<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
GRADALL INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
GRADALL INDUSTRIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.001 PER SHARE
SERIES B PARTICIPATING CUMULATIVE PREFERRED STOCK
(TITLES OF CLASSES OF SECURITIES)
38411P107
(CUSIP NUMBERS OF CLASSES OF SECURITIES)
BARRY L. PHILLIPS
GRADALL INDUSTRIES, INC.
406 MILL AVENUE, S.W.
NEW PHILADELPHIA, OH 44663
(330) 339-2211
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
COPY TO:
ROBERT A. CANTONE, ESQ.
PROSKAUER ROSE LLP
1585 BROADWAY
NEW YORK, NEW YORK 10036-8299
(212) 969-3000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Gradall Industries, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 406 Mill Avenue, S.W., New Philadelphia, OH 44663. The title
of the class of equity security to which this Statement relates is the common
stock, par value $.001 per share (together with associated rights to purchase
Series B Participating Cumulative Preferred Stock), of the Company (the "Common
Stock").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer by JLG Acquisition Corp., a
Delaware corporation, as bidder ("Merger Subsidiary"), a wholly-owned subsidiary
of JLG Industries, Inc., a Pennsylvania corporation ("Parent"), disclosed in a
Tender Offer Statement on Schedule 14D-1, dated May 17, 1999 (the "Schedule
14D-1"), to purchase all of the outstanding shares of Common Stock (together
with the associated rights to purchase Series B Participating Cumulative
Preferred Stock) (collectively, the "Shares"), at a price of $20.00 per Share
("Offer Price") net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Merger Subsidiary's Offer to
Purchase, dated May 17, 1999 (the "Offer to Purchase"), the forms of related
letters of transmittal and summary advertisement (which, together with the Offer
to Purchase, as amended or supplemented from time to time, constitute the
"Offer" and are contained within the Schedule 14D-1).
As set forth in the Schedule 14D-1, the principal executive offices of
Parent and the Merger Subsidiary are located at 1 JLG Drive, McConnellsburg, PA
17233-9533 and the telephone number is (717) 485-5161.
This Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 10, 1999 (the "Merger Agreement"), among the Company, Parent and the
Merger Subsidiary, pursuant to which, following the consummation of the Offer
and the satisfaction or waiver of certain conditions set forth in Article 6 of
the Merger Agreement and in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), the Merger Subsidiary will be merged with and
into the Company (the "Merger"), the separate existence of the Merger Subsidiary
will cease and the Company will continue as the surviving corporation following
the Merger (the "Surviving Corporation"). At the effective time of the Merger
(the "Effective Time"), each outstanding Share (other than Shares held in the
treasury of the Company, Shares owned by Parent, the Merger Subsidiary, or any
other subsidiary of Parent, or Shares with respect to which appraisal rights are
properly exercised under the DGCL (the "Dissenting Shares")) will be converted
into and will represent the right to receive from the Surviving Corporation an
amount of cash, equal to the Offer Price (the "Merger Consideration"), without
interest. Certain other terms of the Merger Agreement are described in Item
3(b). A copy of the Merger Agreement is filed herewith as Exhibit 1 and is
incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The Name and Address of the Company. The name and address of the
Company, which is the person filing this Statement, are set forth in Item 1
above.
(b) Material Contracts, etc. Except as described herein or in Schedule I
attached hereto, which is incorporated herein by reference, to the knowledge of
the Company, there are no material contracts, agreements, arrangements or
understandings and no actual or potential conflicts of interest between the
Company or its affiliates and (i) the Company's executive officers, directors or
affiliates or (ii) Parent or the Merger Subsidiary or their respective executive
officers, directors or affiliates.
ARRANGEMENTS WITH PARENT OR MERGER SUBSIDIARY
CONFIDENTIALITY AGREEMENT
The following is a summary of certain material provisions of the
Confidentiality Agreement (the "Confidentiality Agreement"), dated as of
November 3, 1997, as amended on February 23, 1999, between the
1
<PAGE> 3
Company and Parent. This summary does not purport to be complete and is
qualified in its entirety by reference to the complete text of the
Confidentiality Agreement, a copy of which is filed as Exhibit 2 hereto and is
incorporated herein by reference. Capitalized terms not otherwise defined below
have the meanings ascribed to them in the Confidentiality Agreement.
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Parent has agreed to keep confidential all
nonpublic, confidential or proprietary information furnished to it by the
Company, subject to certain exceptions (the "Confidential Information"), and to
use the Confidential Information solely for the purpose of evaluating a possible
transaction involving the Company and Parent. Parent also has agreed, among
other things, in the Confidentiality Agreement that for a period of 30 months
from November 3, 1997, without the prior written consent of the Company, it
would not (i) acquire any voting securities of the Company or solicit proxies to
vote such securities or form a group within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and (ii)
solicit for employment any of the employees of the Company or its subsidiaries
who were employed as of November 3, 1997 by the Company or its subsidiaries and
who were later identified by the Parent in connection with the proposed
acquisition contemplated by the Confidentiality Agreement.
THE MERGER AGREEMENT
The following is a summary of certain material provisions of the Merger
Agreement. This summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of the Merger Agreement, a copy of
which is filed as Exhibit 1 hereto and is incorporated herein by reference.
The Offer
The Merger Agreement provides for the Merger Subsidiary's commencement of
the Offer in accordance with the terms of the Merger Agreement as promptly as
practicable, but in no event later than five business days after the public
announcement of the execution of the Merger Agreement.
The Merger
The Merger Agreement provides that upon the terms and subject to the
conditions therein, and in accordance with the DGCL, at the Effective Time the
Merger Subsidiary will be merged with and into the Company. Following the
Merger, the separate corporate existence of the Merger Subsidiary will cease and
the Company will continue as the Surviving Corporation. The Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, will be the Certificate of Incorporation of the Surviving Corporation, and
bylaws of the Merger Subsidiary as in effect at the Effective Time will be the
bylaws of the Surviving Corporation. The directors of the Merger Subsidiary and
officers of the Company immediately prior to the Effective Time will be the
directors and officers of the Surviving Corporation until their respective
successors are duly elected and qualified.
Conversion of Securities
At the Effective Time, each share of Common Stock issued and outstanding
immediately prior thereto will be converted into the right to receive the Merger
Consideration, without interest (except for Shares held by the Company as
treasury Shares, Shares owned by Parent or any of its subsidiaries, including
the Merger Subsidiary, all of which will be canceled and no consideration will
be delivered in exchange therefor, and Dissenting Shares). All options
(individually, an "Option" and, collectively, the "Stock Options") outstanding
immediately prior to the Effective Time under any Company stock option plan,
whether or not then exercisable, will be canceled and each holder of a Stock
Option will be entitled to receive from the Surviving Corporation, for each
share of Common Stock subject to a Stock Option, an amount in cash equal to the
product of (i) the total number of Shares of Common Stock subject to such Stock
Option, and (ii) the excess of the Merger Consideration over the exercise price
per share of Common Stock subject to such Stock Option, without interest. Each
share of common stock of Merger Subsidiary issued and outstanding immediately
prior to the Effective Time will be converted into one share of common stock of
Surviving Corporation. The
2
<PAGE> 4
Company will use its reasonable best efforts to obtain all necessary consents to
ensure that after the Effective Time, the only rights of the holders of Stock
Options will be to receive the cash payment in cancellation and settlement
thereof.
The Merger Agreement provides that, notwithstanding the terms of the
Gradall Industries, Inc. Employee Stock Purchase Plan (the "Stock Purchase
Plan") which provides for the purchase of Shares under the Stock Purchase Plan
to occur on the last trading day of each offering period provided for under the
Stock Purchase Plan (the "Offering Period"), the Company will take all actions
as are reasonably necessary to cause the funds credited to each participant's
account under the Stock Purchase Plan during the then current Offering Period to
be applied to the purchase of whole Shares of Common Stock on the last trading
day on which the Common Stock is traded on the NASDAQ, immediately prior to the
date which is fifteen (15) business days following the acceptance for payment
for Shares under the Offer or, if earlier, the Effective Time (the "New Purchase
Date"), provided that Shares have been accepted for payment under the Offer. The
purchase of the Common Stock on the New Purchase Date will occur in accordance
with the terms of the Stock Purchase Plan; provided, however that the cost to
each participant in the Stock Purchase Plan for the Shares will be the lower of
85% of the closing sale price of the Common Stock, as reported on the NASDAQ on
(i) the first trading day of the then current Offering Period; or (ii) the last
trading day prior to the New Purchase Date.
The Merger Agreement further provides that all stock option plans and the
Stock Purchase Plan will terminate as of the Effective Time and following the
Effective Time, no holder of a Stock Option or any participant in any Stock
Plans and the Stock Purchase Plan will have any right thereunder to acquire any
capital stock of the Company, any subsidiary of the Company or the Surviving
Corporation.
Dissenting Shares
The Merger Agreement provides that, if required by the DGCL, Dissenting
Shares will not be exchangeable for the right to receive the Merger
Consideration and holders of such Dissenting Shares will be entitled to receive
payment of the appraised value of their Dissenting Shares in accordance with the
DGCL, unless such holders fail to perfect, withdraw or lose their right to
appraisal and payment under the DGCL. Such judicially determined fair value
could be more or less than the Merger Consideration. If, after the Effective
Time, any holder fails to perfect or effectively withdraws or loses such right,
such Dissenting Shares will thereupon be treated as if they had been converted
into, at the Effective Time, the right to receive, without interest, the Merger
Consideration.
Representations and Warranties
The Merger Agreement contains various customary representations and
warranties of the parties, including representations and warranties by the
Company with respect to (i) organization, standing and power; (ii) governmental
authorization; (iii) non-contravention; (iv) capitalization; (v) subsidiaries;
(vi) documents filed by the Company with the Securities and Exchange Commission
(the "Commission"); (vii) proxy statement and information provided by the
Company; (viii) absence of certain changes; (ix) litigation; (x) benefit plans;
(xi) environmental matters; (xii) taxes; (xiii) Delaware takeover statute; (xiv)
fees and commissions; (xv) material contracts; (xvi) intellectual property
rights; (xvii) labor matters; (xviii) year 2000 compliance; (xix) compliance
with laws; (xx) insurance; and (xxi) other matters.
The Rights Agreement
The Company, on May 11, 1999, entered with its rights agent into an
agreement to amend the Rights Agreement (the "Rights Plan Amendment") by and
between the Company and ChaseMellon Shareholder Services, L.L.C., dated as of
May 29, 1998 (the "Rights Agreement"). The Rights Plan Amendment (i) renders the
Rights Agreement inapplicable to the Offer, the Merger and other transactions
contemplated under the Merger Agreement or the Stockholders Agreements (as
defined in "-- Stockholders Agreements"); and (ii) provides that (a) neither
Parent, Merger Subsidiary nor any of its affiliates will become an Acquiring
Person (as defined in the Rights Agreement) pursuant to the Rights Agreement and
(b) a Distribution Date
3
<PAGE> 5
(as defined in the Rights Agreement) will not occur by reason of the execution
of the Merger Agreement, the commencement or completion of the Offer, the
consummation of the Merger or other transactions contemplated under the Merger
Agreement or the Stockholders Agreements.
Conduct of Business
The Merger Agreement provides that from the date of the Merger Agreement
until acceptance of Shares for payment, the Company will, and cause each of its
subsidiaries to, conduct its operations according to its ordinary and usual
course of business in accordance with past practices, in compliance with
applicable laws and consistent with the preservation of Company's material
business and assets. Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by the Merger Agreement, the Merger
Agreement provides that the Company and its subsidiaries will not, without the
prior written consent of Parent: (i) issue, sell or pledge, or authorize or
propose the issuance, sale or pledge of (a) additional Shares of capital stock
of any class or securities convertible into any such Shares, or any rights,
warrants or option to acquire any such Shares or other convertible securities
other than (1) Shares issuable pursuant to the terms of outstanding Stock
Options, the Stock Purchase Plan and other commitments disclosed to the Parent
in the Merger Agreement, (2) issuance of Shares of capital stock to the Company
by a wholly-owned subsidiary of the Company, or (b) any other securities in
respect of, in lieu of or in substitution for Shares of its capital stock or
split, combine or reclassify any of the Company's capital stock; (ii) purchase,
redeem or otherwise acquire, or propose to purchase or otherwise acquire any of
its outstanding securities; (iii) declare, set aside or pay any dividend or
other distribution on any Shares of capital stock of the Company, other than
payment of dividend or distribution to its parent by any subsidiary of the
Company; (iv) make any acquisition of any corporation or similar entity or
material amount of the assets of any corporation or similar entity or sell a
material amount of its assets, except in all instances for actions in the
ordinary course of business; (v) except in the ordinary course of business (a)
incur any indebtedness for borrowed money or guarantee any such indebtedness of
another Person or (b) make any loans, advances or capital contributions to, or
investments in, any other Person, other than to the Company or any subsidiary of
the Company; (vi) propose or adopt any amendments to the Certificate of
Incorporation or By Laws of the Company; (vii) except in the ordinary course of
business and for any labor or collective bargaining agreement, enter into any
new employment, severance or termination agreement with, or grant any increase
in severance or termination pay, or materially increase any compensation or
benefits of, any officers, directors or key employees; (viii) change any
accounting methods, principles or practices materially affecting the assets,
liabilities or business, except as may be required by a change in generally
accepted accounting principles; (ix) make any material tax election or settle or
compromise any material income tax liability; (x) except for any labor or
collective bargaining agreement, permit any material amendment or waive any
material rights with respect to any material contract or permit any
discretionary release of a material amount of escrowed assets held pursuant to
any escrow agreement included within the definition of Material Contract under
the Merger Agreement; (xi) engage in any negotiations with officials or
representatives of any labor union with respect to any Material Company Proposal
(as the term is defined in the Merger Agreement) regarding modification,
extension or replacement of any union contract or collective bargaining
agreement without first consulting with Parent, provided that Company will not
be obligated to alter any such proposal after consultation with Parent; or (xii)
agree in writing or otherwise to take any of the foregoing actions.
Acquisition Proposal
The Company will not, or permit its subsidiaries to, or authorize or permit
any officer, director, employee, agent or representative of the Company or of
its subsidiaries ("Company Representatives") to directly or indirectly (i)
solicit, initiate, or knowingly facilitate the submission of any proposal or
offer for, or any expression of interest (by public announcement or otherwise)
by any Person, other than Parent or its affiliates, in a merger or other
business combination involving the Company or any subsidiary of the Company or
any inquiry, proposal or offer to acquire in any manner (including through a
joint venture with the Company), all or any significant portion of the assets or
capital stock of the Company or any subsidiary of the Company (any such proposal
or offer being hereinafter referred to as an "Acquisition Proposal"); or (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to its business,
4
<PAGE> 6
properties or assets, for the purpose of facilitating the consummation of, any
Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal; provided, however, that the foregoing will not prohibit
the Company or any of its subsidiaries or the Company Representatives from,
prior to the acceptance for payment of Shares pursuant to the Offer (a)
furnishing information regarding the Company and its business, properties or
assets to a Person who has made an unsolicited written Acquisition Proposal
pursuant to a confidentiality letter with terms no less favorable than the
Confidentiality Agreement signed between the Company and Parent (subject to the
Company's duty to disclose to Parent any request for nonpublic information, if
not in contravention of the fiduciary duties of the Company Board of Directors),
or (b) engaging in discussions or negotiations with such person who has made an
unsolicited written Acquisition Proposal, but in each case referred to in the
foregoing clauses (a) and (b) only to the extent that the Board of Directors of
the Company has concluded in good faith, after consultation with its outside
legal counsel, that such action is necessary for compliance with its fiduciary
duties.
Neither the Board of Directors of the Company nor any committee will,
except as permitted by the Merger Agreement, (i) withdraw or modify, or publicly
propose to withdraw or modify, in a manner adverse to Parent or Merger
Subsidiary, the approval or recommendation of the approval of the Merger
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (iii) cause the Company or any subsidiary
to enter into any agreement with respect to any Acquisition Proposal, except in
the event the Board of Directors of the Company receives an unsolicited bona
fide Acquisition Proposal that is a Superior Proposal (as defined below), the
Board of Directors of the Company may if it shall have concluded in good faith,
after consultation with its outside legal counsel, that such action is necessary
in order for the Board of Directors to comply with its fiduciary duties (i)
withdraw or modify its approval or recommendation of the Offer, the Merger
Agreement and the Merger, (ii) approve or recommend any such Superior Proposal,
(iii) terminate the Merger Agreement in order to enter into an agreement with
respect to such a Superior Proposal, or (iv) or enter into any other agreement
with respect to such a Superior Proposal; in each case after Parent will have
received written notice advising the receipt of a Superior Proposal and
specifying the material terms and conditions of such Superior Proposal. For the
purposes of this paragraph, "Superior Proposal" is defined in the Merger
Agreement to mean any bona fide written Acquisition Proposal on terms which the
Board of Directors of the Company determines in its good faith judgment, after
consultation with Merrill Lynch or another financial advisor of nationally
recognized reputation, to be more favorable to the Company's stockholders than
the Offer and the Merger.
The Merger Agreement further provides that, prior to taking any actions
described in the foregoing paragraph, the Company will promptly advise Parent of
any request for nonpublic information or of any Acquisition Proposal, and the
material terms and conditions of such request or Acquisition Proposal, unless
the Board of Directors of the Company determines in good faith and after
consultation with outside counsel that in the exercise of its fiduciary
obligations it is necessary to refrain from furnishing such information.
Nothing contained in the "Acquisition Proposal" section of the Merger
Agreement will prohibit the Company from disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act and
make any other disclosures if, in the good faith judgment of the Board of
Directors of the Company, after consultation with outside counsel, the failure
to so disclose would violate applicable law.
Access to Information
Between the date of the Merger Agreement and the Effective Time, upon
reasonable notice and subject to the provisions of the Confidentiality
Agreement, the Company will (i) give Parent and its authorized representatives
reasonable access during regular business hours to the Company's and each of its
subsidiary's plants, offices, warehouses and other facilities and to its books
and records; (ii) permit Parent to make such inspections as it may require; and
(iii) cause its officers and those of its subsidiaries to furnish Parent with
such financial and operating data and other information with respect to the
business and properties of the Company and the subsidiaries as Parent may from
time to time reasonably request.
5
<PAGE> 7
Company Stockholder Approval; Proxy Statement
The Merger Agreement provides that if approval or action in respect of the
Merger by the stockholders of the Company is required by applicable law, the
Company will call a meeting of its stockholders (the "Stockholder Meeting") for
the purpose of voting upon the Merger, and the Board of Directors will
recommend, subject to its fiduciary duties, its stockholders to vote in favor of
the Merger. The Merger Agreement further provides that the Company will use its
best efforts to solicit proxies in favor of the Merger and the Merger Agreement,
subject to its fiduciary duties and its non-solicitation obligations. In
addition, all of the Shares owned by Parent, Merger Subsidiary or any other
subsidiary of Parent will be voted in favor of the approval of the Merger.
If required by applicable law, the Company will, as soon as practicable
following the purchase of Shares by the Merger Subsidiary pursuant to the Offer,
prepare and file a proxy statement with respect to the Stockholder Meeting and
will use its reasonable efforts to cause such proxy statement to be cleared by
the Commission. As promptly as practicable after the proxy statement has been
cleared by the Commission, the Company will mail the proxy statement to the
stockholders of the Company. The Parent and the Merger Subsidiary have agreed
not to sell or transfer Shares acquired pursuant to the Offer or otherwise prior
to the Company Stockholder Meeting, except that Shares can be transferred
between Parent, Merger Subsidiary and/or one or more of their wholly-owned
subsidiaries.
Merger without Meeting of Stockholders
The Merger Agreement provides that in the event that Merger Subsidiary
acquires 90% or more of the Shares of all outstanding Common Stock of the
Company, the parties will take necessary steps to make the Merger effective
without a meeting of the stockholders of the Company in accordance with Section
253 of DGCL. In the event Parent or Merger Subsidiary acquires in the aggregate
outstanding Shares of each class of capital stock of the Company sufficient to
effectuate the Merger without a meeting of the stockholders of the Company, the
parties to the Merger Agreement will take all necessary and appropriate action
to cause the Merger to become effective without a meeting of the stockholders of
the Company.
Indemnification and Insurance
The Merger Agreement provides that Parent and Surviving Corporation will
indemnify each person who was, or becomes prior to the Effective Time, an
officer, director or employee of the Company against all losses, expenses,
judgments or amounts paid in settlement arising out of the transactions
contemplated by the Merger Agreement, to the fullest extent provided for under
the Company's Certificate of Incorporation and By Laws, including advancement of
expenses. Upon the Effective Time, the Surviving Company will assume and will
continue to keep in full force and effect (to the fullest extent now or
hereafter permitted under the DGCL), all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time, which exist in favor of current or former directors or officers
of the Company and its subsidiaries under the Certificate of Incorporation,
By-Laws or any other indemnification agreements with the Company. The Merger
Agreement provides that the Parent will guaranty the Surviving Corporation's due
performance of the foregoing, and will cause the Surviving Corporation to honor
its obligations arising under the indemnification provisions of the Merger
Agreement. The Parent and the Surviving Corporation agree to make necessary
provisions in the event of a consolidation, merger or sale of all or
substantially all of the assets of the Parent or the Surviving Corporation, so
that any successors and assigns of the Parent or the Surviving Corporation will
assume the obligations of the Parent and the Surviving Corporation arising under
the indemnification provisions of the Merger Agreement.
The Merger Agreement further provides that the Surviving Corporation will
maintain in effect, for at least six years after the Effective Time, the current
policies of directors' and officers' liability insurance maintained by the
Company with respect to matters occurring on or prior to the Effective Time.
Such directors' and officers' liability insurance policy, which will cover each
person covered by the Company's policy prior to the Effective Time, will be on
terms with respect to coverage and amount no less favorable as a whole
6
<PAGE> 8
than the terms of the policy in effect at the time of the Merger Agreement;
provided, however, the Surviving Corporation will not be obligated to pay total
premiums in excess of $400,000.
Employee Plans and Benefits and Employment Contracts
The Merger Agreement provides that after the Effective Time, Parent will
cause the Surviving Corporation to honor in accordance with their terms all
existing and disclosed employment, severance, consulting or other compensation
agreements, plans or contracts between the Company or any Commonly Controlled
Entity of the Company (as the term is defined in the Merger Agreement) and any
officer, director or employee of the Company or Commonly Controlled Entity of
the Company, provided that the Company implements the changes of the Share
Purchase Date under the Stock Purchase Plan prior to the acceptance for payment
of the Shares under the Offer. Further, for one year following the Effective
Time, Parent will cause the Surviving Corporation to provide the employees of
the Surviving Corporation with benefits and coverage under such benefit plans,
programs and arrangements that are no less favorable to the employees in the
aggregate than the benefit plans, programs and arrangements provided by the
Company prior to the Effective Time; provided however, to the extent that any
such benefit plans, programs and arrangements that are pension plans (whether
qualified or non-qualified, including, but not limited to, the Gradall
Industries, Inc. Benefit Restoration Plan and the Gradall Industries, Inc.
Amended and Restated Supplemental Executive Retirement Plan), are terminated or
suspended at any time after the one-year period immediately following the
Effective Time, Parent will cause the Surviving Corporation to fully vest any
participant in any such pension plans and pay the full accrued benefit (on an
unreduced and nondiscounted basis under the nonqualified plans and with respect
to the Gradall Industries, Inc. Benefit Restoration Plan, as if the participant
retired at age 62 with 30 years of service under such Plan) to the participant
at the time of the termination or suspension.
Board Representation; Directors
Pursuant to the Merger Agreement, promptly upon the purchase of shares of
Common Stock pursuant to the Offer, Merger Subsidiary will be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as will give Merger Subsidiary, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors equal to the product of (i) the total number of directors on the
Board of Directors and (ii) the percentage that the number of shares of Common
Stock purchased by Merger Subsidiary bears to the number of shares of Common
Stock outstanding. The Merger Agreement provides that the Company will, at the
option of Parent and in accordance with applicable law, promptly either increase
the size of the Company's Board of Directors and/or use its best efforts to
obtain the resignation of such number of its current directors as is necessary
to enable Merger Subsidiary's designees to be elected to the Board of Directors
and cause the Merger Subsidiary's designees to be so elected. The Merger
Agreement further provides that the Company will promptly take all actions
requested by Parent in order to effect such elections, including mailing to its
stockholders (together with the mailing of the Schedule 14D-9) the information
statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. Following the election of Merger
Subsidiary's designees and prior to the Effective Time, any amendment or
termination of the Merger Agreement or waiver of the obligations or other acts
of Parent or Merger Subsidiary or waiver by the Company of the Company's rights
under the Merger Agreement, will require the concurrence of a majority of
directors of the Company then in office who are directors on the date of the
Merger Agreement and who voted to approve the Merger Agreement.
Conditions to Each Party's Obligation to Effect the Merger
The respective obligations of each party to effect the Merger will be
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions: (i) if required by applicable law, the Merger Agreement
shall have been approved by the affirmative vote of the stockholders of the
Company by the requisite vote in accordance with applicable law; (ii) any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act") (and any extension thereof),
7
<PAGE> 9
relating to the Merger shall have expired or been earlier terminated; (iii)
Merger Subsidiary shall have, pursuant to the Offer, accepted for payment and
paid for at least that number of Shares which would represent at least a
majority of the voting power represented by the Shares and other securities
entitled generally to vote in the election of directors of the Company
outstanding on a fully diluted basis after giving effect to the exercise or
conversion of all options, rights and securities exercisable or convertible into
or exchangeable for Shares or such voting securities; provided, however, that
Parent may not invoke this condition if Merger Subsidiary shall have failed to
purchase Shares so tendered in violation of the terms of the Merger Agreement;
(iv) no preliminary or permanent injunction or other order by any federal or
state court by any governmental or regulatory agency which prevents the
consummation of the Merger will have been issued and remain in effect (each
party agreeing to use its best efforts to have any such injunction or order
lifted); and (v) no statute, rule, regulation, executive order, decree or order
of any kind shall have been enacted or enforced by any court or governmental
authority which prohibits the consummation of the Merger or has the effect of
making the Merger illegal.
Conditions to the Offer
The Merger Agreement provides that, subject to applicable law, the Merger
Subsidiary will not be obligated to accept for payment or pay for any Shares not
accepted for payment, and may terminate or amend the Offer, subject to the terms
of the Merger Agreement, if (i) that number of Shares representing at least a
majority of the voting power represented by the Shares and other securities
entitled generally to vote in the election of directors of the Company
outstanding on a fully diluted basis after giving effect to the exercise or
conversion of all options, rights and securities exercisable or convertible into
or exchangeable for Shares or such voting securities shall not have been validly
tendered and not withdrawn immediately prior to the expiration of the Offer;
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer; or (iii) at any time on or
after the date of commencement of the Offer and before the acceptance of such
Shares for payment or the payment therefor, any of the following conditions
exist or shall occur and be continuing: (a) there shall be pending by any
governmental entity any suit, action or proceeding, (1) challenging the
acquisition by Parent or Merger Subsidiary of any Shares, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Merger
Agreement, (2) seeking to prohibit or limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries of a material portion of
the business or assets of the Company or its subsidiaries, or Parent or its
subsidiaries, or to compel the Company or Parent to dispose of or hold separate
any material portion of the business or assets of the Company or its
subsidiaries, or Parent or its subsidiaries, as a result of the Offer or any of
the other transactions contemplated by the Merger Agreement, (3) seeking to
impose limitations on the ability of Parent or Merger Subsidiary to acquire or
hold, or exercise full rights of ownership of, any Shares accepted for payment
pursuant to the Offer including, without limitation, the right to vote the
Shares accepted for payment by it on all matters properly presented to the
stockholders of the Company, or (4) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company or its subsidiaries; (b) the Company shall have
entered into an agreement concerning any Superior Proposal, or the Board of
Directors of the Company or any committee thereof shall have resolved to enter
into such an agreement; (c) any Person or group (as defined in Section 13(d)(3)
of the Exchange Act) (other than Parent, Merger Subsidiary or any affiliate
thereof or the Stockholders described in the Stockholders Agreement) shall have
become the beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of Shares representing a majority of the total votes represented
by all outstanding Shares; (d) the Merger Agreement shall have been terminated
in accordance with its terms; (e) there shall have occurred and be continuing
(1) any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the over-the-counter market
in the United States, (2) a commencement and continuation of a war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States which would have a Company Material Adverse Effect
(as defined in the Merger Agreement) (other than the events in Yugoslavia and
neighboring countries), (3) a change in general conditions in the market for
syndicated bank credit facilities which, based on the written advice of Gleacher
& Co. LLC addressed to Parent (with a copy to be provided to the Company),
materially and adversely affects
8
<PAGE> 10
the ability of financial institutions in the United States to extend credit or
syndicate loans, or (4) in the case of any of the foregoing existing at the time
of commencement of the Offer, a material acceleration or worsening thereof; or
(f) there shall have occurred any material adverse change in the financial
condition, assets, liabilities, business or results of operations of the Company
and its subsidiaries taken as a whole, except for general economic changes,
changes that affect the industry of the Company or any subsidiary generally and
changes in the Company's business attributable solely to actions taken by Parent
or Merger Subsidiary; which, in the reasonable judgment of Parent and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer or with such acceptance for payment, purchase of, or
payment for Shares.
Termination of Merger Agreement
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time (except with respect to paragraphs (vii) and (viii)
below providing for termination prior to acceptance for payment of Shares under
the Offer) by either the Company (except with respect to (viii) below) or Parent
(notwithstanding approval thereof by the stockholders of the Company): (i) by
mutual written consent of the Company and Parent; (ii) if there shall be any law
or regulation of any competent authority that makes consummation of the Offer or
the Merger illegal or otherwise prohibited or if any judgment, injunction, order
or decree of any competent authority enjoining Parent or the Company from
consummating the Offer or the Merger is entered and such judgment, injunction,
order or decree shall become final and unappealable; (iii) if the Board of
Directors of the Company shall have (a) withdrawn or modified in a manner
adverse to Parent and Merger Subsidiary its approval or recommendation of the
Offer or the Merger, (b) approved or recommended any Acquisition Proposal in
respect of the Company, or (c) resolved to take any of the foregoing actions, in
each case in compliance with the provisions of the Merger Agreement providing
for such action; (iv) if the Merger has not been consummated by September 30,
1999; provided, however, that the right to terminate the Merger Agreement
pursuant to this sentence will not be available to any party whose failure to
perform any of its obligations under the Merger Agreement results in the failure
of the Merger to be consummated by such time; (v) if the required approval of
the Company's stockholders shall not have been obtained at a Company
Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof; (vi) if, without any material breach by the terminating
party of its obligations under the Merger Agreement, the purchase of Shares
pursuant to the Offer shall not have occurred on or before September 30, 1999;
(vii) if the non-terminating party shall have breached in any material respect
or failed to perform in any material respect any of its representations,
warranties, covenants or other obligations under the Merger Agreement which
breach or failure to perform cannot be or has not been cured within 10 days
after written notice to the non-terminating party (provided that the terminating
party is not then in breach in any material respect or failing to perform in any
material respect any of its representations, warranties, covenants or other
obligations under the Merger Agreement that cannot be or has not been cured
within 10 days after written notice to the terminating party), except that
termination of the Merger Agreement pursuant to this sentence (vii) shall have
occurred prior to acceptance for payment of Shares under the Offer; or (viii) if
MLGA Fund II, L.P. shall have breached in any material respect or failed to
perform in any material respect any of its representations, warranties,
covenants or other obligations under the Stockholders Agreement, dated May 10,
1999, between the Company, Parent, Merger Subsidiary and MLGA Fund II, L.P.
which breach or failure to perform cannot be or has not been cured within 10
days after the giving of written notice to the breaching stockholder of such
breach or failure to perform (provided that Parent is not then in breach in any
material respect or failing to perform in any material respect any of its
representations, warranties, covenants or other obligations under such agreement
that cannot be or has not been cured within 10 days after giving written notice
to the Parent of such breach or failure to perform). The Merger Agreement may
also be terminated and the Merger abandoned by the Company, if the Offer has not
been timely commenced, or if Parent or Merger Subsidiary shall have breached any
covenant in connection with the Offer as provided for under the Merger Agreement
or its representation concerning the financing of the funds necessary to
consummate the Offer.
9
<PAGE> 11
Fees and Expenses
The Merger Agreement provides that whether or not the Merger or the Offer
is consummated, all costs and expenses incurred in connection with the Merger
Agreement and the transactions contemplated thereby will be paid by the party
incurring such expenses, except if the Merger Agreement is terminated as a
result of breach by Parent or Merger Subsidiary of any of their covenants,
representations or warranties, all fees, costs and expenses incurred by the
Company in connection with the transaction contemplated by the Merger Agreement
will be paid by Parent.
Under the Merger Agreement, the Company will pay to Parent an amount equal
to $6,000,000 (the "Termination Fee") in the following event:
(i) termination of the Merger Agreement by Parent pursuant to clause
(iii) of "-- Termination of Merger Agreement" above; or
(ii) termination of the Merger Agreement by Parent pursuant to clause
(vii) or (viii) of "-- Termination of Merger Agreement" above and
within six months thereafter, the Company enters into an agreement
with respect to an Acquisition Proposal or has completed a
transaction pursuant to an Acquisition Proposal.
A wire transfer of immediately available funds is to be made within two
business days following such termination referred to in the preceding clause (i)
or upon the Company entering into such agreement or completing such transaction
referred to in the preceding clause (ii).
If the Company fails to promptly pay any amount due pursuant to the
foregoing paragraph and, in order to obtain such payment, the other party
commences a suit which results in a judgment against the Company for Termination
Fee, the Company shall also pay to Parent its reasonable costs and expenses
incurred in connection with such litigation together with interest on such
unpaid amounts commencing on the date the Termination Fee became due at a rate
equal to the rate of interest announced by Citibank N.A. from time to time, in
the City of New York at such bank's prime or base rate.
Effect of Termination
In the event of termination of the Merger Agreement by either Parent or the
Company as provided in the Merger Agreement, the Merger Agreement will become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of the Merger
Agreement which provide (i) the terms and conditions related to the
consideration and acceptance of a Superior Proposal; (ii) the effect of
termination of the Merger Agreement; and (iii) the payment of fees and expenses,
which provisions will survive such terminations and except to the extent that
such termination results from the willful and material breach by a party of any
of its representations, warranties, covenants or agreements set forth in the
Merger Agreement.
THE STOCKHOLDERS AGREEMENTS
The following is a summary of certain material provisions of the
Stockholders Agreement, dated as of May 10, 1999 by and among Parent, the Merger
Subsidiary, the Company, David Williams, Barry L. Phillips, Bruce A. Jonker,
James C. Cahill, Joseph H. Keller, Sangwoo Ahn, Perry J. Lewis, and Jack D.
Rutherford, and the Stockholders Agreement dated May 10, 1999 by and among
Parent, the Merger Subsidiary, the Company and MLGA Fund II, L.P. (collectively
the "Stockholders Agreements" and stockholders who are parties thereto the
"Stockholders"). This summary does not purport to be complete and is qualified
in its entirety by reference to the complete text of the Stockholders
Agreements, copies of which are filed as Exhibit 3 and Exhibit 4 hereto and are
incorporated herein by reference. Capitalized terms not otherwise defined below
have the meanings ascribed to them in the Stockholders Agreements.
10
<PAGE> 12
Tender of Shares
Pursuant to the Stockholders Agreements and in order to induce Parent and
Merger Subsidiary to enter into the Merger Agreement, the Stockholders, which
own, in the aggregate, approximately 34.4% of the outstanding Common Stock, have
agreed to tender all their Shares pursuant to the Offer and not to withdraw any
Shares tendered in the Offer prior to expiration or termination of the Offer.
Voting and Proxy
The Stockholders have further agreed to vote all Shares beneficially owned
by them (i) in favor of the adoption of the Merger Agreement; and (ii) against
any proposal or action that would result in (a) breach of the Merger Agreement
by the Company; (b) extraordinary corporate actions, (c) sale, lease or transfer
of a material amount of assets of the Company or its subsidiaries or a
reorganization, recapitalization, dissolution, or liquidation, (d) change in
majority of the Board of Directors, (e) change in capitalization; (f) any
amendment of the Company's Certificate of Incorporation or bylaws; (g) any other
material change in the Company's or any of its subsidiaries' corporate structure
or business; or (h) any other action that is intended, or could reasonably be
expected to impede, interfere with, delay, postpone, or adversely affect the
Merger and the other transactions contemplated by the Merger Agreement and the
Stockholders Agreements ("Adverse Proposal"). The Stockholders have also granted
Merger Subsidiary an irrevocable proxy to vote their Shares in favor of the
Merger, the Merger Agreement and transactions contemplated by the Merger
Agreement and against any Adverse Proposal.
Other Covenants, Representations and Warranties
In connection with the Stockholders Agreements, the Stockholders have made
certain customary representations and warranties, including with respect to (i)
ownership of Shares; (ii) the Stockholders' authority to enter into and perform
their obligations under the Stockholders Agreements; (iii) the absence of
certain conflicts; (iv) the absence of certain encumbrances on and in respect of
the Stockholders' Shares; and (v) the absence of any finder's fees. The Company
has also made certain customary representations and warranties, including with
respect to (i) organization and authority, (ii) validity of execution and
delivery of the Stockholders Agreements, (iii) absence of certain conflicts and
(iv) inapplicability of antitakeover statutes. Parent and Merger Subsidiary have
also made certain representations and warranties with respect to Parent and
Merger Subsidiary's organization and authority to enter into the Stockholders
Agreements, validity of execution and delivery and the absence of certain
conflicts.
Each of the Stockholders has also agreed, in its capacity as a stockholder
of the Company, that neither it nor any officer, director, employee,
representative or agent of such stockholder will solicit, initiate, or knowingly
facilitate; participate in or initiate any inquiries or making of any proposal
by any person (other than Merger Subsidiary, Parent or any affiliate of Parent)
which constitutes or may lead to any sale of Shares or Adverse Proposal.
Termination
The Stockholders Agreements will terminate the earlier of (i) the date of
termination of the Merger Agreement by the Company for the following reasons:
(a) the Offer not being timely commenced, (b) the Parent or Merger Subsidiary
breaching any covenant in connection with the Offer as provided for under the
Merger Agreement, or (c) the Parent or Merger Subsidiary breaching the
representation concerning the financing of the funds necessary to consummate the
Offer; or (ii) the date of the expiration or termination of the Offer.
