirtschaftsprufungsgesellschaft
Steuerberatungsgesellschaft
- -Dr. Weckerle-
Wirtschaftprufer
January 28, 1999
<PAGE>
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the registration statement on Form S-4 (SEC
No. 333-71483) dated 29 January 1999 of Dura Automotive Systems, Inc. of our
report dated 7 September 1998, with respect to the consolidated balance sheets
of Adwest Automotive Plc and its subsidiaries at 30 June 1998 and 1997, and the
related consolidated profit and loss accounts, statements of movements in
shareholders' equity and consolidated cash flow statements for each of the years
in the three year period ended 30 June 1998 and to the reference to our firm
under the heading "Experts" in the prospectus.
KPMG Audit Plc
February 17, 1999
<PAGE>
EXHIBIT 99.1
FORM OF ELECTION AND LETTER OF TRANSMITTAL
To accompany certificates representing shares of common stock
("Excel Common Stock"), no par value per share,
of
EXCEL INDUSTRIES, INC., AN INDIANA CORPORATION
("Excel")
when submitted in connection with an election to receive (i) cash, (ii) shares
of Class A Common Stock, par value $0.01 per share ("Dura Class A Common
Stock"), of Dura Automotive Systems, Inc., a Delaware corporation ("Dura"), or
(iii) a combination of cash and shares of Dura Class A Common Stock pursuant to
the Agreement and Plan of Merger dated as of January 19, 1999 (the "Merger
Agreement") among Dura, Windows Acquisition Corporation, an Indiana corporation
and a wholly owned subsidiary of Dura ("MergerSub"), and Excel, pursuant to
which Excel will be merged with and into MergerSub (the "Merger"). All
references herein to Excel Common Stock shall include the preferred stock
purchase rights associated with such common stock.
The Exchange Agent for the Merger is:
FIRSTAR BANK MILWAUKEE, N.A.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
BY MAIL COURIER: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT:
- -------------------------------------------------------------------------------------------
Firstar Bank Milwaukee, N.A. (for Eligible Institutions Firstar Bank Milwaukee, N.A.
P.O. Box 2077 only) 1555 N. River Center Dr., Suite
Milwaukee, Wisconsin 53201-2077 301
Attn: Corporate Trust Services Milwaukee, Wisconsin 53212
Attn: Corporate Trust Services
- -------------------------------------------------------------------------------------------
</TABLE>
For Confirmation Telephone:
(414) 276-3737 or (800) 637-7549
DELIVERY OF THIS FORM OF ELECTION AND LETTER OF TRANSMITTAL TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS FORM OF ELECTION AND
LETTER OF TRANSMITTAL VIA A FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY TO THE EXCHANGE AGENT.
The Information Agent for the Merger is:
Georgeson & Co.
Wall Street Plaza
New York, New York 10005
Call Collect: (212) 440-9800
Call Toll Free: (800) 223-2064
Banks and Brokers Call: (212) 440-9800
TO BE EFFECTIVE, THIS FORM OF ELECTION AND LETTER OF TRANSMITTAL, TOGETHER
WITH YOUR STOCK CERTIFICATES (OR A GUARANTEE OF DELIVERY OF
<PAGE>
SUCH STOCK CERTIFICATES AS SET FORTH IN GENERAL INSTRUCTION 7), MUST BE RECEIVED
BY THE EXCHANGE AGENT BEFORE THE ELECTION DEADLINE SPECIFIED BELOW.
BOX A: ELECTION AND DESCRIPTION OF SHARES OF EXCEL COMMON STOCK
See "Special Election Instructions" and General Instruction 3.
Please list the number of shares of Excel Common Stock held by you in which
you wish to make the following elections:
<TABLE>
<S> <C>
Number of Shares Subject to Stock Election:
--------------
Number of Shares Subject to Cash Election:
--------------
Number of Shares Subject to Non-Election:
--------------
Total Numbered Shares Held by You:
----------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
NUMBER OF SHARES
REPRESENTED BY EACH
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) CERTIFICATE (OR
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE COVERED BY A GUARANTEE
APPEAR(S) ON CERTIFICATES(S)) NUMBER** OF DELIVERY)*
<S> <C> <C>
- -------------------------------------------------------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
Total Shares
- -------------------------------------------------------------------------------------------
</TABLE>
*In the case of a delivery using the Guarantee of Delivery procedures, exactly
as name(s) will appear on the certificate(s) when delivered.
** Certificate numbers are not required if certificates will be delivered using
the Guarantee of Delivery procedures.
PLEASE READ THE SPECIAL ELECTION INSTRUCTIONS AND THE GENERAL INSTRUCTIONS
IN THIS FORM OF ELECTION AND LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING
THIS FORM OF ELECTION AND LETTER OF TRANSMITTAL.
