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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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OMNIQUIP INTERNATIONAL, INC.
(Name of Subject Company)
OMNIQUIP INTERNATIONAL, INC.
(Name of Person Filing Statement)
COMMON STOCK, $0.01 PAR VALUE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
681969 10 1
(CUSIP Number of Class of Securities)
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THOMAS K. BRESLIN
VICE PRESIDENT -- FINANCE AND CHIEF FINANCIAL OFFICER
OMNIQUIP INTERNATIONAL, INC.
222 EAST MAIN STREET
PORT WASHINGTON, WISCONSIN 53074
(414) 268-8965
(Name, address and telephone number of person authorized to receive
notices and communications on behalf of the person(s) filing statement)
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WITH A COPY TO:
MATTHEW G. MALONEY, ESQ.
DICKSTEIN SHAPIRO MORIN & OSHINSKY LLP
2101 L STREET, NW
WASHINGTON, DC 20037
(202) 785-9700
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is OmniQuip International, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 222 East Main Street, Port Washington, Wisconsin 53074. The title
of the class of equity securities to which this Solicitation/ Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is the common stock,
$0.01 par value, including the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of August 21, 1998,
as amended (the "Rights Agreement"), between the Company and First Chicago Trust
Company of New York, as Rights Agent (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to the cash tender offer made by Telescope
Acquisition Inc. ("Purchaser"), a Delaware corporation and a direct wholly-owned
subsidiary of Textron Inc., a Delaware corporation ("Parent"), disclosed in a
Tender Offer Statement on Schedule 14D-1, dated August 27, 1999 (the "Schedule
14D-1"), to purchase all of the outstanding Shares at a price of $21.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated August 27,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together collectively, with any amendments or supplements thereto, constitute
the "Offer"). Capitalized terms used herein and not otherwise defined have the
meanings ascribed thereto in the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 21, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides, among other things, for the
making of the Offer by Purchaser and further provides that, as soon as
practicable after the completion of the Offer and the satisfaction or waiver of
the conditions set forth in the Merger Agreement, Purchaser will be merged with
and into the Company (the "Merger"), and the Company will continue as the
surviving corporation (the "Surviving Corporation") of the Merger as a
wholly-owned subsidiary of Parent.
The Schedule 14D-1 states that the address of the principal executive
offices of Parent and Purchaser is 40 Westminster Street, Providence, Rhode
Island 02903.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b) The provisions of the Merger Agreement relating to the election and
designation of directors to the Board of Directors of the Company (the "Board")
are subject to Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which requires the Company to mail to its stockholders an
Information Statement (the "Information Statement") containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Reference is made to the information contained under the captions
"Executive Compensation" and "Certain Transactions" in the accompanying
Information Statement. The Information Statement is attached as Annex I hereto
and is incorporated herein by reference. Except as described herein or
incorporated herein by reference, to the knowledge of the Company as of the date
hereof, there are no material contracts, agreements, arrangements or
understandings or any actual or potential conflicts of interest between the
Company or its affiliates and (i) its executive officers, directors or
affiliates or (ii) Parent, Purchaser and their executive officers, directors or
affiliates.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified by reference to the full text of the Merger
Agreement, which is incorporated herein by reference and a copy of which has
been filed as Exhibit 1 to this Schedule 14D-9. Capitalized terms used and not
defined herein have the respective meanings assigned to them in the Merger
Agreement.
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The Offer. The Merger Agreement provides that no later than five business
days from and including the date of initial public announcement of the Merger
Agreement Purchaser will commence the Offer. The parties to the Merger Agreement
have agreed in the Merger Agreement that the obligations of Purchaser to accept
for payment and pay for Shares tendered pursuant to the Offer will be subject
only to the satisfaction or waiver of the conditions set forth in Annex A to the
Merger Agreement (the "Offer Conditions"), including the Minimum Condition (as
defined in the Merger Agreement). Under the Merger Agreement, Purchaser
expressly reserves the right, in its sole discretion, to waive any such
condition (other than the Minimum Condition), provided, that, without the prior
written consent of the Company, the Purchaser will not (i) decrease the amount
to be paid per share in the Offer to below $21.00, (ii) change the form of
consideration to be paid in the Offer, (iii) reduce the maximum number of Shares
to be purchased in the Offer or the Minimum Condition, (iv) impose conditions to
the Offer in addition to the Offer Conditions or modify the Offer Conditions in
a manner adverse to the holders of Shares or (v) amend any other term of the
Offer in a manner adverse to the holders of the Shares, (provided that a waiver
by Purchaser of any condition other than the Minimum Condition shall not be
deemed to be adverse to the holders of the Shares).
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer on one or more occasions for up to ten business
days for each such extension beyond the then scheduled expiration date (the
initial scheduled expiration date being 20 business days following commencement
of the Offer), if at the then scheduled expiration date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for the
Shares shall not be satisfied or waived, until such time as such conditions are
satisfied or waived (and, at the request of the Company, Purchaser shall,
subject to Purchaser's right to terminate the Merger Agreement pursuant to
Article IX thereof, extend the Offer for additional periods, unless the only
conditions not satisfied or earlier waived on the then scheduled expiration date
are one or more of the Minimum Condition and the conditions set forth in
paragraph (b) of the Offer Conditions, provided that (x) if the only condition
not satisfied is the Minimum Condition, the satisfaction or waiver of all other
conditions shall have been publicly disclosed at least five business days before
termination of the Offer and (y) if paragraph (b) of the Offer Conditions has
not been satisfied and the failure to so satisfy can be remedied, the Offer
shall not be terminated unless the failure is not remedied within 10 calendar
days after Purchaser has furnished the Company written notice of such failure)
and (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC"
or the "Commission") or the staff thereof applicable to the Offer and (iii)
extend the Offer for an aggregate period of not more than 5 business days beyond
the latest expiration date that would otherwise be permitted under clause (i) or
(ii) of this sentence if there shall not have been tendered sufficient Shares so
that the Merger could be effected without a meeting of the Company's
stockholders in accordance with Section 253 of the Delaware General Corporation
Law ("DGCL"). Purchaser shall have no obligation to pay interest on the purchase
price of tendered Shares.
Company Board Representation. The Merger Agreement provides that, promptly
(but in any event within two business days) upon purchase by Purchaser of a
majority of the outstanding Shares pursuant to the Offer, either (a) a majority
of the members of the Board shall resign and the remaining members of the Board
shall fill all of the vacated Board positions with persons designated by Parent
or (b) the size of the Board shall be expanded and the vacant seats filled with
persons designated by Parent so that Parent's designees shall constitute a
majority of the members of the Board. In either case, at all times thereafter
through the Effective Time a majority of the members of the Board shall be
persons designated by Parent. The Merger Agreement further provides that the
Company's obligations to appoint designees to its Board will be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
The Merger. The Merger Agreement provides, upon the terms and subject to
the conditions thereof, at the Effective Time and in accordance with the DGCL,
Purchaser will be merged with and into the Company. As a result of the Merger,
the separate corporate existence of Purchaser will cease and the Company will
continue as the Surviving Corporation.
The Merger Agreement provides that the certificate of incorporation of
Purchaser, as in effect immediately prior to Effective Time, shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law (except that the name of the Surviving Corporation
shall be changed to
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OmniQuip Textron International Inc.). At the Effective Time, the by-laws of
Purchaser, as in effect immediately prior to the Effective Time will be the
by-laws of the Surviving Corporation and until thereafter altered, amended or
repealed as provided by law. The Merger Agreement provides that the directors of
Purchaser immediately prior to the Effective Time will be the initial directors
of the Surviving Corporation and the officers of the Company immediately prior
to the Effective Time will be the initial officers of the Surviving Corporation,
each to hold office until their respective successor shall be duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and by-laws of the Surviving
Corporation.
At the Effective Time, each Share and each associated Right that are issued
and outstanding immediately prior to the Effective Time (other than Shares (and
associated Rights) owned by the Company or by Parent, Purchaser or any direct or
indirectly wholly-owned subsidiary of the Company, Parent or Purchaser, which
shall be cancelled, and other than Shares (and associated Rights), if any
(collectively, "Dissenting Shares"), held by stockholders who have properly
exercised appraisal rights under Section 262 of the DGCL) will, by virtue of the
Merger and without any action on the part of the Company, Purchaser or the
holders of the Shares, be cancelled, extinguished and converted into and become
a right to receive $21.00 in cash (the "Merger Consideration"), payable to the
holder thereof, without interest, upon surrender of the certificate formerly
representing such Share, less any required withholding taxes. All Shares that
are owned by the Company (as treasury stock or otherwise) and all Shares owned
by Parent, Purchaser or any direct or indirect wholly-owned subsidiary of the
Company, Parent or Purchaser, if any, will be canceled and retired and cease to
exist, and no cash or other consideration will be delivered in exchange
therefore.
The Merger Agreement provides that Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by a stockholder who
has not voted in favor of the Merger and who is otherwise entitled to demand and
who properly demands appraisal for such Shares in accordance with all the
provisions of the DGCL concerning the rights of holders of Shares to dissent
from the Merger and require appraisal of their Shares will not be converted into
or exchangeable for the right to receive the Merger Consideration unless such
holder fails to perfect or otherwise effectively withdraws or loses such
holder's right to appraisal, if any. Such holders will be entitled to receive
the appraised value of such Shares held by them in accordance with the
applicable provisions of the DGCL. If, after the Effective Time, such holder
fails to perfect or loses its right to appraisal, each Share of such holder will
be treated as if it had been converted as of the Effective Time into the right
to receive the Merger Consideration, without any interest thereon.
The Merger Agreement provides that each share of common stock of Purchaser
will be converted into one share of common stock of the Surviving Corporation.
The Merger Agreement provides that each option granted to a Company
employee or director pursuant to the Company's Amended and Restated 1996
Long-Term Incentive Plan (the "Long-Term Incentive Plan") and the 1996 Directors
Non-Qualified Stock Option Plan (the "Directors Plan"; and collectively with the
Long-Term Incentive Plan, the "Stock Plans") to acquire Shares (each such option
hereinafter is referred to as an "Option") that is outstanding immediately prior
to the Effective Time, whether or not then vested or exercisable, with respect
to which, as of the Effective Time, $21.00 exceeds the exercise price per share
shall, effective as of immediately prior to the Effective Time, be canceled in
exchange for a single lump sum cash payment equal to the product of (1) the
number of Shares subject to such Option and (2) the excess of $21.00 over the
exercise price per share of such Option (subject to any applicable withholding
taxes). Each Option that is outstanding immediately prior to the Effective Time,
whether or not then vested or exercisable, with respect to which, as of the
Effective Time, $21.00 does not exceed the exercise price per share shall,
effective as of immediately prior to the Effective Time, be canceled and no
payments shall be made with respect thereto. Prior to the Effective Time, the
Company (a) will obtain any consents from holders of Options under the Directors
Plan necessary to give effect to the aforementioned provisions and (b) will use
its reasonable best efforts to obtain consents to the cancellation of Options
with exercise prices that exceed $21.00 per share from holders of Options under
the Long-Term Incentive Plan.
Immediately prior to the Effective Time, each Share previously issued in
the form of restricted stock pursuant to the Long-Term Incentive Plan shall
fully vest and all restrictions thereon shall be removed.
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Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's organization and authorizations, capital stock, subsidiaries,
noncontravention and consents, filings with the SEC, financial statements, no
material adverse change, legal proceedings, subsequent events, commissions and
fees, offering documents, employee benefit plans, compliance with the law,
rights plan, intellectual property, taxes and opinion of financial advisor. Some
of the representations are qualified by the limitation that, in order for the
representation to have been breached, the event breaching the representation
must have a Material Adverse Effect. A "Material Adverse Effect" as to the
Company means any adverse change or changes in the financial condition,
properties, business or results of operations of the Company or any of its
subsidiaries, which individually or in the aggregate is or are material to the
Company and its subsidiaries, taken as a whole, other than (i) any change or
effect arising out of general economic conditions or (ii) any change or effect
which the Company has disclosed in writing, prior to the date hereof, to Parent
has occurred or is likely to occur.