11
<PAGE> 13
ARRANGEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS
OR AFFILIATES OF THE COMPANY
EMPLOYMENT AGREEMENTS
In January 1998, the Company entered into amended and restated employment
agreements with Mr. Phillips, Mr. Williams and Mr. Jonker. Mr. Phillips'
agreement provides for the continuation of his employment as President and Chief
Executive Officer at an initial annual salary of $225,000, subject to increases
at the Company's discretion. Mr. Williams' agreement provides for the
continuation of his employment as Vice President, Marketing and Sales at an
initial annual salary of $147,000, subject to increases at the Company's
discretion. Mr. Jonker's agreement provides for the continuation of his
employment as Vice President and Chief Financial Officer at an initial annual
salary of $103,000, subject to increases at the Company's discretion. The
salaries of Mr. Phillips, Mr. Williams and Mr. Jonker may be increased from time
to time at the discretion of the Company. The initial term of each agreement was
for a period of one year expiring in January 1999 subject to automatic renewal
for successive one-year periods unless terminated upon the notice required by
the agreement. In the event that the Company experiences a change of control (as
defined in the employment agreements) the term of each employment agreement is
extended for a period of three years from the date on which such change of
control occurs (the "Continuation Term"). If the Company terminates any of these
agreements prior to the occurrence of a change of control, for any reason other
than "for cause," death or disability, the Company is required to continue to
make all payments due thereunder for a period of 12 months. If the employment of
any of these officers is terminated within three years of the occurrence of a
change in control, for any reason other than for cause, death or disability,
including the officer's resignation for "good reason" (as defined in the
employment agreement)the Company is required to continue to make all payments
due thereunder for the balance of the Continuation Term. In addition, upon the
termination of employment of any of these officers within three years of a
change of control, the officer may receive credit for additional years of
service for the purpose of computing benefits due and payable under the
Company's retirement plan and benefit restoration plan. If amounts to be
received by the officer in connection with a termination of the officer's
employment following a change of control ("Total Payments") will be subject to
the excise tax provided by Section 4999 of the Internal Revenue Code (the
"Excise Tax"), (i) the Total Payments will be reduced to the maximum amount of
payments which could be made without imposition of the Excise Tax (the "Safe
Harbor Amount"), if within 115% of the Safe Harbor Amount or (ii) if the Total
Payments equal or exceed 115% of the Safe Harbor Amount, the Company is required
to pay the officer an additional amount to offset any Excise Tax on the Total
Payments (the "Gross-Up Payment") and any federal, state and local income and
employment taxes and Excise Tax levied upon the Gross-Up Payment.
The Company has also entered into employment agreements with Messrs. Keller
and Cahill which provide for the continuation of their employment at current
salaries and benefit levels, subject to annual increases at the discretion of
the Company. The term of each agreement is for a period of one year, which
automatically renews for successive one-year terms unless terminated by the
Company upon written notice. If the Company terminates the employment of Messrs.
Keller or Cahill for any reason other than "for cause," the Company is required
to continue to make all payments due under the employment agreement for a period
of 14 months, subject to offset for amounts earned by the officer from other
employment.
The foregoing summary does not purport to be complete and is qualified in
its entirety by reference to the complete text of the Employment Agreements with
Mr. Phillips, Mr. Williams, Mr. Jonker, Mr. Keller and Mr. Cahill, copies of
which are filed as Exhibits 8, 9, 10, 11, and 12 hereto, respectively, and are
incorporated herein by reference.
POST-MERGER EMPLOYMENT AGREEMENTS
In connection with the Merger, the Company has entered into an amended and
restated employment agreement with Barry Phillips which provides for the
continuation of his employment as President and Chief Executive Officer, for a
term of three years following the consummation of the Merger, at his current
annual base salary of $260,000. The agreement entitles Mr. Phillips to receive
for the balance of the three-year term
12
<PAGE> 14
(i) his annual base salary at the rate in effect immediately prior to his
employment termination, plus (ii) the amount of annual incentive compensation
awarded to him with respect to the preceding year, but not less than 40% of his
annual base salary, (iii) credit for additional years of service for the purpose
of computing benefits payable under the Company's Retirement Plan and Benefit
Restoration Plan and (iv) continued coverage under the Company's health and life
insurance programs, in the event of the termination of his employment prior to
the expiration of the three year term by the Company other than for disability
or for "cause" (as defined therein) or by his resignation in response to a
reduction in annual base salary, employment benefits or compensation potential
under incentive compensation plans or a change in his reporting responsibility
or location of his place of work, or his demotion to a position which is not a
senior executive position. In addition, he would be entitled to receive an
additional payment (the "Gross-Up Payment") sufficient to cover any Excise Tax
on payments considered "contingent on a change in ownership or control" of the
Company within the meaning of Section 280G of the Code, plus an additional
amount to offset any income or employment taxes on the Gross-Up Payment. The
amended and restated employment agreement with Mr. Phillips will become
effective upon the consummation of the Merger. This summary does not purport to
be complete and is qualified in its entirety by reference to the complete text
of Mr. Phillips' employment agreement, a copy of which is filed as Exhibit 21
hereto and is incorporated herein by reference.
The Company also has entered into amended and restated employment
agreements with James C. Cahill, Vice President, Manufacturing, and Joseph H.
Keller, Vice President Engineering, which provide for the continuation of their
employment at their current salaries of $117,700 and $110,245, respectively, and
their current benefit levels, subject to increases at the discretion of the
Company. The term of each agreement is for a term of one year, which
automatically renews for successive one-year terms unless terminated by the
Company upon written notice. Under the agreements, in the event of termination
of employment by the Company without "cause" (as defined therein) they will be
entitled to receive for a period of 14 months following employment termination
all amounts he would otherwise have received including his monthly base salary,
contributions to the Company's Supplemental Executive Retirement Plan at the
rate of $5,000 per year, continuation of coverage under the Company's life and
medical insurance programs and incentive compensation, based on an annual amount
that is not less than 40% of his base salary. The amounts payable to each of
them in the event of such termination are reduced by earnings from other
employment. The amended and restated employment agreements with Messrs. Cahill
and Keller will become effective upon the consummation of the Merger. This
summary does not purport to be complete and is qualified in its entirety by
reference to the complete texts of Mr. Cahill's and Mr. Keller's employment
agreements, copies of which are filed as Exhibits 23 and 22 hereto,
respectively, and are incorporated herein by reference.
DEFERRED COMPENSATION
The Company maintains a Supplemental Executive Retirement Plan for the
benefit of certain key employees of the Company as selected by the Board of
Directors including each of Messrs. Phillips, Williams, Jonker, Cahill and
Keller (the "SERP"). Pursuant to the terms of the SERP, participants may elect
to defer all or any portion of their compensation and contribute such deferral
to the SERP. All participant deferrals are immediately and fully vested. The
Company may make contributions to the SERP at the discretion of the Board of
Directors. Company contributions are 50% vested after the participant reaches
age 55 and are fully vested once the participant reaches age 60. In addition,
Company contributions fully vest upon the death or disability of the participant
or in the event of a change of control of the Company. If a participant's
employment is terminated "for cause," all Company contributions allocated to
such participant's account are forfeited. All amounts contributed to the SERP,
whether as a result of Company contributions or participant deferrals have been
used to purchase whole life insurance policies on the life of the participant.
As of December 31, 1998, life insurance policies purchased under the SERP
included policies on the lives of Mr. Phillips in the aggregate face amount of
$174,133; Mr. Williams in the aggregate face amount of $103,573; Mr. Keller in
the aggregate face amount of $199,234; Mr. Cahill in the aggregate face amount
of $253,446; and Mr. Jonker in the aggregate face amount of $138,030. Upon the
death of the insured, the entire proceeds of the policy will be paid to
insured's designated beneficiary. The insured is entitled to receive the policy
upon the termination of his employment as a result of disability or retirement
after age 60. The Company's contribution to the SERP during 1998, 1997 and 1996
is included in "All Other Compensation"
13
<PAGE> 15
column of the "Summary Compensation Table" in Schedule I hereto. This summary
does not purport to be complete and is qualified in its entirety by reference to
the complete text of the Supplemental Executive Retirement Plan, a copy of which
is filed as Exhibit 13 hereto and is incorporated herein by reference.
Effective July 1989, the Company entered into a Deferred Compensation
Agreement with Mr. Phillips. Pursuant to this Agreement, upon the termination of
Mr. Phillips' employment with the Company at any time after age 65, the Company
will pay to Mr. Phillips or his designated beneficiary in the event of his
death, the sum of $78,687 per year for fifteen years. Upon the death of Mr.
Phillips while employed by the Company, Mr. Phillips' designated beneficiary is
entitled to receive the death benefit payable under a life insurance policy in
the face amount of $125,000. Upon termination of employment as a result of
disability, Mr. Phillips has the option of receiving the net cash surrender
value of this policy or an assignment of the policy. The Company pays all
premiums due under this policy. Premiums paid by the Company for this life
insurance policy during fiscal 1998, 1997 and 1996, are included in "All Other
Compensation" column of the "Summary Compensation Table" in Schedule I hereto.
This summary does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Deferred Compensation Agreement with Mr.
Phillips, a copy of which is filed as Exhibit 14 hereto and is incorporated
herein by reference.
The Company has entered into a Split-Dollar Life Insurance Agreement with
Mr. Phillips with respect to an insurance policy on the life of Mr. Phillips
with a death benefit of $500,000. Pursuant to the terms of the agreement, Mr.
Phillips pays the portion of the premium attributable to the term life insurance
cost of the policy, funded by an off-setting bonus from the Company, and the
Company pays the balance of the premium. Upon the death of Mr. Phillips or the
cancellation of the policy, the Company is entitled to receive the premiums it
has paid under the policy and a portion of the cash value of the policy. The
balance of the policy proceeds will be paid to Mr. Phillips or his designated
beneficiary. Premiums paid by the Company for this life insurance policy during
fiscal 1998, 1997 and 1996 are included in "All Other Compensation" column of
the "Summary Compensation Table" in Schedule I hereto. This summary does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the Split-Dollar Life Insurance Agreement, a copy of which is
filed as Exhibit 15 hereto and is incorporated herein by reference.
Effective July 1989, the Company entered into a Deferred Compensation
Agreement with Mr. Williams. Pursuant to this agreement, upon the termination of
Mr. Williams' employment with the Company at any time after age 60 or as a
result of his disability or death, the Company will pay to Mr. Williams, or his
designated beneficiary in the event of his death, the sum of $30,000 per year
for 15 years. This deferred compensation payment is funded in part through an
insurance policy on the life of Mr. Williams. Mr. Williams contributes $2,469
per year towards the payment of the premium due under this policy, as a deferral
of his compensation. The Company contributes the balance of the premiums due
under the policy which is $10,000 per year. Premiums paid by the Company for
this life insurance policy during fiscal 1998, 1997 and 1996 are included in
"All Other Compensation" column of the "Summary Compensation Table" in Schedule
I hereto. This summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of the Deferred Compensation
Agreement with Mr. Williams, a copy of which is filed as Exhibit 16 hereto and
is incorporated herein by reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the Compensation Committee of the Board of Directors consisted
of Sangwoo Ahn and Jack D. Rutherford, both of whom are non-employee directors,
and Barry L. Phillips, who is an executive officer of the Company. Mr. Phillips
does not participate in the deliberations of the Compensation Committee
concerning his compensation.
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
Certain other contracts, agreements, arrangements, and understandings
between the Company and certain of its directors, executive officers and
affiliates are described above under the captions "The Merger
Agreement -- Indemnification and Insurance" and "The Merger
Agreement -- Employee Plans and Benefits and Employment Contracts."
14
<PAGE> 16
CERTAIN TRANSACTIONS
On September 26, 1997 the Company entered into an agreement with Morgan
Lewis Githens & Ahn ("MLGA"), pursuant to which MLGA agreed to act as a
financial advisor to the Company in connection with the Company's consideration
of possible strategic business alternatives including (i) acquisitions; (ii)
divestitures; (iii) recapitalizations; and (iv) business combinations. The terms
of the agreement provide that in the event a business combination is consummated
within the term of the agreement or within one year thereafter, the Company will
pay MLGA a fee for its services in an amount equal to 0.42% of the purchase
price paid in such business combination up to $192.1 million and an amount equal
to 1.6667% of the purchase price in excess of $192.1 million, plus reasonable
out-of-pocket expenses. See Item 5 herein for a description of the fee to be
paid to MLGA as a result of consummation of the Offer. Messrs. Ahn, Lewis and
Morgan, three of the Company's directors, are founding partners of MLGA. MLGA is
an affiliate of MLGA Fund II, L.P., the largest stockholder of the Company.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY HAS BY UNANIMOUS VOTE DETERMINED THAT
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH
OF THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE
OFFER AND TENDER THEIR SHARES TO MERGER SUBSIDIARY.
This recommendation is based in part upon an opinion the Board of Directors
received from Merrill Lynch, the Company's independent financial advisor, that,
as of the date of such opinion, the consideration to be received by the holders
of the Company Common Stock in the Offer and the Merger, taken together, was
fair, from a financial point of view, to such stockholders (the "Merrill Lynch
Opinion"). The full text of the Merrill Lynch Opinion, which sets forth the
factors considered and the assumptions made by Merrill Lynch, is attached hereto
as Annex 1, and filed as Exhibit 5 hereto. Stockholders are urged to read the
Merrill Lynch Opinion in its entirety.
A letter to the Company's stockholders communicating the Board of
Directors' recommendation and a press release announcing the execution of the
Merger Agreement are filed as Exhibits 6 and 7, respectively, and are
incorporated herein by reference.
See Item 5 herein for a description of the fee to be paid to MLGA as a
result of consummation of the Offer. Messrs. Ahn, Lewis and Morgan, three of the
Company's directors, are founding partners of MLGA. See Item 3(b) for a
description of an employment agreement between the Company and Barry Phillips, a
director of the Company, which will become effective upon the consummation of
the Merger. In addition, David Williams, also a director of the Company, has
been advised in writing by Parent at Mr. William's request that if Mr. Williams
retires from the Company on or after December 31, 1999, Parent will not contest
his rights to severance under Section 10(e) of his employment agreement with the
Company described in Item 3(b) herein.
(b) Background; Reasons for the Board of Directors' Recommendation
(b)(1) Background.
Beginning in early 1997, the Company's management, in periodic consultation
with the Company's directors, began to explore options to improve stockholder
value. On September 26, 1997, the Company retained MLGA, to act as a financial
advisor to the Company and to work with Merrill Lynch, which was retained on
October 1, 1997, in identifying potential acquirors of the Company. Mr. Sangwoo
Ahn, Chairman of the Board and a director of the Company, and two other
directors of the Company, are founding partners of MLGA.
15
<PAGE> 17
From October to December 1997, Merrill Lynch contacted 24 potential
strategic acquirors (including Parent) and 16 potential financial acquirors and
distributed to them memoranda generally describing the Company's operations. On
November 3, 1997, Parent and the Company entered into a customary
confidentiality and standstill agreement under which the Company would provide
Parent certain non-public information in connection with its consideration of a
possible acquisition of the Company, which was amended February 23, 1998. In
December 1997, Parent informed representatives of Merrill Lynch that Parent did
not intend to make a proposal to acquire the Company.
Subsequently, from December 1997 to January 1998, one potential strategic
acquiror (but not Parent) and three potential financial acquirors submitted
preliminary indications of interest to acquire the Company, and management met
with representatives of such potential strategic acquiror and two of the
potential financial acquirors from January to February 1998. By March 1998, such
potential acquirors were encouraged not to submit a final bid to acquire the
Company since their initial indications of interest were not at a price per
share that would be acceptable to the Company. Between March 1998 and December
1998, no substantive discussions took place between the Company or its financial
advisors and potential acquirors.
On December 14, 1998, a representative of Gleacher & Co. LLC ("Gleacher"),
Parent's financial adviser, telephoned a representative of MLGA, to arrange a
meeting to discuss Parent's renewed interest in possibly acquiring the Company.
On December 15, 1998, a representative of Gleacher and a representative of MLGA
met. The Gleacher representative advised the MLGA representative of Parent's
preliminary indication of interest.
On December 23, 1998, a representative of Gleacher and a representative of
MLGA spoke by telephone. The Gleacher representative reiterated Parent's
preliminary indication of interest. A representative of MLGA suggested that a
price higher than Parent's preliminary indication would be required. The
Gleacher representative and the MLGA representative agreed that Parent and the
Company would consider their respective positions over the holidays.
During January 1999, a representative of Gleacher made several unsuccessful
efforts to contact a representative of MLGA. On February 1, 1999, a
representative of Gleacher submitted a written proposal to a representative of
MLGA, increasing its proposed acquisition price, subject to a reasonable period
of due diligence followed by a tender offer to all Company stockholders. In
addition, Parent required a contractual commitment obligating MLGA Fund II, L.P.
to tender all of its shares of the Company to Parent. Mr. Ahn is a general
partner of the general partner of MLGA Fund II, L.P.
On February 2, 1999, a representative of MLGA telephoned a representative
of Gleacher to invite Parent to conduct a due diligence investigation of the
Company.
On February 3, 1999, a representative of Gleacher informed a representative
of MLGA by telephone that Parent would accept the offer to conduct a due
diligence investigation.
On February 8, 1999, a representative of Gleacher sent a letter to a
representative of MLGA describing the scope of due diligence that Parent wished
to conduct. During that week, a representative of Merrill Lynch contacted a
representative of Gleacher to coordinate a due diligence meeting.
On February 25-26, 1999, representatives of the Company's management and
Merrill Lynch made presentations to representatives of Parent's management and
Gleacher regarding the Company's business, operations, and projected results of
operations. The participants engaged in discussions regarding Parent's possible
acquisition of the Company and the Company provided Parent's management with
tours of its New Philadelphia and Orville, Ohio facilities.
In February and early March 1999, the Company's management decided to meet
with two other potential strategic acquirors (the "Other Potential Acquirors")
in addition to Parent. Each of the Other Potential Acquirors executed a
customary confidentiality and standstill agreement with the Company. In separate
meetings during late February and early March 1999, representatives of the
Company and Merrill Lynch made presentations to representatives of the Other
Potential Acquirors and their respective financial advisors regarding the
Company's operations and projected results of operations. The participants
engaged in
16
<PAGE> 18
discussions regarding the Other Potential Acquirors' possible acquisition of the
Company and the Company provided tours of the Company's New Philadelphia and
Orville, Ohio facilities.
On March 18, 1999, Merrill Lynch provided Parent and the Other Potential
Acquirors with written invitations to submit a definitive proposal for the
acquisition of the Company, outlining the timing and procedures for formulating
the proposals and accompanied by a draft Agreement and Plan of Merger. Parent
and the Other Potential Acquirors were required to submit their proposals,
together with any changes to the draft Merger Agreement, in writing no later
than 12:00 noon Eastern Standard Time, on April 9, 1999.
Throughout late March and early April 1999, Parent's management, together
with its counsel, Covington & Burling ("Covington"), and its independent
accountants, Ernst & Young LLP ("E&Y"), and the Other Potential Acquirors,
together with their legal counsel, financial advisors, and independent
accountants, conducted an extensive due diligence investigation of the Company,
including but not limited to its business, operations and financial conditions,
and participated in numerous discussions with members of the Company's
management and visits to the Company's facilities. In addition, on April 5 and
April 6, 1999, representatives of Parent and Covington discussed by telephone
conference meetings certain due diligence matters with representatives of the
Company, and Black, McCuskey, Souers & Arbaugh ("Black"), outside legal counsel
to the Company, and Proskauer Rose LLP ("Proskauer"), special outside legal
counsel to the Company.
On April 9, 1999, Parent submitted to Merrill Lynch a written proposal to
acquire the Company at a cash price of $19.25 per share. Parent's proposal
included comments on the draft Merger Agreement previously provided by Merrill
Lynch (including a termination fee of $8 million) and a draft stockholders
agreement. Also on April 9, 1999, one of the Other Potential Acquirors (the
"Other Bidding Party"), by letter from the Chief Financial Officer of the Other
Bidding Party, submitted to Merrill Lynch a written proposal to acquire the
Company at a cash price that was less than the amount proposed by Parent. The
Other Bidding Party's proposal also included comments on the draft Merger
Agreement (including a termination fee equal to 5% of the proposed aggregate
consideration or approximately $8 million) and a condition that the Other
Bidding Party obtain an agreement to purchase all the shares and options of the
Company held by the Company's directors, senior management and MLGA Fund II,
L.P.
On April 11, 1999, by telephone conference, a representative of MLGA, and
representatives of Merrill Lynch and Proskauer discussed Parent's and the Other
Bidding Party's proposals to acquire the Company, including their proposed
changes to the draft Merger Agreement and required stockholders agreements.
Later that day, a representative of Merrill Lynch contacted representatives of
both Parent's and the Other Bidding Party's financial advisers to discuss the
principal terms of their proposals and invited them to submit revised bids for
the Company by no later than 5:00 pm, Eastern Standard Time, on April 14, 1999.
On April 12, 1999, representatives of Proskauer spoke by telephone
separately with Covington and counsel for the Other Bidding Party regarding
their respective comments on the draft Merger Agreement, required stockholders
agreements, and the role of Company senior management following the Merger.
On April 13, 1999, the Other Bidding Party, by letter from the Chief
Financial Officer of the Other Bidding Party addressed to Merrill Lynch,
clarified certain issues related to their original proposal to acquire the
Company, including reducing the proposed termination fee to 3% of the proposed
aggregate consideration. On April 14, 1999, the Other Bidding Party's legal
counsel, by letter addressed to Merrill Lynch, clarified certain legal issues
and matters discussed with Proskauer other than those specifically addressed in
their April 13, 1999 letter.
On April 14, 1999, Parent submitted to Merrill Lynch a revised written
proposal in which Parent increased the offer price to $20.00 per share, reduced
the proposed termination fee to $6 million and clarified certain other terms of
its proposal to acquire the Company.
On April 15, 1999, Company management, a representative of MLGA, and
representatives of Merrill Lynch and Proskauer held a meeting to discuss
Parent's and the Other Bidding Party's bids and their proposed changes to the
draft Merger Agreement, required stockholders agreements and other terms.
17
<PAGE> 19
On or about April 19, 1999, the Other Bidding Party, by telephone call from
the Other Bidding Party's financial adviser to a representative of Merrill
Lynch, indicated that it was prepared to increase its offer but such increase
was not to a level which, in the opinion of the Company, was competitive with
the $20.00 per share offered by Parent.
From April 15 to May 9, 1999, representatives of the Company and Parent and
their respective legal and financial advisors conducted further negotiations of
the terms of the transaction, including the terms of the Merger Agreement and
stockholders agreements. In addition, Black, as legal counsel to the Company's
senior management, negotiated with representatives of Parent and Covington
regarding proposed new employment agreements for the Company's senior management
to be effective upon the consummation of the Merger (see Item 3(b) above).
On May 10, 1999, the Company's Board of Directors held a special meeting to
consider the proposed transaction. Representatives of Merrill Lynch made a
presentation regarding certain financial analyses that it had performed in
connection with Merrill Lynch's review of the Offer and the Merger, and rendered
its opinion that the consideration to be received by the holders of Shares
pursuant to the Offer and the Merger, taken together, was fair from a financial
point of view. The representatives of Merrill Lynch also reviewed with the
Company Board of Directors, Merrill Lynch's discussions with third parties who
were also potentially interested in concluding transactions with the Company.
Representatives of Proskauer then commented on various legal issues and
presented a summary of the Merger Agreement and Stockholders Agreements.
Following discussion among the directors, the Company's Board, by unanimous
vote, adopted resolutions approving the Offer, the Merger and the Merger
Agreement.
Later in the day on May 10, 1999, the Merger Agreement and the Stockholders
Agreements were executed and on May 11, 1999 a joint press release was issued by
Parent and the Company announcing the transaction.
On May 17, 1999, the Merger Subsidiary commenced the Offer.
(b)(2) Reasons for the Transaction; Factors Considered by the Board.
In making its recommendation to the stockholders of the Company with
respect to the Offer and the Merger, the Company Board of Directors considered a
number of factors, the material ones being:
Financial Condition, Results of Operations, Business and Prospects of the
Company
The Company Board of Directors considered the financial condition, results
of operations, business and prospects of the Company, including its prospects if
it were to remain independent. The Company Board of Directors also discussed the
Company's current strategic plan and the competitive environment in which the
Company operates.
Financial Advisor's Presentation
The Company Board of Directors took into account the financial analysis of
Merrill Lynch as well as its oral opinion, subsequently confirmed in writing as
of May 10, 1999, to the effect that, as of such date, and based upon and subject
to the various considerations set forth in such opinion, the consideration to be
received, pursuant to the Offer and the Merger, taken together, was fair from a
financial point of view to such holders. A copy of the Merrill Lynch Opinion is
filed as Exhibit 5 and attached hereto as Annex I and is incorporated herein by
reference. Holders of Shares should read the Merrill Lynch Opinion in its
entirety for a description of the procedures followed, assumptions and
qualifications made, matters considered and limitations on the review undertaken
by Merrill Lynch.
Historical Stock Price Performance
The Company Board noted that the consideration to be received by the
Company's stockholders pursuant to the Offer and the Merger, taken together,
would represent a substantial premium over (i) the closing price of the Shares
on the NASDAQ Stock Market on May 10, 1999 (the last full trading day prior to
18
<PAGE> 20
announcement of the execution of the Merger Agreement) and (ii) the average
closing price of the Shares during the preceding ten, thirty, ninety, one
hundred and eighty day periods and for the last 12 months.
Terms of the Offer and the Merger
The Company Board of Directors also considered the other terms and
conditions of the Offer and the Merger as well as the terms of the Stockholders
Agreements. The Company Board of Directors noted that the transaction was being
structured as a cash tender offer for all of the outstanding Shares, and it
would permit all holders of Shares to participate on the same basis. The Board
also noted the absence of a financing condition to the Offer. Equally, the
consideration to be received in the Merger would be available to holders of
Shares on the same basis. The Company Board of Directors considered that the
Stockholders, as principal stockholders, were committing to the transaction but
were not being afforded any preferential treatment in connection with the Offer
or the Merger and the fact that Parent had required that the Stockholders
Agreements be entered into as a condition of Parent's execution of the Merger
Agreement.
Other Potential Transactions
The Company Board of Directors considered whether any other person would be
interested in an acquisition of the Company at this time on terms more
attractive to the Company. The Company Board of Directors discussed the fact
that numerous potential acquirors had been contacted by the Company and its
financial advisors and that only Parent and the Other Bidding Party had made
final bids to acquire the Company, and therefore concluded that no other
potential acquiror would be likely to propose an acquisition transaction more
attractive than that proposed by Parent. In this connection, the Company Board
of Directors reviewed information regarding the preliminary discussions between
the Company and potential strategic and financial acquirors (see "-- Background"
above).
Competing Offers
The Company Board of Directors noted that if the Company receives an offer
superior in its terms to the Offer and the Merger, the Company could provide
information to, and negotiate with, such competing bidder and approve or
recommend a transaction that would compete with the Offer, provided that under
the circumstances described in the Merger Agreement, the Company may be required
to pay Parent a termination fee of $6.0 million (see "The Merger
Agreement -- Fees and Expenses").
The foregoing discussion of the information and factors considered and
given weight by the Company Board of Directors is not intended to be exhaustive.
In view of the variety of factors considered in connection with its evaluation
of the Offer and the Merger, the Company Board of Directors did not find it
practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination. In addition,
individual members of the Board of Directors may have given different weights to
different factors.
THE FULL TEXT OF THE MERRILL LYNCH OPINION IS ATTACHED HERETO AS ANNEX I
AND FILED AS EXHIBIT 5 HERETO. STOCKHOLDERS ARE URGED TO AND SHOULD READ SUCH
OPINION IN ITS ENTIRETY. SUCH OPINION WAS PROVIDED FOR THE INFORMATION AND
ASSISTANCE OF THE COMPANY BOARD OF DIRECTORS IN CONNECTION WITH ITS
CONSIDERATION OF THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND IS
DIRECTED ONLY TO THE FAIRNESS (FROM A FINANCIAL POINT OF VIEW) OF THE
CONSIDERATION TO BE RECEIVED, PURSUANT TO THE OFFER AND THE MERGER, TAKEN
TOGETHER. SUCH OPINION DOES NOT CONSTITUTE A RECOMMENDATION AS TO WHETHER OR NOT
ANY STOCKHOLDER SHOULD TENDER HIS, HER OR ITS SHARES IN THE OFFER OR HOW ANY
STOCKHOLDER SHOULD VOTE, OR WHETHER SUCH STOCKHOLDER SHOULD SEEK APPRAISAL
RIGHTS, IN CONNECTION WITH THE MERGER.
19
<PAGE> 21
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to the terms of an engagement letter dated as of October 1, 1997
between the Company and Merrill Lynch (the "Merrill Lynch Engagement Letter")
and an engagement letter dated as of September 26, 1997 between the Company and
MLGA (the "MLGA Engagement Letter"), the Company has engaged Merrill Lynch and
MLGA, respectively, to act as its financial advisors in connection with the
sale, merger, consolidation or any other business combination involving all or a
substantial amount of securities or assets of the Company and certain other
transactions. As part of Merrill Lynch's roles as financial advisor, Merrill
Lynch has delivered to the Board of Directors the Merrill Lynch Opinion.
Pursuant to the Merrill Lynch Engagement Letter and the MLGA Engagement
Letter, the Company has agreed to (i) pay Merrill Lynch a fee of approximately
$2,161,000; and (ii) pay MLGA a fee of approximately $1,086,826, respectively,
upon the first purchase of Company Shares by Merger Subsidiary pursuant to the
Offer. The Company has also agreed, whether or not the Offer is consummated, to
pay Merrill Lynch and MLGA for their reasonable out-of-pocket expenses,
including the reasonable fees and expenses of their respective legal counsel
incurred in connection with their engagement, and to indemnify each of Merrill
Lynch and MLGA against certain liabilities and expenses in connection with their
engagement.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for the transactions contemplated by the Stockholders
Agreements, no transactions in the Shares have been effected during the past 60
days by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best knowledge of the Company, all of its executive officers,
directors, affiliates and subsidiaries presently intend to tender to the Merger
Subsidiary all Shares held of record or beneficially owned by such persons
(other than Shares issuable upon exercise of stock options, Shares that may be
donated to charitable organizations and Shares, if any, which if tendered could
cause such persons to incur liability under the provisions of Section 16(b) of
the Exchange Act). Reference is also made to the Stockholders Agreements
described in Item 3 herein.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Statement, no negotiation is being
undertaken or is underway by the Company in response to the Offer which relates
to or would result in: (1) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (2) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (3) a tender offer for or other acquisition of
securities by or of the Company; or (4) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described in Item 3(b) and Item 4 above (the provisions of
which are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None
20
<PAGE> 22
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Agreement and Plan of Merger, dated as of May 10, 1999, by and
among Parent, the Merger Subsidiary and the Company.
Exhibit 2 Confidentiality Agreement, dated as of November 3, 1997, as
amended on February 23, 1999, by and between Parent and the
Company.
Exhibit 3 Stockholders Agreement, dated as of May 10, 1999, by and among
Parent, the Merger Subsidiary, the Company, David Williams,
Barry L. Phillips, Bruce A. Jonker, James C. Cahill, Joseph H.
Keller, Sangwoo Ahn, Perry J. Lewis, and Jack D. Rutherford.
Exhibit 4 Stockholders Agreement, dated May 10, 1999, by and among
Parent, the Merger Subsidiary and MLGA Fund II, L.P.
Exhibit 5 Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
dated May 10, 1999.*
Exhibit 6 Letter to Stockholders of the Company, dated May 18, 1999.*
Exhibit 7 Joint Press Release issued by Parent and the Company, dated May
11, 1999
Exhibit 8 Amended and Restated Employment Agreement dated January 1, 1998
between the Gradall Company and Barry L.
Phillips -- incorporated by reference to Exhibit 10.04 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997
Exhibit 9 Amended and Restated Employment Agreement dated January 1, 1998
between the Gradall Company and David S.
Williams -- incorporated by reference to Exhibit 10.05 of the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997
Exhibit 10 Amended and Restated Employment Agreement dated as of January
1, 1998 between The Gradall Company and Bruce A.
Jonker -- incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998
Exhibit 11 Employment Agreement dated as of November 1, 1995 between The
Gradall Company and Joseph H. Keller, Jr. -- incorporated by
reference to Exhibit 10.11 to the Company's Registration
Statement on Form S-1 (No. 333-06777)
Exhibit 12 Employment Agreement dated as of November 1, 1995 between The
Gradall Company and James C. Cahill -- incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement on Form S-1 (No. 333-06777)
Exhibit 13 The Gradall Company Amended and Restated Supplemental Executive
Retirement Plan -- incorporated by reference to Exhibit 10.13
to the Company's Registration Statement on Form S-1 (No.
333-06777)
Exhibit 14 Deferred Compensation Agreement dated July 19, 1989 between The
Gradall Company and Barry L. Phillips -- incorporated by
reference to Exhibit 10.06 to the Company's Registration
Statement on Form S-1 (No. 333-06777)
Exhibit 15 Split-Dollar Life Insurance Agreement dated as of August 30,
1995 between The Gradall Company and Barry L.
Phillips -- incorporated by reference to Exhibit 10.08 to the
Company's Registration Statement on Form S-1 (No. 333-06777)
Exhibit 16 Amended and Restated Deferred Compensation Agreement dated
August 30, 1995 between The Gradall Company and David S.
Williams -- incorporated by reference to Exhibit 10.07 to the
Company's Registration Statement on Form S-1 (No. 333-06777)
Exhibit 17 Gradall Industries, Inc. 1995 Stock Option Plan -- incorporated
by reference to Exhibit 10.09 to the Company's Registration
Statement on Form S-1 (No. 333-06777)
Exhibit 18 The Gradall Company Benefit Restoration Plan -- incorporated by
reference to Exhibit 10.14 to the Company's Registration
Statement on Form S-1 (No. 333-06777)
Exhibit 19 Gradall Industries, Inc., 1998 Stock Option Plan incorporated
by reference to Exhibit 10.17 of the Company's Annual Report on
Form 10-K filed for the year ended December 31, 1997
21
<PAGE> 23
Exhibit 20 Amendment No. 1 to Rights Agreement, dated as of May 11, 1999
by and between Gradall Industries, Inc. and ChaseMellon
Shareholder Services, LLC.
Exhibit 21 Amended and Restated Employment Agreement dated as of May 10,
1999, between Gradall Industries, Inc. and Barry L. Phillips.
Exhibit 22 Amended and Restated Employment Agreement dated as of May 10,
1999, between Gradall Industries, Inc. and Joseph H. Keller,
Jr.
Exhibit 23 Amended and Restated Employment Agreement dated as of May 10,
1999, between Gradall Industries, Inc. and James C. Cahill.
- ---------------
* Included in copies of Schedule 14D-9 mailed to Stockholders.
22
<PAGE> 24
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
GRADALL INDUSTRIES, INC.
By: /s/ BARRY L. PHILLIPS
------------------------------------
Barry L. Phillips,
President and Chief Executive
Officer
Dated: May 18, 1999
23
<PAGE> 25
SCHEDULE 1
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
GENERAL
This Information Statement is being mailed on or about May 18, 1999 as part
of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") of Gradall Industries, Inc., a Delaware corporation (the "Company") to
the holders of record of the Company's common stock (together with associated
rights to purchase Series B Participating Cumulative Preferred Stock), par value
$.001 per share, of the Company (the "Common Stock" or "Shares"). You are
receiving this Information Statement in connection with the possible election of
persons designated by Merger Subsidiary (as defined below) to a majority of the
seats on the Board of Directors of the Company (the "Board" or the "Board of
Directors").
On May 10, 1999, the Company, JLG Industries, Inc., a Pennsylvania
corporation ("Parent"), and JLG Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent, ("Merger Subsidiary"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which (i) the
Merger Subsidiary will commence a tender offer (the "Offer") for all outstanding
shares at a price of $20.00 per Share, net to the seller in cash and (ii) the
Merger Subsidiary will be merged with and into the Company (the "Merger"). As a
result of the Offer and the Merger, the Company will become a wholly owned
subsidiary of Parent.
The Merger Agreement provides that, promptly upon the acceptance for
payment of and payment for any Shares by Merger Subsidiary, Merger Subsidiary
shall be entitled to designate such number of directors (the "Merger Subsidiary
Designees") on the Company Board of Directors as will give Merger Subsidiary
representation proportionate to its ownership interest. The Merger Agreement
requires the Company to take such action as Parent may request to cause the
Merger Subsidiary Designees to be elected to the Board of Directors under the
circumstances described therein. This Information Statement is required by
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Rule 14f-1 thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning Parent
and the Merger Subsidiary has been furnished to the Company by Parent and the
Company assumes no responsibility for the accuracy or completeness of such
information.
RIGHT TO DESIGNATE DIRECTORS; THE MERGER SUBSIDIARY DESIGNEES
The Merger Agreement provides that, subject to compliance with applicable
law, promptly upon the acceptance for payment of and payment for any Shares by
Merger Subsidiary, Merger Subsidiary will be entitled to designate such number
of directors, rounded up to the next whole number, on the Board of Directors as
is equal to the product of (i) the number of directors on the Board of Directors
of the Company and (ii) the percentage that such number of votes represented by
Shares so purchased bears to the number of votes represented by Shares
outstanding. The Company will promptly take all actions requested by Parent
necessary to cause the Merger Subsidiary Designees to be so elected, including,
at Parent's option, increasing the size of the Board of Directors or using the
Company's best efforts to seek the resignations of one or more existing
directors. Notwithstanding the foregoing, until the Effective Time of the
Merger, (i) any amendment or termination of the Merger Agreement; or (ii) waiver
of the obligations or other acts of Parent or Merger Subsidiary under the Merger
Agreement; or (iii) waiver by the Company of the Company's rights under the
Merger Agreement will require the concurrence of a majority of directors of the
Company who were directors of the Company as of May 10, 1999 and who voted to
approve the Merger Agreement.
1
<PAGE> 26
The following table sets forth the name, age, present principal occupation
or employment and five-year employment history for each of the persons who
Parent intends to designate as directors of the Company. The business address of
each such person is 1 JLG Drive, McConnellsburg, PA 17233-9533.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AGE POSITIONS, OFFICES, OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---- --- -----------------------------------------------------------------
<S> <C> <C>
L. David Black......... 62 Chairman of the Board, President and Chief Executive Officer of
Parent; Director of Parent since 1990; Director of Merger
Subsidiary
Charles H. Diller,
Jr................... 54 Executive Vice President and Chief Financial Officer of Parent,
Director of Parent
Thomas D. Singer....... 46 Vice President -- General Counsel of Parent; Director of Merger
Subsidiary
Raymond F. Treml....... 59 Senior Vice President -- Operations of Parent
Rao G. Bollimpalli..... 60 Senior Vice President -- Engineering of Parent
Samuel D. Swope........ 49 Vice President -- Human Resources of Parent
Craig E. Paylor........ 43 Vice President -- Sales and Market Development of Parent since
December 1997, prior to December 1997, Vice President -- Sales
of Parent
Ben A. Appleby......... 64 Vice President -- Corporate Development of Parent since December
1997, prior to December 1997 Vice President -- Corporate
Materials of Parent
John F. Louderback..... 43 Vice President -- Sales and Support of Parent since December
1997, prior to December 1997, Director of Customer Support
</TABLE>
Merger Subsidiary has informed the Company that each of the individuals
listed above has consented to act as a director, if so designated. If necessary,
Merger Subsidiary may choose additional or other Merger Subsidiary Designees,
subject to the requirements of Rule 14f-1.
Based solely on the information set forth in the Offer, none of the Merger
Subsidiary Designees (i) is currently a director of, or holds any position with,
the Company, (ii) has a familial relationship with any directors or executive
officers of the Company, or (ii) to the best of the Parent's knowledge, has been
involved in any transactions with the Company or any of its directors, officers,
or affiliates which are required to be disclosed pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC"), except as may
be disclosed herein or in the Schedule 14D-9.
DIRECTORS OF THE COMPANY
Certain information concerning the current directors and executive officers
of the Company and directors and executive officers of The Gradall Company, a
wholly owned subsidiary of the Company, as of May 10, 1999 is set forth below.