THE ELECTION DEADLINE IS 5:00 P.M. (EASTERN TIME) ON MARCH 22, 1999. A
COMPLETED FORM OF ELECTION AND LETTER OF TRANSMITTAL, TOGETHER WITH YOUR EXCEL
STOCK CERTIFICATES OR A GUARANTEE OF DELIVERY (EACH AS DEFINED BELOW), MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE ELECTION DEADLINE IN ORDER FOR ANY
CASH ELECTION OR STOCK ELECTION (EACH AS DEFINED BELOW) MADE HEREBY TO BE
EFFECTIVE. IF A PROPERLY COMPLETED FORM OF ELECTION AND LETTER OF TRANSMITTAL,
TOGETHER WITH YOUR EXCEL STOCK CERTIFICATES OR A GUARANTEE OF DELIVERY, IS NOT
RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE ELECTION DEADLINE, YOU WILL BE
DEEMED TO HAVE MADE A NON-ELECTION WITH RESPECT TO YOUR SHARES, AND THE FORM OF
MERGER CONSIDERATION (AS DEFINED BELOW) WHICH YOU WILL BE ENTITLED TO RECEIVE
WILL BE DETERMINED BY THE PROVISIONS OF THE MERGER AGREEMENT. IF YOU FAIL TO
<PAGE>
INDICATE A CASH ELECTION OR STOCK ELECTION IN BOX A ABOVE YOU WILL BE DEEMED TO
HAVE INDICATED A NON-ELECTION. IF YOUR EXCEL STOCK CERTIFICATES ARE NOT
AVAILABLE AT THE TIME YOU SEND A FORM OF ELECTION AND LETTER OF TRANSMITTAL TO
THE EXCHANGE AGENT, YOU MAY INSTEAD PROVIDE A GUARANTEE OF DELIVERY OF YOUR
EXCEL STOCK CERTIFICATES AS SET FORTH IN GENERAL INSTRUCTION 7, IN WHICH CASE
YOU MUST, WITHIN THREE TRADING DAYS ON THE NEW YORK STOCK EXCHANGE, INC.
("NYSE") THEREAFTER, DELIVER TO THE EXCHANGE AGENT THE EXCEL STOCK CERTIFICATES
REPRESENTING THE SHARES IN RESPECT OF WHICH AN ELECTION IS BEING MADE.
Copies of the Joint Proxy Statement/Prospectus of Dura and Excel dated
February 17, 1999, relating to the Merger (the "Joint Proxy
Statement/Prospectus"), as well as extra copies of this Form of Election and
Letter of Transmittal, may be requested from Georgeson & Co., Inc., the
Information Agent, at the toll-free phone number shown on the cover, or from the
Exchange Agent at the addresses or the toll-free number shown on the cover. The
return of this Form of Election and Letter of Transmittal to the Exchange Agent
is acknowledgment of the receipt of the Joint Proxy Statement/Prospectus.
If your Excel Stock Certificate(s) have been lost, stolen or destroyed and
you require assistance in replacing them, see General Instruction 12 below. You
cannot submit an effective Form of Election and Letter of Transmittal without
enclosing your Excel Stock Certificate(s) or a Guarantee of Delivery with this
Form of Election and Letter of Transmittal. If you submit a Guarantee of
Delivery, your Excel Stock Certificates must be delivered within three NYSE
trading days thereafter. Therefore, if you wish to make an Election, it is
critical that you act immediately to obtain replacement stock certificates.
COMPLETING AND RETURNING THIS FORM OF ELECTION DOES NOT HAVE THE EFFECT OF
CASTING A VOTE WITH RESPECT TO APPROVAL OF THE MERGER OR THE MERGER AGREEMENT AT
THE EXCEL SPECIAL MEETING (AS DEFINED BELOW). TO VOTE AT THE EXCEL SPECIAL
MEETING, YOU MUST COMPLETE, SIGN AND RETURN THE PROXY CARD THAT ACCOMPANIED THE
JOINT PROXY STATEMENT/PROSPECTUS, OR YOU MUST ATTEND THE EXCEL SPECIAL MEETING
IN PERSON AND VOTE YOUR SHARES THEREAT. IF YOU HAVE ANY QUESTIONS CONCERNING THE
VOTING OF YOUR SHARES OF EXCEL COMMON STOCK, PLEASE CALL THE INFORMATION AGENT
TOLL-FREE AT (800) 223-2064.
Ladies and Gentlemen:
Pursuant to the Merger Agreement and subject to the proration procedures
included therein and described in the Joint Proxy Statement/Prospectus, the
undersigned hereby surrenders to Firstar Bank Milwaukee, N.A., as Exchange
Agent, certificate(s) representing all of the shares of Excel Common Stock (each
such certificate, a "Excel Stock Certificate") listed in Box A above and (A)
hereby elects, in the manner indicated in Box A above, to have each of such
shares of Excel Common Stock represented by such Excel Stock Certificates
converted into the right to receive EITHER (i) $25.50 in cash, without interest
(a "Cash Election"), OR (ii) 0.8 of a share of Dura Class A Common Stock (a
"Stock Election" and together with a Cash Election, an "Election"), or (B)
hereby states that the undersigned has no preference as among the Cash Election
or Stock Election (a "Non-Election"). In addition, it is understood that the
Exchange Agent will pay cash in lieu of any fractional shares of Dura Class A
Common Stock otherwise issuable in connection with the Merger. Any cash
(excluding cash received in lieu of fractional shares) and Dura Class A Common
Stock received by holders of Excel Common Stock in connection with the Merger is
hereinafter referred to as "Cash Consideration" and "Stock Consideration,"
respectively. The Cash Consideration, Stock Consideration and cash paid in lieu
of fractional shares are collectively referred to as the "Merger Consideration."
The undersigned understands that each Election is subject to certain terms,
conditions and limitations that have been set forth in the Merger Agreement
including, but not limited to, the fact that 50% of the outstanding shares of
Excel Common Stock will be converted into the right to receive cash in the
Merger and 50% of the outstanding shares of Excel Common Stock will be converted
into the right to receive Dura
<PAGE>
Class A Common Stock in the Merger. THE UNDERSIGNED ACKNOWLEDGES THAT THE MERGER
AGREEMENT PROVIDES FOR PRORATION IF, AS A RESULT OF THE ELECTIONS MADE, EITHER
OF THE FOREGOING LIMITATIONS WOULD OTHERWISE BE EXCEEDED, WITH THE RESULT THAT
THE UNDERSIGNED MAY RECEIVE A COMBINATION OF CASH AND DURA CLASS A COMMON STOCK
THAT DIFFERS FROM THE ELECTION MADE HEREBY.