In addition, the Merger Agreement contains representations and warranties
of Parent and Purchaser concerning their organization, authorizations of the
agreement, noncontravention and consents, commissions and fees, and financing.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
the Company has covenanted and agreed that, prior to the Effective Time, the
Company and its subsidiaries will conduct their operations according to their
ordinary and usual course of business and consistent with past practice. The
Merger Agreement further provides that, without limiting the generality of the
foregoing, and except as expressly contemplated by the Merger Agreement, or as
set forth in the Disclosure Schedules, prior to the Effective Time, neither the
Company nor any of its subsidiaries will, without the prior written consent of
Parent:
(a) except for shares to be issued or delivered pursuant to awards
outstanding on the date hereof under the Company's Stock Plans, issue,
deliver, sell, dispose of, pledge or otherwise encumber, or authorize or
propose the issuance, sale, disposition or pledge or other encumbrance of
(A) any additional shares of capital stock of any class (including the
Shares), or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of capital stock, or any
rights, warrants, options, calls, commitments or any other agreements of
any character to purchase or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock, or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding capital stock,
including the Shares;
(c) split, combine, subdivide or reclassify any Shares or declare, set
aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any Shares or otherwise
make any payments to stockholders in their capacity as such, other than the
payment of a regular quarterly cash dividend on the Shares on or about
September 30, 1999 of $0.01 per Share payable to stockholders of record on
September 15, 1999 and except for dividends by a wholly-owned subsidiary of
the Company;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);
(e) adopt any amendments to its Certificate of Incorporation or
By-Laws or alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
subsidiary of the Company;
(f) make any acquisition, by means of merger, consolidation or
otherwise, or material disposition (other than acquisition or disposition
of inventory, supplies and products in the ordinary course of
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business, consistent with past practice), of assets or securities, or
permit any assets to become subject, other than in the ordinary course of
business, to any material lien or encumbrance;
(g) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any wholly-
owned subsidiary of the Company;
(h) grant any increases in the compensation of any of its directors,
officers or key employees; for avoidance of doubt "compensation" being
defined to include all stock options, stock appreciation rights, phantom
stock units, restricted stock grants, contingent stock grants or similar
benefits;
(i) grant any increases in the compensation of any of its employees,
other than employees who are directors, officers or key employees, except
in the ordinary course of business consistent with past practice;
(j) pay or agree to pay or accelerate the payment of any pension,
retirement allowance or other employee benefit not required or contemplated
by any of the existing benefit, severance, termination, pension or
employment plans, agreements or arrangements as in effect on the date
hereof to any director or officer of the Company or any of its
subsidiaries, whether past or present;
(k) enter into any new or amend any existing employment or severance
or termination agreement with any such director or officer;
(l) except as may be required to comply with applicable law, become
obligated under any new pension plan, welfare plan, multiemployer plan,
employee benefit plan, severance plan, benefit arrangement, or similar plan
or arrangement, which was not in existence on the date hereof, or amend any
such plan or arrangement in existence on the date hereof if such amendment
would have the effect of enhancing any benefits thereunder;
(m) settle or compromise any material claims (including any claims in
respect of tax liabilities or refunds) or litigation or, except in the
ordinary and usual course of business, modify, amend or terminate any of
its material contracts or waive, release or assign any material rights or
claims;
(n) make any change, other than as required by applicable law,
regulation or change in generally accepted accounting principles, in
accounting policies or procedures applied by the Company (including tax
accounting policies and procedures);
(o) except as otherwise required by applicable law or regulation, make
any tax election or permit any insurance policy naming it as a beneficiary
or a loss payable payee to be canceled or terminated, except in the
ordinary course of business;
(p) take any action to amend or alter the Rights Agreement in any
manner adverse to Parent's, Purchaser's or the Company's ability to
commence or consummate the transactions contemplated by the Merger
Agreement pursuant to the terms hereof;
(q) incur any capital expenditures, other than in the ordinary course
of business and consistent with past practices; or
(r) authorize, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
No Solicitation of Transactions. The Merger Agreement provides that the
Company, its affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any existing discussions or
negotiations, if any, with any parties conducted heretofore with respect to any
Takeover Proposal (as defined below). The Merger Agreement also provides that
the Company, its subsidiaries, directors, employees, representatives and agents
may furnish information and access, in each case only in response to a request
for such information or access to any person made after the date hereof which
was not initiated, solicited or knowingly encouraged by the Company or any of
its affiliates or any of its or their
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respective officers, directors, employees, representatives or agents after the
date hereof (with respect to confidential information, pursuant to appropriate
confidentiality agreements), and may participate in discussions and negotiate
with such entity or group concerning any Takeover Proposal, only if such entity
or group has submitted a bona fide proposal to the Board relating to any such
transaction and (a) if the Board determines in good faith, after receiving
advice from its independent financial advisor, that such entity or group has
submitted to the Company a Takeover Proposal which is reasonably likely to be a
Superior Proposal (as defined below), and (b) if the Board determines, in its
good faith judgment, based on the opinion of outside legal counsel to the
Company, that failing to take such action would constitute a breach of such
Board's fiduciary obligations under applicable law. The Company shall promptly
notify Parent if any proposal or offer, or any inquiry or contact with any
person with respect thereto, is made and shall, in any such notice to Parent,
indicate in reasonable detail the identity of the offeror and the terms and
conditions of any proposal or offer, or any such inquiry or contact. The Company
is required to promptly provide to Parent any non-public information concerning
the Company or its subsidiaries provided to any other person which was not
previously provided to Parent and to keep Parent promptly advised of all
developments which could reasonably be expected to culminate in the Board
withdrawing, modifying or amending its recommendation of the Offer, the Merger
and other transactions contemplated by the Merger Agreement. Except as set forth
in Section 7.2 of the Merger Agreement, neither the Company nor any of its
affiliates, nor any of its or their respective officers, directors, employees,
representatives or agents, shall, directly or indirectly, knowingly encourage or
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Parent and Purchaser, any affiliate or associate of Parent and
Purchaser, or any designees of Parent or Purchaser) concerning any Takeover
Proposal; provided, that the Company or the Board may take, and disclose to the
Company's stockholders, a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act; provided further, that the Board may not
recommend that the stockholders of the Company tender their Shares in connection
with any such tender offer unless the Board determines in its good faith
judgment based on the opinion of independent outside legal counsel to the
Company, that failing to take such action would constitute a breach of the
fiduciary duty of the Board under applicable law. As used in the Merger
Agreement, "Takeover Proposal" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving the Company
or any subsidiary of the Company or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the assets
of, the Company or its subsidiaries other than transactions contemplated by the
Merger Agreement. As used in the Merger Agreement, "Superior Proposal" means a
bona fide proposal made by a third party to acquire all of the outstanding
Shares of the Company pursuant to a tender offer or a merger, or to purchase all
or substantially all of the assets of the Company, on terms which a majority of
the members of the Board determines in its good faith reasonable judgment (based
on the advice of its financial and legal advisors) to be more favorable to the
Company and its stockholders than the transactions contemplated by the Merger
Agreement, after taking into account all relevant factors, including, without
limitation, (i) the consideration to be paid to stockholders pursuant thereto,
(ii) the time estimated to be required for consummation, and (iii) financial,
regulatory and other risks of nonconsummation.
Meeting of Stockholders; Proxy Statement. The Merger Agreement provides
that if required by applicable law in order to consummate the Merger, the
Company will duly call, give notice of, convene and hold an annual or special
meeting of stockholders ("Stockholders Meeting") promptly after the consummation
of the Offer to consider and vote upon the Merger Agreement and the Merger. At
the Stockholders Meeting, Parent and Purchaser will cause all Shares then owned
by them and their subsidiaries to be voted in favor of the approval and adoption
of the Merger Agreement and approve the Merger. If the Stockholders Meeting is
called, the Company will prepare and file with the SEC a proxy statement (the
"Proxy Statement") to be mailed to the stockholders of the Company in connection
with the meeting of such stockholders to consider and vote upon the Merger which
will include, subject to the fiduciary obligations of the Board of Directors
under applicable law, the recommendation of the Board that the stockholders of
the Company vote in favor of the approval and adoption of the Merger Agreement
and the transactions contemplated thereby. As soon as practicable following the
consummation of the Offer, the Company will file the Proxy Statement with the
SEC. The Company, Parent and Purchaser will use their reasonable best efforts
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to respond promptly to all comments of and requests by the SEC and to cause the
Proxy Statement and all required amendments and supplements thereto to be mailed
to holders of Shares entitled to vote at the Stockholders Meeting at the
earliest practicable time following expiration or termination of the Offer. The
Merger Agreement provides that in the event that Purchaser shall acquire at
least 90% of the outstanding Shares, the Company will, at the request of
Purchaser, subject to Article VIII of the Merger Agreement, take all necessary
and appropriate action to cause the Merger to become effective as soon as
reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Section 253 of the DGCL.
Access to Information; Confidentiality. The Merger Agreement provides that
the Company will and will cause each of its subsidiaries to give the Parent and
its representatives reasonable access, during regular business hours during the
period prior to the Effective Time upon reasonable notice, to all of the
properties, books and records and, during such period, shall (and shall cause
each of its subsidiaries) to furnish promptly to Parent and its representatives
all information concerning its business, properties and personnel as may
reasonably be requested. Information obtained by Parent or Purchaser will be
subject to a confidentiality agreement between the Company and Parent.
Public Disclosures. The Merger Agreement provides that Parent and the
Company will consult with each other and mutually agree before issuing any press
release or otherwise making any public statement with respect to the Offer or
the Merger and will not issue any such press release or make any such public
statement prior to such consultation and agreement, except as may be required by
applicable law or requirements of any exchange upon which the Shares or the
shares of Parent are traded, in which case the party proposing to issue such
press release or make such public announcement will use its reasonable best
efforts to consult in good faith with the other party before issuing such press
releases or making any such public statements.
Indemnification and Insurance. The Merger Agreement provides that the
certificate of incorporation and by-laws of the Surviving Corporation will
contain the provisions with respect to indemnification set forth in the
certificate of incorporation and by-laws of the Company on the date of the
Merger Agreement, which will not be amended, repealed or otherwise modified for
a period of six years after the Effective Time in any manner that would
adversely affect the rights of individuals who prior to the Effective Time were
directors, officers, employees or agents of the Company in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by the Merger Agreement), unless such
modification is required by law; provided, that in the event any claim or claims
are asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims shall continue until disposition of any
and all such claims.
In addition, the Merger Agreement provides that Parent shall cause to be
maintained in effect for the Indemnified Parties (as defined below) for not less
than six years the policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by the Company and the Company's
subsidiaries with respect to matters occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by the Merger
Agreement); provided, that Parent may substitute therefor policies of
substantially the same coverage containing terms and conditions which are no
less advantageous to the Company's present or former directors or officers or
other employees covered by such insurance policies prior to the Effective Time
(the "Indemnified Parties") and provided further that substitution does not
result in any gaps in coverage with respect to matters occurring prior to the
Effective Time.
Further Assurances. The Merger Agreement provides that, subject to the
other provisions of the Merger Agreement, each of the parties will use its best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
the Merger Agreement, including, without limitation, the Offer and the Merger,
which efforts shall include, without limitation, Parent, Purchaser and the
Company using their respective best efforts to prevent any preliminary or
permanent injunction or other order by a court of competent jurisdiction or
governmental entity relating to consummating the transactions contemplated by
the Merger Agreement, and, if issued, to appeal any such injunction or order
through the appellate court or body for the relevant jurisdiction; provided,
however, in no event shall Parent, Purchaser or
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the Company be obligated to agree or consent to any divestiture of assets,
hold-separate agreement or other similar undertakings pursuant to any antitrust
or similar laws or regulations for the purposes of consummating or making
effective transactions contemplated by the Merger Agreement.
Notice of Subsequent Events. The Merger Agreement provides that each party
will give the other party notice of the occurrence, or non-occurrence, of any
event the respective occurrence, or non-occurrence, of which would be likely to
cause any representation or warranty contained in the Merger Agreement to be
untrue or inaccurate and any failure of a party to comply or satisfy any
covenant, condition or agreement to be complied with under the Merger Agreement.
Employment; Employee Welfare. The Merger Agreement provides that Parent
will maintain for a period of one year following the Effective Time employee
benefit plans and programs, for the benefit of employees of the Company and its
subsidiaries (other than those employees covered by collective bargaining
arrangements) that are in the aggregate no less favorable than those provided to
such employees of the Company and its subsidiaries, as applicable, under the
plans as in effect immediately prior to the Closing. Parent will credit the
prior service of all employees of the Company and its subsidiaries for purposes
of determining the eligibility, and vesting under any employee benefit plan
provided by Parent for the benefit of the employees. Employees covered by
collective bargaining agreements shall be provided with such benefits as shall
be required under the terms of any applicable collective bargaining agreement.
In addition, the Surviving Corporation will assume and honor in accordance with
their terms all existing employment and severance agreements and arrangements
which are set forth in the Company Disclosure Schedules.
Conditions to the Merger. The Merger Agreement provides that the
respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Effective Time, of each of the following
conditions: (i) there shall not be in effect any statute, rule, regulation,
executive order, decree, ruling or injunction or other order of a court or
governmental or regulatory agency of competent jurisdiction directing that the
transactions contemplated herein not be consummated; (ii) to the extent required
by applicable law and the certificate of incorporation and by-laws of the
Company, the Merger Agreement and the Merger shall have been approved and
adopted by the requisite vote of the holders of the Shares; (iii) all
governmental consents, orders and approvals legally required for the
consummation of the Merger and the transactions contemplated by the Merger
Agreement shall have been obtained and be in effect at the Effective Time,
except where the failure to obtain any such consent would not reasonably be
expected to have a Material Adverse Effect on Parent and its subsidiaries,
considered as whole (assuming the Merger had taken place), or on Parent's
ability to own, control and operate the Company and its subsidiaries, and the
waiting periods under the HSR Act (as defined herein) shall have expired or been
terminated; and (iv) Purchaser or its permitted assignee shall have purchased
all Shares tendered pursuant to the Offer.