<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY
- ---- -------------------------
<S> <C>
Sangwoo Ahn.......... Chairman of the Board.
Ernest Green......... Director
Perry J. Lewis....... Director
John A. Morgan....... Director
Barry L. Phillips.... President -- Chief Executive Officer and Director and
President of the Gradall Company
Jack D. Rutherford... Director
William C. Ughetta... Director
David S. Williams.... Director and Vice President-Marketing and Sales, and Vice
President-Marketing and Sales of The Gradall Company
</TABLE>
2
<PAGE> 27
Sangwoo Ahn was a Co-Chairman of the Board from October 1995 to March 1996
and has been Chairman of the Board since March 1996. Mr. Ahn is a founding
partner of Morgan Lewis Githens & Ahn ("MLGA"), a privately-owned international
investment banking and leveraged buyout firm which was founded in 1982. Mr. Ahn
has served as a general partner of MLGAL Partners L.P. ("MLGAL"), a Connecticut
limited partnership and the general partner of MLGA Fund II, L.P. ("Fund II"),
since its formation in 1987. Mr. Ahn also serves on the Board of Directors of
Kaneb Pipeline Partners, L.P., Kaneb Services, Inc., PAR Technology Corporation,
Quaker Fabric Corporation, Stuart Entertainment, Inc. and ITI Technologies, Inc.
Mr. Ahn is 60 years old.
Ernest Green has been a director of the Company since July 1996. Mr. Green
is the founder of, and since its formation in 1981, has served as President and
Chief Executive Officer of EGI, Inc., a manufacturer of automotive components.
He is also President of Florida Production Engineering, Inc., a subsidiary of
EGI, Inc. Mr. Green also serves on the Board of Directors of DPL Inc., Eaton
Corporation, and Pitney Bowes, Inc. Mr. Green is 60 years old.
Perry J. Lewis has been a director of the Company since 1995. Mr. Lewis is
a founding partner of MLGA and has served as a general partner of MLGAL since
its formation. Mr. Lewis also serves on the Board of Directors of Aon
Corporation, Stuart Entertainment, Inc. ITI Technologies, Inc. and Chancellor
Media Corporation. Mr. Lewis is 61 years old.
John A. Morgan has been a director of the Company since 1995. Mr. Morgan is
a founding partner of MLGA and has served as a general partner of MLGAL since
its formation. In December 1997, Mr. Morgan became a Managing Director of Long
Point Capital, Inc. and a Managing Member of Long Point Capital Partners LLC.
Mr. Morgan also serves on the Board of Directors of Masco Tech, Inc., Masco
Corp. and Lifestyle Furnishings International, Inc. Mr. Morgan is 68 years old.
Barry L. Phillips has served as President -- Chief Executive Officer and
has been a director of the Company since 1995 and has served as President of The
Gradall Company, its wholly-owned subsidiary, since 1985. Prior to joining the
Company, Mr. Phillips spent 26 years with International Harvester and was the
plant manager of its Farmall Plant in Rock Island, Illinois. Mr. Phillips is 57
years old.
Jack D. Rutherford has been a director of the Company since its formation
in 1985. Mr. Rutherford has served as Chairman of the Board and Chief Executive
Officer of the Company from 1985 to October 1995 and as Co-Chairman of the Board
from October 1995 until March 1996. He served as President and Vice Chairman of
ICM Krebsoge, Inc., a manufacturer of component parts for the automotive
industry, from January 1993 until December 1996. Mr. Rutherford also served as
Vice Chairman of Magna LLC, and its predecessors, a holding company whose
operating subsidiary manufactures hydraulic cylinders, pumps and valves, from
1986 through September 1996. Mr. Rutherford also serves on the Board of
Directors of Code Alarm, Inc. Mr. Rutherford is 65 years old.
William C. Ughetta, Jr. has been a director of the Company since 1995. In
December 1997, Mr. Ughetta became a Managing Director of Long Point Capital,
Inc., a private equity investment firm. From January 1994 through December 1996,
Mr. Ughetta was a general partner of MLGA and MLGAL. Mr. Ughetta is 38 years
old.
David S. Williams has served as Vice President, Marketing and Sales and has
been a director of the Company since 1995 and has served as Vice President,
Marketing and Sales of The Gradall Company since 1986. Prior to that, Mr.
Williams served as President of Claas of America and held various management
positions at International Harvester, including General Sales Manager. Mr.
Williams is 58 years old.
3
<PAGE> 28
EXECUTIVE OFFICERS OF THE COMPANY
Executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- -----------------------------------------------------
<S> <C> <C>
Barry L. Phillips..................... 57 President-CEO
David S. Williams..................... 58 Vice President, Marketing and Sales
Joseph H. Keller, Jr. ................ 52 Vice President, Engineering and Secretary
James C. Cahill....................... 46 Vice President, Manufacturing
Bruce A. Jonker....................... 56 Vice President, Chief Financial Officer and Treasurer
</TABLE>
Mr. Phillips has served as President and Chief Executive Officer of the
Company since 1995 and has served as President of The Gradall Company since
1985. Prior to 1985, Mr. Phillips spent 26 years with International Harvester
and was the plant manager of its Farmall Plant in Rock Island, Illinois.
Mr. Williams has served as Vice President, Marketing and Sales of the
Company since 1995 and has served as Vice President, Marketing and Sales of The
Gradall Company since 1986. Prior to that, Mr. Williams served as President of
Claas of America and held various management positions at International
Harvester, including General Sales Manager.
Mr. Keller joined The Gradall Company in 1981 and has served as its Vice
President, Engineering and Secretary since 1987. Mr. Keller has served as Vice
President, Engineering and Secretary of the Company since 1995.
Mr. Cahill joined The Gradall Company in 1982 and has served as its Vice
President, Manufacturing since 1990. Mr. Cahill has served as Vice President,
Manufacturing of the Company since 1995.
Mr. Jonker joined The Gradall Company in 1973 and has served as its Vice
President and Chief Financial Officer since July 1994 and its Treasurer since
November 1995. Mr. Jonker has served as Vice President, Finance and
Administration and Treasurer of the Company since November 1995 and as Vice
President, Chief Financial Officer and Treasurer of the Company since April
1996.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held seven meetings during 1998. Each director
attended at least 75% of the total number of meetings of the Board and
Committees on which he served, except Messrs. Morgan, Lewis and Williams.
The Board of Directors has an Audit Committee and a Compensation Committee.
It does not have a Nominating Committee. The Board functions as a committee of
the whole to nominate candidates for election as directors.
The Compensation Committee consists of Messrs. Ahn, Rutherford and
Phillips. The functions of the Compensation Committee are to review and approve
senior executive base and incentive compensation. The Compensation Committee met
twice in 1998.
The Audit Committee, which in 1998 consisted of Messrs. Ughetta, Rutherford
and Green, held one meeting in 1998. The Audit Committee's functions are to
review the plan and results of the annual audit by the Company's independent
accountants, to review the adequacy of the Company's system of internal
controls, to monitor related party transactions and to recommend to the
directors the firm of accountants to serve as the Company's auditors.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Company and are not
affiliated with MLGA are entitled to receive $1,000 per attended meeting and
$20,000 per annum for serving as directors of the Company. In addition, Mr.
Green was granted an option to purchase 10,000 shares of Common Stock of the
Company, at an exercise price of $2.71 per share, which may be exercised at any
time and from time to time prior to August 14, 2006.
4
<PAGE> 29
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides information relating to compensation for the
years ended December 31, 1998, 1997 and 1996 of the Company's Chief Executive
Officer and its other four most highly compensated executive officers
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ------------------
-------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION
- --------------------------- ---- -------- -------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Barry L. Phillips............... 1998 $232,500 $265,000 -0- $21,894(1)
President and Chief 1997 210,249 250,000 65,000 18,290(1)
Executive Officer 1996 166,000 107,000 24,930 18,290(1)
David S. Williams............... 1998 150,154 104,000 -0- 12,534(2)
Vice President 1997 147,000 98,000 25,895 12,534(2)
Marketing and Sales 1996 143,096 77,000 23,545 12,534(2)
Joseph H. Keller, Jr............ 1998 101,085 65,000 -0- 5,139(3)
Vice President, 1997 97,200 60,000 17,000 5,139(3)
Engineering and Secretary 1996 91,711 46,000 6,925 5,139(3)
James C. Cahill................. 1998 104,166 75,000 -0- 5,064(3)
Vice President, 1997 97,704 71,000 25,000 5,064(3)
Manufacturing 1996 88,906 56,000 13,850 5,064(3)
Bruce A. Jonker................. 1998 108,416 100,000 -0- 11,729(3)
Vice President and 1997 99,384 91,000 25,000 5,064(3)
Chief Financial Officer 1996 87,982 64,500 13,850 5,064(3)
</TABLE>
- ---------------
(1) Includes $2,534 the Company contributed on behalf of Mr. Phillips to its
Supplemental Executive Retirement Plan, $10,226 ($13,830 in 1998) in life
insurance premiums the Company paid pursuant to a split-dollar life
insurance agreement with Mr. Phillips and $5,530 in life insurance premiums
the Company paid pursuant to a deferred compensation agreement with Mr.
Phillips.
(2) Includes $2,534 the Company contributed on behalf of Mr. Williams to its
Supplemental Executive Retirement Plan and $10,000 in life insurance
premiums the Company paid pursuant to a deferred compensation agreement with
Mr. Williams.
(3) Represents the amount the Company contributed on behalf of the Named
Executive Officer to its Supplemental Executive Retirement Plan.
5
<PAGE> 30
The following tables provide information relating to stock options held by
the Named Executive Officers as of December 31, 1998. No stock options were
granted to or exercised by any of the Named Executive Officers during the year
ended December 31, 1998.
STOCK OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
ACQUIRED ON ---------------------------- ----------------------------
NAME EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Barry L. Phillips.............. -0- 58,349 59,954 $456,031 $250,123
David S. Williams.............. -0- 41,699 32,961 364,781 141,191
James C. Cahill................ -0- 25,559 25,901 190,943 87,714
Bruce A. Jonker................ -0- 25,559 25,901 190,943 87,714
Joseph H. Keller, Jr........... -0- 14,279 15,951 96,846 46,608
</TABLE>
- ---------------
(1) Values are calculated as the difference between the exercise price of the
options and the market value of the Company's Common Stock as of December
31, 1998.
PENSION PLAN
Under The Gradall Company Employees' Retirement Plan (the "Retirement
Plan"), benefits are payable to all eligible employees of the Company, other
than employees who participate in a separate retirement plan for bargaining unit
employees. The pension plan table below sets forth the estimated annual benefit,
computed as a straight-life annuity, payable under the Retirement Plan at the
normal retirement age of 65:
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
80,000........................... $12,000 $16,000 $20,000 $24,000 $28,000
100,000.......................... 15,000 20,000 25,000 30,000 35,000
120,000.......................... 18,000 24,000 30,000 36,000 42,000
140,000.......................... 21,000 28,000 35,000 42,000 49,000
160,000.......................... 24,000 32,000 40,000 48,000 56,000
180,000.......................... 24,000 32,000 40,000 48,000 56,000
</TABLE>
The Retirement Plan provides a benefit, based upon years of service with
the Company since October 1983, and upon final average base compensation (i.e.,
salary only) for the five highest consecutive calendar years of the ten years
preceding retirement. Compensation covered under the Retirement Plan is limited
by certain provisions of the Internal Revenue Code. For 1998, compensation in
excess of $130,000.00 per year is disregarded for the purposes of computing
benefits under the Retirement Plan. The benefits under the Retirement Plan are
not subject to any deduction for Social Security or other amounts. The credited
years of service at December 31, 1998 for the Named Executive Officers were as
follows: Mr. Phillips, 13; Mr. Williams, 13; Mr. Cahill, 15; Mr. Jonker, 15; and
Mr. Keller, 15. The Company has also adopted a non-qualified supplemental
retirement plan for certain officers and key employees, including Messrs.
Cahill, Jonker and Keller (the "Restoration Plan"). The Retirement Plan provides
an additional benefit to participants retiring before age 65, and is intended to
minimize the effect of revised actuarial reduction factors utilized in
calculating normal benefits under certain provisions of the Internal Revenue
Code of 1986, as amended (the "Code") and the Employee Retirement Income
Security Act of 1974.
6
<PAGE> 31
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
oversees the Gradall executive compensation programs. The Committee met two
times in 1998 to review and approve executive compensation matters.
The Gradall executive compensation philosophy is designed to meet four
primary goals:
(1) Ensure a strong linkage between individual performance and total
compensation.
(2) Integrate compensation programs with Gradall's annual and
long-term strategic goals.
(3) Encourage long-term strategic management and enhancement of
stockholder value through equity awards.
(4) Attract and retain key executives critical to the long-term
success of Gradall by providing a fully competitive reward package that is
appropriately sensitive to performance.
These principles are reflected in the key components of the executive
compensation programs which consist of base salary, annual incentive awards, and
long-term incentive awards. Increases in the base salaries and the specific
level of participation in the incentive compensation plans for the executive
officers is determined by the Committee based on the factors described below.
BASE SALARY
An executive's base salary and subsequent adjustments are determined
relative to the following factors: individual and Company performance, scope of
responsibility and accountability, and comparison with industry pay practices.
The Committee feels that all of these factors are significant and the relevance
of each varies from executive to executive. Therefore, no specific weight has
been assigned to these factors in the evaluation of an executive's base salary.
The specific measures of the Company's performance vary depending upon the
executive's performance area and the goals periodically set for the performance
area by the Company. Industry comparisons of manufacturing organizations of
comparable asset size and net sales are drawn from survey data relating to
various executive levels published by independent sources. Although the
Committee reviews data representing base pay and annual cash incentive awards
practices of the 25th to 75th percentiles of the competitive market, in terms of
compensation, the Committee does have a policy to target base compensation at
the 25th percentile of the competitive market, and the combination of base pay
and annual cash compensation at the 50th percentile.
ANNUAL CASH INCENTIVE AWARDS
Under the Gradall Incentive Compensation Plan in effect for 1998, executive
officers earned annual cash incentive awards determined as a percentage of base
salary. The percentage of base salary for an executive was determined by (i) the
category to which the executive was assigned for 1998 based upon his level of
responsibility and (ii) Gradall's performance as measured by growth in earnings
per share. Awards were assigned weights of 75% for Company performance and 25%
for individual performance.
LONG-TERM INCENTIVE AWARDS
Long-term incentive awards are in the form of stock options granted under
the Company's Stock Option Plan.
Stock option awards are considered annually, by the Committee and the
number of shares granted to an executive officer is based on the individual's
scope of responsibility, a subjective evaluation of the performance of the
individual and the Company's performance since the last grant, and industry
comparisons. No specific weight is attached to these factors.
7
<PAGE> 32
Data from three surveys published by nationally known compensation and
human resources consulting firms was reviewed by the Committee to determine
competitive benchmarks for awarding 1998 base salary, annual cash incentive and
long-term incentive awards. Competitive awards were considered by using sources
presenting data as a percentage of base salary and as a dollar value. The
Committee does not have a policy to target long-term incentive awards at any
specific level of data as provided from these sources.
The Committee considered the total amount of stock options awarded in 1997
to be an adequate amount for the years 1997 and 1998.
Barry L. Phillips, President and Chief Executive Officer, currently has an
employment contract that provides for an initial annual salary of $225,000,
subject to increases at the Company's discretion. In determining to increase Mr.
Phillips' base salary for 1998 from $225,000 to $243,000, the Committee applied
the policies described above with respect to base salaries for other executive
officers. The incentive compensation award to Mr. Phillips was made on the same
basis described above for other executives. The 1998 bonus for Mr. Phillips was
based upon the Company's record performance in 1998 with respect to growth in
earnings per share.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the SIC Code Index and the NASDAQ Composite Index for
the period August 28, 1996 through December 31, 1998. Trading in the Company's
Common Stock commenced on August 28, 1996.
[Compare Cumulative Graph]
8
<PAGE> 33
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the Compensation Committee of the Board of Directors consisted
of Sangwoo Ahn and Jack D. Rutherford, both of whom are non-employee directors,
and Barry L. Phillips, who is an executive officer of the Company. Mr. Phillips
does not participate in the deliberations of the Compensation Committee
concerning his compensation.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
EMPLOYMENT AGREEMENTS
In January 1998, the Company entered into amended and restated employment
agreements with Mr. Phillips, Mr. Williams and Mr. Jonker. Mr. Phillips'
agreement provides for the continuation of his employment as President and Chief
Executive Officer at an initial annual salary of $225,000, subject to increases
at the Company's discretion. Mr. Williams' agreement provides for the
continuation of his employment as Vice President, Marketing and Sales at an
initial annual salary of $147,000, subject to increases at the Company's
discretion. Mr. Jonker's agreement provides for the continuation of his
employment as Vice President and Chief Financial Officer at an initial annual
salary of $103,000, subject to increases at the Company's discretion. The
salaries of Mr. Phillips, Mr. Williams and Mr. Jonker may be increased from time
to time at the discretion of the Company. The initial term of each agreement was
for a period of one year expiring in January 1999 subject to automatic renewal
for successive one-year periods unless terminated upon the notice required by
the agreement. In the event that the Company experiences a change of control (as
defined in the employment agreements) the term of each employment agreement is
extended for a period of three years from the date on which such change of
control occurs (the "Continuation Term"). If the Company terminates any of these
agreements prior to the occurrence of a change of control, for any reason other
than "for cause," death or disability, the Company is required to continue to
make all payments due thereunder for a period of 12 months. If the employment of
any of these officers is terminated within three years of the occurrence of a
change in control, for any reason other than for cause, death or disability,
including the officer's resignation for "good reason" (as defined in the
employment agreement)the Company is required to continue to make all payments
due thereunder for the balance of the Continuation Term. In addition, upon the
termination of employment of any of these officers within three years of a
change of control, the officer may receive credit for additional years of
service for the purpose of computing benefits due and payable under the
Company's retirement plan and benefit restoration plan. If amounts to be
received by the officer in connection with a termination of the officer's
employment following a change of control ("Total Payments") will be subject to
the excise tax provided by Section 4999 of the Internal Revenue Code (the
"Excise Tax"), (i) the Total Payments will be reduced to the maximum amount of
payments which could be made without imposition of the Excise Tax (the "Safe
Harbor Amount"), if within 115% of the Safe Harbor Amount or (ii) if the Total
Payments equal or exceed 115% of the Safe Harbor Amount, the Company is required
to pay the officer an additional amount to offset any Excise Tax on the Total
Payments (the "Gross-Up Payment") and any federal, state and local income and
employment taxes and Excise Tax levied upon the Gross-Up Payment.
The Company has also entered into employment agreements with Messrs. Keller
and Cahill which provide for the continuation of their employment at current
salaries and benefit levels, subject to annual increases at the discretion of
the Company. The term of each agreement is for a period of one year, which
automatically renews for successive one-year terms unless terminated by the
Company upon written notice. If the Company terminates the employment of Messrs.
Keller or Cahill for any reason other than "for cause," the Company is required
to continue to make all payments due under the employment agreement for a period
of 14 months, subject to offset for amounts earned by the officer from other
employment.
POST-MERGER EMPLOYMENT AGREEMENTS
In connection with the Merger, the Company has entered into an amended and
restated employment agreement with Barry Phillips which provides for the
continuation of his employment as President and Chief
9
<PAGE> 34
Executive Officer, for a term of three years following the consummation of the
Merger, at his current annual base salary of $260,000. The agreement entitles
Mr. Phillips to receive for the balance of the three-year term (i) his annual
base salary at the rate in effect immediately prior to his employment
termination, plus (ii) the amount of annual incentive compensation awarded to
him with respect to the preceding year, but not less than 40% of his annual base
salary, (iii) credit for additional years of service for the purpose of
computing benefits payable under the Company's Retirement Plan and Benefit
Restoration Plan and (iv) continued coverage under the Company's health and life
insurance programs, in the event of the termination of his employment prior to
the expiration of the three year term by the Company other than for disability
or for "cause" (as defined therein) or by his resignation in response to a
reduction in annual base salary, employment benefits or compensation potential
under incentive compensation plans or a change in his reporting responsibility
or location of his place of work, or his demotion to a position which is not a
senior executive position. In addition, he would be entitled to receive an
additional payment (the "Gross-Up Payment") sufficient to cover any Excise Tax
on payments considered "contingent on a change in ownership or control" of the
Company within the meaning of Section 280G of the Code, plus an additional
amount to offset any income or employment taxes on the Gross-Up Payment. The
amended and restated employment agreement with Mr. Phillips will become
effective upon the consummation of the Merger.
The Company also has entered into amended and restated employment
agreements with James C. Cahill, Vice President, Manufacturing, and Joseph H.
Keller, Vice President Engineering, which provide for the continuation of their
employment at their current salaries of $117,700 and $110,245, respectively, and
their current benefit levels, subject to increases at the discretion of the
Company. The term of each agreement is for a term of one year, which
automatically renews for successive one-year terms unless terminated by the
Company upon written notice. Under the agreements, in the event of the
termination of employment by the Company without "cause" (as defined therein)
they will be entitled to receive for a period of 14 months following employment
termination all amounts he would otherwise have received including his monthly
base salary, contributions to the Company's Supplemental Executive Retirement
Plan at the rate of $5,000 per year, continuation of coverage under the
Company's life and medical insurance programs and incentive compensation, based
on an annual amount that is not less than 40% of his base salary. The amounts
payable to each of them in the event of such termination are reduced by earnings
from other employment. The amended and restated employment agreements with
Messrs. Cahill and Keller will become effective upon the consummation of the
Merger.
DEFERRED COMPENSATION
The Company maintains a Supplemental Executive Retirement Plan for the
benefit of certain key employees of the Company as selected by the Board of
Directors including each of Messrs. Phillips, Williams, Jonker, Cahill and
Keller (the "SERP"). Pursuant to the terms of the SERP, participants may elect
to defer all or any portion of their compensation and contribute such deferral
to the SERP. All participant deferrals are immediately and fully vested. The
Company may make contributions to the SERP at the discretion of the Board of
Directors. Company contributions are 50% vested after the participant reaches
age 55 and are fully vested once the participant reaches age 60. In addition,
Company contributions fully vest upon the death or disability of the participant
or in the event of a change of control of the Company. If a participant's
employment is terminated "for cause," all Company contributions allocated to
such participant's account are forfeited. All amounts contributed to the SERP,
whether as a result of Company contributions or participant deferrals have been
used to purchase whole life insurance policies on the life of the participant.
As of December 31, 1998, life insurance policies purchased under the SERP
included policies on the lives of Mr. Phillips in the aggregate face amount of
$174,133; Mr. Williams in the aggregate face amount of $103,573; Mr. Keller in
the aggregate face amount of $199,234; Mr. Cahill in the aggregate face amount
of $253,446; and Mr. Jonker in the aggregate face amount of $138,030. Upon the
death of the insured, the entire proceeds of the policy will be paid to
insured's designated beneficiary. The insured is entitled to receive the policy
upon the termination of his employment as a result of disability or retirement
after age 60. The Company's contribution to the SERP during 1998, 1997 and 1996
is included in "All Other Compensation" column of the "Summary Compensation
Table" above.
10
<PAGE> 35
Effective July 1989, the Company entered into a Deferred Compensation
Agreement with Mr. Phillips. Pursuant to this Agreement, upon the termination of
Mr. Phillips' employment with the Company at any time after age 65, the Company
will pay to Mr. Phillips or his designated beneficiary in the event of his
death, the sum of $78,687 per year for fifteen years. Upon the death of Mr.
Phillips while employed by the Company, Mr. Phillips' designated beneficiary is
entitled to receive the death benefit payable under a life insurance policy in
the face amount of $125,000. Upon termination of employment as a result of
disability, Mr. Phillips has the option of receiving the net cash surrender
value of this policy or an assignment of the policy. The Company pays all
premiums due under this policy. Premiums paid by the Company for this life
insurance policy during fiscal 1998, 1997 and 1996, are included in "All Other
Compensation" column of the "Summary Compensation Table" above.
The Company has entered into a Split-Dollar Life Insurance Agreement with
Mr. Phillips with respect to an insurance policy on the life of Mr. Phillips
with a death benefit of $500,000. Pursuant to the terms of the agreement, Mr.
Phillips pays the portion of the premium attributable to the term life insurance
cost of the policy, funded by an off-setting bonus from the Company, and the
Company pays the balance of the premium. Upon the death of Mr. Phillips or the
cancellation of the policy, the Company is entitled to receive the premiums it
has paid under the policy and a portion of the cash value of the policy. The
balance of the policy proceeds will be paid to Mr. Phillips or his designated
beneficiary. Premiums paid by the Company for this life insurance policy during
fiscal 1998, 1997 and 1996 are included in "All Other Compensation" column of
the "Summary Compensation Table" above. This summary does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Split-Dollar Life Insurance Agreement, a copy of which is filed as Exhibit
15 hereto and is incorporated herein by reference.
Effective July 1989, the Company entered into a Deferred Compensation
Agreement with Mr. Williams. Pursuant to this agreement, upon the termination of
Mr. Williams' employment with the Company at any time after age 60 or as a
result of his disability or death, the Company will pay to Mr. Williams, or his
designated beneficiary in the event of his death, the sum of $30,000 per year
for 15 years. This deferred compensation payment is funded in part through an
insurance policy on the life of Mr. Williams. Mr. Williams contributes $2,469
per year towards the payment of the premium due under this policy, as a deferral
of his compensation. The Company contributes the balance of the premiums due
under the policy which is $10,000 per year. Premiums paid by the Company for
this life insurance policy during fiscal 1998, 1997 and 1996 are included in
"All Other Compensation" column of the "Summary Compensation Table" above. This
summary does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Deferred Compensation Agreement with Mr.
Williams, a copy of which is filed as Exhibit 16 hereto and is incorporated
herein by reference.
11
<PAGE> 36
STOCK OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth information as of March 15, 1999 with
respect to each person known to the Company to be the beneficial owner of more
than five percent of the Company's outstanding Common Stock, the only class of
voting securities of the Company which is outstanding.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS SHARES CLASS
- ---------------- --------- ----------
<S> <C> <C>
MLGA Fund II, L.P.(1)....................................... 2,615,637 27.5%
Sangwoo Ahn(1)(2)........................................... 2,686,458 28.2
John A. Morgan(1)(2)........................................ 2,671,458 28.1
Perry J. Lewis(1)(2)........................................ 2,671,458 28.1
Becker Capital Management, Inc.(3).......................... 745,600 7.8
The Prudential Insurance Company of America(4).............. 688,400 7.2
Investment Counselors of Maryland(5)........................ 558,000 5.9
Brinson Partners, Inc.(6)................................... 708,700 7.4
UBS AG(6)................................................... 708,700 7.4
</TABLE>
- ---------------
(1) The business address of MLGA Fund II, L.P. and Messrs. Ahn, Lewis and
Morgan, is Two Greenwich Plaza, Greenwich, CT 06830.
(2) Includes 2,615,637 shares held by MLGA Fund II, L.P. MLGAL Partners L.P.,
the general partner of MLGA Fund II, L.P. has the power to vote or dispose
of the shares held by MLGA Fund II, L.P. Therefore, as general partners of
MLGAL Partners L.P., Messrs. Ahn, Lewis and Morgan, may be deemed to be the
beneficial owners of shares held by MLGA Fund II, L.P. Messrs. Ahn, Lewis
and Morgan disclaim beneficial ownership of the shares held by MLGA Fund II,
L.P.
(3) The business address of Becker Capital Management, Inc. is 1211 S.W. Fifth
Avenue, Suite 2185, Portland, OR 97204.
(4) The business address of The Prudential Insurance Company of America is 751
Broad Street, Newark, NJ 07102-3777.
(5) The business address of Investment Counselors of Maryland is 803 Cathedral
Street, Baltimore, MD 21201.
(6) Includes 708,700 shares owned by managed accounts, with respect to which
Brinson Partners, Inc. ("BPI"), as an investment advisor to such accounts,
has shared voting and investment power. BPI is an indirect, wholly owned
subsidiary of UBS AG. UBS AG may be deemed to be the beneficial owner of
shares held by persons or entities advised by BPI. The business address of
BPI is 209 South LaSalle, Chicago, IL 60604-1295. The business address of
USB AG is Bahnhofstrasse 45, 8021, Zurich, Switzerland.
12
<PAGE> 37
The following table sets forth information as of March 15, 1999 with
respect to the shares of Common Stock of the Company beneficially owned by each
director and nominee for director, the chief executive officer and the four
other most highly compensated executive officers and all directors and executive
officers as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME SHARES CLASS
- ---- --------- ----------
<S> <C> <C>
Sangwoo Ahn................................................. 2,686,458(1) 28.2%
James C. Cahill............................................. 58,709(2) *
Ernest Green................................................ 10,000(2) *
Bruce A. Jonker............................................. 58,709(2) *
Joseph H. Keller............................................ 28,635(2) *
Perry J. Lewis.............................................. 2,671,458(1) 28.1
John A. Morgan.............................................. 2,671,458(1) 28.1
Jack D. Rutherford.......................................... 138,507 1.5
Barry L. Phillips........................................... 351,992(2) 3.7
William C. Ughetta, Jr...................................... 19,169(3) *
David S. Williams........................................... 99,179(2) 1.0
All directors and officers as a group (11 persons).......... 3,463,479(1)(2)(3) 36.4
</TABLE>
- ---------------
* Less than 1%
(1) Includes 2,615,637 shares held by MLGA Fund II, L.P., as to which Messrs.
Ahn, Lewis & Morgan disclaim beneficial ownership.
(2) Includes shares subject to options exercisable within 60 days by Mr. Cahill
as to 31,009 shares, Mr. Green as to 10,000 shares, Mr. Jonker as to 31,009
shares, Mr. Keller as to 17,254 shares, Mr. Phillips as to 74,992 shares and
Mr. Williams as to 50,679 shares.
(3) Includes 1,000 shares held by Mr. Ughetta's wife, as custodian for his two
minor children under the Uniform Gift to Minors Act, as to which Mr. Ughetta
disclaims beneficial ownership.
CERTAIN TRANSACTIONS
In September 1997 the Company entered into an agreement with MLGA, pursuant
to which MLGA agreed to act as a financial advisor to the Company in connection
with the Company's consideration of possible strategic business alternatives
including (i) acquisitions; (ii) divestitures; (iii) recapitalizations; and (iv)
business combinations (the "MLGA Engagement Letter"). Messrs. Ahn, Lewis and
Morgan, three of the Company's directors, are founding partners of MLGA. MLGA is
an affiliate of MLGA Fund II, L.P., the largest shareholder of the Company.
The terms of the agreement provide that in the event a business combination
is consummated within the term of the agreement or within one year thereafter,
the Company will pay MLGA a fee for its services in an amount equal to 0.42% of
the purchase price paid in such business combination up to $192.1 million and an
amount equal to 1.6667% of the purchase price in excess of $192.1 million, plus
reasonable out-of-pocket expenses. Pursuant to the MLGA Engagement Letter, the
Company will pay MLGA a fee in the amount of approximately $1,086,826 upon the
first purchase of Company Shares by the Merger Subsidiary pursuant to the Offer.
The Company has also agreed, whether or not the Offer is consummated, to pay
MLGA for its reasonable out-of-pocket expenses, including the reasonable fees
and expenses of its legal counsel incurred in connection with their engagement,
and to indemnify MLGA against certain liabilities and expenses in connection
with their engagement.
13
<PAGE> 38
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who beneficially own more than ten
percent of a registered class of the Company's equity securities to file reports
of beneficial ownership of such securities and changes in such beneficial
ownership with the Securities and Exchange Commission (the "SEC"). Such persons
are also required to furnish to the Company copies of all reports they file
pursuant to Section 16(a). Based solely on a review of the copies of the forms
filed pursuant to Section 16(a) received by it, the Company believes that its
directors, executive officers and ten percent shareholders have complied with
all such filing requirements.
14
<PAGE> 39
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ---------- ----------- ------------
<C> <S> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of May 10, 1999, by
and among Parent, the Merger Subsidiary and the Company.....
Exhibit 2 Confidentiality Agreement, dated as of November 3, 1997, as
amended on February 23, 1999, by and between Parent and the
Company.....................................................
Exhibit 3 Stockholders Agreement, dated as of May 10, 1999, by and
among Parent, the Merger Subsidiary, the Company, David
Williams, Barry L. Phillips, Bruce A. Jonker, James C.
Cahill, Joseph H. Keller, Sangwoo Ahn, Perry J. Lewis, and
Jack D. Rutherford..........................................
Exhibit 4 Stockholders Agreement, dated May 10, 1999, by and among
Parent, the Merger Subsidiary and MLGA Fund II, L.P. .......
Exhibit 5 Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated dated May 10, 1999*............................
Exhibit 6 Letter to Stockholders of the Company, dated May 17,
1999*.......................................................
Exhibit 7 Joint Press Release issued by Parent and the Company, dated
May 11, 1999................................................
Exhibit 8 Amended and Restated Employment Agreement dated January 1,
1998 between the Gradall Company and Barry L.
Phillips -- incorporated by reference to Exhibit 10.04 of
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.....................................
Exhibit 9 Amended and Restated Employment Agreement dated January 1,
1998 between the Gradall Company and David S.
Williams -- incorporated by reference to Exhibit 10.05 of
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.....................................
Exhibit 10 Amended and Restated Employment Agreement dated as of
January 1, 1998 between The Gradall Company and Bruce A.
Jonker -- incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998...........................................
Exhibit 11 Employment Agreement dated as of November 1, 1995 between
The Gradall Company and Joseph H. Keller, Jr. --incorporated
by reference to Exhibit 10.11 to the Company's Registration
Statement on Form S-1 (No. 333-06777).......................
Exhibit 12 Employment Agreement dated as of November 1, 1995 between
The Gradall Company and James C. Cahill -- incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement on Form S-1 (No. 333-06777).......................
Exhibit 13 The Gradall Company Amended and Restated Supplemental
Executive Retirement Plan -- incorporated by reference to
Exhibit 10.13 to the Company's Registration Statement on
Form S-1 (No. 333-06777)....................................
Exhibit 14 Deferred Compensation Agreement dated July 19, 1989 between
The Gradall Company and Barry L. Phillips -- incorporated by
reference to Exhibit 10.06 to the Company's Registration
Statement on Form S-1 (No. 333-06777).......................
Exhibit 15 Split-Dollar Life Insurance Agreement dated as of August 30,
1995 between The Gradall Company and Barry L.
Phillips -- incorporated by reference to Exhibit 10.08 to
the Company's Registration Statement on Form S-1 (No.
333-06777)..................................................
Exhibit 16 Amended and Restated Deferred Compensation Agreement dated
August 30, 1995 between The Gradall Company and David S.
Williams -- incorporated by reference to Exhibit 10.07 to
the Company's Registration Statement on Form S-1 (No.
333-06777)..................................................
Exhibit 17 Gradall Industries, Inc. 1995 Stock Option
Plan -- incorporated by reference to Exhibit 10.09 to the
Company's Registration Statement on Form S-1 (No.
333-06777)..................................................
</TABLE>
<PAGE> 40
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ---------- ----------- ------------
<C> <S> <C>
Exhibit 18 The Gradall Company Benefit Restoration Plan -- incorporated
by reference to Exhibit 10.14 to the Company's Registration
Statement on Form S-1 (No. 333-06777).......................
Exhibit 19 Gradall Industries, Inc., 1998 Stock Option Plan
incorporated by reference to Exhibit 10.17 of the Company's
Annual Report on Form 10-K filed for the year ended December
31, 1997....................................................
Exhibit 20 Amendment No. 1 to Rights Agreement, dated as of May 11,
1999 by and between Gradall Industries, Inc. and ChaseMellon
Shareholder Services, LLC...................................
Exhibit 21 Amended and Restated Employment Agreement dated as of May
10, 1999, between Gradall Industries, Inc. and Barry L.
Phillips....................................................
Exhibit 22 Amended and Restated Employment Agreement dated as of May
10, 1999, between Gradall Industries, Inc. and Joseph H.
Keller, Jr..................................................
Exhibit 23 Amended and Restated Employment Agreement dated as of May
10, 1999, between Gradall Industries, Inc. and James C.
Cahill......................................................
</TABLE>
- ---------------
* Included in copies of Schedule 14D-9 mailed to Stockholders.
<PAGE> 1
EXHIBIT 1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
JLG Industries, Inc.
JLG Acquisition Corp.
and
Gradall Industries, Inc.
dated as of
May 10, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 THE OFFER ............................................................................................... 1
SECTION 1.01. The Offer.................................................................................. 1
SECTION 1.02. Company Actions............................................................................ 2
ARTICLE 2 THE MERGER .............................................................................................. 5
SECTION 2.01. The Merger................................................................................. 5
SECTION 2.02. Effective Time............................................................................. 5
SECTION 2.03. Effects of the Merger...................................................................... 5
SECTION 2.04. Certificate of Incorporation and Bylaws.................................................... 5
SECTION 2.05. Directors and Officers..................................................................... 5
SECTION 2.06. Conversion of Shares....................................................................... 5
SECTION 2.07. Dissenting Shares.......................................................................... 6
SECTION 2.08. Payments for Shares........................................................................ 6
SECTION 2.09. Stock Option and Other Plans............................................................... 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY .......................................... 8
SECTION 3.01. Corporate Existence and Power.............................................................. 8
SECTION 3.02. Corporate Authority........................................................................ 9
SECTION 3.03. Information Supplied....................................................................... 9
SECTION 3.04. Governmental Authorization................................................................. 9
SECTION 3.05. Non-contravention.......................................................................... 10
SECTION 3.06. Financing.................................................................................. 10
SECTION 3.07. Finders' Fees.............................................................................. 10
SECTION 3.08. Delaware Law............................................................................... 11
SECTION 3.09. Ownership of Shares........................................................................ 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................................................... 11
SECTION 4.01. Corporate Existence and Power.............................................................. 11
SECTION 4.02. Corporate Authority........................................................................ 12
SECTION 4.03. Governmental Authorization................................................................. 12
SECTION 4.04. Non-contravention.......................................................................... 12
SECTION 4.05. Capitalization............................................................................. 13
SECTION 4.06. Subsidiaries............................................................................... 13
SECTION 4.07. Company SEC Documents and Other Reports.................................................... 14
SECTION 4.08. Proxy Statement............................................................................ 14
SECTION 4.09. Information Supplied....................................................................... 14
SECTION 4.10. Absence of Certain Changes................................................................. 15
SECTION 4.11. Litigation................................................................................. 15
SECTION 4.12. Benefit Plans; ERISA....................................................................... 15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.13. Environmental Matters...................................................................... 18
SECTION 4.14. Taxes...................................................................................... 21
SECTION 4.15. Delaware Takeover Statute.................................................................. 22
SECTION 4.16. Fees and Commissions....................................................................... 23
SECTION 4.17. Material Contracts......................................................................... 23
SECTION 4.18. Intellectual Property Rights............................................................... 24
SECTION 4.19. Labor Matters.............................................................................. 25
SECTION 4.20. Year 2000 Compliance....................................................................... 25
SECTION 4.21. Compliance with Laws....................................................................... 26
SECTION 4.22. Insurance.................................................................................. 26
SECTION 4.23. The Rights Agreement....................................................................... 26
ARTICLE 5 COVENANTS ............................................................................................... 26
SECTION 5.01. Conduct of Business of the Company......................................................... 26
SECTION 5.02. No Solicitation............................................................................ 28
SECTION 5.03. Access to Information...................................................................... 30
SECTION 5.04. Best Efforts............................................................................... 30
SECTION 5.05. Indemnification, Exculpation and Insurance................................................. 31
SECTION 5.06. Employee Plans and Benefits and Employment Contracts....................................... 32
SECTION 5.07. Meeting of the Company's Stockholders...................................................... 32
SECTION 5.08. Public Announcements....................................................................... 33
SECTION 5.09. Performance by Merger Subsidiary........................................................... 34
SECTION 5.10. Notification of Certain Matters............................................................ 34
ARTICLE 6 CONDITIONS TO THE MERGER ................................................................................ 34
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger................................. 34
ARTICLE 7 TERMINATION; AMENDMENT; WAIVER .......................................................................... 35
SECTION 7.01. Termination................................................................................ 35
SECTION 7.02. Effect of Termination...................................................................... 36
SECTION 7.03. Amendment.................................................................................. 36
SECTION 7.04. Extension; Waiver.......................................................................... 37
SECTION 7.05. Procedure for Termination, Extension or Waiver............................................. 37
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 8 MISCELLANEOUS ........................................................................................... 37
SECTION 8.01. Non-Survival of Representations and Warranties............................................. 37
SECTION 8.02. Entire Agreement; Assignment............................................................... 37
SECTION 8.03. Validity................................................................................... 37
SECTION 8.04. Notices.................................................................................... 38
SECTION 8.05. Governing Law.............................................................................. 39
SECTION 8.06. Jurisdiction............................................................................... 39
SECTION 8.07. Descriptive Headings....................................................................... 39
SECTION 8.08. Parties in Interest........................................................................ 39
SECTION 8.09. Counterparts............................................................................... 39
SECTION 8.10. Fees and Expenses.......................................................................... 39
SECTION 8.11. Certain Definitions........................................................................ 40
</TABLE>
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of May 10,
1999, among JLG Industries, Inc., a Pennsylvania corporation ("PARENT"), JLG
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("MERGER SUBSIDIARY"), and Gradall Industries, Inc., a Delaware
corporation (the "COMPANY").