If the undersigned is acting in a representative or fiduciary capacity for a
particular beneficial owner, the undersigned hereby certifies that this Form of
Election and Letter of Transmittal covers all of the shares of Excel Common
Stock owned by the undersigned in a representative or fiduciary capacity for
such particular beneficial owner.
The undersigned hereby represents and warrants that the undersigned is, as
of the date hereof, and will be, as of the Effective Time, the registered holder
of the shares of Excel Common Stock represented by the Excel Stock
Certificate(s) surrendered herewith, with good title to such shares of Excel
Common Stock and full power and authority (i) to sell, assign and transfer such
shares free and clear of all liens, restrictions, charges and encumbrances, and
not subject to any adverse claims and (ii) to make the Election indicated
herein. The undersigned will, upon request, execute any additional documents
necessary or desirable to complete the surrender and exchange of such shares of
Excel Common Stock. The undersigned hereby irrevocably appoints the Exchange
Agent, as agent of the undersigned, to effect the exchange pursuant to the
Merger Agreement and the instructions hereto. All authority conferred or agreed
to be conferred in this Form of Election and Letter of Transmittal shall be
binding upon the successors, assigns, heirs, executors, administrators and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned.
SPECIAL ELECTION INSTRUCTIONS
The appropriate share information must be provided in Box A above in order
to make a Cash Election and/or Stock Election. A Non-Election may be selected by
those wishing to make a Non-Election, but any Form of Election and Letter of
Transmittal received by the Exchange Agent without any share information
provided will be treated as indicating a Non-Election.
Your choice of Election is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
<S> <C>
WHAT YOU WILL RECEIVE FOR EACH SHARE OF
ELECTION EXCEL COMMON STOCK
- -------------------------------------------------------------------------------------------
Cash Election................... $25.50 in cash, without interest
Stock Election.................. 0.8 of a share of Dura Class A Common Stock
- -------------------------------------------------------------------------------------------
</TABLE>
ALL ELECTIONS ARE SUBJECT TO THE PRORATION PROCEDURES SET FORTH IN SECTION
1.5 OF THE MERGER AGREEMENT, A COPY OF WHICH IS ATTACHED TO THE JOINT PROXY
STATEMENT/PROSPECTUS AS APPENDIX A. THE PRORATION PROCEDURES ARE DESCRIBED UNDER
THE CAPTION "THE MERGER AGREEMENT--ELECTIONS" IN THE JOINT PROXY
STATEMENT/PROSPECTUS AND IN GENERAL INSTRUCTION 3 BELOW. YOU ARE URGED TO READ
THE JOINT PROXY STATEMENT/ PROSPECTUS IN ITS ENTIRETY BEFORE COMPLETING THIS
FORM OF ELECTION AND LETTER OF TRANSMITTAL.
ALL HOLDERS OF EXCEL COMMON STOCK WISHING TO MAKE AN ELECTION MUST DELIVER
TO THE EXCHANGE AGENT A PROPERLY COMPLETED FORM OF ELECTION AND LETTER OF
TRANSMITTAL PRIOR TO THE ELECTION DEADLINE (WHICH IS 5:00 P.M. (EASTERN TIME) ON
MARCH 22, 1999. ALL HOLDERS SUBMITTING A FORM OF ELECTION AND LETTER OF
TRANSMITTAL THAT IS RECEIVED BY THE EXCHANGE AGENT AFTER THE ELECTION DEADLINE
WILL BE DEEMED TO HAVE MADE A NON-ELECTION REGARDLESS OF THE ELECTION SPECIFIED
ON SUCH FORM.
<PAGE>
The Exchange Agent reserves the right to deem that you have made a
Non-Election if:
A. No Election choice is indicated in Box A above;
B. You fail to follow the instructions on this Form of Election and Letter
of Transmittal (including failure to submit your Excel Stock
Certificate(s) or a Guarantee of Delivery) or otherwise fail to properly
make an Election;
C. A completed Form of Election and Letter of Transmittal (including
submission of your Excel Stock Certificate(s) or a Guarantee of Delivery)
is not actually received by the Exchange Agent prior to the Election
Deadline; or
D. You return this Form of Election and Letter of Transmittal with a
Guarantee of Delivery but do not deliver the Excel Stock Certificates
representing the shares in respect of which the Election is being made
within three NYSE trading days thereafter.
Notwithstanding anything to the contrary in this Form of Election and Letter
of Transmittal, the Exchange Agent reserves the right to waive any flaws in a
completed Form of Election and Letter of Transmittal but shall be under no
obligation to do so.
In order to receive the Merger Consideration, this Form of Election and
Letter of Transmittal must be (i) completed and signed in the space provided
below and on the Substitute Form W-9 and (ii) mailed or delivered with your
Excel Stock Certificate(s) or a Guarantee of Delivery to the Exchange Agent at
either of the addresses set forth above. In order to properly make an Election,
these actions must be taken in a timely fashion such that the Form of Election
and Letter of Transmittal and other required documents are received by the
Exchange Agent prior to the Election Deadline.