Termination; Fees and Expenses. The Merger Agreement provides that it may
be terminated at any time and the Offer and the Merger may be abandoned at any
time prior to the Effective Time:
(a) by mutual written consent of the parties;
(b) by either Parent or the Company if (i) any governmental or
regulatory agency located or having jurisdiction within the United States
or any country or economic region in which either the Company or Parent,
directly or indirectly, has material assets or operations shall have issued
an order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares pursuant to the Offer or the Merger and such order,
decree or ruling or other action shall have become final and nonappealable;
or (ii) due to an occurrence or circumstance which would result in a
failure to satisfy any of the Offer Conditions, Purchaser shall have failed
to pay for Shares pursuant to the Offer on or prior to the Outside Date (as
defined below), unless such failure has been caused by or results from the
failure of the party seeking to terminate the Merger Agreement to perform
in any material respect any of its respective covenants or agreements
contained in the Merger Agreement. As used herein, the term "Outside Date"
shall mean the later of (A) 90 days following the date of the Merger
Agreement, or (B) the date on which either the applicable waiting period
under the HSR Act shall have expired or been terminated;
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(c) by the Company if (i), by action of the Board, (A) the Company,
based on the advice of outside legal counsel to the Company that such
action is necessary in order for the Board to comply with its fiduciary
duties under applicable law, subject to complying with the terms of the
Merger Agreement, proposes to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and the
Company notifies Parent in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement to such
notice and (B) Parent does not make, within five business days of receipt
of the Company's written notification of its intention to enter into a
binding agreement for a Superior Proposal, an offer to enter into an
amendment to the Merger Agreement such that the Board determines, in good
faith after consultation with its financial advisors, that the Merger
Agreement as so amended is at least as favorable, from a financial point of
view, to the stockholders of the Company as the Superior Proposal; and (ii)
if (A) Purchaser shall have (x) failed to commence the Offer within five
business days following the date of the initial public announcement of the
Offer, (y) failed to pay for any Shares pursuant to the Offer to the extent
required under the Merger Agreement, or (z) terminated the Offer without
purchasing Shares pursuant to the Offer, or (B) there has been a material
breach by Parent or Purchaser of any representation, warranty, covenant or
agreement contained in the Merger Agreement that is not curable or, if
curable, is not cured within 10 calendar days after written notice of such
breach is given by the Company to the party committing such breach. The
Merger Agreement provides that (A) the Company will not enter into a
binding agreement referred to in clause (i) above until at least the sixth
business day after it has provided the notice to Parent required thereby,
and (B) the Company will notify Parent promptly if its intention to enter
into a written agreement referred to in its notification shall change at
any time after giving such notification and (C) it shall be a condition
precedent to the effectiveness of any termination pursuant to clause (i)
that the $20,000,000 fee required to be paid as described below shall have
been paid in full simultaneously with, or prior to, such termination; and
(d) by Parent if (i) the Board shall have withdrawn or adversely
modified its approval or recommendation of the Merger Agreement or failed
to reconfirm its recommendation thereof within five business days after a
written request by Parent to do so, (ii) there has been a breach by the
Company of any representation, warranty, covenant or agreement contained in
the Merger Agreement that is qualified as to materiality or there has been
a material breach of any other representation, warranty, covenant or
agreement contained in the Merger Agreement, in any case that is not
curable or, if curable, is not cured within 10 calendar days after written
notice of such breach is given by Parent to the party committing such
breach, or (iii) on a scheduled expiration date all conditions to
Purchaser's obligation to accept for payment and pay for Shares pursuant to
the Offer shall have been satisfied or waived other than the Minimum
Condition and Purchaser terminates the Offer without purchasing Shares
pursuant to the Offer, provided that the satisfaction or waiver of all
other conditions shall have been publicly disclosed at least five business
days before termination of the Offer, or (iv) Purchaser shall have
otherwise terminated the Offer in accordance with the terms of the Merger
Agreement without purchasing shares pursuant to the Offer.
The Merger Agreement provides that if (i) the Merger Agreement is
terminated by the Company pursuant to (c)(i) above or (ii) is terminated by
Parent pursuant to (d)(i)above, then the Company shall simultaneously or prior
to such termination, pay Parent a termination fee of $20,000,000 and pay, in no
event later than two days after the date of such termination, the amount of all
documented out-of pocket expenses of Parent and Purchaser incurred in connection
with the negotiation and execution of the Merger Agreement and the consummation
of the transactions contemplated thereby. If the Merger Agreement is terminated
by Parent pursuant to (d)(ii) above, then the Company shall promptly pay, but in
no event later than two days after the date of such termination, a termination
fee of $1,000,000 representing liquidated damages for Parent's internal costs
and expenses plus the amount of all documented out-of pocket expenses of Parent
and Purchaser incurred in connection with the negotiation and execution of the
Merger Agreement and the consummation of the transactions contemplated thereby.
If the Merger Agreement is (i) terminated by the Company pursuant to
(c)(ii)(A)(x) or (y) or (c)(ii)(B), above, then Parent shall promptly, but in no
event later than two days after the date of such termination or event, pay the
Company a termination fee of $1,000,000, plus the amount of all documented out
of pocket expenses of the Company incurred in connection
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with the negotiation and execution of the Merger Agreement and the consummation
of the transactions contemplated thereby.
The Merger Agreement provides that in the event of a termination by either
the Company, Parent and Purchaser pursuant to the terms of the Merger Agreement,
the Merger Agreement will then become null and void and there will be no further
liability or obligation on the part of either the Company, Parent or Purchaser
(or any of their respective directors, officers, employees, agents, advisors or
other representatives), subject to certain exceptions.
The Merger Agreement further provides that except as otherwise specifically
provided therein, each party will bear its own expenses in connection with the
Merger Agreement and the transactions contemplated thereby.
ARRANGEMENTS WITH DIRECTORS, OFFICERS AND EMPLOYEES
Certain members of the Company's management and the Board may be deemed to
have interests in the transactions contemplated by the Merger Agreement that are
in addition to their interests as stockholders of the Company generally. The
Board was aware of these interests and considered them, among other matters, in
approving the Merger Agreement and the transactions contemplated thereby. In
considering the recommendation of the Board in respect of the Merger Agreement
and the transactions contemplated thereby, the stockholders of the Company
should be aware of these interests which may present actual or potential
conflicts of interest.
The following is a summary of the Stock Purchase Agreements (collectively,
the "Stock Purchase Agreements") each dated August 20, 1999, between Purchaser
and P. Enoch Stiff and Curtis J. Laetz, executive officers of the Company
(collectively, the "Sellers"). Copies of the Stock Purchase Agreements are filed
as Exhibits 9 and 10 to this Schedule 14D-9 and are incorporated herein by
reference.
The Purchaser has entered into Stock Purchase Agreements, dated as of
August 20, 1999, with each of (a) Mr. Stiff and (b) Mr. Laetz and his wife (Mr.
Laetz's shares were held jointly with Mrs. Laetz). In consideration for the
transfer and delivery of 346,275 and 63,938 Shares (collectively, the
"Transferred Shares") to the Purchaser by Mr. Stiff and the Laetz',
respectively, the Purchaser paid $7,271,775 and $1,342,698, respectively, for
such Shares pursuant to the Stock Purchase Agreements. Of such amounts, the
Purchaser paid Mr. Stiff $5,194,125 and the Laetz' $959,070 upon Purchaser's
receipt of the Transferred Shares on August 21, 1999. The remaining portions of
the consideration, $2,077,650 in the case of Mr. Stiff and $383,628 in the case
of the Laetz' (collectively, the "Escrow Amounts"), have been deposited with an
escrow agent who established accounts for such Escrow Amounts.
Under the terms of the Stock Purchase Agreements, the Escrow Amounts will
be paid to the Sellers or returned to Purchaser, depending upon the Company's
operating performance during the period beginning October 1, 1999 and ending
December 31, 2002. The Stock Purchase Agreements establish a Performance
Benchmark (as defined below) and provide that if the cumulative Performance
Benchmark over the applicable period does not exceed $164,597,000, all of the
Escrow Amounts will be payable to Purchaser. If the cumulative Performance
Benchmark equals or exceeds $222,696,000 over the applicable period, the Sellers
will be entitled to receive all of the Escrow Amounts. If the cumulative
Performance Benchmark over the applicable period falls between the foregoing
amounts, the Stock Purchase Agreements provide for proportionate payments of the
Escrow Amounts to Sellers, with the balance being payable to Purchaser.
The Stock Purchase Agreements also contain provisions for the payment of
the Escrow Amounts in the event of termination of employment of a Seller during
the applicable performance period. If employment is terminated by the Company
for any reason but "cause," or by a Seller for "good reason" (as such terms are
defined in employment agreements that may be entered into with the Company) at
any time prior to December 31, 2002, such Seller will be entitled to receive the
entire Escrow Amount. In the event of termination for "cause" or without "good
reason," the Stock Purchase Agreements establish a formula for the proportionate
payment of the Escrow Amounts based upon lapse of time and partial proportionate
achievement of the Performance Benchmark over the period from October 1, 1999 to
the date of termination of
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employment. In addition, if Purchaser fails to commence the Offer for any reason
or the Offer is terminated without purchases being made thereunder for any
reason other than a sale of the Company at a price higher than Purchaser's
Offer, the Escrow Amounts are payable in full to Purchaser.
The Stock Purchase Agreements also provide for loans to the Sellers for
periods of up to four years at the lowest available interest rate that would not
result in imputed income to the Sellers for federal income tax purposes in order
for the Sellers to meet obligations for the payment of taxes arising from the
Escrow Amounts.
For purposes of the Stock Purchase Agreements, "Performance Benchmark"
shall mean, net sales less finance charges less cost of sales less sales,
general and administrative expenses (SG&A) of the Company and its subsidiaries
on a consolidated basis. For the avoidance of doubt, the parties have agreed
that the definition of Performance Benchmark shall include acquisition goodwill
amortization of the Company (including its consolidated subsidiaries) for
acquisition goodwill created prior to the date of Purchaser's purchase of Shares
pursuant to the Offer of $4.152 million; and shall exclude (i) interest expense,
(ii) the Parent's corporate expenses; (iii) the goodwill amortization of the
Parent relating to the Merger and related purchase price adjustments; (iv)
additional depreciation expense resulting from the write up of assets following
the Merger; (v) expenses relating to the period after the Merger for
environmental, health and safety expenses, plant reorganization, product
liability insurance savings; (vi) savings resulting from the elimination of the
obligation of the Company to report its financial results publicly; and (vii)
the effect of acquisitions by the Company or its subsidiaries after the Merger
or of the transfer by the Parent of any business or product line to the Company
or its subsidiaries.
The Company is a party to "change in control" severance agreements (the
"Severance Agreements") with Messrs. Stiff, Laetz, Mueller and Breslin,
executive officers of the Company. The Severance Agreements provide for the
payment of certain severance and other benefits upon certain qualifying
terminations of such employees within two years of a "change in control of the
Company" (as defined in the Severance Agreements). The benefits payable under
the Severance Agreements generally provide for up to two years of base salary, a
bonus equal to 50% of the average of the bonus awarded to such employee in each
of the prior three years pursuant to the Company's executive incentive plan and
the continuation of certain other benefits for a period of one year. In
addition, the Severance Agreements provide for the immediate vesting of any
outstanding options granted to such officers under the Long-Term Incentive Plan.
Each agreement has an initial term through December 31, 2000, which term
automatically extends for an additional one year period each January 1st, unless
at least thirty days prior to such January 1st date the Company gives notice
that it does not wish to extend such agreement; provided, that following a
"change in control," the term of each agreement automatically extends to the
date which is two years following the "change in control." For purposes of the
Severance Agreements, a "change in control of the Company" generally shall be
deemed to occur if (i) any person is or becomes the beneficial owner, directly
or indirectly, of securities of the Company representing a majority of the
combined voting power of the Company's then outstanding securities or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board cease for any reason to constitute at least a
majority thereof unless the election, or nomination for election by the
Company's stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period. Consummation of the Offer will constitute a "change in
control" within the meaning of the Severance Agreements. The Company also
maintains "change in control" severance agreements with other key employees,
which agreements have similar terms and conditions as the Severance Agreements.
The Company maintains the Long-Term Incentive Plan, which provides for the
grant of up to 1,600,000 Shares to selected officers and key employees of the
Company. On August 20, 1999, the Board approved an amendment to the Long-Term
Incentive Plan to provide for the cancellation of stock options granted pursuant
to such plan upon a Change in Control (as defined therein) as follows: (i) if
the Transaction Price per share (as defined therein) is greater than the
exercise price per share, each stock option shall be canceled in consideration
of a cash payment equal to the difference between the Transaction Price and the
exercise price of common stock or (ii) if the Transaction Price per share is
less than the exercise price per share, then such stock options shall be
canceled and no payments shall be made with respect thereto. A copy of the
Long-Term
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Incentive Plan, as amended and restated, is filed as Exhibit 6 to this Schedule
14D-9 and is incorporated herein by reference.