The parties hereto agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer. (a) As promptly as practicable after the date
hereof, but in no event later than the fifth business day after the public
announcement of the execution of this Agreement, Parent shall cause Merger
Subsidiary to commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934), and Merger Subsidiary shall commence, an offer (the
"OFFER") to purchase for cash all issued and outstanding shares, together with
the associated rights to purchase Series B Participating Cumulative Preferred
Stock ( collectively, the "SHARES") of common stock, $.00l par value per share,
of the Company (the "COMMON STOCK") at a price of $20 per Share, net to the
seller in cash (such price, or such higher price per Share as may be paid in the
Offer, being referred to as the "OFFER PRICE"). The Offer shall be subject to
only those conditions set forth in Annex A (any of which may be waived by Merger
Subsidiary in its sole discretion; provided that, without the consent of the
Company, Merger Subsidiary shall not waive the Minimum Tender Condition (as
defined in Annex A)).
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Merger Subsidiary shall file with the Securities and Exchange
Commission (the "SEC") with respect to the Offer a Tender Offer Statement on
Schedule 14D-1 (the "SCHEDULE 14D-1"), which will comply in all material
respects with the provisions of applicable federal securities laws and will
contain the offer to purchase relating to the Offer (the "OFFER TO PURCHASE")
and forms of related letters of transmittal and summary advertisement (which
documents, together with any supplements or amendments thereto, are referred to
herein collectively as the "OFFER Documents"). Parent will deliver copies of the
proposed forms of the Schedule 14D-1 and the Offer Documents (as well as any
change thereto) to the Company within a reasonable time prior to the
commencement of the Offer for prompt review and comment by the Company and its
counsel. Parent will provide the Company and its counsel in writing any comments
that Merger Subsidiary, Parent or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt thereof.
Parent and Merger Subsidiary represent that the Schedule 14D-1 and the Offer
Documents (including any amendments or supplements thereto) (i) shall comply as
to form in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(collectively, the "EXCHANGE ACT") and (ii) shall not, in the
<PAGE> 6
case of the Schedule 14D-1 at the time filed with the SEC and at the time the
Offer is consummated and in the case of the Offer Documents when first
published, sent or given to the stockholders of the Company and at the time the
Offer is consummated, 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; provided, however, that Parent and Merger Subsidiary make
no covenant, representation or warranty as to any of the information relating to
and supplied by the Company in writing specifically for inclusion in the
Schedule 14D-1 or the Offer Documents (including any amendments or supplements
thereto). Parent and Merger Subsidiary shall promptly correct any information in
the Schedule 14D-1 or the Offer Documents that shall have become false or
misleading in any material respect and take all steps necessary to cause such
Schedule 14D-1 or Offer Documents as so corrected to be filed with the SEC and
disseminated to the stockholders of the Company, as and to the extent required
by applicable law. Parent and Merger Subsidiary will provide copies of any
amendments or supplements to the Offer Documents or the Schedule 14D-1 to the
Company prior to any filing of such amendments or supplements with the SEC in
order to provide the Company and its counsel with a reasonable opportunity to
review and comment thereon.
(c) Each of Parent and Merger Subsidiary expressly reserves the right
to modify the terms of the Offer, except that neither Parent nor Merger
Subsidiary shall, without the prior written consent of the Company, decrease the
consideration payable in the Offer, change the form of consideration payable in
the Offer, decrease the number of Shares sought pursuant to the Offer, change or
modify the conditions to the Offer in a manner adverse to the Company or holders
of Shares, impose additional conditions to the Offer, waive the Minimum Tender
Condition, or amend any term of the Offer in any manner adverse to the Company
or holders of Shares. Notwithstanding the foregoing, Merger Subsidiary, without
the consent of the Company, (i) must extend the Offer for an aggregate of 10
additional business days after the then scheduled expiration date of the Offer
to the extent necessary to permit such condition to be satisfied (the "FIRST
EXTENSION PERIOD"), (ii) may extend the Offer, if at the end of the First
Extension Period any of the conditions to Merger Subsidiary's obligation to
accept for payment and pay for Shares shall not have been satisfied, until such
time as such condition is satisfied or waived and (iii) may extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer.
(d) Parent will provide or cause to be provided to Merger Subsidiary on
a timely basis the funds necessary to accept for payment, and pay for, Shares
that Merger Subsidiary becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
(e) Merger Subsidiary shall accept for payment, and pay for, Shares in
accordance with the Offer, subject to the satisfaction or waiver of the
conditions to the Offer.
SECTION 1.2. Company Actions. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held, has by unanimous vote
2
<PAGE> 7
adopted resolutions approving the Offer, the Merger (as defined in Section 2.01)
and this Agreement, determining that the terms of the Offer and the Merger are
fair to, and in the best interests of, the Company's stockholders and
recommending acceptance of the Offer and approval of the Merger and this
Agreement by the stockholders of the Company; provided, however, that the Board
of Directors of the Company may modify, withdraw or change such recommendation
to the extent that the Board of Directors of the Company concludes in accordance
with Section 5.02 hereof, that such action is necessary in order for the Board
of Directors to satisfy its fiduciary duties under applicable law. The Company
further represents that Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MERRILL LYNCH") has delivered to the Company's Board of Directors its opinion
that as of the date of this Agreement the cash consideration to be received by
holders of the Shares for such Shares is fair to such holders from a financial
point of view, and that the Company is authorized by Merrill Lynch to include a
summary description of such opinion in the Offer Documents, provided that any
summary description of such opinion shall be subject to prior review and
approval by Merrill Lynch. The Company hereby consents to the inclusion in the
Offer Documents of the recommendations of the Company's Board of Directors
described in this Section.
(b) The Company will file with the SEC on the date of the commencement
of the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"SCHEDULE 14D-9") containing such recommendations of the Board in favor of the
Offer and the Merger; provided, however, that the Board of Directors of the
Company may modify, withdraw or change such recommendation to the extent that
the Board of Directors concludes in accordance with Section 5.02 hereof, that
such action is necessary in order for the Board of Directors to satisfy its
fiduciary duties under applicable law. The Company will deliver the proposed
forms of the Schedule 14D-9 and the exhibits thereto to Parent within a
reasonable time prior to the commencement of the Offer for prompt review and
comment by Parent and its counsel. Parent and its counsel shall be given a
reasonable opportunity to review any amendments and supplements to the Schedule
14D-9 prior to their filing with the SEC or dissemination to stockholders of the
Company. The Company will provide Parent and its counsel in writing any comments
that the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after receipt thereof, and shall
disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the
Exchange Act. The Company represents that the Schedule 14D-9, on the date filed
with the SEC and on the date first published, sent or given to the stockholders
of the Company, shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, provided, however, that the Company makes no
covenant, representation or warranty as to any of the information relating to
and supplied by Parent or Merger Subsidiary in writing specifically for
inclusion in the Schedule 14D-9 (including any amendments or supplements
thereto). The Company shall promptly correct any information in the Schedule
14D-9 that shall have become false or misleading in any material respect and
take all steps necessary to cause such Schedule 14D-9 as so corrected to be
filed with the SEC and disseminated to the stockholders of the Company, as and
to the extent required by applicable federal securities laws.
3
<PAGE> 8
(c) In connection with the Offer, the Company shall furnish to, or
cause to be furnished to, Parent and its information agent mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of the Shares as of a recent date
and shall furnish Parent and its information agent with such information and
assistance as Parent or its agents may reasonably request in communicating the
Offer to the stockholders of the Company. Subject to the requirements of law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent and Merger
Subsidiary shall, and shall cause each of their affiliates to, hold the
information contained in any of such labels and lists in confidence, use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, deliver to the Company all copies of such information
or extracts therefrom then in their possession or under their control.
(d) Promptly upon the acceptance for payment of and payment for any
Shares by Merger Subsidiary, Merger Subsidiary shall be entitled to designate
such number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give Merger Subsidiary, subject to compliance
with Section 14(f) of the Exchange Act, representation on the Board of Directors
of the Company equal to the product of (i) the number of directors on the Board
of Directors of the Company and (ii) the percentage that such number of votes
represented by Shares so purchased bears to the number of votes represented by
Shares outstanding, and the Company shall at such time, subject to applicable
law, including applicable fiduciary duties, cause Merger Subsidiary's designees
to be so elected by its existing Board of Directors. Subject to applicable law,
including applicable fiduciary duties, the Company promptly shall take all
action requested by Parent necessary to effect any such election, including
mailing to its stockholders the information statement (the "INFORMATION
STATEMENT") containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and the Company shall make such
mailing with the mailing of the Schedule 14D-9 (provided that Parent and Merger
Subsidiary shall have provided to the Company on a timely basis all information
required to be included in the Information Statement with respect to Merger
Subsidiary's designees). In connection with the foregoing, the Company will,
subject to applicable law, including applicable fiduciary duties, promptly, at
the option of Parent, either increase the size of the Company's Board of
Directors and/or use its best efforts to obtain the resignation of such number
of its current directors as is necessary to enable Merger Subsidiary's designees
to be elected or appointed to the Company's Board of Directors as provided
above.
(e) Notwithstanding any other provision hereof, of the certificate of
incorporation or by-laws of the Company or of applicable law to the contrary,
following the election or appointment of Merger Subsidiary's designees pursuant
to Section 1.02(d) and prior to the Effective Time, any amendment or termination
of this Agreement or waiver of the obligations or other acts of Parent or Merger
Subsidiary hereunder or waiver by the Company of the Company's rights hereunder
will require the concurrence of a majority of directors of the Company then in
office who are directors on the date hereof and who voted to approve this
Agreement.
4
<PAGE> 9
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Delaware General
Corporation Law (the "DGCL"), Merger Subsidiary shall be merged with and into
the Company (the "MERGER") as soon as practicable following the satisfaction or
waiver of the conditions set forth in Article 6. Following the Merger, the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION") and shall continue its existence under the laws of the State of
Delaware, and the separate corporate existence of Merger Subsidiary shall cease.
SECTION 2.2. Effective Time. Upon the terms and subject to the
conditions hereof, as soon as possible after consummation of the Offer and to
the extent required by the DGCL after the vote of the stockholders of the
Company in favor of the approval of the Merger and this Agreement has been
obtained, the Merger shall be consummated by filing with the Secretary of State
of the State of Delaware, as provided in the DGCL, a certificate of merger or
other appropriate documents (in any such case, the "CERTIFICATE OF MERGER") and
the parties hereto shall make all other filings or recordings required under the
DGCL (the later of the time of such filing or the time specified in the
Certificate of Merger being the "EFFECTIVE TIME").
SECTION 2.3. Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL. As of the Effective Time, the Company, as
the Surviving Corporation, shall be a wholly-owned subsidiary of Parent.
SECTION 2.4. Certificate of Incorporation and Bylaws. (a) The
certificate of incorporation of the Company in effect immediately prior to the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation from and after the Effective Time until amended in accordance with
applicable law.
(b) The bylaws of Merger Subsidiary in effect at the Effective Time
shall be the bylaws of the Surviving Corporation from and after the Effective
Time until amended in accordance with applicable law.
SECTION 2.5. Directors and Officers. The directors of Merger Subsidiary
and the officers of the Company immediately prior to the Effective Time shall be
the directors and officers of the Surviving Corporation until their respective
successors are duly elected and qualified.
SECTION 2.6. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Subsidiary, the
Company or the holders of any of the following securities:
5
<PAGE> 10
(a) each Share held by the Company as treasury stock and each issued
and outstanding Share owned by Parent, Merger Subsidiary or any other Subsidiary
of Parent shall be canceled and retired and no payment made with respect
thereto;
(b) each issued and outstanding Share, other than those Shares referred
to in Section 2.06(a) or Dissenting Shares (as defined in Section 2.07), shall
be converted into the right to receive from the Surviving Corporation an amount
of cash, equal to the Offer Price payable to the holder thereof, without
interest (the "MERGER CONSIDERATION"); and
(c) each share of common stock of Merger Subsidiary issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of common stock of the Surviving Corporation.
SECTION 2.7. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding Shares held by a Person (a
"DISSENTING STOCKHOLDER") who objects to the Merger and complies with all the
provisions of Delaware law concerning the right of holders of Shares to require
appraisal of their Shares ("DISSENTING SHARES") shall not be converted as
described in Section 2.06(b) but shall become the right to receive such
consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the laws of the State of Delaware. If, after the Effective Time,
such Dissenting Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case pursuant to the
DGCL, his Shares shall be deemed to be converted as of the Effective Time into
the right to receive the Merger Consideration. The Company shall give Parent (i)
prompt notice of any demands for appraisal of Shares received by the Company and
(ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not, except as
required by any competent court, without the prior written consent of Parent,
make any payment with respect to, or settle, offer to settle or otherwise
negotiate, any such demands. "PERSON" means an individual, a corporation, a
limited liability company, a partnership, an association, a trust or any other
entity or organization, including a government or political subdivision or any
agency or instrumentality thereof.
SECTION 2.8. Payments for Shares. (a) Prior to the Effective Time,
Parent shall appoint a commercial bank or trust company reasonably acceptable to
the Company to act as disbursing agent for the Merger (the "DISBURSING AGENT").
Parent will enter into a disbursing agent agreement with the Disbursing Agent,
in form and substance reasonably acceptable in all material respects to the
Company, and shall deposit or cause to be deposited with the Disbursing Agent in
trust for the benefit of the Company's stockholders cash at such times as shall
be necessary to make the payments pursuant to Section 2.06 to holders of Shares
(such amounts being hereinafter referred to as the "EXCHANGE FUND"). The
Disbursing Agent shall, pursuant to irrevocable instructions, make the payments
provided for in the preceding sentence out of the Exchange Fund.
6
<PAGE> 11
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Disbursing Agent to mail to each record holder, as of the Effective
Time, of an outstanding certificate or certificates which immediately prior to
the Effective Time represented Shares (the "CERTIFICATES") a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Disbursing Agent) and instructions for use in effecting the
surrender of the Certificate for payment therefor. Upon surrender to the
Disbursing Agent of a Certificate, together with such letter of transmittal duly
executed, the holder of such Certificate shall be paid in exchange therefor cash
in an amount equal to the product of the number of Shares represented by such
Certificate multiplied by the Merger Consideration, and such Certificate shall
forthwith be canceled. No interest will be paid or accrued on the cash payable
upon the surrender of the Certificates. If payment is to be made to a Person
other than the Person in whose name the Certificate surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered be
properly endorsed or otherwise in proper form for transfer and that the Person
requesting such payment pay any transfer or other taxes required by reason of
the payment to a Person other than the registered holder of the Certificate
surrendered or established to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 2.08, each Certificate (other than
Certificates representing Shares owned by Parent, Merger Subsidiary or any other
Subsidiary of Parent or Dissenting Shares) shall represent for all purposes only
the right to receive the Merger Consideration in cash multiplied by the number
of Shares evidenced by such Certificate, without any interest thereon.
(c) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for cash as
provided in this Section 2.08.
(d) Any portion of the Exchange Fund (including the proceeds of any
investments thereof not previously delivered to Parent) that remains unclaimed
by the stockholders of the Company for six months after the Effective Time shall
be paid to the Parent. Any stockholders of the Company who have not theretofore
complied with Section 2.08 shall thereafter look only to Parent and the
Surviving Corporation for payment of their claim for the Merger Consideration
per Share, without any interest thereon.
(e) To the fullest extent permitted by applicable law, none of Parent,
Merger Subsidiary, the Company or the Disbursing Agent shall be liable to any
Person in respect of any cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
SECTION 2.9. Stock Option and Other Plans. (a) Prior to the Effective
Time, the Board of Directors of the Company (or, if appropriate, any committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary to provide for the cancellation, effective at the Effective Time, of
all the outstanding stock options, stock appreciation rights,
7
<PAGE> 12
limited stock appreciation rights and performance units (the "STOCK OPTIONS")
heretofore granted under any stock option, performance unit or similar plan of
the Company (the "STOCK PLANS"). Immediately prior to the Effective Time each
Stock Option, whether or not then vested or exercisable, shall no longer be
exercisable but shall entitle each holder thereof, in cancellation and
settlement therefor, to payments in cash (subject to any applicable withholding
taxes)(the "CASH PAYMENT"), at the Effective Time, equal to the product of (x)
the total number of shares of Common Stock subject or related to such Stock
Option, whether or not then vested or exercisable, and (y) the excess of the
Merger Consideration over the exercise price per share of Common Stock subject
or related to such Stock Option, each such Cash Payment to be paid to each
holder of an outstanding Stock Option at the Effective Time.
(b) The Company shall use its reasonable best efforts to obtain all
necessary consents to ensure that after the Effective Time, the only rights of
the holders of Stock Options will be to receive the Cash Payment in cancellation
and settlement thereof.
(c) The Company shall take all actions as are reasonably necessary to
cause the "SHARE PURCHASE DATE" applicable to the then current "OFFERING PERIOD"
(both, within the meaning of the Gradall Industries, Inc. Employee Stock
Purchase Plan (the "STOCK PURCHASE PLAN")) to be the last trading day on which
the Company Common Stock is traded on the NASDAQ, immediately prior to the date
which is fifteen (15) business days following the acceptance for payment for
Shares under the Offer (or, if earlier, the Effective Time) (the "NEW PURCHASE
DATE"); provided that, such change in the "SHARE PURCHASE DATE" shall be
conditioned upon the acceptance for payment of Shares under the Offer. On the
New Purchase Date, the Company shall apply the funds credited as of such date
under the Stock Purchase Plan within each participant's payroll withholdings
account to the purchase of whole shares of Common Stock in accordance with the
terms of the Stock Purchase Plan; provided, however that the cost to each
participant in the Stock Purchase Plan for the shares shall be the lower of 85%
of the closing sale price of Company Common Stock, as reported on the NASDAQ on
(i) the first trading day of the then current Offering Period or (ii) the last
trading day prior to the New Purchase Date.
(d) All Stock Plans and the Stock Purchase Plan shall terminate as of
the Effective Time and following the Effective Time, no holder of a Stock Option
or any participant in any Stock Plans and the Stock Purchase Plan shall have any
right thereunder to acquire any capital stock of the Company or any Subsidiary
or the Surviving Corporation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary represent and warrant to the Company as
follows:
8
<PAGE> 13
SECTION 3.1. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power to carry on its business as it is now being conducted.
Each of Parent and Merger Subsidiary is duly qualified to do business as a
foreign corporation, and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not have a material adverse effect on the
financial condition, assets, liabilities, business or results of operations of
Parent and its Subsidiaries taken as a whole, or the ability of Parent or Merger
Subsidiary to perform their obligations under this Agreement or to consummate
the transactions contemplated by this Agreement (a "PARENT MATERIAL ADVERSE
EFFECT").
SECTION 3.2. Corporate Authority. Each of Parent and Merger Subsidiary
has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby have been duly authorized by its respective Board of Directors and the
stockholder of Merger Subsidiary, and no other corporate action on the part of
Parent or Merger Subsidiary is necessary to authorize the execution and delivery
of this Agreement and the consummation by it of the transactions contemplated
hereby (including the Offer). This Agreement has been duly executed and
delivered by each of Parent and Merger Subsidiary and constitutes a valid and
binding agreement of each of Parent and Merger Subsidiary, enforceable against
each of Parent and Merger Subsidiary in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally.
SECTION 3.3. Information Supplied. None of the information supplied by
Parent, Merger Subsidiary and their respective affiliates specifically for
inclusion in the Schedule 14D-9 or the Proxy Statement (as defined below), if
required, shall, with respect to the Schedule 14D-9, at the time such Schedule
is filed with the SEC or first published or sent or given to holders of Shares
or at the time the Offer is consummated or, with respect to the Proxy Statement,
at the time the Proxy Statement is mailed or at the time of the meeting of the
Company's stockholders, or action by written consent of stockholders, as the
case may be ("STOCKHOLDER ACTION DATE"), contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The letter to
stockholders, notice of meeting, proxy statement and form of proxy, or the
information statement, as the case may be, to be distributed to stockholders in
connection with the Merger, or any schedule required to be filed with the SEC in
connection therewith, are collectively referred to herein as the "PROXY
STATEMENT."
SECTION 3.4. Governmental Authorization. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local
9
<PAGE> 14
government or any court, administrative or regulatory agency or commission or
other governmental authority or agency, domestic or foreign (a "GOVERNMENTAL
ENTITY") is required by Parent or Merger Subsidiary in connection with the
execution and delivery of this Agreement by Parent or Merger Subsidiary or the
consummation by Parent and Merger Subsidiary of the transactions contemplated by
this Agreement, except for (i) compliance with any applicable requirements under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), (ii) requirements under the Exchange Act, (iii) the filing of the
Certificate of Merger pursuant to the DGCL and appropriate documents with the
relevant authorities of other states in which Parent or any of its subsidiaries
is qualified to do business; and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
SECTION 3.5. Non-contravention. The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the transactions contemplated hereby do not and will
not (a) contravene or conflict with the certificate of incorporation or bylaws
or other equivalent organizational document, in each case as amended, of Parent
or any of its Subsidiaries, (b) assuming compliance with the matters referred to
in Section 3.04, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Parent or any of its Subsidiaries, (c) constitute a
default under or give rise to a right of termination, cancellation or
acceleration of any obligation of Parent or any of its Subsidiaries or to a loss
of a material benefit to which Parent or any of its Subsidiaries is entitled
under any provision of any agreement, contract or other instrument binding upon
Parent or any of its subsidiaries or any license, franchise, permit or other
similar authorization held by Parent or any of its Subsidiaries, or (d) result
in the creation or imposition of any Lien on any asset of Parent or any of its
Subsidiaries, other than, in the case of clauses (b), (c) and (d), any such
conflict, violation, default, right, loss or Lien that, individually or in the
aggregate, would not reasonably be expected to have a Parent Material Adverse
Effect. For purposes of this Agreement, "LIEN" means, with respect to any asset,
any mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
SECTION 3.6. Financing. As of the date of the acceptance for payments
of the Shares pursuant to the Offer, Parent or Merger Subsidiary has, and will
at all times thereafter until consummation of the Merger and the transactions
contemplated thereby, continue to have, and will make available to Merger
Subsidiary, the funds necessary to consummate the Offer and the Merger and the
transactions contemplated thereby, and to pay related fees and expenses (the
"Merger Funds"). The Company has received a true and complete copy of a letter
of commitment obtained by Parent from First Union National Bank to provide debt
financing pursuant to a credit facility described therein ("Financing
Commitment") that describes Parent's expected source of the Merger Funds.
10
<PAGE> 15
SECTION 3.7. Finders' Fees. Except for Gleacher & Co. LLC, whose fees
will be paid by Parent, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Merger Subsidiary.
SECTION 3.8. Delaware Law. As of the time immediately prior to the
execution of this Agreement, neither Parent nor any of its Subsidiaries was an
"INTERESTED STOCKHOLDER", as such term is defined in Section 203 of DGCL.
SECTION 3.9. Ownership of Shares. Except pursuant to the Stockholders
Agreement, neither Parent nor, to its knowledge any of its Subsidiaries or
affiliates, (i) beneficially owns (as such term is defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, or (ii) is party to any agreement,
arrangement or understanding for purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule of the Company hereto
(the "COMPANY DISCLOSURE SCHEDULE"), the Company hereby represents and warrants
to Parent and Merger Subsidiary as follows:
SECTION 4.1. Corporate Existence and Power. The Company 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 to carry on its
business as it is now being conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not have a Company Material Adverse
Effect. For purposes of this Agreement (except paragraph (f) of Annex A hereto),
"Company Material Adverse Effect" means (i) a material adverse effect on the
financial condition, assets, liabilities, business, or results of operations of
the Company and its Subsidiaries taken as a whole, or (ii) a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby, provided that a
material adverse effect on the liabilities of the Company shall be deemed to be
a loss, casualty, damage, judgment, fine or other liability (net of any
corresponding asset), in each case whether contingent or realized, required in
accordance with generally accepted accounting principles ("GAAP") to be
reflected on the Company's consolidated financial statements and that if so
reflected would reduce the Company's consolidated stockholders equity by more
than $2 million. The definition of Company Material Adverse Effect is not
intended to define, qualify or provide any basis for interpreting paragraph (f)
of Annex A hereto. The Company has heretofore delivered to
11
<PAGE> 16
Parent true and complete copies of the Company's certificate of incorporation
and bylaws as currently in effect.
SECTION 4.2. Corporate Authority. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and, subject
to any required approval of the Merger by the Company's stockholders, to
consummate the transactions contemplated hereby. The execution and delivery by
the Company of this Agreement, and the consummation by the Company of the
transactions contemplated hereby, have been duly authorized by its Board of
Directors, and except for any required approval of the Merger by the Company's
stockholders, no other corporate action on the part of the Company is necessary
to authorize the execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally.
SECTION 4.3. Governmental Authorization. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by the Company or any Subsidiary in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated by this Agreement, except for (i)
compliance with applicable requirements under the HSR Act, (ii) requirements
under the Exchange Act, (iii) the filing of the Certificate of Merger pursuant
to the DGCL and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business and such filings to
satisfy applicable requirements of state securities or "BLUE SKY" laws; and (iv)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 4.4. Non-contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (a) contravene or conflict
with the certificate of incorporation or bylaws of the Company or the comparable
charter or organizational documents of any Subsidiary, (b) assuming compliance
with the matters referred to in Section 4.03, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or any
Subsidiary, (c) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any obligation of the Company or
any Subsidiary or to a loss of a material benefit to which the Company or any
Subsidiary is entitled under any provision of any agreement, contract or other
instrument binding upon the Company or any Subsidiary or any license, franchise,
permit or other similar authorization held by the Company or any Subsidiary, or
(d) result in the creation or imposition of any Lien on any asset of the Company
or any Subsidiary, other than, in the case of clauses (b), (c) and (d), any such
conflict,
12
<PAGE> 17
violation, default, right, loss or Lien that, individually or in the aggregate,
would not have a Company Material Adverse Effect.
SECTION 4.5. Capitalization. The authorized capital stock of the
Company consists of 18,000,000 shares of Common Stock, 140 shares of Series A
Preferred Stock, par value $.01 per share (the "SERIES A PREFERRED STOCK") and
2,000,000 shares of Serial Preferred Stock, par value $.00l per share (the
"SERIAL PREFERRED STOCK") of which 300,000 shares have been designated as Series
B Participating Cumulative Preferred Stock pursuant to the Rights Agreement,
dated as of May 29, 1998, between the Company and ChaseMellon Shareholder
Services, LLC ("RIGHTS AGREEMENT"). As of April 30, 1999, there were outstanding
9,515,460 shares of Common Stock, zero shares of Series A Preferred Stock, zero
shares of Serial Preferred Stock and Stock Options to purchase an aggregate of
811,557 Shares (of which options to purchase an aggregate of 260,774 Shares were
exercisable). All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable. Except
as set forth in this Section and in the Rights Agreement and the Stock Purchase
Plan, and except for changes since April 30, 1999 resulting from the exercise of
Stock Options outstanding on such date, there are outstanding (a) no shares of
capital stock or other voting securities of the Company, (b) no securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company, and (c) no options or other rights to acquire
from the Company, and no obligation of the Company to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company (the items in clauses (a), (b) and (c)
being referred to collectively as the "COMPANY SECURITIES"). There are no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Company Securities.
SECTION 4.6. Subsidiaries. Section 4.06 of the Company Disclosure
Schedule sets forth a list of each Subsidiary of the Company. Each Subsidiary of
the Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has all requisite
corporate power and authority to carry on its business as now conducted and is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except for
those jurisdictions where failure to be so qualified would not have a Company
Material Adverse Effect. All of the outstanding shares of capital stock or other
ownership interests in each of the Subsidiaries have been validly issued, and
are fully paid, non-assessable and are owned by the Company or another
Subsidiary free and clear of all Liens. There are no (i) securities of the
Company or any Subsidiary convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary and
(ii) options or other rights to acquire from the Company or any Subsidiary, or
other obligation of the Company or any Subsidiary to issue any capital stock,
voting securities or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interests in, any Subsidiary (the items in clauses (i) and (ii) being referred
to collectively as the
13
<PAGE> 18
"SUBSIDIARY SECURITIES"). There are no outstanding obligations of the Company or
any Subsidiary to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
SECTION 4.7. Company SEC Documents and Other Reports. Except for the
Company's Annual Report on Form 10-K for fiscal year 1998, since June 25, 1996
the Company has timely filed all required forms, reports and documents with the
SEC required to be filed by it pursuant to the federal securities laws and the
SEC rules and regulations (including under applicable extensions) thereunder
(collectively, the "COMPANY SEC DOCUMENTS"), all of which have complied as of
their respective filing dates in all material respects with all applicable
requirements of the Securities Act of 1933, as amended, and the rules
promulgated thereunder (the "SECURITIES ACT") and the Exchange Act. None of such
forms, reports or documents required by the Exchange Act at the time filed, nor
any of such forms, reports or documents required by the Securities Act as of the
date of their effectiveness contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except to the extent that information contained
in any Company SEC Document has been revised or superseded by a later-filed
Company SEC Document filed and publicly available prior to the date hereof. The
financial statements of the Company included in the Company SEC Documents comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
SECTION 4.8. Proxy Statement. If a Proxy Statement is required for the
consummation of the Merger under applicable law, the Proxy Statement will comply
as to form in all material respects with the Exchange Act, except that no
representation is made by the Company with respect to information supplied by
Parent or any affiliate of Parent specifically for inclusion in the Proxy
Statement or incorporated by reference therein. None of the information supplied
by the Company specifically for inclusion in the Proxy Statement shall, at the
time the Proxy Statement is mailed or at the time of the Stockholder Action
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 4.9. Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents, (ii) the Schedule 14D-9 or (iii) the Information Statement,
will, at the respective times the Offer Documents, the Schedule 14D-9 and the
Information Statement are filed with
14
<PAGE> 19
the SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
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. The Schedule 14D-9 and the Information Statement will comply as to
form in all material respects with the requirements of the Exchange Act, except
that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Merger Subsidiary specifically for inclusion or
incorporation by reference therein.
SECTION 4.10. Absence of Certain Changes. Except as disclosed in the
Company SEC Documents or as contemplated by this Agreement, since December 31,
1998, until the date of acceptance and payment for the Shares under the Offer,
there has not been any material adverse change in the financial condition,
assets, liabilities, business or results of operations of the Company and its
Subsidiaries taken as a whole, except for general economic changes, changes that
affect the industry of the Company or any Subsidiary generally, and changes in
the Company's business after the date hereof attributable solely to actions
taken by Parent or Merger Subsidiary. Except as disclosed in the Company SEC
Documents and Section 4.10 of the Company Disclosure Schedule, since December
31, 1998, there has not been (a) any declaration, setting aside or payment of
any dividend or other distribution in respect of the capital stock of the
Company or any redemption or other acquisition by the Company of any Shares; (b)
any split, combination or reclassification of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (c) (i) any
granting by the Company or any of the Subsidiaries to any officer or key
employee of the Company or any of the Subsidiaries of any increase in
compensation, except in the ordinary course of business or as was required under
employment agreements in effect as of the date of the most recent financial
statements included in the Company SEC Documents or (ii) any entry by the
Company or any Subsidiary into any employment, severance or termination
agreement with any such officer or key employee or granting by the Company or
any Subsidiary to any such officer or key employee of any increase in severance
or termination pay, except as was required under employment, severance or
termination agreements in effect as of the date of the most recent financial
statements included in the Company SEC Documents, (d) any damage, destruction or
loss, whether or not covered by insurance, that has or would have a Company
Material Adverse Effect, or (e) any change in accounting methods, principles or
practices by the Company or any Subsidiary materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
generally accepted accounting principles.
SECTION 4.11. Litigation. Except as disclosed in Section 4.11 of the
Company Disclosure Schedule, as of the date hereof there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary before any court or arbitrator or before or by any
governmental body, agency or official that, individually or in the aggregate,
would be reasonably likely to result in a claim against the Company in excess of
$500,000.
15
<PAGE> 20
SECTION 4.12. Benefit Plans; ERISA. (a) Section 4.12 of the Company
Disclosure Schedule sets forth a complete list of all "EMPLOYEE BENEFIT PLANS"
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), whether or not subject to ERISA, including, but not
limited to, any bonus, pension, profit sharing, deferred compensation, incentive
compensation, excess benefit, stock, stock option, stock purchase, severance
pay, termination pay, unemployment benefit, vacation pay, savings, medical,
dental, post-retirement medical, accident, disability, weekly income, salary
continuation, health, life or other insurance fringe benefits, change in control
or other material employee benefit plans, programs or arrangements currently
maintained, or contributed to, or required to be maintained or contributed to,
by the Company or any other Person that, together with the Company, is treated
as a single employer under Section 414 of the Internal Revenue Code of 1986, as
amended (the "CODE") (each a "COMMONLY CONTROLLED ENTITY"), for the benefit of
any current or former employees, officers, directors or independent contractors
of the Company or any Commonly Controlled Entity and with respect to which the
Company or any Commonly Controlled Entity has any unsatisfied liability
(collectively, the "BENEFIT PLANS"). Section 4.12 of the Company Disclosure
Schedule also includes a list of each written employment, severance,
compensation, termination or similar type of agreement between the Company or a
Commonly Controlled Entity and any current or former employees with respect to
which the Company or any Commonly Controlled Entity has any unsatisfied
liability (the "EMPLOYMENT AGREEMENTS").
(b) Except as indicated in Section 4.12 of the Company Disclosure
Schedule, the Company has delivered or made available to Parent true, complete
and correct copies of each Benefit Plan (including all amendments adopted since
the most recent restatement), and each Employment Agreement (including all
amendments or riders). Except as indicated in Section 4.12 of the Company
Disclosure Schedule, with respect to each Benefit Plan that is subject to ERISA
(an "ERISA PLAN"), the Company has delivered or made available to Parent where
applicable (i) the most recent summary plan description (including all summaries
of material modifications prepared since the most recent summary plan
description); (ii) annual reports on Form 5500 for the three most recent years
such reports have been filed; (iii) each related trust agreement, (including all
amendments), (iv) the most recent Internal Revenue Service (the "IRS")
determination letter, and (v) any participation or collective bargaining
agreement referenced in any ERISA Plan. Except as set forth in Section 4.12 of
the Company Disclosure Schedule, the Company has no unfunded liabilities with
respect to any ERISA Plan as of the end of the Company's most recent fiscal year
that are not reflected on the Company's financial statements for such fiscal
year.
(c) To the Company's knowledge, and except as indicated in Section 4.12
of the Company Disclosure Schedule, each Benefit Plan, has been administered in
all material respects with its terms and with the applicable provisions of ERISA
and the Code. Except as may be provided under any collective bargaining
agreement or as may otherwise be required by law, the Company has no commitment,
whether or not legally binding, to create any
16
<PAGE> 21
additional Benefit Plan or to change the terms of any existing Benefit Plan.
Except as disclosed in the Company Disclosure Schedule, the transactions
contemplated by this Agreement will not, solely as a result of their
consummation, increase or accelerate any amount due under any Employment
Agreement or a Benefit Plan, require assets to be set aside or other forms of
security to be provided with respect to any liability under any Employment
Agreement or Benefit Plan, or result in any "PARACHUTE PAYMENT" (within the
meaning of Code Section 280G) under any Benefit Plan.
(d) Each ERISA Plan, other than a "multiemployer plan", as defined in
Section 3(37) of ERISA (a "Multiemployer Plan) intended to be qualified under
Section 401(a) of the Code has been the subject of a determination letter(s)
from the IRS to the effect that such ERISA Plan is qualified under Section
401(a), and its related trust is exempt from Federal income taxation under
Section 501(a) of the Code as amended at least through the statutory changes
implemented under the Tax Reform Act of 1986, and no such determination letter
has been revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any such ERISA Plan been amended nor, to the knowledge of
the Company, has anything occurred since the date of its most recent
determination letter or application therefor in any respect that would adversely
affect its qualification. Except as indicated in Section 4.12 of the Company
Disclosure Schedule, no Benefit Plan that is not a Multiemployer Plan is subject
to any ongoing audit, administrative proceeding or, to the knowledge of the
Company, any investigation by any governmental entity. Except as indicated in
Section 4.12 of the Company Disclosure Schedule, to the knowledge of the
Company, no event or condition exists or is reasonably expected to occur in
connection with the administration of any Benefit Plan that would either (i)
subject the Company to any material liability, contingent or otherwise to the
IRS, the Department of Labor ("DOL") or the Pension Benefit Guarantee
Corporation (other than any liability for premiums payments to the Pension
Benefit Guarantee Corporation) or (ii) cause the imposition of any lien on the
assets of the Company under the Code or ERISA. Except as indicated in Section
4.12 of the Company Disclosure Schedule, no ERISA Plan that is not a
Multiemployer Plan is the subject of any pending application for administrative
relief under any voluntary compliance program or closing agreement program of
the IRS or the DOL, and to the knowledge of the Company, no Multiemployer Plan
is subject to any such application for administrative relief. To the knowledge
of the Company, no Person has engaged in any "PROHIBITED TRANSACTION" (as such
term is defined in ERISA and the Code) with respect to any ERISA Plan (other
than any prohibited transaction with respect to which an exemption has been
granted). The Company has paid or remitted all contributions to each ERISA Plan
that is not a Multiemployer Plan within the time period required by applicable
law.