The effectiveness of Elections received on the Election Deadline and
accompanied by a Guarantee of Delivery will not be finally determined until
three NYSE trading days after the Election Deadline. As a result, the Merger
Consideration to which a holder of Excel Common Stock is entitled (and whether
any proration is necessary) may be delayed for up to three NYSE trading days.
The Merger Consideration is expected to be mailed promptly following such
determination or, if later, promptly after the Merger is consummated.
Unless otherwise indicated below under "Special Issuance and Payment
Instructions," in exchange for the enclosed Excel Stock Certificates, the Merger
Consideration will be delivered in the name of the undersigned. Similarly,
unless otherwise indicated below under "Special Delivery Instructions," the
Merger Consideration will be mailed to the undersigned at the address shown in
Box A above. In the event that the "Special Issuance and Payment Instructions"
box is completed, the Merger Consideration will be issued in the name of, and
will be mailed to, the person or entity so indicated at the address so
indicated, but only after the Exchange Agent has been provided with satisfactory
evidence of the payment of, or exemption from payment of, any applicable stock
transfer taxes payable on account of the transfer to such person or entity prior
to the delivery of the Merger Consideration. In addition, appropriate signature
guarantees must be included with respect to shares of Excel Common Stock for
which Special Issuance and Payment Instructions are given.
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
____________________________________________________________________________
____________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: ________________________
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by
person(s) authorized to become registered holders(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.: _______________________________________
Employer Identification or Social Security No.: ____________________________
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
____________________________________________________________________________
AUTHORIZED SIGNATURE
__________________________________________________________________________
NAME (PLEASE PRINT)
__________________________________________________________________________
NAME OF FIRM
__________________________________________________________________________
ADDRESS
__________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
AREA CODE AND TELEPHONE NO.
Dated: ________________________
- --------------------------------------------------------------------------------
<PAGE>
SPECIAL ISSUANCE
GUARANTEE OF DELIVERY
(TO BE USED IF EXCEL STOCK CERTIFICATES
ARE NOT SURRENDERED HEREWITH)
(See General Instruction 7)
THE UNDERSIGNED (CHECK APPROPRIATE BOX BELOW) GUARANTEES TO DELIVER TO THE
EXCHANGE AGENT AT THE APPROPRIATE ADDRESS SET FORTH ABOVE THE CERTIFICATES FOR
SHARES OF EXCEL COMMON STOCK COVERED BY THIS FORM OF ELECTION AND LETTER OF
TRANSMITTAL NO LATER THAN 5:00 P.M. (EASTERN TIME), ON THE THIRD NYSE TRADING
DAY AFTER THE DATE OF EXECUTION OF THIS GUARANTEE OF DELIVERY.
- --------------------------------------------------------------------------------
/ / A member of a registered national -------------------------------------
securities exchange Firm (Please Print or Type)
- --------------------------------------------------------------------------------
/ / A member of the National -------------------------------------
Association of Securities Dealers, Authorized Signature
Inc.
- --------------------------------------------------------------------------------
/ / A commercial bank or trust company -------------------------------------
in the United States Address
- --------------------------------------------------------------------------------
Dated: -------------------------------------
- ----------------------------------- Area Code and Phone Number
- --------------------------------------------------------------------------------
- -------------------------------------------
SPECIAL ISSUANCE AND
PAYMENT INSTRUCTIONS
(SEE GENERAL INSTRUCTIONS 6 AND 11)
To be completed ONLY if the Merger Consideration (whether cash, Dura
Class A Common Stock or a combination thereof) is to be issued in the name
of, and mailed to, someone other than the undersigned.
Issue the Merger Consideration (whether cash, Dura Class A Common Stock
or a combination thereof) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NO.)
If you complete this box, you will need a signature guarantee by an
eligible institution. See General Instruction 6.
- -------------------------------------------
- -------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE GENERAL INSTRUCTION 11)
To be completed ONLY if the Merger Consideration (whether cash, Dura
Class A Common Stock or a combination thereof) is to be mailed to the
undersigned at an address other than that shown in Box A above.
Mail the Merger Consideration (whether cash, Dura Class A Common Stock
or a combination thereof) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NO.)
Check this box if this is a permanent change of address. / /
- ------------------------------------------
<PAGE>
GENERAL INSTRUCTIONS
This Form of Election and Letter of Transmittal is to be completed and
submitted to the Exchange Agent prior to the Election Deadline by those holders
of shares of Excel Common Stock desiring to make a Cash Election or Stock
Election. It may also be used as a letter of transmittal for holders of Excel
Common Stock who do not complete and submit the Form of Election and Letter of
Transmittal prior to the Election Deadline or at any time by any holders of
Excel Common Stock who wish to make a Non-Election. Until a record holder's
Excel Stock Certificates are received by the Exchange Agent at one of the
addresses set forth on the cover, together with such documents as the Exchange
Agent may require, and until the same are processed for exchange by the Exchange
Agent, such holders will not receive any certificates representing shares of the
Stock Consideration or the check representing the Cash Consideration or cash in
lieu of fractional shares (if any) in exchange for their Excel Stock
Certificates. No interest will accrue on the Cash Consideration or any cash in
lieu of fractional shares. Holders of Excel Common Stock receiving Stock
Consideration will be entitled to any dividends or other distributions paid on
Dura Class A Common Stock after the Effective Time. If your stock certificate(s)
are lost, stolen or destroyed, please refer to General Instruction 12 below.
A HOLDER OF EXCEL COMMON STOCK MUST FILL IN THE APPROPRIATE ELECTION
INFORMATION IN BOX A ABOVE TO MAKE A CASH ELECTION AND/OR STOCK ELECTION.