The Company has agreed in the Merger Agreement that each option granted to
a Company employee pursuant to the Long-Term Incentive Plan to acquire Shares
that is outstanding immediately prior to the Effective Time, whether or not then
vested or exercisable, with respect to which, as of the Effective Time, $21.00
per share (such amount, or any greater amount per share paid pursuant to the
Offer, the "Per Share Amount") exceeds the exercise price per share, shall,
effective immediately prior to the Effective Time, be canceled in exchange for a
single lump sum cash payment equal to the product of (1) the number of Shares
subject to such option and (2) the excess of the Per Share Amount over the
exercise price per share of such option (subject to any applicable withholding
taxes). Each such option that is outstanding immediately prior to the Effective
Time, whether or not then vested or exercisable, with respect to which, as of
the Effective Time, the Per Share Amount does not exceed the exercise price per
share, shall, effective as of immediately prior to the Effective Time, be
canceled and no payments shall be made with respect thereto, and prior to the
Effective Time, the Company will use its reasonable best efforts to obtain
consents from holders of such options to their cancellation.
The Company has agreed in the Merger Agreement that, immediately prior to
the Effective Time, each Share previously issued in the form of restricted
stock, pursuant to the Long-Term Incentive Plan shall fully vest and all
restrictions thereon shall be removed.
The Company maintains the Directors Plan, which provides for the grant of
up to an aggregate of 250,000 Shares to non-employee directors of the Company. A
copy of the Directors Plan is filed as Exhibit 7 to this Schedule 14D-9 and is
incorporated herein by reference.
The Company has agreed in the Merger Agreement that each option granted to
a Company director pursuant to the Company's Directors Plan to acquire Shares
that is outstanding immediately prior to the Effective Time, whether or not then
vested or exercisable, with respect to which, as of the Effective Time, the Per
Share Amount exceeds the exercise price per share, shall, effective as of
immediately prior to the Effective Time, be canceled in exchange for a single
lump sum cash payment equal to the product of (1) the number of Shares subject
to such option and (2) the excess of the Per Share Amount over the exercise
price per share of such option (subject to any applicable withholding taxes).
Each such option that is outstanding immediately prior to the Effective Time,
whether or not then vested or exercisable, with respect to which, as of the
Effective Time, the Per Share Amount does not exceed the exercise price per
share, shall, effective as of immediately prior to the Effective Time, be
canceled and no payments shall be made with respect thereto. Prior to the
Effective Time, the Company shall obtain any consents from holders of options
under the Directors Plan necessary to give effect to the aforementioned
provisions.
CONFIDENTIALITY AGREEMENT
On July 9, 1999, the Company and Parent signed a confidentiality and
standstill agreement (the "Confidentiality Agreement") providing that, subject
to the terms of the agreement, each company keep confidential certain nonpublic
information furnished by the other. In addition, under the terms of the
Confidentiality Agreement, and subject to certain transactions, Parent agreed
that without the prior written consent of the Company, (1) for a period of three
(3) years, neither it nor any of its affiliates will solicit to employ any of
the current officers or key employees of the Company with whom Parent has had
contact or who were specifically identified to Parent during the course of its
investigation of the Company and (2) for a period of eighteen (18) months,
neither it nor any of its affiliates will (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in any
way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in (i) any acquisition of any
securities (or beneficial ownership thereof) or assets of the Company or any of
its subsidiaries, (ii) any tender or exchange offer, merger or other business
combination involving the Company or any of its subsidiaries, (iii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the Company or any of its subsidiaries or (iv) any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
SEC) or consents to vote any voting securities of the Company; (b) form,
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join or in any way participate in a "group" (as defined under the Exchange Act);
(c) otherwise act, alone or in concert with others, to seek to control or
influence the management, Board or policies of the Company; (d) take any action
which might force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above; or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing. The
Confidentiality Agreement is filed as Exhibit 2 to this Schedule 14D-9 and is
incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD HAS (i) UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, (i)
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS AND (iii) RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER, AND TENDER THEIR SHARES TO PURCHASER AND APPROVE
AND ADOPT THE MERGER AGREEMENT AND THE MERGER, IF REQUIRED.
(b) BACKGROUND; REASONS FOR THE RECOMMENDATION
In early August 1998, the Company received separate informal inquiries,
from two publicly-traded participants in the construction equipment industry
("Company 1" and "Company 2"), expressing an interest in exploring a possible
business combination with, or acquisition of, the Company. In light of such
inquiries, the Board appointed a special committee of directors (the "Special
Committee") to oversee inquiries received by the Company concerning possible
business combinations and to review steps that might be taken to address the
Company's stock price, which had fallen sharply from early June 1998 to
mid-August 1998. Separately, another special committee of the Board had been
appointed in July 1998 to evaluate the desirability of adopting a shareholder
rights plan. That special committee engaged Morgan Stanley & Co. Incorporated
("Morgan Stanley") to assist it in evaluating the desirability of adopting a
shareholder rights plan and the terms thereof. On August 21, 1998, that special
committee recommended to the Board, and the Board approved, the adoption of the
Rights Agreement. For a description of the Rights Agreement, see Item 8(a) of
this Schedule 14D-9.
From late August to early October 1998, the Special Committee met on
several occasions, consulted with the Company's financial and legal advisors and
considered various alternatives to enhance stockholder value and protect
stockholder interests. Although follow-up discussions between representatives of
Company 1 and Company 2 occurred, no formal process was initiated and the
Special Committee, as well as the Board, determined that it would not be in the
best interests of the Company and its stockholders to pursue further any
possible business combination or sale of the Company at that time.
During the first several weeks of 1999, the Company's share price traded
down by over 25% from the closing price at the end of 1998. On February 5, 1999,
the Chief Executive Officer of Company 1 wrote a letter (the "Letter") to the
Company's Chief Executive Officer, P. Enoch Stiff, expressing a desire to pursue
a business combination with the Company. The Special Committee requested that
Morgan Stanley make a presentation to the Board on the Company's alternatives
and discuss ways to respond to the Letter.
On February 16, 1999, the Company's Board met in Milwaukee to discuss a
number of matters, including the Letter. Morgan Stanley presented a range of
possible alternatives available to the Company and discussed, on a preliminary
basis, issues and opportunities associated with those alternatives. At the
conclusion of the meeting, the Board determined to authorize management and
Morgan Stanley to initiate discussions with Company 1, Company 2 and other
parties about a possible business combination.
On March 4, 1999, the Company formally retained Morgan Stanley to assist it
in connection with the exploration of a possible business combination.
Subsequent to February 16, 1999, Morgan Stanley contacted a number of
parties to explore their potential interest in a business combination with the
Company. Morgan Stanley and the Company provided information, subject to
confidentiality agreements, to Company 1, Company 2, and other third parties.
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During May, June and July, potential acquirors of the Company, including
Company 1 and Company 2, undertook a business investigation of the Company,
including meetings with management, tours of certain of the Company's
manufacturing facilities, and a review of certain of the Company's financial,
legal and other documents and records.
On June 23, 1999, John Janitz, President and Chief Operating Officer of
Parent, called Mr. Stiff to express an interest in a possible business
combination. On July 9, 1999, Parent and the Company executed the
Confidentiality Agreement, pursuant to which the Company provided financial and
other information to the Parent. Mr. Janitz and Mr. Stiff met in Milwaukee on
July 19, 1999, and discussed the merits of a possible business combination. Mr.
Stiff informed Mr. Janitz that the Company would be willing to make available to
Parent additional financial and other information about the Company. Commencing
on July 21, 1999 and continuing into August, representatives of Parent undertook
a due diligence investigation of the Company.
During the week of August 2, 1999, the Company received proposals for a
business combination from Company 1, Company 2 and Parent.
On August 6, 1999, the Special Committee convened a telephonic meeting to
review the proposals. It was determined to discuss the proposals with the Board
at a meeting held on August 10, 1999.
At the August 10 Board meeting, management and Morgan Stanley reviewed the
process conducted over the preceding months and reviewed the proposals. Morgan
Stanley presented a financial presentation on the Company including a detailed
discussion of valuation. The Board concluded that Parent's proposal was superior
to the indications of interest provided by Company 1 and Company 2 and,
accordingly, determined to authorize management and the Company's legal and
financial advisors to enter into contractual negotiations with Parent concerning
a transaction and to allow Parent to conclude its due diligence investigation of
the Company.
Prior to the August 10 meeting, representatives of Parent contacted Mr.
Stiff and indicated that, in connection with Parent's proposal, Parent also
desired to enter into certain arrangements with Mr. Stiff providing for the
purchase of a portion of the Shares owned by him and additional understandings
concerning his employment by the Company following an acquisition by Parent.
Subsequently, those discussions were broadened to include other members of
management. Between August 10 and August 20, various members of management and
their counsel negotiated with Parent and its counsel concerning the terms of
such arrangements.
Following the August 10 meeting, the Company's counsel provided Parent's
counsel with a draft merger agreement and proceeded to negotiate the terms
thereof with Parent's counsel.
On August 17, 1999, the Board met by telephone to review developments since
its meeting on August 10 and to evaluate progress made by Parent in completing
its due diligence investigation and the status of contract negotiations between
the parties. In addition, the Board received and reviewed a report from
management containing preliminary internal financial projections for fiscal 2000
and subsequent years.
Between August 17 and August 20, 1999, counsel to the Company and counsel
to Parent substantially completed negotiations concerning the terms of the
Merger Agreement and certain key employees and their counsel completed
negotiations with Parent and its counsel concerning the terms of the Stock
Purchase Agreements.
On August 20, 1999, the Board met to consider the proposed Merger Agreement
and the transactions contemplated thereby. At such meeting, the Board reviewed
the discussions between the Company, Parent and other parties and considered the
proposed transaction with Parent. In particular, the Board received reports from
its legal and financial advisers concerning the transaction process and reviewed
the terms and conditions of the proposed Merger Agreement. Morgan Stanley
delivered its opinion to the Board that, based upon and subject to the matters
set forth therein and as of the date thereof, the cash consideration to be
received by stockholders of the Company in the Offer and the Merger was fair to
stockholders of the Company from a financial point of view. After considering
such presentations, the Board unanimously approved the proposed Merger Agreement
and all transactions contemplated thereby, including the Offer and the Merger
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and determined that the terms of the Offer and the Merger are fair to, and in
the best interests of, the stockholders of the Company. WITH RESPECT TO THE
OFFER, THE BOARD UNANIMOUSLY RECOMMENDED THAT STOCKHOLDERS ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES PURSUANT TO THE OFFER.
At the meeting, the Company also approved an amendment to the Rights
Agreement to provide that Parent shall not be deemed an Acquiring Person (as
defined in the Rights Agreement) and that the Rights will not separate from the
Shares as a result of entering into the Merger Agreement, commencing or
consummating the Offer or consummating the Merger pursuant to the terms of the
Merger Agreement. The Company has also taken actions necessary to ensure that
the Merger Agreement and the transactions contemplated thereby will not trigger
any "poison pill" or any other anti-takeover provision adopted by the Company or
available to it, to its knowledge, under applicable law.
Following the Board's meeting on August 20, 1999, the Stock Purchase
Agreements were executed and delivered. On August 21, 1999, the Company's
counsel and Parent's counsel completed final negotiations concerning the terms
of the Merger Agreement, and the Merger Agreement was executed and delivered.
Concurrent with execution and delivery of the Merger Agreement, Morgan Stanley
delivered its written opinion attached hereto as Annex II and filed as Exhibit 5
to this Schedule 14D-9.
A copy of the joint press release of the Company and Parent announcing the
execution of the Merger Agreement is filed as Exhibit 3 to this Schedule 14D-9
and is incorporated herein by reference. A copy of a letter to stockholders of
the Company, which accompanies this Schedule 14D-9 is filed as Exhibit 4 and is
incorporated herein by reference.
In reaching its conclusion and recommendation described above, the Board
considered the following factors:
1. the business, results of operations and future prospects of the
Company;
2. the terms of the Merger Agreement and the conditions of the Offer;
3. the opinion of Morgan Stanley to the effect that, as of the date of
its opinion and based upon and subject to certain matters stated therein,
the consideration to be received by the stockholders pursuant to the Offer
and the Merger was fair to such holders from a financial point of view. The
full text of Morgan Stanley's written opinion, which sets forth the
assumptions made, matters considered and limitations on the review
undertaken by Morgan Stanley is attached as Annex II hereto and filed as
Exhibit 5 to this Schedule 14D-9 and is incorporated herein by reference.
STOCKHOLDERS ARE URGED TO READ THE OPINION OF MORGAN STANLEY CAREFULLY IN
ITS ENTIRETY;
4. the fact that the Offer is not subject to any financing, due
diligence or pooling-of-interests conditions;
5. the fact that the Merger Agreement, which prohibits the Company,
its affiliates, and their respective officers, directors, employees,
representatives and agents from, directly or indirectly, knowingly
encouraging or soliciting or participating in or initiating discussions or
negotiations regarding any potential Takeover Proposal, does permit the
Company prior to consummation of the Offer (conditioned upon the execution
of confidentiality agreements) to furnish information and to allow access
by and participation in discussions and negotiations with any third party
that has submitted a bona fide and unsolicited acquisition proposal to the
Company, provided that (i) the Board, upon advice of its independent
financial advisor, determines that such Takeover Proposal is reasonably
likely to be a Superior Proposal and (ii) the Board in its good faith
judgment, upon the opinion of independent legal counsel, determines its
failure to do so would constitute a breach of its fiduciary obligations;
6. the fact that the Company may terminate the Merger Agreement,
subject to certain conditions, if the Board determines, upon advice of its
financial and legal advisors, that a Takeover Proposal received by the
Company is a Superior Proposal. In such event and under certain other
limited circumstances, the provisions of the Merger Agreement require the
Company to pay Parent a termination fee of $20 million as a condition
precedent to termination and reimburse Parent and Purchaser for
out-of-pocket expenses as described under "The Merger Agreement" in Item 3
above;
15
<PAGE> 17
7. the results of the process undertaken to identify and consider
proposals from third parties;
8. historical market prices with respect to the Shares, particularly
the fact that the transaction will enable stockholders to realize a
significant premium over the prices at which the Shares traded prior to
public announcement of the Offer; and
9. the regulatory approvals required to consummate the Offer and
Merger, and the prospects for receiving all such approvals.