(e) No ERISA Plan that is a "SINGLE-EMPLOYER PLAN" (as defined in
Section 4001(a)(15) of ERISA and which is subject to Title IV of ERISA ("SINGLE
EMPLOYER PLAN")) has incurred an "ACCUMULATED FUNDING DEFICIENCY" (as such term
is defined in Section 302 of ERISA or Section 412 of the Code), whether or not
waived.
17
<PAGE> 22
(f) No "REPORTABLE EVENT" (as that term is defined in Section 4043 of
ERISA) has occurred with respect to any Single Employer Plan, for which the
30-day notice requirement has not been waived (other than with respect to
transactions contemplated by this Agreement).
(g) Except as set forth in the Company Disclosure Schedule, with
respect to any Benefit Plan that is an employee welfare benefit plan (as defined
in Section 3(l) of ERISA), no such Benefit Plan provides benefits, including
without limitation, death or medical benefits, beyond termination of employment
or retirement other than (A) coverage mandated by law or (B) death or retirement
benefits under an ERISA Plan qualified under Section 401(a) of the Code.
(h) Section 4.12 of the Company Disclosure Schedule identifies each
ERISA Plan that is a Multiemployer Plan. To the Company's knowledge, (i) each
such plan has been operated and administered, in all material respects, in
accordance with its terms and all applicable laws, (ii) each such plan is
qualified under Section 401(a) of the Code, (iii) all required material
contributions or other material payments of any type that the Company or any
Commonly Controlled Entity has been obligated to make to any such plan have been
duly and timely made, (iv) with respect to each such plan, no claims (other than
routine claims for benefits) are pending and (v) neither the Company nor any
Commonly Controlled Entity has made or incurred a "COMPLETE WITHDRAWAL" or
"PARTIAL WITHDRAWAL" as those terms are respectively defined in Sections 4203
and 4205 of ERISA from any Plan that would reasonably be expected to result in a
withdrawal liability (as determined in accordance with Section 4201(b) of ERISA)
that would have a Company Material Adverse Effect. With respect to any
Multiemployer Plan in which any employee of the Company participates, any
complete withdrawal from such plan by the Company and/or any Commonly Controlled
Entity would not result in a liability to the Company or any Commonly Controlled
Entity in excess of $2,000,000.
(i) Except as identified in Section 4.12 of the Company Disclosure
Schedule, with respect to any Benefit Plan that is not a Multiemployer Plan, no
claims (other than routine claims for benefits) are pending, or to the knowledge
of the Company, threatened.
SECTION 4.13. Environmental Matters. Except as set forth in Section
4.13 of the Company Disclosure Schedule or any non-compliances, violations or
environmental conditions or matters that are inconsistent with the following
representations and warranties and that individually or in the aggregate, would
not have a Company Material Adverse Effect:
(a) the Company, its Subsidiaries, and their respective predecessors in
interest, as well as the facilities owned, leased, used, or operated by the
Company, its Subsidiaries, and their respective predecessors in interest, are,
and have at all times been, in compliance with all applicable Environmental
Laws, including without limitation, obtaining and maintaining in force all
permits, licenses, registrations, and other governmental authorizations (and
complying
18
<PAGE> 23
with all terms and conditions thereof), making all notifications, and involving
all governmental authorities in environmental activities, as required under the
Environmental Laws;
(b) the Company, its Subsidiaries, and their respective predecessors in
interest have not received any claim, notice, allegation, suggestion, or other
communication (whether in writing or otherwise) from any Person that alleges
that the Company is or was not in compliance with any Environmental Law or that
the Company, its Subsidiaries, or their respective predecessors in interest are
subject to liability or responsibility of any kind under or relating to any
Environmental Law;
(c) there are no facts, events, or circumstances (whether on
Company-owned property or off-site) that may prevent or interfere with the
Company's compliance with any Environmental Laws in the future, or that would
give rise to liability under any Environmental Law, or that would materially
restrict Parent from operating the Company and operating or using its properties
after the Effective Time;
(d) the Company, its Subsidiaries, and their respective predecessors in
interest, their agents, contractors, lessees, lessors, subtenants and third
parties have at all times received, handled, used, stored, treated, shipped,
transported, and disposed of all Hazardous Substances at or from such facilities
owned, leased, used, or operated by the Company, its Subsidiaries, or their
respective predecessors in interest in compliance with all Environmental Laws;
(e) there are no conditions at, on, about, under, adjacent to, or near
any real property currently or formerly owned, leased, used or operated by the
Company, its Subsidiaries, or their respective predecessors in interest, that
are in violation of the Environmental Laws;
(f) there are no conditions at, on, about, under, adjacent to, or near
any real property currently or formerly owned, leased, used or operated by the
Company, its Subsidiaries, or their respective predecessors in interest for
which remedial, response, removal, corrective action, abatement, or other
cleanup-related or corrective work is required under the Environmental Laws;
(g) there has been no release, discharge, deposit, placement, disposal,
or migration of Hazardous Substances at, on, about, under, adjacent to, or near
any real property currently or formerly owned, leased, used or operated by the
Company, its Subsidiaries, or their respective predecessors in interest, and no
real property currently or formerly owned, leased, used or operated by the
Company, its Subsidiaries, or their respective predecessors in interest is or
was otherwise contaminated by a Hazardous Substance, or has been used at any
time as a landfill or waste disposal site for Hazardous Substances or
non-hazardous wastes;
(h) neither the Company, its Subsidiaries, nor their respective
predecessors in interest, has disposed of or treated, or arranged for the
disposal or treatment of any Hazardous Substance at any site or location that
was not authorized or licensed to receive such materials
19
<PAGE> 24
for disposal or treatment, or at any site or location for which it has received
a notice of potential liability or request for information under the
Environmental Laws, or at any site or location which, pursuant to any
Environmental Law has been placed on the National Priorities List or state or
local equivalent cleanup priorities list, has been proposed by any person or
entity for consideration for or placement on such a list, or is the subject of a
claim, order, decree, request, settlement, or other demand from any person or
entity for removal, remedial, response, corrective action, abatement, or cleanup
or corrective work, or is the site or location of an event or occurrence in
violation of the Environmental Laws;
(i) neither the Company, its Subsidiaries, any of their respective
predecessors in interest, nor any third party uses, or has used, places, or has
placed, in any underground storage tanks, oil/water separators, septic tanks or
other subsurface process tanks or containment devices (whether or not presently
abandoned and whether or not on property now or previously occupied by the
Company, its Subsidiaries, or their respective predecessors in interest) as
defined in the Environmental Laws (whether or not such tanks are subject to any
exemption included in the Environmental Laws);
(j) neither the Company, its Subsidiaries, nor their respective
predecessors in interest are subject to any fine or penalty as a result of a
violation of any Environmental Law;
(k) no litigation, judicial or administrative proceeding,
investigation, order, judgment or decree is pending or threatened relating to
violation of or liability under or relating to any Environmental Law, including
without limitation violations or liabilities relating to any off-site disposal
or contamination, and/or the ownership, use, maintenance or operation of the
facilities currently or formerly owned, leased, used or operated by the Company,
its Subsidiaries, or their respective predecessors in interest, nor is there any
basis for any such proceedings being instituted or filed;
(l) none of the Company, its Subsidiaries, or their respective
predecessors in interest has entered into, has agreed to, or is subject to any
settlement, judgment, decree, order, agreement, or negotiation or other similar
obligation or proceeding under or relating to any Environmental Law;
(m) there are no environmental reports of which the Company has
knowledge and possession and no material environmental data, audits, or
assessments describing the condition of any property owned, leased, used or
operated by the Company, its Subsidiaries, or their respective predecessors in
interest that have not been provided (in true and correct form) to Parent; and
(n) the Company, its Subsidiaries, and their respective predecessors in
interest have exercised due diligence to determine the presence, location and
amount of asbestos-containing material and presumed asbestos-containing material
at the facilities currently owned, leased, used or operated by the Company, its
Subsidiaries, and their respective predecessors, in full
20
<PAGE> 25
compliance with 29 C.F.R. 1919 et seq., and all documents concerning the
presence, location and quantity of asbestos-containing material and presumed
asbestos-containing material are identified on the Company Disclosure Schedule.
"ENVIRONMENTAL LAW" means any and all applicable Federal, state, local,
or other law (including, without limitation, common law, tort principles, toxic
tort, contribution, and equity), statute, regulation, rule, code, guidance,
standard, ordinance, order, judgment, directive, permit, license, registration,
authorization, approval, injunction, decree or judicial opinion or other
governmental requirement relating to the manufacture, processing, distribution,
use, treatment, storage, handling, emission, discharge, release, threatened
release, transport, or disposal of Hazardous Substances or relating to pollution
or protection of human health, natural resources, or the environment (including
air, surface water, groundwater, soil, ground, land surface, land subsurface
areas, and terms of similar import).
"HAZARDOUS SUBSTANCE" means any hazardous material, hazardous
substance, hazardous chemical, toxic chemical, toxic substance, hazardous waste,
solid waste, liquid waste, pollutant, contaminant, or substance or term of
similar import (including constituents thereof) that was, is now, or hereafter
becomes regulated by or under authority of any Environmental Law or that could
result in liability under any Environmental Law, or that is otherwise a danger
to human health, reproduction, natural resources, or the environment, including
without limitation, any petroleum products or by-products, asbestos or
asbestos-containing material, polychlorinated biphenyls, chlorofluorocarbons,
flammables or explosives, lead paint, radioactive material, including radon gas,
and urea formaldehyde foam insulation.
SECTION 4.14. Taxes. (a) Except as disclosed in Section 4.14 of the
Company Disclosure Schedule: (i) all Tax Returns required to be filed by or with
respect to the Company and each of its Subsidiaries have been filed and such Tax
Returns were true, correct, and complete in all material respects, and (ii) the
Company and each of its Subsidiaries has paid (or there has been paid on its
behalf) all Taxes that are due whether or not shown on any Tax Return, except
for Taxes being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in the Company's financial statements
(as of the date thereof) and other than, in the case of clauses (i) and (ii),
any such failure to file, inaccuracy, omission or failure to pay that
individually or in the aggregate, would not have a Company Material Adverse
Effect.
(b) To the Company's knowledge, no claim has ever been made by an
authority in a jurisdiction where any of the Company and its Subsidiaries does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. To the Company's knowledge, there are no security interests on any
of the assets of any of the Company and its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax, except for any
lien for taxes not yet due. Each of the Company and its Subsidiaries has
withheld and paid all Taxes
21
<PAGE> 26
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party other than any such failure to withhold or pay that individually or in the
aggregate, would not have a Company Material Adverse Effect.
(c) Except as disclosed in Section 4.14 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries, (i) currently is the
beneficiary of any extension of time within which to file any Tax Return; (ii)
has filed a consent under Section 341(f) of the Code concerning collapsible
corporations; (iii) has made any payments, is obligated to make any payments, or
is a party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Section 280G of the Code;
(iv) has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the five-year period ending on
the date the Offer commences; (v) is a party to any tax allocation or sharing
agreement; (vi) has any liability for the taxes of any person (other than any of
the Company and its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise; or (vii) has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a tax assessment or deficiency.
(d) Section 4.14 of the Company Disclosure Schedule lists all federal,
state, local, and foreign Tax Returns filed with respect to any of the Company
and its Subsidiaries for taxable periods ending after December 31, 1993,
indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The Company has delivered to
Purchaser correct and complete copies of all Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by any of the
Company and its Subsidiaries for taxable periods ending after December 31, 1993.
(e) The unpaid income Taxes of the Company and its Subsidiaries (A) did
not, as of December 31, 1998, exceed by any material amount the reserve for
Income Tax liability (other than any reserve for deferred taxes established to
reflect timing differences between book and tax income) set forth on the face of
the December 31, 1998 audited balance sheet (other than in any notes thereto)
and (B) will not exceed by any material amount that reserve as adjusted for
operations and transactions through the Effective Time in accordance with the
past custom and practice of the Company and its Subsidiaries in filing their
income Tax Returns.
(f) The term "TAXES" shall mean all taxes, charges, fees, levies, or
other similar assessments or liabilities imposed by the United States of
America, or by any state, local, or foreign government, or any subdivision,
agency, or other similar person of the United States or any such government,
including without limitation (i) income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs duties,
capital stock franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on
22
<PAGE> 27
minimum, and estimated taxes and (ii) any interest, penalties or additions
thereto, whether disputed or not.
(g) The term "TAX RETURNS" shall mean any report, return, declaration,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
SECTION 4.15. Delaware Takeover Statute. The Board of Directors of the
Company has approved the Offer, the Merger and the other transactions
contemplated by this Agreement in accordance with the provisions of Section 203
of the DGCL.
SECTION 4.16. Fees and Commissions. Other than amounts payable to
Merrill Lynch and Morgan Lewis Githens & Ahn in accordance with the agreements
attached to the Company Disclosure Schedule, no Person is entitled to receive
from the Company or any Subsidiary of the Company any investment banking,
brokerage or finder's fee in connection with this Agreement or the transactions
contemplated hereby.
SECTION 4.17. Material Contracts. (a) Except as disclosed in the
Company Disclosure Schedule, neither the Company nor any Subsidiary is currently
a party to or bound by, and none of the assets of the Company or any Subsidiary
is covered by or subject to, any of the following (whether oral or written):
(i) any lease (whether of real or personal property) providing
for annual rentals of $500,000 or more;
(ii) any agreement for the purchase of materials, software,
supplies, goods, services, equipment or other assets providing for either (A)
annual payments to be made by the Company and the Subsidiaries of $2,000,000 or
more or (B) aggregate payments to be made by the Company and the Subsidiaries of
$2,000,000 or more;
(iii) any sales, distribution or other similar agreement
providing for the sale by the Company or any Subsidiary of materials, supplies,
goods, services, equipment or other assets that provides for either (A) annual
payments to be made to the Company and the Subsidiaries of $2,000,000 or more or
(B) aggregate payments to be made to the Company and the Subsidiaries of
$2,000,000 or more;
(iv) any partnership, joint venture or other similar agreement
or arrangement;
(v) any agreement relating to the acquisition or disposition
of any business (whether by merger, sale of stock, sale of assets or otherwise)
under which the Company retains any rights or obligations including any such
agreement relating to any recapitalization of the Company or any predecessor;
23
<PAGE> 28
(vi) any agreement relating to indebtedness for borrowed money
or the deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset), except any such agreement with an
aggregate outstanding principal amount not exceeding $500,000 and which may be
prepaid on not more than 30 days notice without the payment of any penalty;
(vii) any material option to purchase or sell assets, license,
franchise or similar agreement;
(viii) any agency, dealer, sales representative, marketing or
other similar agreement (other than the Company's standard form of
dealer/distributor agreement);
(ix) any agreement that limits the freedom of the Company or
any Subsidiary to compete in any line of business or with any Person or in any
geographic area or which would so limit the freedom of the Company or any
Subsidiary after the Effective Time;
(x) any agreement with (A) any Person directly or indirectly
owning, controlling or holding with power to vote, 5% or more of the outstanding
voting securities of the Company or any of its Subsidiaries, (B) any Person 5%
or more of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote by the Company or any of its Subsidiaries;
(xi) any agreement with any director or officer of the Company
or any Subsidiary or with any "ASSOCIATE" or any member of the "IMMEDIATE
FAMILY" (as such terms are respectively defined in Rules 12b-2 and 16a-l of the
Exchange Act) of any such director or officer;
(xii) any material agreement (A) creating any obligation of
the Company or any Subsidiary to indemnify any person or (B) (other than
commercial insurance policies) creating any obligation of any other person to
indemnify the Company or any Subsidiary; or
(xiii) any escrow agreement relating to escrowed assets having
a value in excess of $100,000.
(b) Except as set forth in the Company Disclosure Schedule, each
agreement contract, plan, lease arrangement or commitment disclosed in the
Company Disclosure Schedule to this Agreement or required to be disclosed
pursuant to this Section 4.17 (collectively, the "MATERIAL CONTRACTS") is a
valid and binding agreement of the Company or a Subsidiary, as the case may be,
and is in full force and effect, and none of the Company, any Subsidiary or, to
the knowledge of the Company, any other party thereto is in default or breach in
any material respect under the terms of any such Material Contract, and, to the
knowledge of the Company, no event or circumstance has occurred that, with
notice or lapse of time or
24
<PAGE> 29
both, would constitute an event of default thereunder. True and complete copies
of each such written Material Contract have been delivered to Parent.
SECTION 4.18. Intellectual Property Rights. The Company and its
Subsidiaries possess rights to use, whether through ownership, licensing or
otherwise, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes that are
necessary for their business as now conducted and that the failure to possess
would reasonably be expected to have a Company Material Adverse Effect
(collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any
of its Subsidiaries have assigned, hypothecated or otherwise encumbered any of
the Intellectual Property Rights. Except as disclosed in Section 4.18 of the
Company Disclosure Schedule, (i) to the Company's knowledge, there are no
infringements by any other party of any of the Intellectual Property Rights and
(ii) neither the Company nor any of its Subsidiaries have entered into any
agreement to indemnify any other Person against any charge of infringement of
any of its Intellectual Property Rights except for such matters as would not
reasonably be expected to have, individually or in the aggregate, have a Company
Material Adverse Effect. Except as disclosed in Section 4.18 of the Company
Disclosure Schedule, to (i) the knowledge of the Company, the Company and its
Subsidiaries have not since 1990 and do not violate or infringe any intellectual
property right of any other Person, (ii) without regard to the knowledge of the
Company, the Company and its Subsidiaries have not since 1990 and do not violate
or infringe any intellectual property right of any other Person where such
infringement would reasonably be expected to have a Company Material Adverse
Effect, and (iii) the Company and its Subsidiaries have not since 1990 received
any written communication alleging that it violates or infringes the
intellectual property right of any other Person where such infringement would
reasonably be expected to have a Company Material Adverse Effect. The Company
and its Subsidiaries have not since 1990 received any written notice that it has
been sued for infringing any intellectual property right of another Person.
SECTION 4.19. Labor Matters. Except as set forth in Section 4.19 of the
Company Disclosure Schedule, there are no labor disputes pending or, to the
knowledge of the Company, threatened, between the Company or any of its
Subsidiaries and any of their respective employees, which disputes are
reasonably likely to have a Company Material Adverse Effect. Except as set forth
in Section 4.19 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries is involved in or, to the knowledge of the Company,
threatened with any labor dispute, grievance, litigation, administrative
proceeding, petition or request relating to labor, safety or discrimination
matters involving any persons employed by the Company or its Subsidiaries,
(including, without limitation, charges of unfair labor practices or
discrimination complaints) that individually or in the aggregate would
reasonably be expected to have a Company Material Adverse Effect. To the
Company's knowledge, neither the Company nor any of its Subsidiaries has engaged
in any unfair labor practices within the meaning of the National Labor Relations
Act within the past five years of the date hereof. Except as set forth in the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to, or bound by, any collective bargaining agreement or
25
<PAGE> 30
union contract with respect to any persons employed by the Company or its
Subsidiaries and no collective bargaining agreement is being negotiated by the
Company or any of its Subsidiaries. Except as set forth in Section 4.19 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has
any knowledge of any strikes, slowdowns, work stoppages or lockouts, or threats
thereof, by or with respect to any employees of the Company or any of its
Subsidiaries, and there have been no such strikes, slowdowns, work stoppages or
lockouts within the past three years of the date hereof.
SECTION 4.20. Year 2000 Compliance. The computer systems of the Company
and its Subsidiaries (including all software, hardware, workstations and related
components, automated devices, embedded chips and other date sensitive
equipment) are Year 2000 compliant or will be Year 2000 compliant by December
31, 1999 except as would not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 4.21. Compliance with Laws. Except as to Environmental Laws, as
to which the only representation is exclusively in Section 4.13 hereof, and
except as to ERISA and the Code with respect to the Benefit Plans, as to which
the only representation is exclusively in Section 4.12 hereof, neither the
Company nor any Subsidiary is in violation of, or has violated, any applicable
provisions of any laws, statutes, ordinances, regulations, judgments,
injunctions, orders or decrees, except for such violations which would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect. Neither the Company nor any Subsidiary has received any
written notice to the effect that the Company or any Subsidiary is not in
compliance with any applicable law, statute, ordinance, regulation, judgment,
injunction, order or decree, except for such violations which would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
SECTION 4.22. Insurance. Section 4.22 of the Company Disclosure
Schedule contains an accurate and complete list as of the date of this Agreement
of all material policies of fire, liability, workmen's compensation and other
forms of insurance policies (the "Insurance Policies") owned by the Company or
its Subsidiaries. All premiums due and payable on the Insurance Policies have
been paid in full. Except as set forth in Section 4.22 of the Company Disclosure
Schedule, none of the Insurance Policies will terminate or lapse (in any way
which would cause a Company Material Adverse Effect) by reason of the
transactions contemplated by this Agreement. The Company has not received any
written notice that any insurer under any Insurance Policy has canceled or
disclaimed a significant liability under any such policy or, to the Company's
knowledge, indicated any intent to do so or not to renew any such policy. All
material pending claims under the Insurance Policies have been filed in a timely
fashion, except where the failure to so file would not reasonably be expected to
result in a Company Material Adverse Effect.
SECTION 4.23. The Rights Agreement. The Company's Board of Directors
has approved, and the Company agrees within two business days of the date hereof
to enter into
26
<PAGE> 31
with its rights agent, an amendment to the Rights Agreement (the "RIGHTS PLAN
AMENDMENT") to, among other things, (i) render the Rights Agreement inapplicable
to the Offer, the Merger and the other transactions contemplated hereby and (ii)
ensure that (y) neither Parent nor any of its Subsidiaries is an Acquiring
Person pursuant to the Rights Agreement and (z) a Distribution Date (as defined
in the Rights Agreement) does not occur by reason of the execution of this
Agreement, the commencement or completion of the Offer, the consummation of the
Merger or the other transactions contemplated hereby.
ARTICLE 5
COVENANTS
SECTION 5.1. Conduct of Business of the Company. Except as contemplated
by this Agreement or as approved in writing by Parent, during the period from
the date of this Agreement to the acceptance of Shares for payment, the Company
and its Subsidiaries will each conduct its operations according to its ordinary
and usual course of business in accordance with past practices, including
substantial compliance with all applicable laws and the preservation, in
accordance with commercially reasonable practices, of the Company's material
business and assets (including its relationships with its significant customers
and suppliers). Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, neither the Company nor any
Subsidiary of the Company, without the prior written consent of Parent, will
(i) issue, sell or pledge, or authorize or propose the
issuance, sale or pledge of (A) additional shares of capital stock of
any class (including the Shares), or securities convertible into any
such shares, or any rights, warrants or options to acquire any such
shares or other convertible securities, or grant or accelerate any
right to convert or exchange any securities of the Company for shares,
other than (1) Shares issuable pursuant to the terms of outstanding
Stock Options, the Stock Purchase Plan and commitment to the extent
disclosed in Section 4.05, or (2) issuance of shares of capital stock
to the Company by a wholly-owned Subsidiary of the Company, or (B) any
other securities in respect of, in lieu of or in substitution for
Shares outstanding on the date thereof or split, combine or reclassify
any of the Company's capital stock;
(ii) purchase, redeem or otherwise acquire, or propose to
purchase or otherwise acquire, any of its outstanding securities
(including the Shares);
(iii) declare, set aside or pay any dividend or other
distribution on any shares of capital stock of the Company, except that
a direct or indirect wholly-owned Subsidiary of the Company may pay a
dividend or distribution to its parent;
(iv) except as disclosed to Parent prior to the date hereof,
make any acquisition of any corporation or similar entity or a material
amount of the assets of any
27
<PAGE> 32
corporation or similar entity, or sell a material amount of its assets,
except in all instances for actions in the ordinary course of business;
(v) except in the ordinary course of business, (A) incur any
indebtedness for borrowed money or guarantee any such indebtedness of
another Person or (B) make any loans, advances of capital contributions
to, or investments in, any other Person, other than to the Company or
any direct or indirect wholly-owned Subsidiary of the Company;
(vi) propose or adopt any amendments to the certificate of
incorporation or bylaws of the Company;
(vii) except in the ordinary course of business and for any
labor or collective bargaining agreement, enter into any new
employment, severance or termination agreements with, or grant any
increase in severance or termination pay to, any officers, directors or
key employees or grant any material increases in the compensation or
benefits to officers, directors and key employees;
(viii) change any accounting methods, principles or practices
materially affecting their assets, liabilities or business, except
insofar as may be required by a change in generally accepted accounting
principles;
(ix) make any material tax election or settle or compromise
any material income tax liability;
(x) except for any labor or collective bargaining agreement,
permit any material amendment or waive any material rights with respect
to any Material Contract or permit any discretionary release of a
material amount of escrowed assets held pursuant to any escrow
agreement included within the definition of Material Contract;
(xi) without first consulting with Parent regarding any
material Company proposal, engage in any negotiations with officials or
representatives of any labor union with respect to such material
proposal regarding any possible modification, extension or replacement
of any union contract or collective bargaining agreement, provided that
the Company shall not be obligated to alter any such proposal after
consultation with Parent;
(xii) take or permit any action (over which it has control)
that would make any representation or warranty of the Company hereunder
inaccurate in any material respect or omit to take any action (which
action is commercially reasonable) necessary to prevent such
representation or warranty from being so inaccurate; or
(xiii) agree in writing or otherwise to take any of the
foregoing actions.
28
<PAGE> 33
SECTION 5.2. No Solicitation. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director, employee, agent or representative of the Company or any of its
Subsidiaries ("COMPANY REPRESENTATIVES") to, directly or indirectly, (i)
solicit, initiate, or knowingly facilitate the submission of any Acquisition
Proposal or any inquiries regarding any Acquisition Proposal, (ii) participate
in any discussions or negotiations regarding, or furnish to any Person
(including any parties with which the Company or any representative of the
Company has previously engaged in discussions or negotiations with respect to
any Acquisition Proposal) any information with respect to its business,
properties or assets, for the purpose of facilitating the consummation of, any
Acquisition Proposal, or (iii) enter into any agreement with respect to any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the Company or any of its Subsidiaries or the Company Representatives from,
prior to the acceptance for payment of Shares pursuant to the Offer, (A)
furnishing information pursuant to a confidentiality letter (provided for
informational purposes to Parent subject to the proviso in Section 5.02(c)),
with terms no less favorable than the Confidentiality Agreement (as defined in
Section 5.03) concerning the Company and its businesses, properties or assets to
a Person who has made an unsolicited written Acquisition Proposal, or (B)
engaging in discussions or negotiations with such Person who has made an
unsolicited written Acquisition Proposal, but in each case referred to in the
foregoing clauses (A) and (B) only to the extent that the Board of Directors of
the Company shall have concluded in good faith, after consultation with its
outside legal counsel, that such action is necessary in order for the Board of
Directors to comply with its fiduciary duties to the stockholders of the Company
under applicable law. For purposes of this Agreement, "ACQUISITION PROPOSAL"
means any proposal or offer for, or any expression of interest (by public
announcement or otherwise) by any Person, other than Parent or its affiliates,
in a merger or other business combination involving the Company or any
Subsidiary of the Company or any inquiry, proposal or offer to acquire in any
manner (including through a joint venture with the Company), directly or
indirectly, all or any significant portion of the assets or capital stock of the
Company or any Subsidiary of the Company.
(b) Except as permitted by this Section, neither the Board of Directors
of the Company nor any committee thereof shall (i) withdraw or modify, or
publicly propose to withdraw or modify, in a manner adverse to Parent or Merger
Subsidiary, the approval or recommendation by such Board of Directors or any
committee thereof of this Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal or (iii) cause the
Company or any Subsidiary to enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, in the event the Board of
Directors of the Company receives an unsolicited bona fide Acquisition Proposal
that is a Superior Proposal, the Board of Directors of the Company may, if it
shall have concluded in good faith, after consultation with its outside legal
counsel, that such action is necessary in order for the Board of Directors to
comply with its fiduciary duties to the stockholders of the Company under
applicable law, withdraw or modify its approval or recommendation of the Offer,
this Agreement and the Merger taken together, or approve or recommend any such
29
<PAGE> 34
Superior Proposal, or terminate this Agreement in order to enter into an
agreement with respect to such a Superior Proposal or enter into any agreement
with respect to such a Superior Proposal, in each case after Parent's receipt of
written notice (a "NOTICE OF SUPERIOR PROPOSAL") advising Parent that the Board
of Directors of the Company has received a Superior Proposal and specifying the
material terms and conditions of such Superior Proposal. For purposes of this
Agreement, a "Superior Proposal" means any bona fide written Acquisition
Proposal on terms which the Board of Directors of the Company determines in its
good faith judgment, after consultation with Merrill Lynch or another financial
advisor of nationally recognized reputation, to be more favorable to the
Company's stockholders than the Offer and the Merger.
(c) In addition to the obligations of the Company set forth in
paragraph (b) above, the Company shall promptly, and in any event prior to
taking any of the actions in clauses (A) and (B) of Section 5.02(a), advise
Parent of any request for nonpublic information or of any Acquisition Proposal,
and the material terms and conditions of such request or Acquisition Proposal;
provided, however, that the Company is not required to provide to Parent any
information if and to the extent that the Board of Directors of the Company
determined in good faith and after consultation with outside counsel that in the
exercise of its fiduciary obligations it is necessary to refrain from furnishing
such information.
(d) Nothing contained in this Section 5.02 will prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with outside counsel, the failure to so
disclose would violate applicable law.
SECTION 5.3. Access to Information. (a) Between the date of this
Agreement and the Effective Time, the Company will upon reasonable notice (i)
give Parent and its authorized representatives reasonable access during regular
business hours to the Company's and each of its Subsidiary's plants, offices,
warehouses and other facilities and to its books and records, (ii) permit Parent
to make such inspections as it may require, and (iii) cause its officers,
employees and agents and those of its Subsidiaries to furnish Parent with such
financial and operating data and other information with respect to the business
and properties of the Company and the Subsidiaries as Parent may from time to
time reasonably request.
(b) Information obtained by Parent pursuant to this Section 5.03 shall
be subject to the provisions of the confidentiality agreement between the
Company and Parent, dated November 3, 1997, as amended on February 23, 1999 (the
"CONFIDENTIALITY AGREEMENT"), which remains in full force and effect.
SECTION 5.4. Best Efforts. (a) Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under
30
<PAGE> 35
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Such best efforts shall include,
without limitation, obtaining as promptly as practicable all necessary consents,
approvals or waivers from third parties and governmental authorities necessary
to the consummation of the transactions contemplated by this Agreement.
(b) The Company agrees to provide, and will cause its
Subsidiaries and their respective officers, employees and advisors to provide,
all reasonable cooperation in connection with the arrangement of any financing
contemplated by Financing Commitment, including without limitation,
participation in meetings, due diligence sessions, and the preparation of any
necessary documents and financial statements. The Company will also provide
commercially reasonable assistance to Parent and the Merger Subsidiary in
connection with the execution and delivery of any agreements or instruments
necessary to obtain financing, or other certificates or documents as may be
requested by Parent or the Merger Subsidiary, provided that neither the Company
nor any of its Subsidiaries shall be required to enter into any written
agreement or other instrument in connection with providing such assistance.
(c) The Company and Merger Subsidiary will as promptly as
practicable file with the Federal Trade Commission and the Department of Justice
the notification and report forms required for the transactions contemplated
hereby and any supplemental information that may be reasonably requested in
connection therewith pursuant to the HSR Act, which notification and report
forms and supplemental information will comply in all materials respects with
the requirements of the HSR Act. Merger Subsidiary shall pay all filing fees
required with respect to the notification, report and other requirements of the
HSR Act.
(d) If at any time prior to the Effective Time any event or
circumstance relating to either the Company, Parent or Merger Subsidiary, or any
of their respective Subsidiaries, should be discovered by the Company or Parent,
as the case may be, and which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering parties will promptly inform the
other party of such event or circumstance.
SECTION 5.5. Indemnification, Exculpation and Insurance. (a) From and
after the Effective Time, Parent and Surviving Corporation shall indemnify,
defend and hold harmless each person who was, is now, or who becomes prior to
the Effective Time, an officer, director or employee of the Company against all
losses, expenses, claims, damage, liabilities, costs, expenses, judgments or
amounts that are paid in settlement with the approval of the indemnifying party
(which approval will not be unreasonably withheld) arising out of the
transactions contemplated by this Agreement to the fullest extent provided for
under the Company's Certificate of Incorporation and By Laws as in effect as of
the date hereof, including without limitation the advancement of expenses. All
rights to indemnification and exculpation from liabilities for acts or omissions
occurring at or prior to the Effective Time now existing in favor of the current
or former directors or officers of the Company and its
31
<PAGE> 36
Subsidiaries as provided in their respective certificates of incorporation or
by-laws (or comparable organizational documents) and any indemnification
agreements of the Company shall be assumed by the Surviving Corporation in the
Merger, without further action, as of the Effective Time and shall survive the
Merger and shall continue in full force and effect (to the extent consistent
with applicable law) in accordance with their terms.
(b) From and after the Effective Time, Parent shall cause the Surviving
Corporation to honor its commitments and obligations pursuant to this Section
5.05 and Parent hereby guarantees the due and prompt performance in full of the
Surviving Corporation's commitments and obligations pursuant to this Section
5.05. In the event that Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provision will be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, assume the obligations set forth in
this Section 5.05(b).
(c) For at least six years after the Effective Time, the Surviving
Corporation shall provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to or at the Effective Time,
including but not limited to the transactions contemplated by this Agreement,
covering each person currently covered by the Company's officers' and directors'
liability insurance policy, or who becomes covered by such policy prior to the
Effective Time, on terms with respect to coverage and amount no less favorable
as a whole than those of such policy in effect on the date hereof; provided that
in satisfying its obligation under this Section 5.05 the Surviving Corporation
shall not be obligated to pay total premiums in excess of $400,000.
(d) The provisions of this Section 5.05 are (i) intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and (ii) in addition to, and not in substitution
or, any other rights to indemnification or contribution that any such person may
have by contract or otherwise.
SECTION 5.6. Employee Plans and Benefits and Employment Contracts. (a)
From and after the Effective Time, Parent shall cause the Surviving Corporation
to honor in accordance with their terms all existing employment, severance,
consulting or other compensation agreements, plans or contracts between the
Company or any Commonly Controlled Entity of the Company and any officer,
director or employee of the Company or any Commonly Controlled Entity which are
specifically disclosed on the Company Disclosure Schedule, provided that the
Company shall implement the change of the Share Purchase Date under the Stock
Purchase Plan prior to the acceptance for payment of Shares under the Offer.
(b) For the one-year period immediately following the Effective Time,
Parent shall cause the Surviving Corporation to provide the employees of the
Surviving Corporation with
32
<PAGE> 37
benefits and coverage under such benefit plans, programs and arrangements that
are no less favorable to the employees in the aggregate than the Benefit Plans;
provided, however, to the extent that any such benefit plans, programs and
arrangements that are pension plans (whether qualified or nonqualified,
including, but not limited to, the Gradall Industries, Inc. Restoration Plan and
the Gradall Industries, Inc. Amended and Restated Supplemental Executive
Retirement Plan) are terminated or suspended at any time after the one-year
period immediately following the Effective Time, Parent shall cause the
Surviving Corporation to fully vest any participant in any such pension plans
and pay the full accrued benefit on an unreduced and nondiscounted basis under
the nonqualified plans (and with respect to the Gradall Industries, Inc. Benefit
Restoration Plan, as if the participant retired at age 62 with 30 years of
service under such Plan) to the participant at the time of the termination or
suspension.
SECTION 5.7. Meeting of the Company's Stockholders. (a) After
consummation of the Offer, to the extent required by applicable law, the Company
shall promptly take all action necessary in accordance with the DGCL and its
certificate of incorporation and bylaws to convene the Company Stockholder
Meeting to consider and vote on the Merger and this Agreement. At the Company
Stockholder Meeting, all of the Shares then owned by Parent, Merger Subsidiary
or any other Subsidiary of Parent shall be voted to approve the Merger and this
Agreement. Subject to its fiduciary duties and Section 5.02, the Board of
Directors of the Company shall recommend that the Company's stockholders vote to
approve the Merger and this Agreement if such vote is sought and shall use its
best efforts to solicit from stockholders of the Company proxies in favor of the
Merger.
(b) If required under applicable law, the Company and Parent shall
prepare the Proxy Statement, file it with the SEC under the Exchange Act as
promptly as practicable after Merger Subsidiary purchases Shares pursuant to the
Offer, and use all reasonable efforts to have it cleared by the SEC. As promptly
as practicable after the Proxy Statement has been cleared by the SEC, the
Company shall mail the Proxy Statement to the stockholders of the Company as of
the record date for the Company Stockholder Meeting. If, at any time prior to
the Effective Time, any event occurs relating to Parent or any of its
Subsidiaries, affiliates, officers or directors that is required pursuant to
applicable law to be set forth in a supplement to the Proxy Statement, Parent
shall promptly inform the Company of such event.
(c) Parent and Merger Subsidiary shall not, and they shall cause their
Subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the Shares acquired pursuant to the Offer or otherwise prior to the Company
Stockholder Meeting; provided, however, that this Section 5.07(c) shall not
apply to the sale, transfer, assignment, encumbrance or other disposition of any
or all such Shares in transactions involving solely Parent, Merger Subsidiary
and/or one or more of their wholly-owned Subsidiaries.
(d) Notwithstanding the foregoing, in the event that Merger Subsidiary
shall acquire Shares representing at least 90% of the votes represented by all
outstanding Common Stock, the parties hereto agree, at the request of Merger
Subsidiary and subject to Article 6 hereof, to
33
<PAGE> 38
take all necessary and appropriate action to cause the Merger to become
effective, in accordance with Section 253 of the DGCL, as soon as reasonably
practicable after such acquisition, without a meeting of the stockholders of the
Company.
(e) Notwithstanding the provisions of Section 5.07(a), in the event
that, pursuant to the Offer or otherwise, Parent or Merger Subsidiary shall
acquire in the aggregate a number of the outstanding shares of each class of
capital stock of the Company sufficient to enable Merger Subsidiary or the
Company to cause the Merger to become effective without a meeting of
stockholders of the Company, the parties hereto shall, at the request of Parent,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition without a meeting of
stockholders of the Company, provided that the failure of such Merger to become
effective shall not constitute a breach of this provision.
SECTION 5.8. Public Announcements. Parent and the Company shall consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statement with respect to the transactions contemplated by this Agreement,
including the Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as either
party may determine is required by applicable law or by obligations pursuant to
any listing agreement with any national securities exchange or the NASDAQ Stock
Market.
SECTION 5.9. Performance by Merger Subsidiary. Parent hereby agrees to
cause Merger Subsidiary to comply with its obligations hereunder and under the
Offer and to cause Merger Subsidiary to consummate the Merger as contemplated
herein.