Your election is subject to certain terms, conditions and limitations which
are set forth in the Merger Agreement and described in the Joint Proxy
Statement/Prospectus. The Merger Agreement is included as Appendix A to the
Joint Proxy Statement/Prospectus. Copies of the Joint Proxy Statement/Prospectus
may be requested from the Information Agent or from the Exchange Agent at the
addresses or toll-free numbers shown on the cover. The delivery of this Form of
Election and Letter of Transmittal to the Exchange Agent is acknowledgment of
the receipt of the Joint Proxy Statement/Prospectus.
1. ELECTION DEADLINE. THE ELECTION DEADLINE IS 5:00 P.M. (EASTERN TIME) ON
MARCH 22, 1999, THE LAST BUSINESS DAY PRIOR TO THE DATE OF THE SPECIAL MEETING
OF STOCKHOLDERS OF EXCEL CALLED TO APPROVE THE MERGER (THE "EXCEL SPECIAL
MEETING") AND THE SPECIAL MEETING OF STOCKHOLDERS OF DURA CALLED TO APPROVE THE
ISSUANCE OF SHARES OF DURA COMMON STOCK IN THE MERGER (THE "DURA SPECIAL
MEETING"), UNLESS OTHERWISE EXTENDED BY MUTUAL AGREEMENT OF DURA AND EXCEL. For
any Cash Election or Stock Election contained herein to be effective, this Form
of Election and Letter of Transmittal, properly completed, and the related Excel
Stock Certificate(s) (or a Guarantee of Delivery) must be received by the
Exchange Agent at one of the addresses shown above on this Form of Election and
Letter of Transmittal at or prior to the Election Deadline. ANY EXCEL STOCK
CERTIFICATES FOR WHICH A GUARANTEE OF DELIVERY IS PROVIDED MUST IN FACT BE
DELIVERED WITHIN THREE NYSE TRADING DAYS AFTER THE DATE SUCH GUARANTEE OF
DELIVERY IS EXECUTED OR YOU WILL BE DEEMED TO HAVE MADE A NON-ELECTION. The
Exchange Agent will determine whether any Form of Election and Letter of
Transmittal or any Excel Stock Certificates in respect of a Guarantee of
Delivery are received on a timely basis. Any such determinations made in good
faith will be conclusive and binding.
2. REVOCATION OR CHANGE OF FORM OF ELECTION AND LETTER OF TRANSMITTAL. A
Form of Election and Letter of Transmittal may be (i) revoked if the Exchange
Agent receives written notice prior to the Election Deadline from the record
holder of the shares covered by such Election or (ii) changed if the Exchange
Agent receives a completed replacement Form of Election and Letter of
Transmittal prior to the Election Deadline from the record holder of the shares
covered by such Election. Any person who has effectively revoked a Form of
Election and Letter of Transmittal may, by signed and written notice to the
Exchange Agent, request the return of the Excel Stock Certificates submitted to
the Exchange Agent and such Excel Stock Certificates will be returned without
charge to such person promptly after receipt of such request.
3. ELECTION PROCEDURES/PRORATION. To properly complete Box A, (i) the
undersigned must indicate the number of shares of Excel Common Stock subject to
a Cash Election, Stock Election or Non-Election (if no amounts are indicated, a
Non-Election will be deemed to have been made); (ii) the name and
<PAGE>
address of the registered holder(s) must be set forth in the column under the
heading "Name and Address of Registered Holder(s)" and (iii) either (a) the
number of each Excel Stock Certificate surrendered herewith must be written in
the column under the heading "Certificate Number" or (b) if the Guarantee of
Delivery procedures are used, the number of shares represented by the Excel
Stock Certificates to be delivered pursuant to such procedures must be written
in the column under the heading "Number of Shares Represented by each
Certificate," but no certificate number is required. As set forth in the Joint
Proxy Statement/Prospectus, 50% of the outstanding shares of Excel Common Stock
will be exchanged for cash and 50% of the outstanding shares of Excel Common
Stock will be exchanged for Dura Class A Common Stock. If the Elections result
in an oversubscription of either the Cash Consideration or the Stock
Consideration, the procedures for allocating the Merger Consideration set forth
in Section 1.5 of the Merger Agreement and described in the Joint Proxy
Statement/Prospectus will be followed by the Exchange Agent. Accordingly, there
can be no assurance that a Cash Election or Stock Election made by you will
result in your receipt of the desired type and amount of Merger Consideration.
See the Joint Proxy Statement/Prospectus under the caption "The Merger
Agreement--Elections." The effectiveness of Elections that are accompanied by
Guarantees of Delivery may not be finally determined until three NYSE trading
days after the Election Deadline. As a result, it is expected that the final
determination of the Merger Consideration to which a holder of Excel Common
Stock is entitled (and whether any proration is necessary) will take place on or
around March 26, 1999. The Merger Consideration is expected to be mailed
promptly following such determination, or, if later, promptly after the Merger
is consummated.
4. TERMINATION OF MERGER AGREEMENT. Consummation of the Merger is subject
to the required approval of the stockholders of Excel and Dura and to the
satisfaction of certain other conditions. No payments related to any surrender
of Excel Stock Certificates will be made prior to the consummation of the Merger
and no payments will be made if the Merger Agreement is terminated. If the
Merger Agreement is terminated, all Elections will be void and of no effect and
the Exchange Agent will promptly return all Excel Stock Certificates previously
received by it. In such event, shares of Excel Common Stock held through The
Depository Trust Company are expected to be available for sale or transfer
promptly following such termination. Certificates representing shares of Excel
Common Stock held of record directly by the beneficial owners of such shares of
Excel Common Stock will be returned by the Exchange Agent without charge to the
holder as promptly as practicable by first class, insured mail.