The Board did not assign relative weights to the factors or determine that
any factor was of particular importance. Rather, the Board viewed its position
and recommendations as being based on the totality of the information presented
to and considered by it. Individual directors may have given different weight to
different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Morgan Stanley has been retained by the Company to act as the Company's
financial advisor with respect to the Offer and the Merger. Pursuant to an
engagement letter with Morgan Stanley, the Company has agreed to pay Morgan
Stanley for its services a transaction fee of approximately $3.45 million,
payable upon consummation of the Merger. The Company has also agreed to
reimburse Morgan Stanley for its out-of-pocket expenses, including the fees and
expenses of its counsel and other professional advisers (if approved by the
Board), and to indemnify Morgan Stanley and certain related parties against any
losses, claims, damages or liabilities related to, arising out of or in
connection with the engagement under the engagement letter. In the ordinary
course of business, Morgan Stanley and its affiliates may actively trade the
debt and equity securities of the Company and Parent for their own account and
for the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities. In the past, Morgan Stanley and its
affiliates have provided financial advisory and financing services, including
providing senior loans to the Company and Parent, and have received fees for the
rendering of these services.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to the Company's stockholders with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best knowledge of the Company, no transactions in the Shares
have been effected during the past 60 days by the Company or any executive
officer, director, affiliate or subsidiary of the Company, except Purchaser
acquired 346,275 and 63,938 Shares from Messrs. Stiff and Laetz, respectively,
pursuant to the Stock Purchase Agreements. Pursuant to the Stock Purchase
Agreements, Purchaser acquired 50% of the Shares of Messrs. Stiff and Laetz
(calculated on a fully-diluted basis after giving effect to options for common
stock issued to each of Messrs. Stiff and Laetz under the Long-Term Incentive
Plan) for $21 per share. Messrs. Stiff and Laetz received a cash payment of $15
per share, with the remaining $6 per share placed in escrow. Pursuant to the
Stock Purchase Agreements and certain incentive provisions therein, Messrs.
Stiff and Laetz could each forfeit some or all of the escrowed purchase price
based on the profitability of the Company from the date of Purchaser's
acquisition of the Company through December 31, 2002.
(b) To the best knowledge of the Company, all of its executive officers,
directors affiliates or subsidiaries presently intend to tender to Purchaser,
pursuant to the Offer, any Shares which are held of record or are beneficially
owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Prior to entering into the Merger Agreement, the Company had
preliminary contact with entities that expressed interest in the Company, as set
forth in Item 4 hereof. Upon execution of the Merger Agreement, the Company
ceased contact with these other entities. The Company is not engaged in any
other negotiation in response to the Offer that relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or
16
<PAGE> 18
transfer of a material amount of assets by the Company or any subsidiary of the
Company; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described above or in Item 3(b), there are currently no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Offer, that relate to or would result in one or more of the
matters referred to in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) RIGHTS AGREEMENT
Each Right issued pursuant to the Rights Agreement, when exercisable,
entitles the registered holder thereof to purchase one one-hundredth of a share
of Series A Preferred Stock, par value $0.01 per share (the "Preferred Shares"),
of the Company at a price of $85 per share, subject to adjustment. The Rights
will be exercisable only if a person or a group acquires 10% or more of the
outstanding Shares or announces a tender offer following which it would hold 10%
or more of such outstanding Shares. The Rights entitle the holders, other than
the acquiring person, to purchase Shares having a market value of two times the
exercise price of the Right. If, following the acquisition by a person or group
of 10% or more of the Company's outstanding Shares, the Company were acquired in
a merger or other business combination, each Right would be exercisable for that
number of the acquiring company's shares of common stock having a market value
of two times the exercise price of the Right. Subject to the terms of the Rights
Agreement, the Company may redeem the Rights at one cent per Right at any time
until ten days following the occurrence of an event that causes the Rights to
become exercisable for Shares. The Rights expire in ten years.
The foregoing description of the Rights Agreement, as amended, and of the
Rights is qualified in its entirety by the terms of the Rights Agreement, dated
as of August 21, 1998, by and between the Company and First Chicago Trust
Company of New York, as Rights Agent (the "Rights Agent"), a copy of which has
been filed as an exhibit to the Company's Current Report on Form 8-K dated
August 21, 1998, the terms of the First Amendment to the Rights Agreement, dated
as of October 2, 1998, by and between the Company and the Rights Agent, a copy
of which has been filed as an exhibit to the Company's Current Report on Form
8-K dated October 2, 1998, and the terms of the Second Amendment to the Rights
Agreement, dated as of February 16, 1999, by and between the Company and the
Rights Agent, a copy of which has been filed as an exhibit to the Company's
Current Report on Form 8-K dated February 24, 1999.
The Company has entered into a Third Amendment to the Rights Agreement,
dated as of August 21, 1999, to make it inapplicable to the Offer, the Merger
and the other transactions contemplated by the Merger Agreement. A copy of such
amendment to the Rights Agreement is filed as Exhibit 8 to this Schedule 14D-9
and is incorporated herein by reference.
(b) DELAWARE GENERAL CORPORATION LAW
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the DGCL. Section 203 would prevent an "Interested Stockholder"
(generally defined as a person beneficially owning 15% or more of a
corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Stockholder unless: (i) before such
person became an Interested Stockholder, the board of directors of the
corporation approved the transaction in which the Interested Stockholder became
an Interested Stockholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares of outstanding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares), or (iii) following the transaction in
which such person became an Interested Stockholder, the Business Combination is
(x) approved by the board of directors of the corporation and (y) authorized at
a meeting of stockholders by the affirmative vote of the holders of at least
66 2/3% of the outstanding voting stock
17
<PAGE> 19
of the corporation not owned by the Interested Stockholder. In accordance with
the provisions of the Company's Restated Certificate of Incorporation and
Section 203, the Board of Directors of the Company has approved the Merger
Agreement and Purchaser's acquisition of Shares pursuant to the Offer and the
Merger and the transactions contemplated thereby and, therefore, the
restrictions of Section 203 are inapplicable to the Offer, the Merger and the
related transactions.
(c) ANTITRUST
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules that have been promulgated thereunder by the
Federal Trade Commission (the "FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
and the FTC and certain waiting period requirements have been satisfied. The
acquisition of Shares by Purchaser pursuant to the Offer is subject to such
requirements. Pursuant to the requirements of the HSR Act, Parent and the
Company filed their respective required Notification and Report Forms (the
"Forms") with the Antitrust Division and the FTC on August 25, 1999 and August
26, 1999, respectively. The statutory waiting period applicable to the purchase
of Shares pursuant to the Offer is scheduled to expire at 11:59 P.M., New York
City time, on the fifteenth day after Parent has filed its Form, unless early
termination of the waiting period is granted or Parent and the Company receive a
request for additional information or documentary material prior thereto.
Pursuant to the HSR Act, Parent has requested early termination of the
applicable waiting period. However, prior to such date, the Antitrust Division
or the FTC may extend the waiting period by requesting additional information or
documentary material relevant to the acquisition. If such a request is made, the
waiting period will be extended until 11:59 P.M., New York City time, on the
tenth day after substantial compliance by Parent with such request. Thereafter,
such waiting periods can be extended only by court order. There can be no
assurance that the waiting period will be terminated early. The Antitrust
Division and the FTC frequently scrutinize the legality under the antitrust laws
of transactions. At any time before or after the consummation of any such
transaction, the Antitrust Division or the FTC could, notwithstanding
termination of the waiting period, take such action under the antitrust laws as
either deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of
the Shares so acquired or divestiture of substantial assets of Parent or the
Company. Private parties may also bring legal actions under the antitrust laws.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made, or if such a challenge is made, what the result will be.
(d) PURCHASER'S DESIGNATION OF PERSONS TO BE ELECTED TO THE COMPANY'S BOARD
OF DIRECTORS.
The Information Statement attached hereto as Annex I is being furnished in
connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board other than at a
meeting of the Company's stockholders.
18
<PAGE> 20
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of August 21, 1999,
by and among Parent, Purchaser and the Company.
Exhibit 2 Confidentiality Agreement, dated as of July 9, 1999, by and
between the Company and Parent.
Exhibit 3 Joint Press Release issued by Parent and the Company on
August 23, 1999.
Exhibit 4 Letter to Stockholders, dated August 27, 1999.*
Exhibit 5 Opinion of Morgan Stanley, dated August 21, 1999.*
Exhibit 6 Amended and Restated 1996 Long-Term Incentive Plan.
Exhibit 7 1996 Directors Non-Qualified Stock Option Plan.
Exhibit 8 Third Amendment to Rights Agreement, dated as of August 21,
1999, by and between the Company and First Chicago Trust
Company of New York.
Exhibit 9 Stock Purchase Agreement, dated as of August 20, 1999, by
and between Purchaser and P. Enoch Stiff.
Exhibit 10 Stock Purchase Agreement, dated as of August 20, 1999, by
and between Purchaser, Curtis Laetz and Linda Laetz.
</TABLE>
- ---------------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
19
<PAGE> 21
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Solicitation/Recommendation
Statement is true, complete and correct.
OMNIQUIP INTERNATIONAL, INC.
By: /s/ P. ENOCH STIFF
------------------------------------
P. Enoch Stiff
President and Chief Executive
Officer
Dated: August 27, 1999
20
<PAGE> 22
ANNEX I
OMNIQUIP INTERNATIONAL, INC.
222 EAST MAIN STREET
PORT WASHINGTON, WISCONSIN 53074
------------------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND
RULE 14f-1 THEREUNDER
------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
This Information Statement is being mailed on or about August 27, 1999 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"). You are receiving this Information Statement in connection
with the possible election of persons designated by Purchaser to a majority of
seats on the Board of Directors of the Company (the "Board"). The Merger
Agreement requires the Company, upon the purchase by Purchaser of a majority of
the outstanding shares of common stock, par value $0.01 per share of the
Company, including the associated preferred stock purchase rights (the "Rights")
issued pursuant to the Rights Agreement, dated as of August 21, 1998, as amended
(the "Rights Agreement"), between the Company and First Chicago Trust Company of
New York, as Rights Agent, (the "Shares"), pursuant to the Offer, promptly to
cause Purchaser's designees to be elected to a majority of the seats on the
Board under the circumstances described therein. See "Board of Directors --
Rights to Designate Directors; Purchaser's Designees."
You are urged to read this Information Statement carefully. Capitalized
terms used and not otherwise defined herein shall have the meaning set forth in
Schedule 14D-9.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on August
27, 1999. The Offer is scheduled to expire at 12:00 midnight on Friday,
September 24, 1999, New York City time. The consummation of the Offer and the
Merger pursuant to the terms of the Merger Agreement would result in a change in
control of the Company.
The information contained in this Information Statement concerning Parent
and Purchaser has been furnished to the Company by Parent and Purchaser, and the
Company assumes no responsibility for the accuracy or completeness of such
information.
OUTSTANDING SHARES
The common stock, par value $0.01 per share (the "Common Stock"), is the
only class of voting securities of the Company outstanding. As of August 21,
1999, there were 14,277,500 Shares outstanding, each of which is entitled to one
vote. No cumulative voting rights exist under the Company's Restated Certificate
of Incorporation. For information regarding the ownership of the Shares by
holders of more than five percent of the outstanding shares and by the
management of the Company, see "Security Ownership of Certain Beneficial Owners
and Management."
<PAGE> 23
BOARD OF DIRECTORS
GENERAL
The Board is divided into three classes (Class I, Class II and Class III),
with all classes as nearly equal in number as possible. One class of directors
is ordinarily elected at each Annual Meeting of the stockholders of the Company
for a three-year term or until his or her successor is elected and qualified.
The Board currently consists of nine (9) members and there are no family
relationships among any directors or executive officers of the Company.
RIGHTS TO DESIGNATE DIRECTORS; PURCHASER'S DESIGNEES
The Merger Agreement provides that, promptly (but in any event within two
(2) business days) upon the purchase by Purchaser of a majority of the
outstanding Shares pursuant to the Offer, either (a) a majority of the members
of the Board shall resign and the remaining members of the Board shall fill all
of the positions so vacated with persons designated by Parent or (b) the size of
the Board shall be expanded and the vacant seats filled with persons designated
by Purchaser so that Purchaser's designees shall constitute a majority of the
members of the Board. In either case, at all times thereafter through the
Effective Time a majority of the members of the Board shall be persons
designated by Purchaser.