SECTION 5.10. Notification of Certain Matters. Parent and the Company
shall promptly notify each other of any failure of the Company or Parent, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder in any material respect or of any
material breach of a representation or warranty; provided, however, that no such
notification shall affect the representations or warranties of any party or the
conditions to the obligations of any party hereunder nor shall it limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
ARTICLE 6
CONDITIONS TO THE MERGER
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to consummate the Merger is
subject to the satisfaction or waiver, where permissible, prior to the Effective
Time, of the following conditions:
34
<PAGE> 39
(a) if required by applicable law, this Agreement shall have been
approved by the affirmative vote of the stockholders of the Company by the
requisite vote in accordance with applicable law;
(b) any applicable waiting period under the HSR Act (and any extension
thereof) relating to the Merger shall have expired or been earlier terminated;
(c) Merger Subsidiary shall have, pursuant to the Offer, accepted for
payment and paid for at least that number of Shares which would represent at
least a majority of the voting power represented by the Shares and other
securities entitled generally to vote in the election of directors of the
Company outstanding on a fully diluted basis after giving effect to the exercise
or conversion of all options, rights and securities exercisable or convertible
into or exchangeable for Shares or such voting securities; provided, however,
that Parent may not invoke this condition if Merger Subsidiary shall have failed
to purchase Shares so tendered in violation of the terms of this Agreement;
(d) no preliminary or permanent injunction or other order shall have
been issued by any court or by any governmental or regulatory agency, body or
authority which enjoins, restrains or prohibits the transactions contemplated
hereby, including the consummation of the Merger or has the effect of making the
Merger illegal and which is in effect at the Effective Time (each party agreeing
to use its best efforts to have any such injunction or order lifted).
(e) no statute, rule, regulation, executive order, decree or order of
any kind shall have been enacted, entered, promulgated or enforced by any court
or governmental authority which prohibits the consummation of the Merger or has
the effect of making the Merger illegal.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1. Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time (except with respect to 7.01(h) or (i) which shall be prior to acceptance
for payment of Shares under the Offer) and notwithstanding approval thereof by
the stockholders of the Company:
(a) by mutual written consent of the Company and Parent;
(b) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.01, or if Parent or Merger Subsidiary shall have
breached any covenant in Section 1.01 or its representation in Section 3.06;
(c) by either the Company or Parent, if there shall be any law or
regulation of any competent authority that makes consummation of the Offer or
the Merger illegal or otherwise
35
<PAGE> 40
prohibited or if any judgment, injunction, order or decree of any competent
authority enjoining Parent or the Company from consummating the Offer or the
Merger is entered and such judgment, injunction, order or decree shall become
final and unappealable;
(d) by either the Company or Parent, if the Board of Directors of the
Company shall have (i) withdrawn or modified in a manner adverse to Parent and
Merger Subsidiary its approval or recommendation of the Offer or the Merger or
(ii) approved or recommended any Acquisition Proposal in respect of the Company
or (iii) resolved to take any of the foregoing actions, in each case in
compliance with the provisions contained in Section 5.02;
(e) by either Parent or the Company if the Merger has not been
consummated by September 30, 1999; provided, however, that the right to
terminate this Agreement pursuant to this sentence will not be available to any
party whose failure to perform any of its obligations under this Agreement
results in the failure of the Merger to be consummated by such time;
(f) by either the Company or Parent, if the required approval of the
Company's stockholders shall not have been obtained at a Company Stockholders
Meeting duly convened therefor or at any adjournment or postponement thereof,
subject to the provisions of Section 5.07;
(g) by either the Company or Parent if, without any material breach by
such terminating party of its obligations under this Agreement, the purchase of
Shares pursuant to the Offer shall not have occurred on or before September 30,
1999;
(h) by Parent or the Company prior to acceptance for payment of Shares
under the Offer, if the non-terminating party shall have breached in any
material respect or failed to perform in any material respect any of its
representations, warranties, covenants or other obligations under this Agreement
which breach or failure to perform cannot be or has not been cured within 10
days after the giving of written notice to the non-terminating party of such
breach or failure to perform (provided that the terminating party is not then in
breach in any material respect or failing to perform in any material respect any
of its representations, warranties, covenants or other obligations under this
Agreement that cannot be or has not been cured within 10 days after giving
written notice to the terminating party of such breach or failure to perform);
or
(i) by Parent prior to acceptance for payment of Shares under the
Offer, if MLGA Fund II, L.P. shall have breached in any material respect or
failed to perform in any material respect any of its representations,
warranties, covenants or other obligations under the Stockholders Agreement,
dated the date hereof, between the Company, Parent, Merger Subsidiary and the
Stockholders party thereto (the "Stockholders Agreement") which breach or
failure to perform cannot be or has not been cured within 10 days after the
giving of written notice to the breaching stockholder of such breach or failure
to perform (provided that Parent is not then in breach in any material respect
or failing to perform in any material respect any of
36
<PAGE> 41
its representations, warranties, covenants or other obligations under the
Stockholder's Agreement that cannot be or has not been cured within 10 days
after giving written notice to the Parent of such breach or failure to perform).
SECTION 7.2. Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party or its directors, officers or stockholders, other than
the provisions of Section 5.03(b), this Section 7.02 and Section 8.10, which
provisions will survive such termination, and except to the extent that such
termination results from the willful and material breach by a party of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 7.3. Amendment. To the extent permitted by applicable law, this
Agreement may be amended by the parties at any time before or after approval of
this Agreement by the stockholders of the Company; provided, however, that after
any such stockholder approval, no amendment shall be made which (a) by law
requires further approval of the Company's stockholders or (b) reduces the
Merger Consideration, in each case without the subsequent approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 7.4. Extension; Waiver. At any time prior to the Effective
Time, a party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto by any other party or (c) subject to Section
7.03, waive compliance by any other party with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 7.5. Procedure for Termination, Extension or Waiver. Subject to
Section 1.02(e), a termination of this Agreement pursuant to Section 7.01, an
amendment of this Agreement pursuant to Section 7.03 or an extension or waiver
pursuant to Section 7.04 in order to be effective shall require, in the case of
Parent or the Company, action by its Board of Directors or, with respect to any
amendment of this Agreement, a duly authorized committee of its Board of
Directors.
37
<PAGE> 42
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Non-Survival of Representations and Warranties. None of
the representations and warranties made in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive after the Effective Time.
This Section 8.01 shall not limit any covenant or agreement of the parties
hereto which by its terms contemplates performance after the Effective Time.
SECTION 8.2. Entire Agreement; Assignment. This Agreement (including
the Company Disclosure Schedule) and, to the extent contemplated in Section
5.03(b), the Confidentiality Agreement, (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, among the
parties or any of them with respect to the subject matter hereof and (b) shall
not be assigned by operation of law or otherwise, provided that Parent or Merger
Subsidiary may assign any of their rights and obligations to any direct or
indirect wholly-owned Subsidiary of Parent, but no such assignment shall relieve
Parent or Merger Subsidiary of its obligations hereunder. Either Parent, Merger
Subsidiary or any direct or indirect wholly-owned Subsidiary of Parent may
purchase Shares under the Offer.
SECTION 8.3. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 8.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by facsimile transmission with confirmation
of receipt, by overnight courier (with delivery confirmed), or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
(a) if to Parent or Merger Subsidiary:
JLG Industries, Inc.
1 JLG Drive
McConnelsburg, PA 17233
Attention: General Counsel
Fax No. (717) 485-6541
38
<PAGE> 43
with a copy to:
Covington & Burling
1201 Pennsylvania Ave. N.W.
Washington, D.C. 20044-7566
Attention: W. Andrew Jack, Esq.
Fax No. (202) 662-6291
(b) if to the Company:
Gradall Industries, Inc.
406 Mill Avenue, S.W.
New Philadelphia, Ohio 44663
Attention: Barry L. Phillips
Fax No. (330) 339-5224
with copies to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Attention: Arnold S. Jacobs
Fax No. 212-969-2900
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 8.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the conflicts of laws provisions thereof.
SECTION 8.6. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought
against any of the parties only in a federal court located in the State of
Delaware or a Delaware state court, and each of the parties hereto hereby
consents to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and waives
any objection to venue laid therein. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the State of Delaware. Without limiting the generality of the foregoing,
each party hereto agrees that service of process upon such party at
39
<PAGE> 44
the address referred to in Section 8.04, together with written notice of such
service to such party, shall be deemed effective service of process upon such
party.
SECTION 8.7. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and shall not constitute a part of or
affect the meaning or interpretation of this Agreement.
SECTION 8.8. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except Section 1.01 (which is intended to be for the benefit of the Company's
stockholders and may be enforced by them) and except for Sections 5.05 and 5.06
(which are intended to be for the benefit of the Persons entitled to therein,
and may be enforced by such Persons).
SECTION 8.9. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 8.10. Fees and Expenses. (a) All fees, costs and expenses
incurred in connection with the transactions contemplated by this Agreement
shall be paid by the party incurring such fees and expenses, whether or not the
Offer or the Merger is consummated; provided, however, that if this Agreement is
terminated as a result of the breach by Parent or Merger Subsidiary of any of
their covenants or representations and warranties in this Agreement, all fees,
costs and expenses incurred by the Company in connection with the transactions
contemplated by this Agreement shall be paid by Parent.
(b) In the event that this Agreement is terminated by Parent
(i) pursuant to Section 7.01(d), or
(ii) pursuant to Section 7.01 (h) or (i) hereof and within
six months thereafter, the Company enters into an
agreement with respect to an Acquisition Proposal or
has completed a transaction pursuant to an
Acquisition Proposal,
the Company shall pay to Parent by wire transfer of immediately available funds
to an account designated by Parent (A) within two business days following such
termination referred to in the preceding clause (i) or (B) upon the Company
entering into such agreement or completing such transaction referred to in the
preceding clause (ii) an amount equal to $6,000,000 (the "TERMINATION FEE").
(c) The Company acknowledges that the agreements contained in this
Section 8.10 are an integral part of the transactions contemplated by this
Agreement, and that, without these
40
<PAGE> 45
agreements, Parent would not enter into this Agreement. Accordingly, if the
Company fails to promptly pay any amount due pursuant to this Section 8.10, and,
in order to obtain such payment, the other party commences a suit which results
in a judgment against the Company for the fee or fees and expenses set forth in
this Section 8.10, the Company shall also pay to Parent its reasonable costs and
expenses incurred in connection with such litigation together with interest or
such unpaid amounts commencing on the date the Termination Fee became due at a
rate equal to the rate of interest announced by Citibank N.A. from time to time,
in the City of New York at such bank's prime or base rate.
SECTION 8.11. Certain Definitions. For purposes of this Agreement
(including Annex A hereto), the following terms shall have the meanings ascribed
to them below:
(a) "AFFILIATE" of a Person shall mean (i) a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first-mentioned Person and (ii) an
"ASSOCIATE", as that term is defined in Rule 12b-2 promulgated under the
Exchange Act as in effect on the date of this Agreement.
(b) "BENEFICIAL OWNER" (including the term "BENEFICIALLY OWN" or
correlative terms) with respect to any securities means a Person who shall be
deemed to be the beneficial owner of such securities which (i) such Person or
any of its affiliates beneficially owns, directly or indirectly, (ii) such
Person or any of its affiliates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or only after the passage
of time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding or (iii) are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of its affiliates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any of such securities.
(c) "CONTROL" (including the terms "CONTROLLING", "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH" or correlative terms) shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract, or otherwise.
(d) "FULLY DILUTED" in reference to the Shares means all outstanding
securities entitled generally to vote in the election of directors of the
Company on a fully diluted basis, after giving effect to the exercise or
conversion of all options, rights and securities exercisable or convertible into
such voting securities.
(e) "KNOWLEDGE" shall mean the actual knowledge of Barry Phillips,
Bruce Jonker, Jim Cahill, David Williams, Joe Keller, Jerry Hall, and Stan
Swope.
41
<PAGE> 46
(f) "SUBSIDIARY" shall mean, when used with reference to a Person means
a corporation (or other entity) the majority of the outstanding voting
securities (or equity interests) of which are owned directly or indirectly by
such Person.
[END OF TEXT]
42
<PAGE> 47
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officer thereunto duly authorized, on the day and
year first above written.
JLG INDUSTRIES, INC.
By: /s/ L. David Black
______________________
Name: L. David Black
Title: Chairman & President & CEO
JLG ACQUISITIONS CORP.
By: /s/ L. David Black
______________________
Name: L. David Black
Title: Chairman & President
GRADALL INDUSTRIES, INC.
By: /s/ Barry L. Phillips
______________________
Name: Barry L. Phillips
Title: President & CEO
43
<PAGE> 48
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Merger Subsidiary
shall not be obligated to accept for payment or pay for, subject to Rule
14e-l(c) of the Exchange Act, any Shares not theretofore accepted for payment,
and, subject to the terms of the Agreement, may terminate or amend the Offer if
(i) that number of Shares which would represent at least a majority of the
voting power represented by the Shares and other securities entitled generally
to vote in the election of directors of the Company outstanding on a fully
diluted basis after giving effect to the exercise or conversion of all options,
rights and securities exercisable or convertible into or exchangeable for Shares
or such voting securities shall not have been validly tendered and not withdrawn
immediately prior to the expiration of the Offer (the "MINIMUM TENDER
CONDITION"), (ii) any applicable waiting period under the HSR Act shall not have
expired or been terminated prior to the expiration of the Offer or (iii) at any
time on or after the date of commencement of the Offer and before the acceptance
of such Shares for payment or the payment therefor, any of the following
conditions exist or shall occur and be continuing:
(a there shall be pending by any Governmental Entity any suit,
action or proceeding, (i) challenging the acquisition by Parent or
Merger Subsidiary of any Shares, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of
any of the other transactions contemplated by this Agreement, (ii)
seeking to prohibit or limit the ownership or operation by the Company,
Parent or any of their respective Subsidiaries of a material portion of
the business or assets of the Company or the Subsidiaries, or Parent or
its Subsidiaries, or to compel the Company or Parent to dispose of or
hold separate any material portion of the business or assets of the
Company or its Subsidiaries, or Parent or its Subsidiaries, as a result
of the Offer or any of the other transactions contemplated by this
Agreement, (iii) seeking to impose limitations on the ability of Parent
or Merger Subsidiary to acquire or hold, or exercise full rights of
ownership of, any Shares accepted for payment pursuant to the Offer
including, without limitation, the right to vote the Shares accepted
for payment by it on all matters properly presented to the stockholders
of the Company, or (iv) seeking to prohibit Parent or any of its
Subsidiaries from effectively controlling in any material respect the
business or operations of the Company or its Subsidiaries;
(b the Company shall have entered into an agreement concerning
any Superior Proposal, or the Board of Directors of the Company or any
committee thereof shall have resolved to enter into such an agreement;
<PAGE> 49
(c) any Person or group (as defined in Section 13(d)(3)of the
Exchange Act) (other than Parent, Merger Subsidiary or any affiliate
thereof or the Stockholders described in the Stockholders Agreement)
shall have become the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of Shares representing a majority
of the total votes represented by all outstanding Shares;
(d) the Merger Agreement shall have been terminated in
accordance with its terms;
(e) there shall have occurred and be continuing (i) any
general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the
over-the-counter market in the United States, (ii) a commencement and
continuation of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United
States which would have a Company Material Adverse Effect (other than
the events in Yugoslavia and neighboring countries), (iii) a change in
general conditions in the market for syndicated bank credit facilities
which, based on the written advice of Gleacher & Co. LLC addressed to
Parent (with a copy to be provided to the Company), materially and
adversely affects the ability of financial institutions in the United
States to extend credit or syndicate loans, or (iv) in the case of any
of the foregoing existing at the time of commencement of the Offer, a
material acceleration or worsening thereof; and
(f) there shall have occurred any material adverse change in
the financial condition, assets, liabilities, business or results of
operations of the Company and its Subsidiaries taken as a whole, except
for general economic changes, changes that affect the industry of the
Company or any Subsidiary generally and changes in the Company's
business attributable solely to actions taken by Parent or Merger
Subsidiary;
which, in the reasonable judgment of Parent and regardless of the circumstances
giving rise to any such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment, purchase of, or payment for Shares.
Unless otherwise defined in this Annex A, capitalized terms used in
this Annex A have the meanings ascribed to them in the Merger Agreement among
the Parent, Merger Subsidiary and the Company to which this Annex A is attached.
<PAGE> 1
[GRADALL LETTERHEAD]
EXHIBIT 2
November 3, 1997
JLG Industries, Inc.
1 JLG Drive
McConnellsburg, PA 17233-9533
Attention: Mr. Tom Singer
Vice President & General Counsel
Gentlemen:
In order to allow you to evaluate the possible acquisition (the "Proposed
Acquisition") of Gradall Industries, Inc. (the "Company"), we will deliver to
you, upon your execution and delivery to us of this letter agreement, certain
information about the properties and operations of the Company. All information
about the Company furnished by us or our Representatives (as defined below),
whether furnished before or after the date hereof, whether oral or written, and
regardless of the manner in which it is furnished, is referred to in this
letter agreement as "Proprietary Information". Propriety Information does not
include, however, information which (a) is or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives,
(b) was available to you on a nonconfidential basis prior to its disclosure by
us or our Representatives or (c) becomes available to you on a nonconfidential
basis from a person other than us or our Representatives who is not otherwise
bound by a confidentiality agreement with us or any Representative of ours, or
is otherwise not under an obligation to us or any Representative of ours not to
transmit the information to you. As used in this letter agreement, the term
"Representative" means, as to any person, such person's affiliates and its and
their directors, officers, employees, agents, advisors (including, without
limitation, financial advisors, counsel and accountants) and controlling
persons. As used in this letter agreement, the term "person" shall be broadly
interpreted to include, without limitation, any corporation, company,
partnership, other entity or individual.
Except as required by law, unless otherwise agreed to in writing by us,
you agree (a) to keep all Proprietary Information confidential and not to
disclose or reveal any Proprietary Information to any person other than your
Representatives who are actively and directly participating in your evaluation
of the Proposed Acquisition or who otherwise need to know the Proprietary
Information for the purpose of evaluating the Proposed Acquisition and to cause
those persons to observe the terms of this letter agreement, (b) not to use
Proprietary Information for any purpose other than in connection with your
evaluation of the Proposed Acquisition or the consummation of the Proposed
Acquisition and (c) not to disclose to any person (other than those of your
Representatives who are actively and directly participating in your evaluation
of the Proposed Acquisition or who otherwise need to know for the purpose of
evaluating the Proposed Acquisition and, in the case of your Representatives,
whom you will cause to observe the terms of this letter agreement) any
information about the Proposed Acquisition, or the terms or conditions or any
other facts relating thereto, including, without limitation, the fact that
discussions are taking place with respect thereto or the status thereof, or the
fact that Proprietary
<PAGE> 2
-2-
Information has been made available to you or your Representatives. You will be
responsible for any breach of the terms of this letter agreement by you or your
Representatives.
In the event that you are requested pursuant to, or required by,
applicable law or regulation or by legal process to disclose any Proprietary
Information or any other information concerning the Company or the Proposed
Acquisition, you agree that you will provide us with prompt notice of such
request or requirement in order to enable us to seek an appropriate protective
order or other remedy, to consult with you with respect to our taking steps to
resist or narrow the scope of such request or legal process; provided that your
disclosure of any Proprietary Information pursuant to any such law, regulation
or legal process shall not be deemed a violation of this letter agreement. In
any such event you will use your reasonable best efforts to ensure that all
Proprietary Information and other information that is so disclosed will be
accorded confidential treatment.
You also agree that for a period of 18 months from the date of this letter
agreement, neither you nor any of your Representatives will, without the prior
written consent of the Company or its Board or Directors:
(a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or direct
or indirect rights to acquire any voting securities of the Company or
any subsidiary thereof, or of any successor to or person in control of
the Company, or any assets of the Company or any subsidiary or
division thereof or of any such successor or controlling person;
(b) make or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" to vote (as such terms are used in the
rules of the Securities and Exchange Commission), or seek to advise or
influence any person or entity with respect to the voting of any
voting securities of the Company;
(c) form, join or in any way participate in a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, in
connection with any of the foregoing; or
(d) request the Company or any of our Representatives, directly or
indirectly, to amend or waive any provision of this paragraph.
You will promptly advise the Company of any inquiry or proposal made to you
with respect to any of the foregoing.
If you determine that you do not wish to proceed with the Proposed
Acquisition, you will promptly advise us of that decision. In that case, or in
the event that we, in our sole discretion, so request or the Proposed
Acquisition is not consummated by you, you will, upon our request, promptly
deliver to us all Proprietary Information, including all copies,
reproductions, summaries, analyses or extracts thereof or based thereon in your
possession or in the possession of any Representative of yours.
You acknowledge that none of the Company, Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") or our other Representatives and none of
the respective officers, directors, employees, agents or controlling persons of
Merrill Lynch or such other Representatives makes any express or implied
representation or warranty as to the accuracy or completeness of any
Proprietary Information, and you agree that none of such persons shall have any
liability to you or any of your Representatives relating to or arising from
your or their use of any Proprietary Information or for any errors therein or
omissions therefrom. You also agree that you are not entitled to rely on the
accuracy or completeness of any Proprietary Information and that you shall be
entitled to rely solely on such representations and warranties regarding
Proprietary Information as may be made to you in any final acquisition
agreement relating to the Proposed Acquisition, subject to the terms and
conditions of such agreement.
<PAGE> 3
-3-
You agree that, without our prior written consent, you will not for a
period of 18 months from the date hereof directly or indirectly solicit for
employment or employ any person who is now employed by us or any of our
subsidiaries and who is identified by you as a result of your evaluation or
otherwise in connection with the Proposed Acquisition; provided, however, that
you shall not be prohibited from employing any such person who contacts you on
his or her own initiative and without any direct or indirect solicitation by
you.
You agree that until a final acquisition agreement regarding the Proposed
Acquisition has been executed by you and us, neither we nor any of our
Representatives are under any legal obligation and shall have no liability to
you of any nature whatsoever with respect to the Proposed Acquisition by
virtue of this letter agreement or otherwise. You also acknowledge and agree
that (i) we and our Representatives may conduct the process that may or may
not result in the Proposed Acquisition in such manner as we, in our sole
discretion, may determine (including, without limitation, negotiating and
entering into a final acquisition agreement with any third party without notice
to you) and (ii) we reserve the right to change (in our sole discretion, at any
time and without notice to you) the procedures relating to our and your
consideration of the Proposed Acquisition (including, without limitation,
terminating all further discussions with you and requesting that you return all
Proprietary Information to us).
Without prejudice to the rights and remedies otherwise available to us,
you agree we shall be entitled to equitable relief by way of injunction or
otherwise if you or any of your Representatives breach or threaten to breach
any of the provisions of this letter agreement.
It is further understood and agreed that no failure or delay by us in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts executed in and
to be performed in that state.
Any assignment of this letter agreement by you without our prior written
consent shall be void.
Your obligations under this letter agreement shall be for three years from
your acceptance hereof.
<PAGE> 4
-4-
This letter agreement contains the entire agreement between you and us
concerning confidentiality of the Proprietary Information, and no modification
of this letter agreement or waiver of the terms and conditions hereof shall be
binding upon you or us, unless approved in writing by each of you and us.
Please confirm your agreement with the foregoing by signing and returning
to the undersigned the duplicate copy of this letter enclosed herewith.
GRADALL INDUSTRIES, INC.
By /s/ BARRY L. PHILLIPS
----------------------
Barry L. Phillips
President & Chief Executive Officer
Accepted and Agreed
as of the date
first written above:
By /s/ THOMAS SINGER
---------------------------------------
Title Vice President & General Counsel
--------------------------------
Company JLG Industries, Inc.
------------------------------
<PAGE> 5
Gradall Industries, Inc.
February 23, 1999
CONFIDENTIAL
- ------------
JLG Industries Inc.
2 JLG Drive
McConnellsburg, PA 17233-9533
Attention: Mr. Tom Singer
Vice President and General Counsel
Ladies and Gentlemen:
We refer to the letter agreement entered into as of November 3, 1997 (the
"Confidentiality Letter") between Gradall Industries, Inc. ("Gradall") and JLG
Industries Inc. ("JLG") in connection with a possible acquisition of Gradall.
This letter agreement (the "Amendment") is to confirm our understanding with
respect to amending the Confidentiality Letter. Capitalized terms used and not
otherwise defined herein shall have the meanings given to them in the
Confidentiality Letter.
In consideration of continuing discussions between JLG and Gradall, the
parties hereby agree to amend the Confidentiality Letter to replace the term
"18 months" appearing on the first line of the second full paragraph on page 2
of the Confidentiality Letter and on the first line of page 3 with the term "30
months". Additionally, you hereby agree to amend the Confidentiality Letter to
replace the term "three years" appearing on the last line of page 3 of the
Confidentiality Letter with the term "four years".
Except as otherwise amended hereby, the Confidentiality Letter shall
remain in full force and effect, and that the terms and conditions of the
Confidentiality Letter shall each apply with respect to the Amendment.
<PAGE> 6
Please confirm that the foregoing correctly sets forth our agreement by
signing and returning to the undersigned the duplicate copy of this letter
agreement enclosed herewith.
Very truly yours,
GRADALL INDUSTRIES, INC.
By: /s/ Barry L. Phillips
-------------------------
Barry L. Phillips
President & Chief Executive Officer
Accepted and Agreed
to as of the date first
above written:
JLG INDUSTRIES INC.
By /s/ THOMAS SINGER
------------------
Vice President & General Counsel
2
<PAGE> 1
EXHIBIT 3
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of
May 10, 1999, is by and among JLG Industries, Inc., a Pennsylvania corporation
("Parent"), JLG Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Subsidiary"), Gradall Industries, Inc., a Delaware
corporation (the "Company"), and the stockholders identified on the signature
page hereof (the "Stockholders").
W I T N E S S E T H :
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, Merger Subsidiary and the Company have entered into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, (the "Merger Agreement"), pursuant to which Merger Subsidiary will
be merged with and into the Company (the "Merger");
WHEREAS, in accordance with the Merger Agreement, Merger
Subsidiary shall commence an Offer (as defined in the Merger Agreement) to
purchase all outstanding shares, together with associated rights to purchase
Series B Participating Cumulative Preferred Stock, of Common Stock (as defined
in Section 1 hereof) of the Company, including all of the Shares (as defined in
Section 2 hereof) beneficially owned by the Stockholders; and
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholders and the Company
agree, and the Stockholders and the Company have agreed, to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Adverse Proposal" shall mean any (1) proposal or action
that would reasonably be expected to result in a breach of any
covenant, representation or warranty of Company set forth in the Merger
Agreement, or (2) the following actions (other than the Offer, the
Merger and the other transactions contemplated by the Merger
Agreement), (i) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the
Company or its Subsidiaries; (ii) a sale, lease or transfer of a
material amount of assets of the Company or one of its Subsidiaries, or
a reorganization, recapitalization, dissolution or liquidation of the
Company or any of its Subsidiaries; (iii) (A) any change in a majority
of the persons who constitute the board of directors of the Company as
of the date hereof-, (B) any change in the present capitalization of
the Company or any amendment of the Company's certificate of
<PAGE> 2
2
incorporation or bylaws, as amended to date; (C) any other material
change in the Company's or any of its Subsidiaries' corporate structure
or business; or (D) any other action that is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
adversely affect the Merger and the other transactions contemplated by
this Agreement and the Merger Agreement.
(b) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including
pursuant to any agreement, arrangement or understanding, whether or not
in writing. Without duplicative counting of the same securities by the
same holder, securities Beneficially Owned by a Person shall include
securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(c) "Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(d) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity.
(e) "Termination Date" shall mean the earlier of (i) the date
of termination of the Merger Agreement by the Company pursuant to
7.01(b) thereof, and (ii) the date of the expiration or termination of
the Offer.
(f) Capital terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement.
2. TENDER OF SHARES.
2.1 TENDER. In order to induce Parent and Merger Subsidiary to enter
into the Merger Agreement, the Stockholders hereby agrees to validly tender (or
cause the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifteenth business day after commencement of the Offer pursuant to the Merger
Agreement and Rule l4d-2 under the Exchange Act, the number of shares of Common
Stock set forth opposite each such Stockholder's name on Schedule A hereto (the
"Existing Shares"), all of which are Beneficially Owned by such Stockholder, and
any shares of Common Stock acquired by such Stockholder in any capacity after
the date hereof and prior to the termination of this Agreement by means of
purchase, exercise of any option, dividend, distribution or in any other way
(such shares of Common Stock, together with the Existing Shares, the "Shares").
Each of the Stockholders hereby acknowledges and agrees that Parent's and Merger
Subsidiary's obligation to accept for payment and pay for the Shares in the
Offer,
<PAGE> 3
3
including the Shares Beneficially Owned by such Stockholder, is subject to the
terms and conditions of the Offer.
2.2 DISCLOSURE. Each of the Stockholders hereby permits Parent and
Merger Subsidiary to publish and disclose in the Offer Documents and, if
approval of the Company's stockholders is required under applicable law, in the
Proxy Statement or Information Statement (including all documents and schedules
filed with the Securities and Exchange Commission) its identity and ownership of
the Shares and the nature of its commitments, arrangements and understandings
under this Agreement.
3. AGREEMENT TO VOTE SHARES.
During the term of this Agreement, at any meeting of the stockholders
of the Company called to consider and vote upon the adoption of the Merger
Agreement (and at any and all postponements and adjournments thereof), and in
connection with any action to be taken in respect of the adoption of the Merger
Agreement by written consent of stockholders of the Company, each Stockholder
will vote or cause to be voted (including by written consent, if applicable) all
of such Stockholder's Shares in favor of the adoption of the Merger Agreement
and in favor of any other matter necessary or appropriate for the consummation
of the transactions contemplated by the Merger Agreement which is considered and
voted upon at any such meeting or made the subject of any such written consent,
as applicable. During the term of this Agreement, at any meeting of the
stockholders of the Company called to consider and vote upon any Adverse
Proposal (and at any and all postponements and adjournments thereof), and in
connection with any action to be taken in respect of any Adverse Proposal by
written consent of stockholders of Company, each Stockholder will vote or cause
to be voted (including by written consent, if applicable) all of such
Stockholder's Shares against the adoption of such Adverse Proposal.
4. IRREVOCABLE PROXY.
Each Stockholder hereby irrevocably appoints Merger Subsidiary or any
designee of Merger Subsidiary the lawful agent, attorney and proxy of such
Stockholder, during the term of this Agreement, at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company, to vote (or cause to be voted) the
Stockholder's Shares (a) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement, this Agreement
and any actions required in furtherance hereof and thereof and (b) against
adoption of any Adverse Proposal. Each Stockholder intends this proxy to be
irrevocable and coupled with an interest and will take such further action or
execute such other instruments as may be necessary to effectuate the intent of
this proxy and hereby revokes any proxy previously granted by it with respect to
the Shares. Each Stockholder shall not hereafter, until the termination of this
Agreement, purport to vote (or
<PAGE> 4
4
execute a consent with respect to) such Shares (other than through this
irrevocable proxy) or grant any other proxy or power of attorney with respect to
any Shares, deposit any Shares into a voting trust or enter into any agreement
(other than this Agreement), arrangement or understanding with any Person,
directly or indirectly, to vote, grant any proxy or give instructions with
respect to the voting of such Shares.
5. REPRESENTATIONS AND WARRANTIES.
5.1 CERTAIN REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder, severally and not jointly, represents and warrants to Parent and
Merger Subsidiary, as of the date hereof and as of the acceptance for payment of
shares of Common Stock under the Offer, as follows:
(a) OWNERSHIP. Such Stockholder is the sole Beneficial Owner
of the number of shares of Common Stock set forth opposite such
Stockholder's name on Schedule A hereto. The Shares are now, and at all
times during the term hereof will be (except as provided in Section 6.2
hereof), held exclusively by such Stockholder, or by a nominee or
custodian for the exclusive benefit of such Stockholder, free and clear
of all liens, proxies, or other restrictions on disposition or voting,
except for any liens, proxies or restrictions, arising hereunder. The
tender by such Stockholder of its Shares to Merger Subsidiary or Parent
pursuant to the Offer will pass to Merger Subsidiary or Parent the
Stockholder's interest in the Shares free of any adverse claims under
Section 8-102(a)(1) of the Uniform Commercial Code. Except as set forth
in Schedule A hereto, such Stockholder does not (a) Beneficially Own
any securities of the Company on the date hereof or (b) directly or
indirectly, Beneficially Own or have any option, warrant or other right
to acquire any securities of the Company that are or may by their terms
become entitled to vote or any securities that are convertible or
exchangeable into or exercisable for any securities of the Company that
are or may by their terms become entitled to vote; nor is the
Stockholder subject to any contract, commitment, arrangement,
understanding or relationship (whether or not legally enforceable),
other than this Agreement, that allows or obligates such Stockholder to
vote, dispose of or acquire any securities of the Company.
(b) POWER AND AUTHORITY; EXECUTION AND DELIVERY. Such
Stockholder has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated
hereby have been duly authorized by all necessary action, if any, on
the part of such Stockholder. This Agreement has been duly executed and
delivered by such Stockholder and constitutes a valid and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms.
<PAGE> 5
5
(c) NO CONFLICTS. The execution and delivery of this Agreement
do not, and, subject to compliance with the HSR Act and appropriate
filings under securities laws (which each Stockholder agrees to make
promptly), to the extent applicable, the consummation of the
transactions contemplated hereby and compliance with the provisions
hereof will not, conflict with, result in a breach or violation of or
default (with or without notice or lapse of time or both) under, or
give rise to any material obligation, any right of termination, benefit
under, or require notice to or the consent of any person under any
agreement, instrument, undertaking, law, rule, regulation, judgment,
order, injunction, decree, determination or award binding on such
Stockholder, other than such conflicts, breaches, violations, defaults,
obligations, rights or losses that individually or in the aggregate
would not impair the ability of such Stockholder to perform such
Stockholder's obligations under this Agreement.
(d) BROKERS. Except as provided in the Merger Agreement, no
broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement or the Merger Agreement based upon
arrangements made by or on behalf of the Stockholder that is or will be
payable by the Company or any of its Subsidiaries.
5.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Merger Subsidiary, as of the date hereof
and as of the acceptance for payment of Shares of Common Stock under the Offer,
as follows:
(a) ORGANIZATION; AUTHORITY. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware,
has the requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and has taken
all necessary corporate action to authorize the execution; and delivery
of, and the performance of its obligations under, this Agreement.
(b) EXECUTION AND DELIVERY. This Agreement has been duly
executed and delivered by the Company and, assuming that this Agreement
constitutes the valid and binding obligation of the other parties
hereto, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(c) NO CONFLICTS. The execution and delivery of this Agreement
by the Company does not and, subject to compliance with the HSR Act and
appropriate filings under securities laws (which the Company agrees to
make promptly), to the extent applicable, the performance of its
obligations hereunder and compliance with the provisions hereof will
not, conflict with, result in a breach or violation of or default (with
or without notice or lapse of time or both) under, or give rise to any
material obligation, any right of termination, cancellation, or
acceleration of any obligation or any loss of a material benefit under,
or require notice to or the consent of any person under (i) its
<PAGE> 6
6
certificate of incorporation or bylaws, (ii) any agreement, instrument,
undertaking, law, rule, regulation, judgment, order, injunction,
decree, determination or award by which it is bound, or (iii) any
judgment, writ, decree, order or ruling applicable to the Company;
except in the case of clauses (ii) and (iii) for conflicts, violations,
breaches or defaults that would not impair the ability of the Company
to perform its obligations under this Agreement.
(d) ANTITAKEOVER STATUTES. The Company's Board of Directors
has approved the Offer, the Merger, the Merger Agreement, this
Agreement and the transactions contemplated thereby and hereby and such
approval is sufficient to render inapplicable to the Offer, the Merger,
the Merger Agreement, this Agreement and the transactions contemplated
thereby and hereby, the provisions of Section 203 of the Delaware
General Corporations Law (the "DGCL").
5.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY.
Each of Parent and Merger Subsidiary hereby represents and warrants, jointly and
severally, to the Company and the Stockholders, as of the date hereof and as of
the acceptance for payment of Shares of Common Stock under the Offer, that:
(a) ORGANIZATION; AUTHORITY. Each of Parent and Merger
Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation,
has the requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, and has taken
all necessary corporate action to authorize the execution and delivery
of, and the performance of its obligations under, this Agreement.
(b) EXECUTION AND DELIVERY. This Agreement has been duly
executed and delivered by Parent and Merger Subsidiary and, assuming
that this Agreement constitutes the valid and binding obligation of the
other parties hereto, constitutes a valid and binding obligation of
Parent and Merger Subsidiary, enforceable against Parent and Merger
Subsidiary in accordance with its terms.
(c) NO CONFLICTS. The execution and delivery of this Agreement
by Parent and Merger Subsidiary do not, and, subject to compliance with
the HSR Act and appropriate filings under securities laws (which Parent
and Merger Subsidiary agree to make it promptly), to the extent
applicable, the performance of its obligations hereunder and compliance
with the provisions hereof will not, conflict with, result in a breach
or violation of or default (with or without notice or lapse of time or
both) under, or give rise to any material obligation, any right of
termination, cancellation, or acceleration of any obligation or any
loss of a material benefit under, or require notice to or the consent
of any person under (i) its articles of incorporation or bylaws or
equivalent organizational documents, (ii) any agreement, instrument,
undertaking, law, rule, regulation, judgment,
<PAGE> 7
7
order, injunction, decree, determination or award by which it is bound,
or (iii) any judgment, writ, decree, order or ruling applicable to
Parent or Merger Subsidiary; except in the case of clauses (ii) and
(iii) for conflicts, violations, breaches or defaults that would not
impair the ability of Parent or Merger Subsidiary to perform its
obligations under this Agreement.
6. CERTAIN COVENANTS OF STOCKHOLDER. Each Stockholder hereby severally covenants
and agrees as follows:
6.1 NO SOLICITATION. Neither Stockholder nor any officer, director,
employee, representative or agent of the Stockholder shall, in that
Stockholder's capacity as such and not in such Stockholder's capacity as an
officer, director, employee, representative or agent of the Company, directly or
indirectly, solicit, initiate, or knowingly facilitate; participate in or
initiate any inquiries or the making of any proposal by any person or entity
(other than Merger Subsidiary, Parent or any affiliate of Parent) which
constitutes, or may reasonably be expected to lead to, (a) any sale of the
Shares or (b) any Adverse Proposal. If the Stockholder, or any officer,
director, employee, representative or agent of the Stockholder, receives an
inquiry or proposal with respect to the sale of Shares, then the Stockholder
shall promptly inform Parent of the terms and conditions, if any, of such
inquiry or proposal and the identity of the person making it. The Stockholder
shall cause its officers, directors, employees, representatives and agents to,
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
6.2 RESTRICTION ON TRANSFER, PROXIES AND NONINTERFERENCE. Each
Stockholder hereby agrees, while this Agreement is in effect, and except as
contemplated hereby, not to (a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of the Shares without
notifying Parent in advance and obtaining and delivering to Parent any evidence
that Parent may reasonably request to evidence the transferee's agreement to be
bound by this Agreement; provided, however, that in the event of the
Stockholder's death during the term of this Agreement, the Shares may be
transferred in accordance with the Stockholder's last will and testament, or if
none, in accordance with the applicable laws of intestate succession, in either
of which cases, the Shares shall remain subject in all respects to the terms of
this Agreement, or (b) grant any proxies, deposit any Shares into a voting trust
or enter into a voting agreement with respect to any Shares, or (c) take any
action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling in any material respect such Stockholder from performing such
Stockholder's obligations under this Agreement.