5. NO FRACTIONAL INTERESTS. No certificate representing a fraction of a
share of Dura Class A Common Stock will be issued. In lieu thereof, the Exchange
Agent will remit on Dura's behalf cash, without interest, in an amount equal to
the product of (i) the per share closing price on the NYSE of Dura Class A
Common Stock on the trading day immediately prior to the Effective Time and (ii)
the fractional interest to which a holder of Excel Common Stock would otherwise
be entitled (after taking into account all shares of Excel Common Stock then
held of record by such holder). No such holder of Excel Common Stock shall be
entitled to dividends, voting rights or any other rights in respect of any
fractional share.
6. GUARANTEE OF SIGNATURES. If the Merger Consideration is to be issued in
the name of the registered holder(s) as inscribed on the surrendered Excel
Certificate(s), the signatures on this Form of Election and Letter of
Transmittal need not be guaranteed. If the "Special Issuance and Payment
Instructions" box has been completed so that payment is to be made to someone
other than the registered holder(s) of Excel Common Stock with respect to the
surrendered Excel Stock Certificate(s), signatures on this Form of Election and
Letter of Transmittal must be guaranteed by a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Security Transfer Agent's Medallion Program, the New
York Stock Exchange Medallion Program or the Stock Exchange Medallion Program.
Public notaries cannot execute acceptable guarantees of signatures.
7. DELIVERY OF FORM OF ELECTION AND LETTER OF TRANSMITTAL AND EXCEL STOCK
CERTIFICATES; GUARANTEE OF DELIVERY. This Form of Election and Letter of
Transmittal, properly completed and duly executed, together with your Excel
Stock Certificate(s) or a Guarantee of Delivery, should be delivered to the
Exchange Agent at one of the addresses set forth above. A Guarantee of Delivery
of such Excel Stock Certificates must be made by a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an
<PAGE>
office or correspondent in the United States, AND ANY EXCEL STOCK CERTIFICATES
COVERED BY A GUARANTEE OF DELIVERY MUST IN FACT BE DELIVERED TO THE EXCHANGE
AGENT WITHIN THREE NYSE TRADING DAYS AFTER THE DATE OF EXECUTION OF SUCH
GUARANTEE OF DELIVERY. Failure to deliver such Excel Stock Certificates within
such three day period shall invalidate any Election, and a Non-Election shall be
deemed to have been made. THE METHOD OF DELIVERY OF THE FORM OF ELECTION AND
LETTER OF TRANSMITTAL, THE EXCEL STOCK CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER OF SHARES OF EXCEL COMMON
STOCK. IF YOU CHOOSE TO SEND THE MATERIALS BY MAIL, IT IS RECOMMENDED THAT THEY
BE SENT BY REGISTERED MAIL, APPROPRIATELY INSURED, WITH RETURN RECEIPT
REQUESTED. Delivery of the materials will be deemed effective, and risk of loss
with respect thereto will pass, only when such materials are actually received
by the Exchange Agent.
8. SHARES HELD BY NOMINEES, TRUSTEES OR OTHER REPRESENTATIVES. Holders of
record of shares of Excel Common Stock who hold such shares as nominees,
trustees or in other representative or fiduciary capacities (a "Representative")
may submit one or more Forms of Election and Letter of Transmittal covering the
aggregate number of shares of Excel Common Stock held by such Representative for
the beneficial owners for whom the Representative is making an Election or a
Non-Election, provided that such Representative certifies that each Form of
Election and Letter of Transmittal covers all of the shares of Excel Common
Stock held by such Representative for any single beneficial owner. Any
Representative that makes an Election or a Non-Election may be required to
provide the Exchange Agent with such documents and/or additional certifications,
if requested, in order to satisfy the Exchange Agent that such Representative
holds such shares of Excel Common Stock for a particular beneficial owner. If
any shares of Excel Common Stock are not covered by an effective Form of
Election and Letter of Transmittal, they will be deemed to be covered by a
Non-Election.
9. INADEQUATE SPACE. If the space provided herein is inadequate, the share
certificate numbers and the numbers of shares of Excel Common Stock represented
thereby should be listed on additional sheets and attached hereto.
10. SIGNATURES ON FORM OF ELECTION AND LETTER OF TRANSMITTAL, SHARE POWERS
AND ENDORSEMENTS.
(a) All signatures must correspond exactly with the name written on the
face of the Excel Stock Certificate(s) without alteration, variation
or any change whatsoever.
(b) If the Excel Stock Certificates surrendered are held of record by two
or more joint owners, all such owners must sign this Form of Election
and Letter of Transmittal.
(c) If any surrendered shares of Excel Common Stock are registered in
different names on several Excel Stock Certificate(s), it will be
necessary to complete, sign and submit as many separate Forms of
Election and Letter of Transmittal as there are different
registrations of Excel Stock Certificates.
(d) If this Form of Election and Letter of Transmittal is signed by a
person(s) other than the record holder(s) of the Excel Stock
Certificate(s) listed (other than as set forth in paragraph (e)
below), such certificates must be endorsed or accompanied by
appropriate share powers, in either case signed exactly as the
name(s) of the record holder(s) appears on such certificate(s).