The Company's obligation under the Merger Agreement to appoint Purchaser's
designees to the Board is subject to Section 14(f) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under the Merger
Agreement and shall include in the Schedule 14D-9 such information with respect
to the Company and its officers and directors as is required under Section 14(f)
and Rule 14f-1 to fulfill such obligations.
Following the election of designees of Purchaser pursuant to the Merger
Agreement, prior to the Effective Time, any amendment of the Merger Agreement or
the Restated Certificate of Incorporation or By-laws of the Company, any
termination of the Merger Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or Purchaser or waiver of any of the Company's rights thereunder shall
require the concurrence of a majority of the directors of the Company then in
office who were directors as of August 21, 1999 or persons designated by such
directors and who were neither designated by Purchaser nor employees of the
Company ("Continuing Directors"). Prior to the Effective Time, the Company and
Purchaser shall use all reasonable efforts to ensure that the Board at all times
includes at least three Continuing Directors.
It is expected that certain of Purchaser's designees may assume office at
any time following the purchase by Purchaser of a minimum number of Shares
pursuant to the Offer, which purchase cannot be effected earlier than September
24, 1999, and that, upon assuming office, the designees will thereafter
constitute at least a majority of the Board. This step will be accomplished at a
meeting or by written consent of the Board providing that the size of the Board
will be increased and/or a sufficient number of current directors will resign
such that, immediately following such action, the number of vacancies to be
filled by Purchaser's designees will constitute at least a majority of the
available positions on the Board. It is currently not known which of the current
directors of the Company will resign.
No action is required by the stockholders of the Company in connection with
the election of the Purchaser's designees to the Board. However, Section 14(f)
of the Exchange Act requires the mailing to the Company's stockholders of the
information set forth in this Information Statement prior to a change in a
majority of the Company's directors other than at a meeting of the Company's
stockholders.
The terms of the Merger Agreement, a summary of the events leading up to
the Offer and the execution of the Merger Agreement and other information
concerning the Offer and the Merger are contained in the Purchaser's Offer to
Purchase and in the Schedule 14D-9 with respect to the Offer, copies of which
are being delivered to stockholders of the Company contemporaneously herewith.
Certain other documents (including the Merger Agreement) were filed with the
Securities and Exchange Commission (the "SEC") as exhibits to
2
<PAGE> 24
the Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") of the
Purchaser and Parent and as exhibits to the Schedule 14D-9. The exhibits to the
Schedule 14D-1 and the Schedule 14D-9 may be examined at and copies thereof may
be obtained from the SEC in the manner set forth in Section 8 of the Offer to
Purchase.
PURCHASER'S DESIGNEES
Pursuant to the terms of the Merger Agreement, it is expected that
Purchaser's designees will take office as directors of the Company upon
Purchaser's payment for such number of Shares as represents at least a majority
of the outstanding Shares (on a fully diluted basis) in the Offer.
Purchaser has advised the Company that it currently intends to choose
designees to the Board of Directors pursuant to the Merger Agreement from the
persons set forth in the following table. Parent has provided the information
below regarding such individuals.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- ---- --- --------------------
<S> <C> <C>
Robert J. Ayotte..................... 46 Chief Financial Officer of Textron Industrial Products
Frank J. Feraco...................... 52 President of Purchaser
John R. Curran....................... 44 Vice President of Purchaser
Bhikhaji M. Maneckji................. 50 Vice President, General Counsel and Assistant Secretary
of Purchaser
Lawrence J. O'Connell................ 36 Vice President of Purchaser
</TABLE>
Robert J. Ayotte has been Chief Financial Officer of Textron Industrial
Products since January 1999. Previously, Mr. Ayotte was Vice President --
Finance of Textron Fastening Systems -- Europe from January 1997 to December
1998, Vice President -- Finance of Avdel Textron from September 1994 to
December 1996, and Vice President -- Finance of Textron Systems Division from
April 1991 to August 1994.
Mr. Feraco has been President of Purchaser since August 1999. Mr. Feraco
has been President of Textron Industrial Products since September 1998.
Previously, Mr. Feraco was President of the Outdoor Leisure Division, Sunbeam
Corporation from January 1998 to August 1998. From 1996 to 1998, Mr. Feraco was
President and Sector Executive of Kohler International -- Sterling Plumbing
Group, Kohler Company, and from 1994 to 1996, he was President of Danaher Tool
Group, Danaher Corporation. Mr. Feraco is a director of the American Hardware
Association.
Mr. Curran has been Vice President of Purchaser since August 1999. Mr.
Curran is Vice President, Business Development -- Industrial Products Segment of
Parent, a position he has held since July 1998. Previously, Mr. Curran was
Director, Business Development of Textron Industrial Products from 1995 to June
1998, and Director, Tax Planning and Senior Tax Counsel of Parent from 1994 to
1995.
Mr. Maneckji has been a director and Vice President, General Counsel and
Assistant Secretary of Purchaser since August 1999. Mr. Maneckji is Vice
President and General Counsel of Textron Industrial Products, a position he has
held since 1997. Previously, Mr. Maneckji was General Counsel of Textron
Industrial Products from 1995 to 1997, and Assistant General Counsel and
Assistant Secretary of Parent from 1986 to 1995. Mr. Maneckji was a director of
Bridgeport Machines, Inc. from 1995 through August 1999.
Mr. O'Connell has been a director and Vice President of Purchaser since
August 1999. Mr. O'Connell is Group Counsel -- Golf, Turf Care and Specialty
Products of Textron Industrial Products, a position he has held since May 1999.
Previously, Mr. O'Connell was Risk Management Counsel of Parent from 1994 to May
1999.
The business address of each of Purchaser's designees is c/o Parent, 40
Westminster Street, Providence, Rhode Island 02903. Purchaser has advised the
Company that each of the persons listed in the table above has consented to act
as a director, if so designated, and that none of such persons has during the
last five years been convicted in a criminal proceeding or was party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was, or is, subject to a judgment, decree or final
3
<PAGE> 25
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws. Parent
and Purchaser have also advised the Company that none of the persons listed in
the table above is a director of, or holds any position with, the Company, and
that none of such persons beneficially owns any equity securities, or rights to
acquire any equity securities, of the Company or has been involved in any
transactions with the Company or any of its directors, executive officers or
affiliates which are required to be disclosed pursuant to the rules and
regulations of the SEC.
BOARD OF DIRECTORS OF THE COMPANY
Listed below are the names, ages and principal occupations of all directors
of the Company.
<TABLE>
<CAPTION>
CLASS I
(TERM OF OFFICE EXPIRES 2000) AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ----------------------------- --- -------------------- --------------
<S> <C> <C> <C>
Paul W. Jones............................. 51 Chairman, President and Chief April 1997
Executive Officer of U.S. Can
Corporation, Oak Brook, Illinois
Donald E. Nickelson....................... 66 Chairman of the Board of the September 1996
Company, Port Washington, Wisconsin
and Vice Chairman of Harbour Group
Industries, Inc., St. Louis,
Missouri
P. Enoch Stiff............................ 51 President and Chief Executive September 1996
Officer of the Company, Port
Washington, Wisconsin
CLASS II
(TERM OF OFFICE EXPIRES 2001)
- ------------------------------------------
Peter S. Finley........................... 43 Private Investor, St. Louis, August 1995
Missouri
Jeffrey L. Fox............................ 39 Vice Chairman -- Operations of September 1996
Harbour Group Ltd., St. Louis,
Missouri
Jerry E. Ritter........................... 64 Chairman of the Board of Clark April 1997
Enterprises, Inc., St. Louis,
Missouri
CLASS III
(TERM OF OFFICE EXPIRES 2002)
- ------------------------------------------
Samuel A. Hamacher........................ 46 Executive Vice President of Harbour August 1995
Group Industries, Inc., St. Louis,
Missouri
Jay G. Henges............................. 72 Chief Executive Officer of Jay February 1999
Henges Enterprises, Inc., St. Louis,
Missouri
Robert L. Virgil.......................... 65 Principal of Edward Jones & Co., St. April 1997
Louis, Missouri
</TABLE>
Except as set forth below, each of the directors has been engaged in his
principal occupation during the past five years.
Mr. Jones has been the Chairman, President and Chief Executive Officer and
a member of the Board of Directors of U.S. Can Corporation since April 1998. He
previously served as the President and Chief Operating Officer of the Greenfield
Division of Kennametal, Inc. from November 1997 to March 1998 and as the
President of Greenfield Industries, Inc. from November 1989 to November 1997 and
as its Chief Executive Officer from May 1993 to November 1997. Mr. Jones is also
a member of the Board of Directors of Federal Signal Corporation. Mr. Jones was
elected a director of the Company in April 1997.
Mr. Nickelson has been the Vice Chairman of Harbour Group Industries, Inc.
("Harbour Group") (a company which provides development services to its
affiliates) since 1991. From 1988 to 1990, he served as President of PaineWebber
Group (an investment banking and brokerage firm). Mr. Nickelson currently serves
as a trustee of Mainstay Mutual Funds Group and as a director of Carey
Diversified LLC and Sugen, Inc. Mr. Nickelson was elected a director of the
Company in September 1996.
4
<PAGE> 26
Mr. Stiff has been the President and Chief Executive Officer of the Company
since September 1996 and the President and Chief Executive Officer of TRAK
International, Inc. ("TRAK"), now a wholly-owned subsidiary of the Company,
since August 1989. He previously served as the Chief Operating Officer of TRAK
from November 1987 to August 1989. Mr. Stiff was elected a director of the
Company in September 1996.
Mr. Finley is a private investor. He served as the Senior Managing Director
of Harbour Group from 1997 to 1998. He previously served as the Senior Vice
President -- Corporate Development of Harbour Group from 1990 to 1997. Mr.
Finley was elected a director of the Company in August 1995.
Mr. Fox has been Vice Chairman -- Operations of Harbour Group Ltd. ("HGL")
(an affiliate of Harbour Group which provides operations management services to
manufacturing affiliates of Harbour Group) since September 1997. Mr. Fox served
as Group President of HGL from 1995 until September 1997. Mr. Fox previously
served as President of Engineered Polymers Corporation (a manufacturer of
plastic material handling products that was an affiliate of Harbour Group) from
1992 to 1995. Mr. Fox was elected a director of the Company in September 1996.
Mr. Ritter has been a consultant to Anheuser-Busch Companies, Inc. and
Chairman of the Board of Clark Enterprises, Inc. (the general partner of the
Kiel Center and the St. Louis Blues Hockey Club) since July 1996. From March
1990 to June 1996, he served as Executive Vice President and Chief Financial and
Administrative Officer for Anheuser-Busch Companies, Inc. Mr. Ritter currently
serves as a director of The Earthgrains Company, Brown Group, Inc., and The
Kroll-O'Gara Company and as a trustee of the NationsBank Private Client Services
Board. Mr. Ritter was elected a director of the Company in April 1997.
Mr. Hamacher has been the Executive Vice President of Harbour Group, in
charge of corporate development, since January 1992. From January 1988 to
January 1992, he was the Vice President -- Finance of HGL. Mr. Hamacher was
elected a director of the Company in August 1995.
Mr. Henges has for the past 30 years been the owner and Chief Executive
Officer of Jay Henges Enterprises, Inc. (a company which serves the construction
industry as a subcontractor and supplier through its Henges Interiors and Henges
Insulation divisions and manufactures preassembled kiosk structures and modular
buildings through its Porta-King Building Systems division). Mr. Henges was
elected a director of the Company in February 1999.
Mr. Virgil has been a principal of Edward Jones & Co., a retail investment
firm, since September 1993. From September 1998 to December 1998, he served as
the David McLaughlin Visiting Professor of Accounting, Amos Tuck School of
Business Administration, Dartmouth College, Hanover, New Hampshire. He
previously served as a professor of accounting at the John M. Olin School of
Business, Washington University, St. Louis, Missouri from 1964 to September 1993
and was dean of the School of Business from 1977 to 1993 and Executive Vice
Chancellor of University Relations from 1992 to 1993. He is currently a member
of the Board of Directors of CPI Corporation, General American Life Insurance
Company and Maritz, Inc. Mr. Virgil was elected a director of the Company in
April 1997.
BOARD MEETINGS -- COMMITTEES OF THE BOARD
The Board held twelve (12) meetings during the fiscal year ended September
30, 1998. The Board presently maintains an Executive Committee, an Audit
Committee, a Compensation and Options Committee, an Incentive Plan Committee and
a Nominating Committee.
The Executive Committee consisted during the fiscal year ended September
30, 1998 of Messrs. Fox, Hamacher, Jones, Nickelson and Stiff. The Executive
Committee exercises all powers of the Board, to the extent permitted by law,
between meetings of the Board. The Executive Committee was formed in April 1997
and held seven meetings during the fiscal year ended September 30, 1998.
The Audit Committee consisted during the fiscal year ended September 30,
1998 of Messrs. Jones, Ritter, Joseph F. Shaughnessy and Virgil. This committee
recommends engagement of the Company's independent auditors and is primarily
responsible for approving the services performed by the Company's independent
auditors and for reviewing and evaluating the Company's accounting principles
and its systems of
5
<PAGE> 27
internal accounting controls. The Audit Committee was formed in April 1997 and
held two meetings during the fiscal year ended September 30, 1998.