6.3 LEGENDING OF CERTIFICATES; NOMINEE SHARES. If requested by Merger
Subsidiary, each Stockholder agrees to submit to Merger Subsidiary
contemporaneously with or within five
<PAGE> 8
8
business days following execution of this Agreement all certificates
representing the Shares so that Merger Subsidiary may note thereon a legend
referring to the proxy and other rights granted to it by this Agreement. If any
of the Shares beneficially owned by a Stockholder are held of record by a
brokerage firm in "street name" or in the name of any other nominee (a
"Nominee", and, as to such Shares, "Nominee Shares"), each such Stockholder
agrees that, upon written notice by Merger Subsidiary requesting it, each
Stockholder will within five business days of the giving of such notice execute
and deliver to Merger Subsidiary a limited power of attorney in such form as
shall be reasonably satisfactory to Merger Subsidiary enabling Merger Subsidiary
to require the Nominee to (i) tender such Nominee Shares in the Offer pursuant
to Section 2, (ii) agree to vote the Nominee Shares to the same effect as
Section 3, (iii) grant to Merger Subsidiary an irrevocable proxy to the same
effect as Section 4 with respect to the Nominee Shares held by such Nominee,
(iv) submit to Merger Subsidiary the certificates representing such Nominee
Shares for notation of the above-referenced legend thereon, and (v) effect any
other obligation of such Stockholder hereunder.
6.4 STOP TRANSFER ORDER. In furtherance of this Agreement, concurrently
herewith, the Stockholder shall and hereby does authorize the Company's counsel
to notify the Company's transfer agent that there is a stop transfer order with
respect to all of the Shares (and that this Agreement places limits on the
voting and transfer of such Shares).
7. FURTHER ASSURANCES. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be reasonably
necessary or desirable to consummate the transactions contemplated by this
Agreement.
8. STOCK DIVIDENDS, ETC. In the event of a stock dividend or distribution, or
any change in the Company's Common Stock by reason of any stock dividend,
split-up, reclassification, recapitalization, combination or the exchange of
shares, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged. I
9. MISCELLANEOUS.
9.1 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) shall not
be assigned by operation of law or otherwise.
9.2 AMENDMENTS. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
<PAGE> 9
9
9.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following address:
If to Stockholder: At such Stockholder's address set
forth on Schedule A hereto
copy to: Gradall Industries, Inc.
406 Mill Avenue, S.W.
New Philadelphia, Ohio 44663
Facsimile No: (330) 339-5224
Attention: Barry L. Phillips
copy to: Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Facsimile No: (212) 969-2900
Attention: Robert A. Cantone, Esq.
If to Parent or Merger Subsidiary: JLG Industries, Inc.
1 JLG Drive
McConnelsburg, PA 17233
Facsimile No: (717) 485-6542
Attention: General Counsel
copy to: Covington & Burling
1201 Pennsylvania Ave., N.W.
Washington, D.C. 20044-7566
Facsimile No: (202) 662-6291
Attention: W. Andrew Jack, Esq.
If to the Company: Gradall Industries, Inc.
406 Mill Avenue, S.W.
New Philadelphia, Ohio 44663
Facsimile No: (330) 339-5224
Attention: Barry L. Phillips
copy to: Proskauer Rose LLP
1585 Broadway
<PAGE> 10
10
New York, New York 10036
Facsimile No: (212) 969-2900
Attention: Robert A. Cantone, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
9.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
9.5 COOPERATION AS TO REGULATORY MATTERS. If so requested by Parent or
Merger Subsidiary, promptly after the date hereof, the Stockholder will use its
reasonable best efforts, and will use reasonable best efforts to cause the
Company (if required in either case) to make all filings which are required
under the HSR Act and applicable requirements and to seek all regulatory
approvals required in connection with the transactions contemplated hereby. The
parties hereto shall furnish to each other such necessary information and
reasonable assistance as may be requested in connection with the preparation of
filings and submissions to any governmental agency, including, without
limitation, filings under the provisions of the HSR Act. Each Stockholder shall
also use its reasonable best efforts to cause the Company to supply Merger
Subsidiary with copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between the Company and its
representatives and the Federal Trade Commission, the Department of Justice and
any other governmental agency or authority and members of their respective
staffs with respect to this Agreement and the transactions contemplated hereby.
9.6 TERMINATION. This Agreement shall terminate on the Termination
Date.
9.7 SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore, each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
9.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same Agreement.
<PAGE> 11
11
9.9 DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
9.10 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
9.11 STOCKHOLDER CAPACITY. Each Stockholder executing this Agreement
makes no agreement hereunder in his capacity as a director or officer of the
Company. Each Stockholder is executing and delivering this Agreement solely in
that Stockholder's capacity as the record and/or beneficial owner of that
Stockholder's Shares. Notwithstanding anything to the contrary in this
Agreement, no action or inaction by any Stockholder in his capacity as a
director, officer, or employee of the Company shall be deemed to contravene
Section 6.1 hereof as long as the action or inaction does not contravene Section
5.02 of the Merger Agreement.
[The remainder of this page has been left blank.]
<PAGE> 12
(Page 1 of 2 Signature Pages)
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto, all as of the date first above written.
JLG INDUSTRIES, INC.
By: /s/ L. David Black
_________________________________
Name: L. David Black
Title: Chairman, President & CEO
JLG ACQUISITION CORP.
By: /s/ L. David Black
_________________________________
Name: L. David Black
Title: Chairman & President
GRADALL INDUSTRIES, INC.
By: /s/ Barry L. Phillips
_________________________________
Name: Barry L. Phillips
Title: President and CEO
<PAGE> 13
(Page 2 of 3 Signature Pages)
Stockholders:
By: /s/ Sangwoo Ahn
_________________________________
Sangwoo Ahn
Director, Gradall Industries, Inc.
By: /s/ Barry L. Phillips
_________________________________
Barry L. Phillips
Director, Gradall Industries, Inc.
By: /s/ David S. Williams
_________________________________
David S. Williams
Director, Gradall Industries, Inc.
By: /s/ Perry J. Lewis
_________________________________
Perry J. Lewis
Director, Gradall Industries, Inc.
By: /s/ Jack D. Rutherford
_________________________________
Jack D. Rutherford
Director, Gradall Industries, Inc.
<PAGE> 14
(Page 3 of 3 Signature Pages)
/s/ Bruce A. Jonker
_________________________________
Bruce Jonker
/s/ James C. Cahill
_________________________________
James Cahill
/s/ Joseph Keller
_________________________________
Joseph Keller
<PAGE> 15
SCHEDULE A
<TABLE>
<CAPTION>
NAME * COMMON STOCK SHARES **
- ----- - ------------------- --
<S> <C> <C> <C>
BARRY PHILLIPS -- 277,000 74,994
DAVID WILLIAMS -- 48,500 50,680
BRUCE JONKER -- 27,700 31,010
JAMES CAHILL 330 27,700 31,010
(Note #1)
JOSEPH KELLER 51 11,350 17,255
SANGWOO AHN -- 70,821 --
PERRY J. LEWIS -- 55,821 --
JACK D. RUTHERFORD 138,507
-------- -------- --------
381 657,399 204,949
======== ======== ========
</TABLE>
* Does not include additional shares purchased in Employee Stock
Purchase Plan.
** Identifying number of options under this agreement not required to exercise
but if exercised are obligated to tender, i.e. Total Shares Exercisable as
of 5/1/99.
Note #1: 330 shares (Mrs. James C. Cahill - 300; Cahill Children, J.C.
Cahill, Custodian - 30).
<PAGE> 1
EXHIBIT 4
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of
May 10, 1999, is by and among JLG Industries, Inc., a Pennsylvania corporation
("Parent"), JLG Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Subsidiary"), Gradall Industries, Inc., a Delaware
corporation (the "Company"), and the stockholder identified on the signature
page hereof (the "Stockholder").
W I T N E S S E T H :
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, Merger Subsidiary and the Company have entered into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, (the "Merger Agreement"), pursuant to which Merger Subsidiary will
be merged with and into the Company (the "Merger");
WHEREAS, in accordance with the Merger Agreement, Merger
Subsidiary shall commence an Offer (as defined in the Merger Agreement) to
purchase all outstanding shares, together with associated rights to purchase
Series B Participating Cumulative Preferred Stock, of Common Stock (as defined
in Section 1 hereof) of the Company, including all of the Shares (as defined in
Section 2 hereof) beneficially owned by the Stockholders; and
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholder and the Company
agree, and the Stockholder and the Company have agreed, to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Adverse Proposal" shall mean any (1) proposal or action
that would reasonably be expected to result in a breach of any
covenant, representation or warranty of Company set forth in the Merger
Agreement, or (2) the following actions (other than the Offer, the
Merger and the other transactions contemplated by the Merger
Agreement), (i) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the
Company or its Subsidiaries; (ii) a sale, lease or transfer of a
material amount of assets of the Company or one of its Subsidiaries, or
a reorganization, recapitalization, dissolution or liquidation of the
Company or any of its Subsidiaries; (iii) (A) any change in a majority
of the persons who constitute the board of directors of the Company as
of the date hereof-, (B) any change in the present capitalization of
the Company or any amendment of the Company's certificate of
<PAGE> 2
2
incorporation or bylaws, as amended to date; (C) any other material
change in the Company's or any of its Subsidiaries' corporate structure
or business; or (D) any other action that is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
adversely affect the Merger and the other transactions contemplated by
this Agreement and the Merger Agreement.
(b) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including
pursuant to any agreement, arrangement or understanding, whether or not
in writing. Without duplicative counting of the same securities by the
same holder, securities Beneficially Owned by a Person shall include
securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(c) "Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(d) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association,
trust, unincorporated organization or other entity.
(e) "Termination Date" shall mean the earlier of (i) the date
of termination of the Merger Agreement by the Company pursuant to
7.01(b) thereof, and (ii) the date of the expiration or termination of
the Offer.
(f) Capital terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement.
2. TENDER OF SHARES.
2.1 TENDER. In order to induce Parent and Merger Subsidiary to enter
into the Merger Agreement, the Stockholder hereby agrees to validly tender (or
cause the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifteenth business day after commencement of the Offer pursuant to the Merger
Agreement and Rule l4d-2 under the Exchange Act, the number of shares of Common
Stock set forth opposite such Stockholder's name on Schedule A hereto (the
"Existing Shares"), all of which are Beneficially Owned by such Stockholder, and
any shares of Common Stock acquired by such Stockholder in any capacity after
the date hereof and prior to the termination of this Agreement by means of
purchase, exercise of any option, dividend, distribution or in any other way
(such shares of Common Stock, together with the Existing Shares, the "Shares").
The Stockholder hereby acknowledges and agrees that Parent's and Merger
Subsidiary's obligation to accept for payment and pay for the Shares in the
Offer,
<PAGE> 3
3
including the Shares Beneficially Owned by such Stockholder, is subject
to the terms and conditions of the Offer.
2.2 DISCLOSURE. The Stockholder hereby permits Parent and Merger
Subsidiary to publish and disclose in the Offer Documents and, if approval of
the Company's stockholders is required under applicable law, in the Proxy
Statement or Information Statement (including all documents and schedules filed
with the Securities and Exchange Commission) its identity and ownership of the
Shares and the nature of its commitments, arrangements and understandings under
this Agreement.
3. AGREEMENT TO VOTE SHARES.
During the term of this Agreement, at any meeting of the stockholders
of the Company called to consider and vote upon the adoption of the Merger
Agreement (and at any and all postponements and adjournments thereof), and in
connection with any action to be taken in respect of the adoption of the Merger
Agreement by written consent of stockholders of the Company, the Stockholder
will vote or cause to be voted (including by written consent, if applicable) all
of such Stockholder's Shares in favor of the adoption of the Merger Agreement
and in favor of any other matter necessary or appropriate for the consummation
of the transactions contemplated by the Merger Agreement which is considered and
voted upon at any such meeting or made the subject of any such written consent,
as applicable. During the term of this Agreement, at any meeting of the
stockholders of the Company called to consider and vote upon any Adverse
Proposal (and at any and all postponements and adjournments thereof), and in
connection with any action to be taken in respect of any Adverse Proposal by
written consent of stockholders of Company, the Stockholder will vote or cause
to be voted (including by written consent, if applicable) all of such
Stockholder's Shares against the adoption of such Adverse Proposal.
4. IRREVOCABLE PROXY.
The Stockholder hereby irrevocably appoints Merger Subsidiary or any
designee of Merger Subsidiary the lawful agent, attorney and proxy of such
Stockholder, during the term of this Agreement, at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company, to vote (or cause to be voted) the
Stockholder's Shares (a) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement, this Agreement
and any actions required in furtherance hereof and thereof and (b) against
adoption of any Adverse Proposal. The Stockholder intends this proxy to be
irrevocable and coupled with an interest and will take such further action or
execute such other instruments as may be necessary to effectuate the intent of
this proxy and hereby revokes any proxy previously granted by it with respect to
the Shares. The Stockholder shall not hereafter, until the termination of this
Agreement, purport to vote (or
<PAGE> 4
4
execute a consent with respect to) such Shares (other than through this
irrevocable proxy) or grant any other proxy or power of attorney with respect to
any Shares, deposit any Shares into a voting trust or enter into any agreement
(other than this Agreement), arrangement or understanding with any Person,
directly or indirectly, to vote, grant any proxy or give instructions with
respect to the voting of such Shares.
5. REPRESENTATIONS AND WARRANTIES.
5.1 CERTAIN REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. The
Stockholder, severally and not jointly, represents and warrants to Parent and
Merger Subsidiary, as of the date hereof and as of the acceptance for payment of
shares of Common Stock under the Offer, as follows:
(a) OWNERSHIP. Such Stockholder is the sole Beneficial Owner
of the number of shares of Common Stock set forth opposite such
Stockholder's name on Schedule A hereto. The Shares are now, and at all
times during the term hereof will be (except as provided in Section 6.2
hereof), held exclusively by such Stockholder, or by a nominee or
custodian for the exclusive benefit of such Stockholder, free and clear
of all liens, proxies, or other restrictions on disposition or voting,
except for any liens, proxies or restrictions, arising hereunder. The
tender by such Stockholder of its Shares to Merger Subsidiary or Parent
pursuant to the Offer will pass to Merger Subsidiary or Parent the
Stockholder's interest in the Shares free of any adverse claims under
Section 8-102(a)(1) of the Uniform Commercial Code. Except as set forth
in Schedule A hereto, such Stockholder does not (a) Beneficially Own
any securities of the Company on the date hereof or (b) directly or
indirectly, Beneficially Own or have any option, warrant or other right
to acquire any securities of the Company that are or may by their terms
become entitled to vote or any securities that are convertible or
exchangeable into or exercisable for any securities of the Company that
are or may by their terms become entitled to vote; nor is the
Stockholder subject to any contract, commitment, arrangement,
understanding or relationship (whether or not legally enforceable),
other than this Agreement, that allows or obligates such Stockholder to
vote, dispose of or acquire any securities of the Company.
(b) POWER AND AUTHORITY; EXECUTION AND DELIVERY. Such
Stockholder has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated
hereby have been duly authorized by all necessary action, if any, on
the part of such Stockholder. This Agreement has been duly executed and
delivered by such Stockholder and constitutes a valid and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms.
<PAGE> 5
5
(c) NO CONFLICTS. The execution and delivery of this Agreement
do not, and, subject to compliance with the HSR Act and appropriate
filings under securities laws (which each Stockholder agrees to make
promptly), to the extent applicable, the consummation of the
transactions contemplated hereby and compliance with the provisions
hereof will not, conflict with, result in a breach or violation of or
default (with or without notice or lapse of time or both) under, or
give rise to any material obligation, any right of termination, benefit
under, or require notice to or the consent of any person under any
agreement, instrument, undertaking, law, rule, regulation, judgment,
order, injunction, decree, determination or award binding on such
Stockholder, other than such conflicts, breaches, violations, defaults,
obligations, rights or losses that individually or in the aggregate
would not impair the ability of such Stockholder to perform such
Stockholder's obligations under this Agreement.
(d) BROKERS. Except as provided in the Merger Agreement, no
broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement or the Merger Agreement based upon
arrangements made by or on behalf of the Stockholder that is or will be
payable by the Company or any of its Subsidiaries.
5.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Merger Subsidiary, as of the date hereof
and as of the acceptance for payment of Shares of Common Stock under the Offer,
as follows:
(a) ORGANIZATION; AUTHORITY. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware,
has the requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and has taken
all necessary corporate action to authorize the execution; and delivery
of, and the performance of its obligations under, this Agreement.
(b) EXECUTION AND DELIVERY. This Agreement has been duly
executed and delivered by the Company and, assuming that this Agreement
constitutes the valid and binding obligation of the other parties
hereto, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(c) NO CONFLICTS. The execution and delivery of this Agreement
by the Company does not and, subject to compliance with the HSR Act and
appropriate filings under securities laws (which the Company agrees to
make promptly), to the extent applicable, the performance of its
obligations hereunder and compliance with the provisions hereof will
not, conflict with, result in a breach or violation of or default (with
or without notice or lapse of time or both) under, or give rise to any
material obligation, any right of termination, cancellation, or
acceleration of any obligation or any loss of a material benefit under,
or require notice to or the consent of any person under (i) its
<PAGE> 6
6
certificate of incorporation or bylaws, (ii) any agreement, instrument,
undertaking, law, rule, regulation, judgment, order, injunction,
decree, determination or award by which it is bound, or (iii) any
judgment, writ, decree, order or ruling applicable to the Company;
except in the case of clauses (ii) and (iii) for conflicts, violations,
breaches or defaults that would not impair the ability of the Company
to perform its obligations under this Agreement.
(d) ANTITAKEOVER STATUTES. The Company's Board of Directors
has approved the Offer, the Merger, the Merger Agreement, this
Agreement and the transactions contemplated thereby and hereby and such
approval is sufficient to render inapplicable to the Offer, the Merger,
the Merger Agreement, this Agreement and the transactions contemplated
thereby and hereby, the provisions of Section 203 of the Delaware
General Corporations Law (the "DGCL").
5.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY.
Each of Parent and Merger Subsidiary hereby represents and warrants, jointly and
severally, to the Company and the Stockholder, as of the date hereof and as of
the acceptance for payment of Shares of Common Stock under the Offer, that:
(a) ORGANIZATION; AUTHORITY. Each of Parent and Merger
Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation,
has the requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, and has taken
all necessary corporate action to authorize the execution and delivery
of, and the performance of its obligations under, this Agreement.
(b) EXECUTION AND DELIVERY. This Agreement has been duly
executed and delivered by Parent and Merger Subsidiary and, assuming
that this Agreement constitutes the valid and binding obligation of the
other parties hereto, constitutes a valid and binding obligation of
Parent and Merger Subsidiary, enforceable against Parent and Merger
Subsidiary in accordance with its terms.
(c) NO CONFLICTS. The execution and delivery of this Agreement
by Parent and Merger Subsidiary do not, and, subject to compliance with
the HSR Act and appropriate filings under securities laws (which Parent
and Merger Subsidiary agree to make it promptly), to the extent
applicable, the performance of its obligations hereunder and compliance
with the provisions hereof will not, conflict with, result in a breach
or violation of or default (with or without notice or lapse of time or
both) under, or give rise to any material obligation, any right of
termination, cancellation, or acceleration of any obligation or any
loss of a material benefit under, or require notice to or the consent
of any person under (i) its articles of incorporation or bylaws or
equivalent organizational documents, (ii) any agreement, instrument,
undertaking, law, rule, regulation, judgment,
<PAGE> 7
7
order, injunction, decree, determination or award by which it is bound,
or (iii) any judgment, writ, decree, order or ruling applicable to
Parent or Merger Subsidiary; except in the case of clauses (ii) and
(iii) for conflicts, violations, breaches or defaults that would not
impair the ability of Parent or Merger Subsidiary to perform its
obligations under this Agreement.
6. CERTAIN COVENANTS OF STOCKHOLDER. The Stockholder hereby severally covenants
and agrees as follows:
6.1 NO SOLICITATION. Neither Stockholder nor any officer, director,
employee, representative or agent of the Stockholder shall, in that
Stockholder's capacity as such and not in such Stockholder's capacity as an
officer, director, employee, representative or agent of the Company, directly or
indirectly, solicit, initiate, or knowingly facilitate; participate in or
initiate any inquiries or the making of any proposal by any person or entity
(other than Merger Subsidiary, Parent or any affiliate of Parent) which
constitutes, or may reasonably be expected to lead to, (a) any sale of the
Shares or (b) any Adverse Proposal. If the Stockholder, or any officer,
director, employee, representative or agent of the Stockholder, receives an
inquiry or proposal with respect to the sale of Shares, then the Stockholder
shall promptly inform Parent of the terms and conditions, if any, of such
inquiry or proposal and the identity of the person making it. The Stockholder
shall cause its officers, directors, employees, representatives and agents to,
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
6.2 RESTRICTION ON TRANSFER, PROXIES AND NONINTERFERENCE. The
Stockholder hereby agrees, while this Agreement is in effect, and except as
contemplated hereby, not to (a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of the Shares without
notifying Parent in advance and obtaining and delivering to Parent any evidence
that Parent may reasonably request to evidence the transferee's agreement to be
bound by this Agreement; provided, however, that in the event of the
Stockholder's death during the term of this Agreement, the Shares may be
transferred in accordance with the Stockholder's last will and testament, or if
none, in accordance with the applicable laws of intestate succession, in either
of which cases, the Shares shall remain subject in all respects to the terms of
this Agreement, or (b) grant any proxies, deposit any Shares into a voting trust
or enter into a voting agreement with respect to any Shares, or (c) take any
action that would make any representation or warranty of the Stockholder
contained herein untrue or incorrect or have the effect of preventing or
disabling in any material respect such Stockholder from performing the
Stockholder's obligations under this Agreement.
6.3 LEGENDING OF CERTIFICATES; NOMINEE SHARES. If requested by Merger
Subsidiary, the Stockholder agrees to submit to Merger Subsidiary
contemporaneously with or within five
<PAGE> 8
8
business days following execution of this Agreement all certificates
representing the Shares so that Merger Subsidiary may note thereon a legend
referring to the proxy and other rights granted to it by this Agreement. If any
of the Shares beneficially owned by a Stockholder are held of record by a
brokerage firm in "street name" or in the name of any other nominee (a
"Nominee", and, as to such Shares, "Nominee Shares"), the Stockholder agrees
that, upon written notice by Merger Subsidiary requesting it, the Stockholder
will within five business days of the giving of such notice execute and deliver
to Merger Subsidiary a limited power of attorney in such form as shall be
reasonably satisfactory to Merger Subsidiary enabling Merger Subsidiary to
require the Nominee to (i) tender such Nominee Shares in the Offer pursuant to
Section 2, (ii) agree to vote the Nominee Shares to the same effect as Section
3, (iii) grant to Merger Subsidiary an irrevocable proxy to the same effect as
Section 4 with respect to the Nominee Shares held by such Nominee, (iv) submit
to Merger Subsidiary the certificates representing such Nominee Shares for
notation of the above-referenced legend thereon, and (v) effect any other
obligation of the Stockholder hereunder.
6.4 STOP TRANSFER ORDER. In furtherance of this Agreement, concurrently
herewith, the Stockholder shall and hereby does authorize the Company's counsel
to notify the Company's transfer agent that there is a stop transfer order with
respect to all of the Shares (and that this Agreement places limits on the
voting and transfer of such Shares).
7. FURTHER ASSURANCES. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be reasonably
necessary or desirable to consummate the transactions contemplated by this
Agreement.
8. STOCK DIVIDENDS, ETC. In the event of a stock dividend or distribution, or
any change in the Company's Common Stock by reason of any stock dividend,
split-up, reclassification, recapitalization, combination or the exchange of
shares, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged. I
9. MISCELLANEOUS.
9.1 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) shall not
be assigned by operation of law or otherwise.
9.2 AMENDMENTS. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
<PAGE> 9
9
9.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following address:
If to Stockholder: At such Stockholder's address set
forth on Schedule A hereto
copy to: Gradall Industries, Inc.
406 Mill Avenue, S.W.
New Philadelphia, Ohio 44663
Facsimile No: (330) 339-5224
Attention: Barry L. Phillips
copy to: Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Facsimile No: (212) 969-2900
Attention: Robert A. Cantone, Esq.
If to Parent or Merger Subsidiary: JLG Industries, Inc.
1 JLG Drive
McConnelsburg, PA 17233
Facsimile No: (717) 485-6542
Attention: General Counsel
copy to: Covington & Burling
1201 Pennsylvania Ave., N.W.
Washington, D.C. 20044-7566
Facsimile No: (202) 662-6291
Attention: W. Andrew Jack, Esq.
If to the Company: Gradall Industries, Inc.
406 Mill Avenue, S.W.
New Philadelphia, Ohio 44663
Facsimile No: (330) 339-5224
Attention: Barry L. Phillips
copy to: Proskauer Rose LLP
1585 Broadway
<PAGE> 10
10
New York, New York 10036
Facsimile No: (212) 969-2900
Attention: Robert A. Cantone, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
9.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
9.5 COOPERATION AS TO REGULATORY MATTERS. If so requested by Parent or
Merger Subsidiary, promptly after the date hereof, the Stockholder will use its
reasonable best efforts, and will use reasonable best efforts to cause the
Company (if required in either case) to make all filings which are required
under the HSR Act and applicable requirements and to seek all regulatory
approvals required in connection with the transactions contemplated hereby. The
parties hereto shall furnish to each other such necessary information and
reasonable assistance as may be requested in connection with the preparation of
filings and submissions to any governmental agency, including, without
limitation, filings under the provisions of the HSR Act. The Stockholder shall
also use its reasonable best efforts to cause the Company to supply Merger
Subsidiary with copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between the Company and its
representatives and the Federal Trade Commission, the Department of Justice and
any other governmental agency or authority and members of their respective
staffs with respect to this Agreement and the transactions contemplated hereby.
9.6 TERMINATION. This Agreement shall terminate on the Termination
Date.
9.7 SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore, each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
9.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same Agreement.
<PAGE> 11
11
9.9 DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
9.10 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
9.11 STOCKHOLDER CAPACITY. The Stockholder executing this Agreement
makes no agreement hereunder with respect to certain affiliates of Stockholder
who are directors or officers of the Company. The Stockholder is executing and
delivering this Agreement solely in that Stockholder's capacity as the record
and/or beneficial owner of that Stockholder's Shares. Notwithstanding anything
to the contrary in this Agreement, no action or inaction by any affiliate of the
Stockholder in his capacity as a director, officer, or employee of the Company
shall be deemed to contravene Section 6.1 hereof.
[The remainder of this page has been left blank.]
<PAGE> 12
(Page 1 of 2 Signature Pages)
IN WITNESS WHEREOF, this Agreement has been executed by or on
behalf of each of the parties hereto, all as of the date first above written.
JLG INDUSTRIES, INC.
By: /s/ L. David Black
-----------------------
Name: L. David Black
Title: Chairman, President & CEO
JLG ACQUISITION CORP.
By: /s/ L. David Black
-----------------------
Name: L. David Black
Title: Chairman & President
GRADALL INDUSTRIES, INC.
By: /s/ Barry L. Phillips
-----------------------
Name: Barry L. Phillips
Title: President & CEO
<PAGE> 13
(Page 2 of 2 Signature Pages)
Stockholders:
MLGA FUND II, L.P.
By: /s/ Sangwoo Ahn
_______________________
Name: Sangwoo Ahn
Title: General Partner
<PAGE> 14
SCHEDULE A
NAME: COMMON STOCK SHARES
MLGA FUND II, L.P. 2,615,637
2 Greenwich Plaza
Greenwich, CT 06830
<PAGE> 1
EXHIBIT 5
MERRILL LYNCH LETTERHEAD
May 10, 1999
Board of Directors
Gradall Industries, Inc.
406 Mill Avenue S.W.
New Philadelphia, Ohio 44663
Members of the Board of Directors:
Gradall Industries, Inc. (the "Company"), JLG Industries, Inc. (the
"Acquiror") and JLG Acquisition Corp., a newly formed, wholly owned subsidiary
of the Acquiror (the "Acquisition Sub") have entered into an Agreement and Plan
of Merger, dated as of May 10, 1999 (the "Agreement"), pursuant to which (i) the
Acquiror will cause the Acquisition Sub to commence a tender offer (the "Tender
Offer") for all outstanding shares of the Company's common stock, par value
$.001 per share, (collectively, the "Company Shares") for $20.00 per share, net
to the seller in cash (the "Consideration"), and (ii) the Acquisition Sub will
be merged with and into the Company in a merger (the "Merger"), in which each
Company Share not acquired in the Tender Offer, other than the Company Shares
held in treasury or held by the Acquiror or any affiliate of the Acquiror or as
to which dissenter's rights have been perfected, will be converted into the
right to receive the Consideration. The Tender Offer and the Merger, taken
together, are referred to as the "Transaction."
You have asked us whether, in our opinion, the Consideration to be received
by the holders of the Company Shares pursuant to the Transaction is fair from a
financial point of view to such holders.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial
information relating to the Company that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets, liabilities
and prospects of the Company furnished to us by the Company;
(3) Conducted discussions with members of senior management and
representatives of the Company concerning the matters described in
clauses 1 and 2 above;
(4) Reviewed the market prices and valuation multiples for the Company
Shares and compared them with those of certain publicly traded
companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and compared
them with those of certain publicly traded companies that we
deemed to be relevant;
(6) Compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions that we deemed to be
relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Company and the Acquiror and their
financial and legal advisors;
(8) Reviewed the Agreement; and
<PAGE> 2
(9) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or been furnished with any such evaluation or
appraisal. In addition, we have not assumed any obligation to conduct any
physical inspection of the properties or facilities of the Company. With respect
to the financial forecast information furnished to or discussed with us by the
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Company's management as
to the expected future financial performance of the Company.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof.
We are acting as financial advisor to the Company in connection with the
Transaction and will receive a fee from the Company for our services, a
significant portion of which is contingent upon the consummation of the
Transaction. The Company has agreed to indemnify us for certain liabilities
arising out of our engagement. In addition, in the ordinary course of our
business, we may actively trade the Company Shares and other securities of the
Company, as well as securities of the Acquiror for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion does not address the merits of the underlying decision by
the Company to engage in the Transaction and does not constitute a
recommendation to any shareholder as to whether such shareholder should tender
any Company Shares pursuant to the Tender Offer and how such shareholder should
vote on the proposed Merger or any matter related thereto.
On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Consideration to be received by the holders of the
Company Shares pursuant to the Transaction is fair from a financial point of
view to the holders of such shares.
Very truly yours,
/s/ MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
2
<PAGE> 1
EXHIBIT 6
GRADALL LETTERHEAD
May 18, 1999
Dear Stockholder:
I am pleased to inform you that on May 10, 1999, the Company entered into
an agreement and plan of merger (the "Merger Agreement") providing for the
acquisition of the Company by JLG Industries, Inc. ("JLG"). Pursuant to the
Merger Agreement, JLG, through a wholly owned subsidiary, has commenced a tender
offer (the "Offer") for all outstanding shares of the Company's common stock at
the offer price of $20.00 cash per share. The Merger Agreement provides that,
subject to satisfaction of certain conditions, the tender offer is to be
followed by a merger (the "Merger") in which the holders of any remaining
Company shares (other than dissenting shares) will receive the right to receive
cash in an amount of $20.00. The tender offer is currently scheduled to expire
at 12:00 midnight, New York City Time, on June 15, 1999.
THE BOARD OF DIRECTORS OF THE COMPANY HAS BY UNANIMOUS VOTE DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF
THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF GRADALL INDUSTRIES, INC. AND RECOMMENDS THAT HOLDERS OF SHARES
ACCEPT THE OFFER AND TENDER THEIR SHARES TO JLG.
In determining to approve the Merger Agreement and the transaction
contemplated thereby, your Board of Directors gave careful consideration to a
number of factors described in the attached Schedule 14D-9 that has been filed
with the Securities Exchange Commission. Among other things, your Board of
Directors considered the opinions of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, dated May 10, 1999 (copy of which is included with the Schedule
14D-9), to the effect that, as of such date, and based upon and subject to the
various considerations set forth in such opinion, the consideration to be
received, pursuant to the Offer and the Merger, taken together, was fair from a
financial point of view to such holders.
The attached Schedule 14D-9 describes the Board's decision and contains
other important information relating to such decision. We urge you to read it
carefully.
In a separate arrangement, MLGA Fund II, L.P., one of the Company's
principal stockholders, and certain of the Company's officers and directors (the
"Stockholders") have agreed with JLG to tender their shares into the tender
offer and otherwise support the transaction with JLG. MLGA Fund II, L.P., and
the Stockholders own approximately 34.4% of the outstanding common stock of the
Company.
Accompanying this letter and the Schedule 14D-9 is the Offer to Purchase
and related materials, including a Letter of Transmittal to be used for
tendering your shares. These documents describe the terms and conditions of the
tender offer and provide instructions regarding how to tender your shares. We
urge you to read the enclosed material carefully.
The Board of Directors and management of the Company thank you for your
loyalty and support over the years.
Very truly yours,
Barry L. Phillips Signature
Barry L. Phillips,
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 7
PRESS RELEASE
[JLG LOGO]
[JLG LETTERHEAD]
FOR IMMEDIATE RELEASE
JLG INDUSTRIES CONTACT: JUNA ROWLAND
DIRECTOR, CORPORATE RELATIONS
(717) 485-6605
GRADALL INDUSTRIES CONTACT: ANDREA PHILLIPS
CORPORATE COMMUNICATIONS
(330) 339-2212 EXT 154
JLG INDUSTRIES, INC. ANNOUNCES DEFINITIVE AGREEMENT
TO ACQUIRE GRADALL INDUSTRIES, INC.
PROVIDING A BROADENED PRODUCT LINE AND EXPANDED CUSTOMER BASE
COMBINED ANNUAL REVENUES APPROACHING $800 MILLION
EXPECTED TO BE ACCRETIVE TO EPS IN THE FIRST FULL YEAR OF COMBINED OPERATIONS
MCCONNELLSBURG, PA, AND NEW PHILADELPHIA, OH, MAY 11, 1999 - JLG
Industries, Inc. (NYSE: JLG) and Gradall Industries, Inc. (NASDAQ: GRDL) today
announced the signing of a definitive agreement under which JLG will acquire
Gradall Industries, Inc. in an all-cash transaction for $20.00 per share,
representing a 14 percent premium to yesterday's closing price and resulting in
total cash to Gradall shareholders of approximately $200 million. The
transaction will create a diversified capital equipment manufacturer with
combined revenues approaching $800 million for the most recent four fiscal
quarters and is expected to be accretive to JLG earnings per share in the first
full year of combined operations.
"A well established company with a leading brand name, Gradall brings
to the table strong market share and a reputation for high quality products,"
said L. David Black, JLG's Chairman of the Board, President and Chief Executive
Officer. "This acquisition brings JLG closer to our immediate goal of becoming a
$1 billion company. The increased size and expanded product breadth will further
(more)
<PAGE> 2
JLG Industries, Inc.
Page 2
enhance our ability to compete in a consolidating rental industry marketplace
and position JLG for future growth opportunities, both domestically and
internationally and is an excellent transaction for the stakeholders of both
companies. The transaction not only combines two leading capital equipment
brands with strong market shares, but also fits well with our diversification
strategy. There is a tremendous opportunity within our respective markets to
grow and expand the presence of both entities."
Barry L. Phillips, Gradall's President and Chief Executive Officer,
stated, "Gradall and JLG have similar corporate cultures and a common goal of
being the best in our respective industries. We expect to benefit from JLG's
global market strength. We also anticipate leveraging our product development
and manufacturing expertise. Gradall looks forward to being a part of the JLG
family. From a marketplace perspective, the strengths of our organizations are
complementary and we target many of the same markets and share customers so we
can leverage existing relationships. We are very excited about the prospects for
cross-selling opportunities."
The strategic reasons for this transaction are compelling for both
companies and include the following key elements:
- ADDITION OF GROWTH SEGMENT - Gradall's material handler
product line will allow JLG to access one of the most dynamic
and fastest growing product segments in the construction and
industrial equipment industry.
- MARKET CHANNEL LEVERAGE - Using their respective distribution
strengths, the combined companies will further solidify their
market position as a prime supplier to the North American
rental industry.
- CORE COMPETENCY LEVERAGE - Similarities between Gradall's
products and those of JLG will allow JLG to leverage its core
competencies in manufacturing, engineering, new product
development, distribution and industry-leading sales and
support services.
- RELATED DIVERSIFICATION - The transaction will allow JLG to
diversify its operations in accordance with its strategic
plan. JLG's and Gradall's product lines are complementary, yet
respond, in part, to different domestic and international
economic cycles. The
(more)
<PAGE> 3
JLG Industries, Inc.
Page 3
addition of Gradall's excavator product line can be expected
to add a measure of consistency and counter-cyclicality to the
overall product portfolio since Gradall's over-the-road
highway-speed excavators are used extensively by state, county
and local governments and by private highway contractors for
infrastructure construction, maintenance and repair. Gradall's
excavator business is expected to benefit from the passage of
the Federal Highway Bill (TEA-21) that guarantees a minimum of
$167 billion in spending for the highway program over the next
six years (a 40 percent increase from the 1991 Federal Highway
Bill).
- BRAND STRENGTH - Gradall's products, like those of JLG, are
known for quality, reliability and durability. Its excavators
have set the industry standard for more than half a century
and its material handlers boast unique performance-enhancing
features. The combined companies will offer a broad portfolio
of products, each with brand name recognition and
identification with quality.
- CAPACITY - The acquisition of Gradall adds significantly to
JLG's overall manufacturing capacity. Gradall's existing New
Philadelphia, Ohio operation has more than 430,000 square feet
under one roof and its recently acquired Orrville, Ohio
facility provides more than 300,000 square feet of additional
space.
This transaction, including the refinancing of the pre-acquisition
outstanding debt of both companies, will be financed using a $250 million
five-year revolving credit facility. Commenting on the transaction financing,
Mr. Black added, "As you know, JLG has historically been a debt-averse
organization. This fiscal conservatism is now paying off as we are in a
comfortable position to finance this transaction. Once the acquisition is
complete, our total debt to total capitalization will be less than 50 percent
and we expect comfortable EBITDA to interest expense coverage. Furthermore,
given the current low interest rate environment and the negligible amount of
debt currently on our balance sheet, leveraging our borrowing power is the
expedient approach, particularly in today's environment where we believe that
JLG's value is not being adequately recognized by the equity market."
The transaction is expected to be completed during the fourth quarter
of JLG's 1999 fiscal year (which ends July 31st) and is subject to customary
conditions, including regulatory antitrust clearance
(more)
<PAGE> 4
JLG Industries, Inc.
Page 4
and the tender of a majority of Gradall's shares. Gleacher & Co. LLC is acting
as advisor to JLG in the transaction and Merrill Lynch & Co. is acting on behalf
of Gradall.
JLG Industries, Inc. is the world's leading manufacturer, distributor
and international marketer of mobile aerial work platforms. Sales are made
principally to distributors and rental companies, which rent and sell the
Company's products to a diverse customer base, which includes users in the
industrial, commercial, institutional and construction markets. Headquartered in
McConnellsburg, Pennsylvania, JLG has two additional manufacturing facilities in
Bedford, Pennsylvania and sales and service locations in Europe and Australia.