(e) If this Form of Election and Letter of Transmittal 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 and such person is not the record holder of
the accompanying Excel Stock Certificates, he or she must indicate
the capacity when signing and must submit proper evidence of his or
her authority to act.
11. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. In the "Special Issuance
and Payment Instructions" box, indicate the name and/or address of the person(s)
to whom the Merger Consideration is to be issued and mailed only if the Merger
Consideration (whether cash, Dura Common Stock or a combination
<PAGE>
thereof) is to be issued in the name of someone other than the person(s) signing
this Form of Election and Letter of Transmittal. If the "Special Issuance and
Payment Instructions" box is completed, the Exchange Agent will issue the Merger
Consideration in the name of, and will mail the Merger Consideration to, the
person or entity so indicated at the address so indicated, but only after the
Exchange Agent has been provided with satisfactory evidence of the payment of,
or exemption from payment of, any applicable stock transfer taxes payable on
account of the transfer to such person or entity prior to the delivery of the
Merger Consideration. In the "Special Delivery Instructions" box, indicate the
address to which the Merger Consideration is to be mailed in the name of the
undersigned only if different from the address set forth in Box A.
12. LOST, STOLEN OR DESTROYED CERTIFICATES. You cannot submit an effective
Form of Election and Letter of Transmittal without enclosing your Excel Stock
Certificates with this Form of Election and Letter of Transmittal or providing a
Guarantee of Delivery followed within three NYSE trading days thereafter by the
Excel Stock Certificates. If your Excel Stock Certificate(s) have been lost,
stolen or destroyed, you are urged to call Chase Mellon Shareholder Services
LLC, Excel's transfer agent (the "Transfer Agent"), at 1-800-851-9677. The
Transfer Agent will forward additional documentation which you must complete in
order to obtain a replacement stock certificate. You may be required to post an
indemnity bond if so required by Dura.
13. MISCELLANEOUS. Dura and the Exchange Agent have the discretion to
determine whether a Form of Election and Letter of Transmittal has been properly
completed, signed and submitted or revoked and to disregard immaterial defects
in any Form of Election and Letter of Transmittal. The good faith decision of
Dura or the Exchange Agent in such matters shall be conclusive and binding. Dura
and the Exchange Agent are not under any duty to give notification of defects in
any Form of Election and Letter of Transmittal.
14. INFORMATION AND ADDITIONAL COPIES. Information and additional copies
of this Form of Election and Letter of Transmittal may be obtained from the
Information Agent by telephoning toll-free (800) 566-9061 or from the Exchange
Agent by telephoning toll-free (800) 637-7549.
IMPORTANT TAX INFORMATION
Under federal income tax law, the Exchange Agent is required to file a
report with the Internal Revenue Service ("IRS") disclosing any payments made to
a holder of Excel Common Stock pursuant to the Merger Agreement and to impose
31% backup withholding if required. If the correct certifications on Substitute
Form W-9 are not provided, a $50 penalty may be imposed on the holder by the IRS
and payments made for shares of Excel Common Stock may be subject to backup
withholding of 31%. Backup withholding is also required if the IRS notifies the
recipient that the recipient is subject to backup withholding as a result of a
failure to report all interest and dividends.
In order to avoid backup withholding resulting from a failure to provide a
correct certification, a holder of Excel Common Stock must, unless an exemption
applies, provide the Exchange Agent with his correct taxpayer identification
number ("TIN") on Substitute Form W-9 as set forth on this Form of Election and
Letter of Transmittal. Such person must certify under penalties of perjury that
such number is correct and that such holder is not otherwise subject to backup
withholding. The TIN that must be provided is that of the registered holder of
the Excel Common Stock. If the Excel Common Stock is held in more than one name
or is not registered in the name of the actual holder or if the Merger
Consideration is to be delivered to another person as provided in the box
entitled "Special Issuance and Payment Instructions," consult the enclosed
guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 and your tax advisor for additional guidance on which number to report.
The box in Part 3 of the Substitute Form W-9 should be checked if the
surrendering holder of Excel Common Stock has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near future. If the box
in Part 3 is checked and the Exchange Agent is not provided with a TIN, Dura
will withhold 31% of all such payments and dividends. A foreign person may
qualify as an exempt recipient by submitting to the Exchange Agent a properly
completed IRS Form W-8, signed under penalties of perjury, attesting to that
<PAGE>
person's exempt status. Foreign investors should consult their tax advisors
regarding the need to complete IRS Form W-8 and any other forms that may be
required.
Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
Please read the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional important
information on how to complete the Substitute Form W-9.
For a summary of the federal income tax consequences of the receipt of the
Merger Consideration, see "Certain Federal Income Tax Consequences of the
Merger" in the Joint Proxy Statement/Prospectus.
<TABLE>
<S> <C> <C> <C>
PAYER'S NAME: FIRSTAR BANK MILWAUKEE, N.A.
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN ------------------------
Form W-9 IN THE BOX AT RIGHT AND CERTIFY Social Security Number(s)
BY SIGNING AND DATING BELOW. OR
--------------------------
Employer Identification
Number
Department of the Treasury PART 2--Exempt Payees Name (if joint ownership,
Internal Revenue Service list first and circle the
name of the person or entity
whose number is entered in
Part 1
-----------------------------
Address (Number and Street)
-----------------------------
City, State and Zip Code
PART 3--AWAITING TIN ( )
CERTIFICATION--UNDER PENALTY OF PERJURY, I CERTIFY THAT: (1) The
number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
Payer's Request for (2) I am not subject to backup withholding because: (a) I am
Taxpayer Identification exempt from backup withholding, or (b) I have not been notified
Number "TIN" by the Internal Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am
no longer subject to backup withholding.
DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if
you have been notified PAYER'S REQUEST FOR TAXPAYER by the IRS
that you are subject to backup withholding because of
under-reported IDENTIFICATION NUMBER (TIN) 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 stating that you are no longer subject
to backup withholding, do not cross out item (2). If you are
exempt from backup withholding, check the box in Part 2 above.
SIGNATURE: ------------------------------------------------------------ DATE: ---------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM OF ELECTION AND LETTER OF
TRANSMITTAL, INCLUDING THE SUBSTITUTE FORM W-9, MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE MERGER
AGREEMENT. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL
DETAILS.
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 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 (a) 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 (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number, 31% of all reportable payments made to me
thereafter will be withheld until I provide such number.
Signature
------------------------------------------------------ Date
------------------
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PROXY
<S> <C>
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DURA AUTOMOTIVE SYSTEMS, INC.
SPECIAL MEETING OF STOCKHOLDERS
March 23, 1999
The undersigned stockholder of Dura Automotive Systems, Inc., a Delaware corporation (the "Company"), hereby appoints S.A.
Johnson, Karl F. Storrie and Robert R. Hibbs, or any of them, each with full power of substitution, as proxies or proxy of
the undersigned, to vote all the shares of Class A Common Stock, par value $.01 per share ("Class A Common Stock"), and
Class B Common Stock, par value $.01 per share, of the Company which the undersigned would be entitled to vote if personally
present at the Special Meeting of Stockholders of the Company to be held on March 23, 1999 at 9:00 a.m., local time, at
Dura's operating headquarters, 2791 Research Drive, Rochester Hills, Michigan, and at any adjournment or postponement
thereof, upon the proposals set forth on the reverse side and as described in the Joint Proxy Statement/Prospectus dated
February 17, 1999, and, in their discretion, upon all matters incident to the conduct of the Special Meeting and such other
matters as may properly be brought before the Special Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS.
This signed Proxy revokes all proxies previously given by the undersigned to vote at the Special Meeting of
Stockholders or any adjournment for postponement thereof. The undersigned hereby acknowledges receipt of the Notice of
Special Meeting of Stockholders and the Joint Proxy Statement/Prospectus relating to the Special Meeting of Stockholders.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE
(CONTINUED ON REVERSE SIDE)
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------------------
------- PLEASE MARK
YOUR VOTES AS
X INDICATED IN
------- THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS
1. Proposal to approve the issuance of shares of the Company's Class A Common Stock pursuant to an FOR AGAINST ABSTAIN
Agreement and Plan of Merger, dated as of January 19, 1999, by and among the Company, Excel
Industries, Inc. ("Excel") and Windows Acquisition Corporation under which Excel will become a / / / / / /
wholly owned subsidiary of the Company.
FOR AGAINST ABSTAIN
2. Proposal to approve and adopt the 1998 Dura Automotive Systems, Inc. 1998 Stock Incentive Plan
/ / / / / /
Signature(s) Date: , 1999
---------------------------------------------------------------------------- ------------------------
Note: This Proxy should be dated, signed by the stockholder(s) exactly as the name(s) appear(s) hereon, and returned
promptly in the enclosed envelope. Joint owners should each sign. Trustees, executors and others signing in a representative
capacity should indicate this capacity. An authorized officer may sign on behalf of a corporation and should indicate the
name of the corporation and his or her capacity.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXCEL INDUSTRIES, INC
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON MARCH 23, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints James O. Futterknecht, Jr.
and Ralph R. Whitney, Jr., and each of them with full power of substitution,
as proxies, to vote all shares of common stock, no par value, of Excel
Industries, Inc. ("Excel") that the undersigned is entitled in any capacity
to vote at the Special Meeting of Shareholders of Excel (the "Special
Meeting") to be held on March 23, 1999 at 9:00 a.m., local time, at Excel's
executive offices, 1120 North Main Street, Elkhart, Indiana, and at any and
all adjournments or postponements thereof, on the matters set forth on the
reverse side hereof and on such other matters as may properly come before the
meeting. This proxy revokes all prior proxies given by the undersigned.
All properly executed proxies will be voted as directed on the reverse side
of this proxy card. If no instructions are indicated on a properly executed
proxy, such proxy will be voted FOR the proposals set forth on the reverse
side hereof. All ABSTAIN votes will be counted in determining the existence
of a quorum at the Special Meeting, but will not be deemed to have been cast
either "for" or "against" the proposals.
Receipt of the Notice of Meeting and the Joint Proxy Statement/Prospectus,
dated February 17, 1999 (the "Proxy Statement"), is hereby acknowledged.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
SEE REVERSE SIDE
<PAGE>
The Board of Directors of Excel recommends a vote FOR the following proposal:
/X/ Please mark your votes
as indicated in this example
1. To approve and adopt the Agreement and Plan of Merger, dated as of
January 19, 1999, among Excel, Dura Automotive Systems, Inc. and Windows
Acquisition Corporation, as described in the accompanying Joint Proxy
Statement/Prospectus.
FOR AGAINST ABSTAIN
/ / / / / /
__________________________________________
SIGNATURE
__________________________________________
SIGNATURE (IF HELD JOINTLY)
DATE __________________
NOTE: Please sign exactly as name appears hereon. If a joint account, each
joint owner must sign. If signing for a corporation or partnership or
as agent, attorney or fiduciary, indicate the capacity in which you
are signing.