The Compensation and Options Committee consisted during the fiscal year
ended September 30, 1998 of Messrs. Finley, Hamacher, Nickelson, Ritter and
Shaughnessy. This committee reviews and approves the Company's executive
compensation policy, makes recommendations concerning the Company's employee
benefit policies and exercises such powers and makes such other
compensation-related determinations as are entrusted to it by the Board. The
Compensation and Options Committee was formed in April 1997 and held four
meetings during the fiscal year ended September 30, 1998.
The Incentive Plan Committee consisted during the fiscal year ended
September 30, 1998 of Messrs. Ritter and Shaughnessy. This committee administers
the Company's Amended and Restated 1996 Long-Term Incentive Plan (the "Long-Term
Incentive Plan") and exercises such powers and makes such determinations as are
entrusted to it in the Long-Term Incentive Plan. The Incentive Plan Committee
was formed in April 1997 and held four meetings during the fiscal year ended
September 30, 1998.
The Nominating Committee consisted during the fiscal year ended September
30, 1998 of Messrs. Hamacher, Nickelson and Virgil. The Nominating Committee,
which was formed in April 1997 and held one meeting during the fiscal year ended
September 30, 1998, recommends nominees for election to the Board.
During the fiscal year ended September 30, 1998 no director attended fewer
than 75% of the aggregate of (i) the total number of meetings of the Board (held
during the period for which he has been a director) and (ii) the total number of
meetings held by all committees of the Board on which he served (during the
periods that he served).
6
<PAGE> 28
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
HOLDERS OF MORE THAN FIVE PERCENT BENEFICIAL OWNERSHIP
The following table sets forth information regarding all persons known to
the Company to be the beneficial owners of more than five percent of the
Company's Common Stock as of August 21, 1999.
<TABLE>
<CAPTION>
PERCENT OF
SHARES OWNED OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY SHARES
- ------------------------------------ ------------ -----------
<S> <C> <C>
Prudential Insurance Company of America(1).................. 1,578,800 11.1%
100 Mulberry Street
Newark, New Jersey 07102
Putnam Investments, Inc.(2)................................. 1,538,471 10.8%
One Post Office Square
Boston, Massachusetts 02109
T. Rowe Price Associates, Inc.(3)........................... 934,900 6.5%
100 E. Pratt Street
Baltimore, Maryland 21202
Lazard Freres & Co.(4)...................................... 837,200 5.9%
30 Rockefeller Plaza
New York, New York 10020
Thomson Horstmann & Bryant, Inc.(5)......................... 832,300 5.8%
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07662
</TABLE>
- ---------------
(1) Information obtained from the Schedule 13G filed by such company with the
SEC on July 12, 1999.
(2) Information obtained from the Schedule 13G filed by such company with the
SEC on July 9, 1999.
(3) Information obtained from the Schedule 13G filed by such company with the
SEC on February 10, 1999.
(4) Information obtained from the Schedule 13G filed by such company with the
SEC on February 16, 1999.
(5) Information obtained from the Schedule 13G filed by such company with the
SEC on January 25, 1999.
7
<PAGE> 29
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the ownership of the
Company's Common Stock for each director, each executive officer named in the
Summary Compensation Table and all directors and executive officers (including
all executive officers named in the Summary Compensation Table) as a group as of
August 21, 1999.
<TABLE>
<CAPTION>
PERCENT OF
SHARES OWNED OUTSTANDING
NAME OF BENEFICIAL OWNER BENEFICIALLY SHARES
------------------------ ------------ -----------
<S> <C> <C>
Peter S. Finley(1).......................................... 106,336 *
Jeffrey L. Fox(2)........................................... 10,000 *
Philip G. Franklin(3)....................................... 56,000 *
Samuel A. Hamacher(4)....................................... 15,000 *
Jay G. Henges(5)............................................ 10,000 *
Paul W. Jones(6)............................................ 14,000 *
Curtis J. Laetz(7).......................................... 63,937 *
Robert D. Melin(8).......................................... 116,675 *
Donald E. Nickelson(9)...................................... 15,000 *
Jerry E. Ritter(10)......................................... 15,000 *
Paul D. Roblee(11).......................................... 96,675 *
P. Enoch Stiff(12).......................................... 346,275 2.4%
Robert L. Virgil(13)........................................ 10,000 *
------- ---
All directors and executive officers (including all
executive officers named in the Summary Compensation
Table) as a group (15 persons)............................ 957,898 6.5%
======= ===
</TABLE>
- ---------------
* Less than 1.0%.
(1) Represents 94,836 Shares directly owned by Mr. Finley and 1,500 Shares
indirectly owned by Mr. Finley as custodian for his children. Includes
10,000 Shares issuable pursuant to options granted under the 1996 Directors
Non-Qualified Stock Option Plan (the "Directors Plan").
(2) Includes 10,000 Shares issuable pursuant to options granted under the
Directors Plan.
(3) Includes 40,000 Shares issuable pursuant to options granted under the
Long-Term Incentive Plan.
(4) Includes 10,000 Shares issuable pursuant to options granted under the
Directors Plan.
(5) Includes 10,000 Shares issuable pursuant to options granted under the
Directors Plan.
(6) Excludes 500 Shares owned by his wife as to which Mr. Jones disclaims any
beneficial ownership and includes 10,000 Shares issuable pursuant to
options granted under the Directors Plan.
(7) Includes 43,500 Shares issuable pursuant to options granted under the
Long-Term Incentive Plan. Excludes 63,938 Shares sold to Purchaser
immediately prior to execution and delivery of the Merger Agreement. For a
description of such transaction and the terms thereof, reference is hereby
made to Item 3(b) of the Schedule 14D-9.
(8) Includes 32,300 Shares issuable pursuant to options granted under the
Long-Term Incentive Plan.
(9) Includes 15,000 Shares issuable pursuant to options granted under the
Directors Plan.
(10) Includes 10,000 Shares issuable pursuant to options granted under the
Directors Plan.
(11) Includes 32,300 Shares issuable pursuant to options granted under the
Long-Term Incentive Plan.
(12) Includes 130,000 Shares issuable pursuant to options granted under the
Long-Term Incentive Plan. Excludes 346,275 Shares sold to Purchaser
immediately prior to execution and delivery of the Merger Agreement. For a
description of such transaction and the terms thereof, reference is hereby
made to Item 3(b) of the Schedule 14D-9.
(13) Includes 10,000 Shares issuable pursuant to options granted under the
Directors Plan.
No agreements, formal or informal, exist among the various executive
officers and directors with respect to the voting of their shares.
8
<PAGE> 30
EXECUTIVE OFFICERS
The following table provides certain information regarding the executive
officers of the Company as of August 21, 1999 who are appointed by and serve at
the pleasure of the Board.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
P. Enoch Stiff............................ 51 Director, President and Chief Executive Officer(1)
Thomas K. Breslin......................... 38 Vice President -- Finance, Chief Financial Officer
and Treasurer(2)
Curtis J. Laetz........................... 54 Senior Vice President, Chief Administrative Officer
and Secretary(3)
Richard G. Mueller........................ 50 President -- OmniQuip Services Group(4)
</TABLE>
- ---------------
(1) See information under "Board of Directors of the Company."
(2) Mr. Breslin has been the Vice President -- Finance and Chief Financial
Officer of the Company since April 1999. Prior to joining the Company, Mr.
Breslin served from June 1996 as the Senior Vice President and Chief
Financial Officer of Nissan Forklift Corporation, North America. From
September 1995 to June 1996, he served in an executive management program at
McDonalds, Inc. Prior thereto, Mr. Breslin served as a senior manager with
Deloitte & Touche.
(3) Mr. Laetz has been the Senior Vice President and Chief Administrative
Officer of the Company since October 1998. He previously served as the Vice
President -- Marketing and Development of the Company since September 1996
and held a similar position with TRAK since 1990.
(4) Mr. Mueller has been the President -- OmniQuip Services Group since December
1998. He previously served as a Vice President of the Company since June
1998. Prior to joining the Company, Mr. Mueller served as President of his
own senior management consulting firm from October 1997 to June 1998. From
May 1993 to October 1997, he served in various senior executive positions
with Swing-n-Slide Corp. (now called PlayCore, Inc.) (a manufacturer of
playground equipment and recreational products), including as Chairman and
Chief Executive Officer from 1996 to 1997, President and Chief Executive
Officer from 1994 to 1996 and President and Chief Operating Officer from
1993 to 1994.
9
<PAGE> 31
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the fiscal years indicated to the chief
executive officer and to the additional four most highly compensated executive
officers during the fiscal year ended September 30, 1998 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------- ------------------------
STOCK
OPTION
FISCAL OTHER ANNUAL AWARDS LTIP ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(4)(5) (IN SHARES) PAYOUTS(8) COMPENSATION
- ------------------------- ------ --------- -------- ------------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
P. Enoch Stiff.......... 1998 $215,307 $140,765 $38,649(6) 18,000 -- $ 1,790(9)
President and Chief 1997 178,939 134,924(2) 25,237(6) 275,000 $87,575 1,045(9)
Executive Officer 1996 174,736 102,000 9,865(6) -- -- 35,009(10)
Philip G. Franklin...... 1998 159,904 80,620 12,361 -- -- 835(9)
Vice President -- 1997 145,000 332,234(3) 9,587 40,000 -- 5,482(11)
Finance, Chief 1996 26,769 -- -- -- -- 4,155(11)
Financial Officer,
Treasurer and
Secretary(15)
Curtis J. Laetz......... 1998 127,919 65,482 17,249(7) 7,000 -- 952(9)
Senior Vice President, 1997 106,837 50,563(2) 10,260(7) 99,375 36,099 916(9)
Chief Administrative 1996 104,606 38,063 4,714(7) -- -- 13,569(12)
Officer and Assistant
Secretary
Robert D. Melin......... 1998 117,841 67,547 18,387(7) 7,000 -- 1,555(9)
Vice President 1997 116,132 51,962(2) 17,503(7) 99,375 38,013 1,497(9)
1996 107,302 40,959 11,681(7) -- -- 14,565(13)
Paul D. Roblee.......... 1998 140,212 55,651 15,534(7) 7,000 -- 265(9)
Vice President 1997 159,488 41,971(2) 12,884(7) 99,375 19,127 306(9)
1996 130,449 31,584 6,077(7) -- -- 10,224(14)
</TABLE>
- ---------------
(1) Includes amounts deferred under the 401(k) feature of the Company's
Retirement Income Savings Plan.
(2) Includes a non-recurring bonus paid in connection with the Company's
initial public offering.
(3) Includes a non-recurring signing bonus and non-recurring bonuses paid in
connection with the Company's initial public offering.
(4) Excludes certain personal benefits, the total value of which was less than
10% of the total annual salary and bonus for each of the executives.
(5) Includes amounts contributed by the Company under the Company's Retirement
Income Savings Plan.
(6) Includes bonuses of $15,961 in fiscal 1998, $15,961 in fiscal 1997 and
$4,504 in fiscal 1996 paid to reimburse the interest cost on a promissory
note used to purchase certain shares of Common Stock. See "Certain
Transactions -- Agreements with Directors and Executive Officers."
(7) Includes bonuses of $5,611 in fiscal 1998, $5,611 in fiscal 1997 and $1,584
in fiscal 1996 paid to reimburse the interest cost on promissory notes used
to purchase certain shares of Common Stock. See "Certain
Transactions -- Agreements with Directors and Executive Officers."
(8) Reflects amounts paid out under a deferred compensation plan which
permitted the senior management and directors to defer 25% of their annual
bonus for a period of three years. This arrangement was terminated in
fiscal 1996.
(9) Reflects amount paid for premiums on a life insurance policy.
(10) Reflects amounts accrued under the Company's deferred compensation plan
described in note 8 above and $1,009 paid for premiums on a life insurance
policy.
10
<PAGE> 32
(11) Reflects $142 paid for premiums on a life insurance policy in fiscal 1997
and relocation expenses of $5,340 and $4,155 paid in fiscal 1997 and 1996,
respectively.
(12) Reflects amounts accrued under the Company's deferred compensation plan
described in note 8 above and $881 paid for premiums on a life insurance
policy.
(13) Reflects amounts accrued under the Company's deferred compensation plan
described in note 8 above and $1,440 paid for premiums on a life insurance
policy.
(14) Reflects amounts accrued under the Company's deferred compensation plan
described in note 8 above and $224 paid for premiums on a life insurance
policy.
(15) Mr. Franklin joined the Company as Vice President -- Finance and Chief
Financial Officer of TRAK in July 1996.