Founded in 1946 and headquartered in New Philadelphia, Ohio, Gradall
Industries, Inc. is a leading manufacturer of rough-terrain, variable-reach
material handlers and telescoping hydraulic excavators used in infrastructure,
residential, non-residential and institutional construction and is one of the
industry's most widely recognized brand names. Gradall's variable-reach material
handlers accounted for approximately 60 percent of their 1998 total net sales.
The company is one of the market leaders in this segment, with its
variable-reach material handlers presently ranking among the top three in market
share in North America. Gradall's excavator business is an industry leader in
the road maintenance and infrastructure markets in much the same way as JLG has
achieved a leadership position in the aerial work platform market. Excavators
represented nearly 30 percent of Gradall's 1998 total net sales.
The forward-looking statements in this announcement may involve certain
risks and uncertainties, including cyclical demand, a consolidating customer
base, product liability, availability of product components and others, as
detailed in the Company's SEC reports, including the report on Form 10-Q for the
quarter ended January 31, 1999. In addition, there are inherent risks in
consummating the transaction and executing the strategy that it entails. These
risks include the difficulty of integrating two business organizations and
achieving potential business and operational synergies and interest rate market
risks and other risks associated with the transaction financing. Additional
risks that should be considered for the combined entities are described in the
reports of Gradall filed with the SEC.
For a fax copy, please call 800-758-5804, extension 470675.
# # #
<PAGE> 1
EXHIBIT 20
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This Amendment dated May 11, 1999, amends the Rights Agreement dated as of
May 29, 1998 ("Rights Agreement"), between Gradall Industries, Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, LLC (the
"Rights Agent"). Terms defined in the Rights Agreement and not otherwise defined
herein are used herein as so defined.
WHEREAS, on May 29, 1998, the Board of Directors of the Company authorized
the issuance of Rights to purchase, on the terms and subject to the provisions
of the Rights Agreement, one one-hundredth of a share of the Company's Preferred
Stock, and the Company and the Rights Agent entered into the Rights Agreement to
set forth the description and terms of the Rights;
WHEREAS, the Company, JLG Industries, Inc., a Pennsylvania corporation
("Parent") and JLG Acquisition Corp., a Delaware corporation ("Merger
Subsidiary"), have entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which, among other things, Merger Subsidiary will
commence a cash tender offer (the "Offer") to purchase all of the outstanding
shares of the Company and, following the commencement of the Offer, the Merger
Subsidiary would merge with and into the Company (the "Merger");
WHEREAS, certain stockholders of the Company also entered into a
Stockholders Agreement, pursuant to which, among other things, such stockholders
would agree (i) to tender his shares of Common Stock, par value $.001 per share
of the Company (the "Common Stock") pursuant to the Offer, and (ii) grant to
Merger Subsidiary an irrevocable proxy to vote his Common Stock in favor of the
Merger, the Merger Agreement and the transactions contemplated thereby;
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company and
the Rights Agent may from time to time supplement and amend the Rights Agreement
in order to make any change which the Company may deem necessary or desirable,
and the Continuing Directors now desire to amend certain provisions of the
Rights Agreement in order to supplement certain provisions therein; and
WHEREAS, all acts and things necessary to make this Amendment a valid
agreement, enforceable according to its terms, have been done and performed, and
the execution and delivery of this Amendment by the Company and the Rights Agent
have been in all respects duly authorized by the Company and the Rights Agent.
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. Amendment to Section 1. Section 1 of the Rights Agreement is
supplemented to add the following definitions in the appropriate locations:
" 'Merger' shall have the meaning set forth in the Merger Agreement."
" 'Merger Agreement' shall mean the Agreement and Plan of Merger,
dated as of May 10, 1999, by and among Company, Parent and Merger
Subsidiary, as it may be amended from time to time."
" 'Offer' shall have the meaning set forth in the Merger Agreement."
" 'Stockholders Agreement' shall mean the Stockholders Agreements
dated as of May 10, 1999 by and among the Company, Parent, Merger
Subsidiary and the Stockholders parties thereto."
2. Amendment of the definition of "Acquiring Person." The definition of
"Acquiring Person" in Section 1 of the Rights Agreement is amended by adding the
following at the end thereof:
"In addition, notwithstanding the foregoing or any provision to the
contrary in this Agreement, none of Parent, Merger Subsidiary or any of
their respective Affiliates shall, individually or collectively, be deemed
to be an Acquiring Person by virtue of (i) the approval, execution or
delivery of the Offer, the Merger Agreement or the Stockholders Agreement,
(ii) the commencement or consummation of the
<PAGE> 2
Offer, (iii) the acquisition of Common Stock by Parent, Merger Subsidiary
or any of their respective Affiliates pursuant to the Offer or the
Stockholders Agreement, or (iv) the consummation of the Merger or other
transactions contemplated in the Merger Agreement or the Stockholders
Agreement; provided, however, that in the event Parent, Merger Subsidiary
or any of their respective Affiliates becomes the Beneficial Owner of 15%
or more of the Common Stock other than pursuant to the Offer, the Merger
Agreement or the Stockholders Agreement, the provisions of this sentence
(other than this proviso) shall not be applicable."
3. Amendment of the definition of "Distribution Date." The definition of
"Distribution Date" in Section 1 of the Rights Agreement is amended by adding
the following sentence at the end thereof:
"Notwithstanding the foregoing or any provision to the contrary in
this Agreement, a Distribution Date shall not be deemed to occur by reason
of (i) the approval, execution or delivery of the Offer, the Merger
Agreement or the Stockholders Agreement, (ii) the commencement or
consummation of the Offer, (iii) the acquisition of Common Stock by Parent,
Merger Subsidiary or any of their respective Affiliates pursuant to the
Offer or the Stockholders Agreement, (iv) the consummation of the Merger,
or other transactions contemplated in the Merger Agreement or the
Stockholders Agreement, or (v) the announcement of the Offer, the Merger or
other transactions contemplated by the Merger Agreement or the Stockholders
Agreement; provided, however, that in the event Parent, Merger Subsidiary
or any of their respective Affiliates becomes the Beneficial Owner of 15%
or more of the Common Stock other than pursuant to the Offer, the Merger
Agreement or the Stockholders Agreement, the provisions of this sentence
(other than this proviso) shall not be applicable."
4. Amendment of the definition of "Stock Acquisition Date." The
definition of "Stock Acquisition Date" in Section 1 of the Rights Agreement is
amended by adding the following sentence at the end thereof:
"Notwithstanding the foregoing or any provision to the contrary in
this Agreement, a Stock Acquisition Date shall not be deemed to occur by
virtue of (i) the approval, execution or delivery of the Offer, the Merger
Agreement or the Stockholders Agreement, (ii) the commencement or
consummation of the Offer, (iii) the acquisition of Common Stock by Parent,
Merger Subsidiary or any of their respective Affiliates pursuant to the
Offer or the Stockholders Agreement, (iv) the consummation of the Merger,
or other transactions contemplated in the Merger Agreement or the
Stockholders Agreement, or (v) the announcement of the Offer, the Merger or
the other transactions contemplated by the Merger Agreement or the
Stockholders Agreement; provided, however, that in the event Parent, Merger
Subsidiary or any of their respective Affiliates becomes the Beneficial
Owner of 15% or more of the Common Stock other than pursuant to the Offer,
the Merger Agreement or the Stockholders Agreement, the provisions of this
sentence (other than this proviso) shall not be applicable."
5. Amendment to Section 2. Section 2 of the Rights Agreement is amended
by deleting "and the holders of the Rights in accordance with the terms and
conditions hereof" from the first sentence thereof.
6. Amendment to Section 20. Section 20 of the Rights Agreement is amended
to add the following sentence at the end of subparagraph (c) thereof:
"In no case will the Rights Agent be liable for special, indirect,
punitive, incidental or consequential loss or damages of any kind
whatsoever (including without limitation lost profits), even if the Rights
Agent has been advised of the possibility of such damages."
7. Amendment to Section 30. Section 30 of the Rights Agreement is amended
to add the following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any holder of
Rights or any other Person any legal or equitable rights, remedies or
claims under this Agreement by virtue of the approval, execution or
delivery of the Offer, the Merger Agreement or the Stockholders Agreement
or by virtue of any of the transactions contemplated by the Merger
Agreement and the Stockholders Agreement; provided, however, that in the
event Parent, Merger Subsidiary or any of their respective Affiliates
becomes the Beneficial Owner of 15% or more of the Common Stock other than
pursuant to the Offer, the Merger
2
<PAGE> 3
Agreement or the Stockholders Agreement, the provisions of this sentence
(other than this proviso) shall not be applicable. Unless or until the
Rights Agent has received written notice to the contrary, the Rights Agent
shall be fully protected and shall incur no liability in always assuming
that the Parent, Merger Subsidiary or any of their respective Affiliates,
has not become the Beneficial Owner of 15% or more of the Common Stock
other than pursuant to the Offer, the Merger Agreement or the Stockholders
Agreement."
8. This Amendment shall be deemed to be entered into under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State, except that the rights and obligations of
the Rights Agent shall be governed by the law of the State of New York.
9. This Amendment may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
10. Except as expressly herein set forth, the remaining provisions of the
Rights Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
date first written above.
Gradall Industries, Inc.
By: /s/ BARRY L. PHILLIPS
------------------------------------
Name: Barry L. Phillips
Title: President and CEO
Attest: /s/ BRUCE A. JONKER
----------------------------------
ChaseMellon Shareholder Services,
LLC.,
as Rights Agent
By: /s/ MITZI BRINKMAN
------------------------------------
Signature of Authorized Signatory
3
<PAGE> 1
Exhibit 21
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 10th day of May, 1999, by and between
GRADALL INDUSTRIES, INC., a Delaware corporation (the "Company"), and BARRY L.
PHILLIPS ("Executive").
WITNESSETH THAT:
WHEREAS, the Executive has been employed by the Company as its
President pursuant to the terms of an employment agreement by and between The
Gradall Company and the Executive dated September 5, 1985, as restated and
amended by agreements dated July 21, 1987, January 19, 1988, July 20, 1988, July
17, 1989, February 5, 1993, October 13, 1995, and January 1, 1998 (the "Prior
Employment Agreement");
WHEREAS, the Company and the Executive desire to amend and restate the
Prior Employment Agreement to provide for the continued employment of the
Executive after the sale of the Company to JLG Industries, Inc.
("JLG") upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive's services are of great value to the Company and
it is recognized that substantial inducement must be offered to the Executive in
order that the Company may retain his services.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties agree as follows:
SECTION 1. DUTIES. The Company hereby agrees to continue to employ the
Executive as President and Chief Executive Officer of the Company, and the
Executive hereby agrees to continue to serve the Company in that capacity in
accordance with the terms and conditions set forth herein:
(a) The Executive shall be vested with all powers and rights
attendant to the office of President and Chief Executive
Officer, and shall have full authority and responsibility,
subject to the general direction, approval and control of the
Board of Directors of the Company, to formulate policies and
administer the Company in all respects.
(b) If elected or appointed by the Board of Directors, the
Executive shall serve as a director of the Company without
additional compensation.
(c) During the term of this Agreement, the Executive shall devote
all of his business time, attention, energy and
<PAGE> 2
skill to the performance of the duties and services described
herein, and shall not engage directly or indirectly in any
other business activity, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage,
except with the written consent of the Company's Board of
Directors, provided, that the provisions of this Section 1(c)
shall not restrict the Executive's investment of his personal
assets or the Executive's participation in any professional,
academic or civic activity.
SECTION 2. TERM. Subject to prior termination as set forth in Section
10 hereof, the term of the Executive's employment under this Agreement shall be
for a period of three (3) years, beginning on the date this Agreement becomes
effective.
SECTION 3. COMPENSATION. The Company shall pay to the Executive as
compensation for his services hereunder a base salary of Two Hundred Twenty-five
Thousand Dollars ($225,000) per year, payable in equal semi-monthly
installments, subject to withholding and other applicable taxes. The salary
provided herein shall be subject to adjustment based on annual reviews conducted
by the Company (as so adjusted from time to time, "Base Salary"). Effective on
the date this Agreement becomes effective, "Base Salary" shall include an
additional $12,360 per year in lieu of the automobile allowance previously
provided.
SECTION 4. INCENTIVE COMPENSATION. The Executive shall be entitled to
participate in any incentive compensation plans established by the Company from
time to time. The amount payable to the Executive under existing management
incentive compensation plans for 1999 shall be payable on or before September
30, 1999 in an amount equal to 7/12 of the bonus that would be payable for
calendar year 1999 assuming that the Company would have achieved 24% growth in
earnings per share compared to 1998. Effective as of August 1, 1999, the
Executive shall participate in the management incentive compensation plans and
stock based compensation plans of JLG as approved by the JLG Compensation
Committee from time to time, and shall no longer participate in existing Company
management incentive compensation plans.
SECTION 5. EXPENSES. The Executive is authorized to incur reasonable
expenses in connection with the business of the Company and the performance of
his duties hereunder, including expenses for entertainment, travel and similar
items. The Company will pay or reimburse the Executive for all such expenses
upon the presentation by the Executive of an itemized account of such
expenditures and any other documentation or substantiation of expenses which may
be required for compliance with applicable state and federal tax laws.
SECTION 6. VACATIONS. The Executive shall be entitled to
2
<PAGE> 3
four (4) weeks of vacation each year, during which time his compensation shall
be paid in full.
SECTION 7. [Reserved]
SECTION 8. EXECUTIVE BENEFITS. (a) The Executive shall be entitled to
all benefits offered by the Company to any of its executive or salaried
employees including, but not limited to, major medical health insurance,
hospitalization insurance, life insurance, travel and accident insurance, and
disability insurance, including, but not limited to, those benefits the
Executive currently receives from the Company; provided, however, to the extent
that any benefit provided to the Executive under this Section 8 is, or is
equivalent to, a Broad-Based Benefit, the benefit provided to the Executive
shall reflect any generally applicable change to or reduction of such
Broad-Based Benefit. The term "Broad-Based Benefit" shall mean any applicable
benefit under any plan, program, or arrangement that is provided or made
available to employees generally and shall not include any benefit considered to
be an "executive" benefit that is provided or made available only to upper-level
management.
(b) DISABILITY. The Company shall maintain in full force and effect and
pay all premiums due under that certain disability insurance policy, insuring
the Executive and issued by The New England Insurance Companies under Policy No.
DO99437 (the "Disability Policy"). In the event that the Executive is unable to
perform his duties hereunder by reason of illness or incapacity, the Executive
shall continue to receive all amounts payable under this Agreement, until the
Executive receives payments under the Disability Policy. If the Executive
receives the full benefit amount payable under the Policy, the Company shall
have no further obligation to make payments under this Agreement to the
Executive during the period in which the Executive is receiving the full benefit
under the Disability Policy. During any such period of disability, the Executive
shall continue to receive all benefits theretofore received by the Executive.
Upon the termination of the Executive's disability and the Executive's right to
receive the full benefit payable under the Disability Policy, the Executive's
full compensation shall be reinstated in full, subject to the provisions of
Section 10(a).
SECTION 9. DEFERRAL OF COMPENSATION. The Executive shall be entitled to
participate in the Company's Supplemental Executive Retirement Plan, the Benefit
Restoration Plan and any other deferred compensation program maintained by the
Company.
SECTION 10. TERMINATION. The Executive's employment hereunder may be
terminated in accordance with the following terms and conditions:
3
<PAGE> 4
(a) The Company may terminate the Executive's employment hereunder
upon ninety (90) days written notice to the Executive, in the
event that the Executive has been unable to perform his duties
by reason of illness or incapacity, which inability continues
for a consecutive twelve month period, provided, that the
Executive is receiving the full benefit amount payable under
the Disability Policy.
(b) Notwithstanding anything herein to the contrary, the Company
shall have the right to terminate the Executive's employment
hereunder, effective upon written notice of such termination,
and shall not have an obligation to pay any amounts provided
under Section 10(d) hereof upon the happening of any of the
following events:
(i) the failure by the Executive to observe the
restrictive covenants set forth in Sections 11,
if applicable, and 12 hereof, as determined by a
court of competent jurisdiction;
(ii) the commission by the Executive of a material
theft or embezzlement of Company property;
(iii) the conviction of the Executive for a crime
resulting in injury to the business or property
of the Company; or
(iv) the commission of any act by the Executive in the
performance of his duties hereunder adjudged by a
court of competent jurisdiction to amount to
gross, willful or wanton negligence.
(c) The Executive may terminate his employment with the Company
upon ninety (90) days written notice to the Company. Upon the
effective date of such termination, the Company shall have no
further obligation to pay any amounts provided for in this
Agreement, except as set forth in Sections 10(d), 10(f) and
10(h) hereof.
(d) In the event the Executive's employment with the Company (or
any successor company) is terminated within three (3) years
following the date this Agreement becomes effective, and such
termination is due to the Executive's dismissal (other than
pursuant to Sections 10(a) or 10(b)), or the Executive's
resignation for Good Reason, as hereinafter defined, the
Company (or such successor company) shall:
(i) continue to pay the Executive for a period
4
<PAGE> 5
equal to the remaining term of this Agreement as
set forth in Section 2 (the "Continuation
Period") (A) his Base Salary, including any
portion thereof the receipt of which the
Executive may previously have elected to defer,
plus (B) for each month in the Continuation
Period, 1/12 of his incentive compensation
awarded with respect to services rendered during
the calendar year preceding such termination
(including any portion thereof which the
Executive elected to defer), which incentive
compensation shall in no event be less than forty
percent (40%) of his Base Salary for such year,
(ii) continue for the duration of the Continuation
Period the Executive's participation in the major
medical, health, hospitalization, life, travel
and accident and disability insurance plans or
programs provided to the Executive prior to the
date hereof, or provide equivalent benefits, at
no premium cost to him, provided, however, that
to the extent that any benefit provided to the
Executive under this Section 10(e)(ii) is, or is
equivalent to, a Broad-Based Benefit, the benefit
provided to the Executive shall reflect any
generally applicable change to or reduction of
such Broad-Based Benefit,
(iii) treat the Executive as if he had retired at the
expiration of the Continuation Period at age 60
for the purpose of determining benefits due and
payable to him under the Company's Employees'
Retirement Plan and The Gradall Company Benefit
Restoration Plan,
(iv) provide the Executive with outplacement services
by a firm selected by the Executive, at the
expense of the Company, in an amount up to
fifteen percent (15%) of the Executive's Base
Salary, and
(v) provide the Executive with the benefits set forth
in Section 15.
(e) The term "Good Reason" shall mean (i) a material breach of
this Agreement by the Company or its successor; (ii) a
reduction in the Executive's Base Salary or employee benefits
referred to in Sections 8 and 9 hereof; provided, however,
that any generally applicable change to or reduction of a
Broad-Based Benefit shall not be
5
<PAGE> 6
considered a reduction in employee benefits; (iii) a material
reduction in fringe benefits; (iv) a change of 5% or more in
the Bonus Target Percentage applicable to the Executive under
the JLG Management Incentive Plan as in effect for calendar
year 1999, or a variance of the range of the Company Modifier
Percentage or the Individual Performance Modifier from the
respective ranges thereof applicable to other officers of JLG;
(v) the assignment or demotion of the Executive to a position
that is not a senior executive management position or that
involves the performance of functions which are not senior
executive management functions; (vi) a change in the
Executive's reporting responsibility to someone other than the
President of JLG; (vii) a change in position, duties or
responsibilities that renders the Executive ineligible to
participate in JLG's stock option plans or reduces the number
of shares covered by options awarded to him thereunder from
the number of option shares he would have been awarded had
such change not been made; (viii) the relocation of the
Executive's principal work place without his consent to a
location outside the New Philadelphia, Ohio metropolitan area.
(f) In the event of termination pursuant to Sections 10(a), 10(b),
10(c), or 10(d) hereof, the Executive shall receive the entire
balance of any sums earned by him prior to termination and
such other benefits which may be due him including, but not
limited to, a prorata portion of amounts earned by the
Executive under any incentive compensation plans maintained by
the Company or JLG.
(g) Upon termination of his employment, for any reason, the
Executive shall promptly surrender to the Company all property
provided him by the Company for use in relation to his
employment, and, in addition, the Executive shall surrender to
the Company any and all documents, files, records or other
material and information of or pertaining to the Company or
its business operations.
(h) The Company (or any successor company) shall pay or reimburse
the Executive for all costs and expenses including, without
limitation, court costs and reasonable attorneys' fees,
incurred by Executive in connection with any claim, action or
proceeding brought to enforce or interpret any provision of
this Section 10 or challenging the validity or enforceability
of any provision thereof.
SECTION 11. NON-COMPETITION. During the period of his
6
<PAGE> 7
employment with the Company, the Executive covenants and agrees that he shall
not do any of the following:
(a) Own, manage, operate, join, control, be employed by,
participate in, or be connected in any manner with the
ownership, management, operation, or control of any business
that is competitive with the types of businesses conducted by
the Company at that time within any areas in which the Company
intends to conduct business, as known to Executive by reason
of Executive's affiliation with the Company. Nothing herein
shall prohibit Executive from owning stock or other securities
of a competitor, provided that Executive's equity interest
shall not exceed five percent (5%) of the total outstanding
stock of such competitor, and provided Executive, in fact,
does not have the power to control or direct the management or
policies of such competitor and does not serve as a director
or officer thereof, and is not otherwise associated with any
competitor, except as consented to by the Company.
(b) Induce or influence any employee, independent contractor,
agent, customer or supplier of the Company to terminate or
curtail his, her or its employment or business relationship
with the Company.
(c) Solicit or sell any product or service which is competitive
with those offered by the Company to any customer which did
business with the Company at any time during the term of
Executive's employment with the Company.
SECTION 12. CONFIDENTIALITY. During the period of his employment by the
Company and for a period of six (6) months following its termination, for any
reason, the Executive covenants and agrees that he shall not use, disseminate,
or disclose, for his own benefit, or for the benefit of any person, firm,
business, or other entity, any confidential information pertaining to the
Company unless such information is first made public by the Company; the Company
authorizes, in writing, the use, dissemination, or disclosure of such
information; or as otherwise required by law. For purposes of this subparagraph,
confidential information is information which is not generally known to the
Company's industry, and relates, by way of example and not by way of limitation,
to the Company's manufacturing process, cost and pricing data, supply sources,
contracts, and customer lists.
SECTION 13. MITIGATION. The Executive shall not be obligated to seek
other employment following termination of employment hereunder; however, any
amounts owing to Executive
7
<PAGE> 8
under Section 10(d)(other than subsection (ii) thereof) of this Agreement shall
be offset against all amounts earned by the Executive from other employment
(including self employment) beginning one year after termination of employment
hereunder. The Executive's entitlements under Section 10(d)(ii) shall terminate
immediately upon the Executive's becoming entitled to coverage of a similar
nature under benefit plans of a subsequent employer, subject to the Executive's
rights to continuation coverage under the Company's plans at his expense under
COBRA.
SECTION 14. GOLDEN PARACHUTE EXCISE TAX. (a) If any of the payments or
benefits received or to be received by the Executive in connection with a Change
in Control or the Executive's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement) (such
payments or benefits, excluding the Gross-Up Payment defined below, being
hereinafter referred to as the "Total Payments") will be subject to the excise
tax imposed under Section 4999 (the "Excise Tax"), then the provisions of either
subclause (i) or (ii) of this section shall apply: (i) if the Total Payments are
less than 115% of the maximum amount of such payments that could be made without
imposition of Excise Tax (the "Safe Harbor Amount"), then the Total Payments
will be reduced to the Safe Harbor Amount; or (ii) if the Total Payments equal
or exceed 115% of the Safe Harbor Amount, the Company shall pay to the Executive
an additional amount (the "Gross-Up Payment") such that the net amount retained
by the Executive, after deduction of any Excise Tax on the Total Payments and
any federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments.
(b) The calculations necessary to give effect to this section shall be
performed by the accounting firm which was immediately prior to the Change in
Control, the Company's independent auditor (the "Auditor"). For purposes of
determining whether any of the Total Payments will exceed the Safe Harbor Amount
and the amount of the Excise Tax, if any, (i) all of the Total Payments shall be
treated as "parachute payments" (within the meaning of section 280G(b)(2) of the
Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably
acceptable to the Executive and selected by the Auditor, such payments or
benefits (in whole or in part) do not constitute parachute payments, including
by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of section 280G(b)(4)(B) of the
Code) in excess of the Base Amount allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be
8
<PAGE> 9
determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the date of termination of employment, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes.
(c) In the event that subclause (i) of this Section 14(a) applies, the
Executive and the Company shall jointly agree on the allocation of any reduction
in the Total Payments.
(d) The provisions of this Section 14 shall be applied without giving
effect to any cap or limitation on benefits under the Company's Supplemental
Executive Retirement Plan that is intended to avoid Excise Tax, and the Company
hereby waives the application of any such provision to the Executive.
SECTION 15. SUPPLEMENTAL RETIREMENT BENEFITS. In the event that the
Executive's employment is terminated under circumstances entitling him to the
payments and benefits set forth in Section 10(e), the Executive shall be
entitled to the following additional benefits:
(a) Under the Company's Supplemental Executive Retirement Plan (i)
three years of additional service credit for vesting purposes; and (ii) three
additional years of Company contributions, each in an amount not less than the
Company contribution for the year prior to the year of termination of
employment.
(b) Under the Deferred Compensation Agreement between the Executive and
the Company dated July 19, 1989, the Executive shall be treated as if he had
retired from the Company on or after age 65.
(c) The Company shall continue to pay all premiums due under The New
England Mutual Life Insurance Company Policy No. 6801161 insuring the life of
Executive in the amount of $500,000 and shall otherwise comply with the
provisions of the Split-Dollar Life Insurance Agreement between the Company and
the Executive dated August 30, 1995.
SECTION 16. NOTICES. Any notice required or desired to be given
pursuant to this Agreement shall be in writing and sent by certified mail to the
parties at the following addresses, or to such other addresses as either may
designate in writing to the other party:
9
<PAGE> 10
To the Company: Gradall Industries, Inc.
406 Mill Avenue S.W.
New Philadelphia, Ohio 44663
To Executive: Barry L. Phillips
403 Hillcrest Drive N.E.
New Philadelphia, Ohio 44663
SECTION 17. WAIVER. Failure to insist upon strict compliance with any
of the terms, covenants, or conditions hereof shall not be deemed a waiver of
such term, covenant, or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 18. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision. In the event that any part of a covenant contained herein is
determined by a court of law to be invalid, a judicially enforceable provision
shall be substituted in its place. Any covenant so modified shall be binding
upon the parties and shall have the same force and effect as if originally set
forth in this Agreement.
SECTION 19. MODIFICATION. This Agreement may be amended only in
writing, signed by both parties hereto.
SECTION 20. HEADINGS. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the provisions
thereof.
SECTION 21. ASSIGNMENT. The Executive acknowledges that the services to
be rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. However, the rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company including, but not limited to, any corporation which
may acquire all or substantially all of the Company's assets and business, or
which may be consolidated or merged with or into the Company.
SECTION 22. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Ohio.
SECTION 23. NOVATION. When it becomes effective, this Agreement will
terminate and supersede the Prior Employment Agreement.
10
<PAGE> 11
SECTION 24. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the Company and the Executive with regard to
all matters herein. There are no other agreements, conditions or
representations, oral or written, express or implied, with regard thereto.
SECTION 25. EFFECTIVENESS. This Amended and Restated Employment
Agreement shall become effective only upon the consummation of the merger
contemplated by the Agreement and Plan of Merger among Gradall Industries, Inc.,
JLG Acquisition Corp. and JLG Industries, Inc. dated as of May 10, 1999. Unless
and until such merger is consummated, the Amended and Restated Employment
Agreement between the Company and the Executive dated as January 1, 1998 shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
GRADALL INDUSTRIES, INC.
By: /s/ Sangwoo Ahn
-------------------------------
Sangwoo Ahn
Chairman
Barry L. Phillips
<PAGE> 1
EXHIBIT 22
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of the 10th day of May, 1999
by and between GRADALL INDUSTRIES, INC., a Delaware corporation (the "Company")
and JOSEPH H. KELLER, JR., (the "Executive")
WITNESSETH THAT:
WHEREAS, the Executive has been employed by the Company pursuant to the
terms of an Employment Agreement between The Gradall Company and the Executive
dated November 1, 1995 (the "Prior Employment Agreement"), and
WHEREAS, the Company and the Executive desire to amend and restate the
Prior Employment Agreement to provide for the continued employment of the
Executive after the sale of the Company to JLG Industries, Inc.
("JLG") upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. DUTIES. The Company hereby agrees to continue to employ the
Executive in an executive capacity and the Executive hereby agrees to continue
to serve the Company in that capacity in accordance with the terms and
conditions set forth in this Agreement. The Executive shall devote his best
efforts and skills, energy and attention to the business of the Company.
2. TERM. Subject to prior termination as set forth in Section 7 hereof,
the term of this Agreement shall be for a one year period, beginning on the date
hereof, which term shall be automatically renewed for successive one year
periods, until terminated pursuant to Section 7 hereof.
3. COMPENSATION. The Company shall pay to the Executive as compensation
for his services hereunder a base salary of $7,428.00 per month, or at the rate
currently existing, whichever is higher. The salary provided for herein shall be
subject to adjustment based on the annual reviews conducted by the Company.
Effective on the date this Agreement becomes effective, base salary shall
include an additional $12,360 per annum in lieu of the automobile allowance
previously provided. In addition to the Executive's base salary, the Executive
shall continue to participate in any incentive compensation plans established by
the Company from time to time, provided that the Executive is eligible to
participate in such plans pursuant to the terms
<PAGE> 2
thereof; provided that the amount payable to the Executive under existing
Company management incentive compensation plans for 1999 shall be payable on or
before September 30, 1999 in an amount equal to 7/12 of the bonus that would be
payable for calendar year 1999 assuming that the Company would have achieved 24%
growth in earnings per share compared to 1998; and provided further that,
effective as of August 1, 1999, the Executive shall participate in the
management incentive compensation plans of JLG as approved by the JLG
Compensation Committee from time to time, and shall no longer participate in
existing Company management incentive compensation plans; and provided further
that the Executive shall discontinue participation in the Company's stock based
compensation plans and shall participate as approved by the JLG Compensation
Committee from time to time in JLG's stock based compensation plans. The Company
shall contribute for the account of the Executive $5,000 per year to the
Supplemental Executive Retirement Plan ("SERP") maintained by the Company.
4. EXPENSES. Subject to the Company's policies and procedures in effect
from time to time, the Executive is authorized to incur reasonable expenses in
connection with the business of the Company and the performance of his duties
hereunder, including expenses for entertainment, travel and similar items.
Subject to the Company's policies and procedures, in effect from time to time,
the Company will reimburse the Executive for all such expenses upon the
presentation by the Executive of an itemized account of such expenditures and
any other documentation or substantiation of expenses which may be required for
compliance with applicable state and federal tax laws.
5. VACATIONS. The Executive shall be entitled to four weeks of vacation
each year, during which time his compensation shall be paid in full.
6. TERMINATION. This Agreement may be terminated in accordance with the
following terms and conditions:
(a) The Company may terminate this Agreement at any time, without
cause, upon written notice to the Executive, provided that the
Company shall continue to pay to the Executive all amounts he
would otherwise receive under this Agreement for a period of
14 months from the effective date of such termination
including, but not limited to, salary, incentive compensation,
contributions to the SERP and continuation of coverage under
life and medical insurance programs in which the Executive
participated; provided, however, that to the extent that any
benefit provided to the Executive prior to the date this
Agreement becomes effective is, or is
2
<PAGE> 3
equivalent to, a Broad-Based Benefit, the benefit provided to
the Executive shall reflect any generally applicable change to
or reduction of such Broad-Based Benefit. The term,
Broad-Based Benefit, shall mean any applicable benefit under
any plan, program or arrangement that is provided or made
available to employees generally and shall not include any
benefit considered to be an "executive" benefit that is
provided or made available only to upper-level management. The
amount of incentive compensation payable to the Executive
under this Section 6(a) shall be based on an annual amount
that is no less than 40% of the Executive's base salary for
the applicable year. Notwithstanding the above, the amount
required to be paid by the Company pursuant to this Section
6(a) shall be reduced by any amounts paid to or for the
Executive by any other company for which the Executive
provides services during such period. The Executive's
entitlements to welfare benefits (including but not limited to
medical, disability, life insurance, travel and AD&D insurance
benefits) under this Section 6(a) shall terminate immediately
upon the Executive's becoming entitled to coverage of a
similar nature under benefit plans of a subsequent employer,
subject to the Executive's rights to continuation coverage
under the Company's plans at his expense under COBRA.
(b) The Company may terminate this Agreement upon written notice
to the Executive and shall have no obligation to pay any
amounts provided for under this Agreement if the Executive
commits any act of fraud or dishonesty, is convicted of a
felony or commits an act of gross negligence or willful
misconduct which are injurious to the Company of its
stockholders.
7. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the Company and the Executive with regard to
the subject matter hereof and supersedes all other agreements, conditions or
representations, oral or written, express or implied, including, without
limitation, all prior employment agreements by and between the Company and the
Executive.
9. EFFECTIVENESS. This Agreement shall become effective only upon
consummation of the merger contemplated by the Agreement and Plan of Merger
among GRADALL INDUSTRIES, INC., JLG ACQUISITION CORP. and JLG INDUSTRIES, INC.,
dated May 10, 1999.
3
<PAGE> 4
Unless and until such merger is consummated, the Employment Agreement between
the Company and the Executive dated as of November 1, 1995 shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above set forth.
GRADALL INDUSTRIES, INC.
By:
Barry L. Phillips
Joseph H. Keller, Jr.
4
<PAGE> 1
EXHIBIT 23
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of the 10th day of May, 1999
by and between GRADALL INDUSTRIES, INC., a Delaware corporation (the "Company")
and JAMES C. CAHILL, (the "Executive")
WITNESSETH THAT:
WHEREAS, the Executive has been employed by the Company pursuant to the
terms of an Employment Agreement between The Gradall Company and the Executive
dated November 1, 1995 (the "Prior Employment Agreement"), and
WHEREAS, the Company and the Executive desire to amend and restate the
Prior Employment Agreement to provide for the continued employment of the
Executive after the sale of the Company to JLG Industries, Inc.
("JLG") upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. DUTIES. The Company hereby agrees to continue to employ the
Executive in an executive capacity and the Executive hereby agrees to continue
to serve the Company in that capacity in accordance with the terms and
conditions set forth in this Agreement. The Executive shall devote his best
efforts and skills, energy and attention to the business of the Company.
2. TERM. Subject to prior termination as set forth in Section 7 hereof,
the term of this Agreement shall be for a one year period, beginning on the date
hereof, which term shall be automatically renewed for successive one year
periods, until terminated pursuant to Section 7 hereof.
3. COMPENSATION. The Company shall pay to the Executive as compensation
for his services hereunder a base salary of $6,930.00 per month, or at the rate
currently existing, whichever is higher. The salary provided for herein shall be
subject to adjustment based on the annual reviews conducted by the Company.
Effective on the date this Agreement becomes effective, base salary shall
include an additional $12,360 per annum in lieu of the automobile allowance
previously provided. In addition to the Executive's base salary, the Executive
shall continue to participate in any incentive compensation plans established by
the Company from time to time, provided that the Executive is eligible to
participate in such plans pursuant to the terms
<PAGE> 2
thereof; provided that the amount payable to the Executive under existing
Company management incentive compensation plans for 1999 shall be payable on or
before September 30, 1999 in an amount equal to 7/12 of the bonus that would be
payable for calendar year 1999 assuming that the Company would have achieved 24%
growth in earnings per share compared to 1998; and provided further that,
effective as of August 1, 1999, the Executive shall participate in the
management incentive compensation plans of JLG as approved by the JLG
Compensation Committee from time to time, and shall no longer participate in
existing Company management incentive compensation plans; and provided further
that the Executive shall discontinue participation in the Company's stock based
compensation plans and shall participate as approved by the JLG Compensation
Committee from time to time in JLG's stock based compensation plans. The Company
shall contribute for the account of the Executive $5,000 per year to the
Supplemental Executive Retirement Plan ("SERP") maintained by the Company.
4. EXPENSES. Subject to the Company's policies and procedures in effect
from time to time, the Executive is authorized to incur reasonable expenses in
connection with the business of the Company and the performance of his duties
hereunder, including expenses for entertainment, travel and similar items.
Subject to the Company's policies and procedures, in effect from time to time,
the Company will reimburse the Executive for all such expenses upon the
presentation by the Executive of an itemized account of such expenditures and
any other documentation or substantiation of expenses which may be required for
compliance with applicable state and federal tax laws.
5. VACATIONS. The Executive shall be entitled to four weeks of vacation
each year, during which time his compensation shall be paid in full.
6. TERMINATION. This Agreement may be terminated in accordance with the
following terms and conditions:
(a) The Company may terminate this Agreement at any time, without
cause, upon written notice to the Executive, provided that the
Company shall continue to pay to the Executive all amounts he
would otherwise receive under this Agreement for a period of
14 months from the effective date of such termination
including, but not limited to, salary, incentive compensation,
contributions to the SERP and continuation of coverage under
life and medical insurance programs in which the Executive
participated; provided, however, that to the extent that any
benefit provided to the Executive prior to the date this
Agreement becomes effective is, or is
2
<PAGE> 3
equivalent to, a Broad-Based Benefit, the benefit provided to
the Executive shall reflect any generally applicable change to
or reduction of such Broad-Based Benefit. The term,
Broad-Based Benefit, shall mean any applicable benefit under
any plan, program or arrangement that is provided or made
available to employees generally and shall not include any
benefit considered to be an "executive" benefit that is
provided or made available only to upper-level management. The
amount of incentive compensation payable to the Executive
under this Section 6(a) shall be based on an annual amount
that is no less than 40% of the Executive's base salary for
the applicable year. Notwithstanding the above, the amount
required to be paid by the Company pursuant to this Section
6(a) shall be reduced by any amounts paid to or for the
Executive by any other company for which the Executive
provides services during such period. The Executive's
entitlements to welfare benefits (including but not limited to
medical, disability, life insurance, travel and AD&D insurance
benefits) under this Section 6(a) shall terminate immediately
upon the Executive's becoming entitled to coverage of a
similar nature under benefit plans of a subsequent employer,
subject to the Executive's rights to continuation coverage
under the Company's plans at his expense under COBRA.
(b) The Company may terminate this Agreement upon written notice
to the Executive and shall have no obligation to pay any
amounts provided for under this Agreement if the Executive
commits any act of fraud or dishonesty, is convicted of a
felony or commits an act of gross negligence or willful
misconduct which are injurious to the Company of its
stockholders.
7. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the Company and the Executive with regard to
the subject matter hereof and supersedes all other agreements, conditions or
representations, oral or written, express or implied, including, without
limitation, all prior employment agreements by and between the Company and the
Executive.
9. EFFECTIVENESS. This Agreement shall become effective only upon
consummation of the merger contemplated by the Agreement and Plan of Merger
among GRADALL INDUSTRIES, INC., JLG ACQUISITION CORP. and JLG INDUSTRIES, INC.,
dated May 10, 1999.
3
<PAGE> 4
Unless and until such merger is consummated, the Employment Agreement between
the Company and the Executive dated as of November 1, 1995 shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above set forth.
GRADALL INDUSTRIES, INC.
By:
Barry L. Phillips
James C. Cahill
4