OPTIONS
The following table sets forth information concerning options granted
during the fiscal year ended September 30, 1998 under the Company's stock option
plans to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
PERCENTAGE POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES PER SHARE FOR OPTION TERM(2)
OPTIONS IN FISCAL EXERCISE EXPIRATION -------------------------
NAME GRANTED 1998 PRICE DATE 5% 10%
- ---- ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
P. Enoch Stiff............ 18,000 4.1(1) $10.75 9/22/08 $121,691.11 $308,389.17
Philip G. Franklin........ -- -- -- -- -- --
Curtis J. Laetz........... 7,000 1.6(1) 10.75 9/22/08 47,324.32 119,929.12
Robert D. Melin........... 7,000 1.6(1) 10.75 9/22/08 47,324.32 119,929.12
Paul D. Roblee............ 7,000 1.6(1) 10.75 9/22/08 47,324.32 119,929.12
</TABLE>
- ---------------
(1) Options to acquire a total of 440,500 shares were granted under the
Long-Term Incentive Plan in fiscal 1998, the purpose of which is to provide
a financial incentive to key employees who are in a position to make
significant contributions to the Company. Options granted under the
Long-Term Incentive Plan have an exercise price equal to the market price on
the date of grant. Options become exercisable with respect to one fourth of
the shares covered thereby on each anniversary of the date of grant,
commencing on the second anniversary of such date.
(2) Potential realizable value is calculated based on an assumption that the
price of the Company's Common Stock appreciates at the annual rate shown (5%
and 10%), compounded annually, from the date of grant of the option until
the end of the option term. The value is net of the exercise price but is
not adjusted for the taxes that would be due upon exercise. The 5% and 10%
assumed rates of appreciation are mandated by the rules of the SEC and do
not in any way represent the Company's estimate or projection of future
stock prices.
11
<PAGE> 33
The following table sets forth information concerning option exercises and
the value of unexercised options held by the Named Executive Officers as of
September 30, 1998.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED,
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED SEPTEMBER 30, 1998 SEPTEMBER 30,1998
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
P. Enoch Stiff......... -- -- -- 68,000 -- --(1)
Philip G. Franklin..... -- -- -- 40,000 -- --(1)
Curtis J. Laetz........ -- -- -- 22,000 -- --(1)
Robert D. Melin........ -- -- -- 22,000 -- --(1)
Paul D. Roblee......... -- -- -- 22,000 -- --(1)
</TABLE>
- ---------------
(1) No options held by this Named Executive Officer at September 30, 1998 were
in-the-money.
LONG-TERM INCENTIVE PLAN
The Company maintains the Long-Term Incentive Plan pursuant to which equity
incentives covering up to 1,600,000 Shares may be awarded to selected officers
and key employees of the Company. On August 20, 1999, the Board approved an
amendment to the Long-Term Incentive Plan to provide for the cancellation of
stock options granted pursuant to such plan upon a Change in Control (as defined
therein) as follows: (i) if the Transaction Price per share (as defined therein)
is greater than the exercise price per share, each stock option shall be
canceled in consideration of a cash payment equal to the difference between the
Transaction Price and the exercise price of common stock or (ii) if the
Transaction Price per share is less than the exercise price per share, then such
stock option shall be canceled and no payments shall be made with respect
thereto. A copy of the Long-Term Incentive Plan, as amended and restated, is
attached as Exhibit 6 to the Schedule 14D-9.
The Company has agreed in the Merger Agreement that each option granted to
a Company employee pursuant to the Company's Long-Term Incentive Plan to acquire
Shares that is outstanding immediately prior to the Effective Time, whether or
not then vested or exercisable, with respect to which, as of the Effective Time,
$21.00 per share (such amount, or any greater amount per share paid pursuant to
the Offer, the "Per Share Amount") exceeds the exercise price per share, shall,
effective immediately prior to the Effective Time, be canceled in exchange for a
single lump sum cash payment equal to the product of (1) the number of Shares
subject to such option and (2) the excess of the Per Share Amount over the
exercise price per share of such option (subject to any applicable withholding
taxes). Each such option that is outstanding immediately prior to the Effective
Time, whether or not then vested or exercisable, with respect to which, as of
the Effective Time, the Per Share Amount does not exceed the exercise price per
share, shall, effective as of immediately prior to the Effective Time, be
canceled and no payments shall be made with respect thereto, and prior to the
Effective Time, the Company will use its reasonable best efforts to obtain
consents from holders of such options to their cancellation.
The Company has agreed in the Merger Agreement that, immediately prior to
the Effective Time, each Share previously issued in the form of restricted stock
pursuant to the Company's Long-Term Incentive Plan shall fully vest and all
restrictions thereon shall be removed.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company is a party to "change in control" severance agreements (the
"Severance Agreements") with Messrs. Stiff, Laetz, Mueller and Breslin,
executive officers of the Company. The Severance Agreements
12
<PAGE> 34
provide for the payment of certain severance and other benefits upon certain
qualifying terminations of such employees within two years of a "change in
control of the Company" (as defined in the Severance Agreements). The benefits
payable under the Severance Agreements generally provide for up to two years of
base salary, a bonus equal to 50% of the average of the bonus awarded to such
employee in each of the prior three years pursuant to the Company's executive
incentive plan and the continuation of certain other benefits for a period of
one year. In addition, the Severance Agreements provide for the immediate
vesting of any outstanding options granted to such officers under the Long-Term
Incentive Plan. Each agreement has an initial term through December 31, 2000,
which term automatically extends for an additional one year period each January
1st, unless at least thirty days prior to such January 1st date the Company
gives notice that it does not wish to extend such agreement; provided, that
following a "change in control," the term of each agreement automatically
extends to the date which is two years following the "change in control." For
purposes of the Severance Agreements, a "change in control of the Company"
generally shall be deemed to occur if (i) any person is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing a majority of the combined voting power of the Company's then
outstanding securities or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof unless the election, or
nomination for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period. The Company also maintains
"change in control" severance agreements with other key employees, which
agreements have terms and conditions similar to those of the Severance
Agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In April 1997, the Company formed a Compensation and Options Committee. For
the fiscal year ended September 30, 1998, the members of the Compensation and
Options Committee were Messrs. Finley, Hamacher, Nickelson, Ritter and
Shaughnessy. No member of the Compensation and Options Committee is an executive
officer of the Company. Prior to the Company's initial public offering, Messrs.
Hamacher and Finley served as Executive Vice President and Vice President,
respectively, of the Company and held similar positions with TRAK and Lull
International, Inc. Mr. Hamacher and Mr. Nickelson are officers of Harbour
Group. The Company pays Harbour Group and its affiliate, HGL, for providing
certain consulting and related services. See "Certain Transactions -- Related
Party Transactions."
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled to receive
an annual fee of $10,000 and additional fees of $750 for attendance at each
meeting of the full Board and $500 for attendance at each meeting of a committee
of the Board. Directors are also entitled to reimbursement for their expenses
incurred in attending meetings.
1996 DIRECTORS NON-QUALIFIED STOCK OPTION PLAN. The Company maintains the
Directors Plan, which provides for the granting of options to the Company's
directors who are not employees of the Company, for up to an aggregate 250,000
Shares. A copy of the Directors Plan is filed as Exhibit 7 to the Schedule
14D-9.
The Directors Plan, by its express terms, provided for the grant of options
thereunder to each eligible director serving on March 20, 1997, the date of the
Company's initial public offering, with respect to 10,000 Shares, and an
additional option to the Chairman of the Board (provided he was an eligible
director) with respect to 5,000 Shares, in each case at the initial public
offering price of $14.00 per share. In addition, the Directors Plan provides for
the grant of options to each person first becoming an eligible director
subsequent to the date of the Company's initial public offering with respect to
10,000 Shares and the grant of an additional option to each person first
becoming Chairman of the Board subsequent to such date (provided such person is
an eligible director) with respect to 5,000 Shares.
Options granted or to be granted under the Directors Plan may not be
exercised for a period of one year from the date of grant. Thereafter, 50% of
such options become exercisable on the first anniversary of the date of grant
and the remaining 50% of such options become exercisable in equal amounts on the
second, third,
13
<PAGE> 35
fourth and fifth anniversaries of the date of grant. All options granted under
the Directors Plan expire ten years from the date of grant.
Options granted or to be granted under the Directors Plan are
nontransferable, and the exercise price must be equal to the fair market value
of the Common Stock on the date of grant. Upon exercise, the exercise price must
be paid in full in cash or such other consideration as the Board or any
committee thereof may permit.
The Company has agreed in the Merger Agreement that each option granted to
a Company director pursuant to the Directors Plan to acquire Shares that is
outstanding immediately prior to the Effective Time, whether or not then vested
or exercisable, with respect to which, as of the Effective Time, the Per Share
Amount exceeds the exercise price per share, shall, effective as of immediately
prior to the Effective Time, be canceled in exchange for a single lump sum cash
payment equal to the product of (1) the number of Shares subject to such option
and (2) the excess of the Per Share Amount over the exercise price per share of
such option (subject to any applicable withholding taxes). Each such option that
is outstanding immediately prior to the Effective Time, whether or not then
vested or exercisable, with respect to which, as of the Effective Time, the Per
Share Amount does not exceed the exercise price per share, shall, effective as
of immediately prior to the Effective Time, be canceled and no payments shall be
made with respect thereto. Prior to the Effective Time, the Company shall obtain
any consents from holders of options under the Directors Plan necessary to give
effect to the aforementioned provisions.
Set forth below is information with respect to options outstanding under
the Directors Plan as of September 30, 1998.
<TABLE>
<CAPTION>
DATE OF NUMBER OF EXERCISE PRICE
NAME GRANT SHARES PER SHARE
- ---- ------- --------- --------------
<S> <C> <C> <C>
Peter S. Finley.......................................... 3/20/97 10,000 $14.00
Jeffrey L. Fox........................................... 3/20/97 10,000 14.00
Samuel A. Hamacher....................................... 3/20/97 10,000 14.00
Paul W. Jones............................................ 4/10/97 10,000 13.25
Donald E. Nickelson...................................... 3/20/97 15,000 14.00
Jerry E. Ritter.......................................... 4/10/97 10,000 13.25
Joseph F. Shaughnessy.................................... 4/10/97 10,000 13.25
Robert L. Virgil......................................... 4/10/97 10,000 13.25
</TABLE>
Upon his election to the Board of Directors in February 1999, Mr. Henges
was granted an option to purchase 10,000 Shares pursuant to the Directors Plan
at an exercise price of $10.375 per share.
CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
In connection with the founding of the Company by Harbour Group and HGL, on
August 16, 1995, Harbour Group Investments III, L.P. ("Investments L.P."),
Uniquip-HGI Associates, L.P. ("Uniquip L.P.") and P. Enoch Stiff purchased
9,225,000 Shares, 1,125,000 Shares and 337,500 Shares, respectively, of the
Company's Common Stock for approximately $0.56 per share payable $5,209,411.76
in cash, $600,000 in cash and $35,294.12 by a promissory note and $190,588.24 in
cash, respectively. On September 20, 1995, Mr. Stiff purchased an additional
225,000 Shares of the Company's Common Stock for approximately $0.56 per share
payable $200 in cash and $126,859 by a promissory note. On September 20, 1995,
Curtis J. Laetz and three other officers of the Company each purchased 84,375
Shares of the Company's Common Stock for approximately $0.56 per share payable
$75 in cash and $47,572 by a promissory note. Harbour Group and HGL are
affiliates of Investments L.P. and Uniquip L.P. Certain members of the Board are
officers of Harbour Group and HGL. See "Board of Directors of the Company."
14
<PAGE> 36
In connection with the acquisitions of TRAK and Lull Industries, Inc.
("Lull"), the Company incurred junior subordinated indebtedness evidenced by
subordinated notes (the "Subordinated Notes") in the principal amounts of
$2,000,000 and $14,000,000, respectively. Investments L.P. held the subordinated
note in the principal amount of $2,000,000 and guaranteed the Company's
obligations under the subordinated note in the principal amount of $14,000,000.
The Company repaid the entire balance of indebtedness outstanding under the
Subordinated Notes from the net proceeds received by the Company from its
initial public offering.
The Company engages HGL and Harbour Group to provide certain management
consulting services to the Company for which payments totaling $668,000,
$601,000 and $141,000 were made by the Company to HGL for the fiscal years ended
September 30, 1996, 1997 and 1998, respectively. In connection with the
acquisitions of TRAK, Lull and the Snorkel Division of Figgie International
Inc., the Company paid fees to Harbour Group and affiliates of approximately
$1,224,000 in the aggregate for investment banking, corporate development and
other services, including fees of $550,000 paid in the fiscal year ended
September 30, 1998. The Company has entered into an Operations Consulting and
Advisory Services Agreement (the "HGL Services Agreement") with HGL, pursuant to
which HGL provides management consulting services to the Company for a one-year
term from September 30, 1996, which term automatically renews from year to year
until terminated by the Company or HGL upon 30 days notice. Under the HGL
Services Agreement, the Company compensates HGL for management consulting
services at HGL's approximate costs incurred in performing such services. The
Company has also entered into a Corporate Development Consulting and Advisory
Services Agreement (the "HGI Services Agreement") with Harbour Group, an
affiliate of HGL, pursuant to which Harbour Group continues to provide corporate
development services to the Company for a one-year term from September 30, 1996,
which term automatically renews from year to year until terminated by the
Company or Harbour Group upon 30 days notice. Under the HGI Services Agreement,
the Company compensates Harbour Group for corporate development services by
paying an annual fee equal to the greater of $100,000 or Harbour Group's
approximate costs incurred in performing such services, plus a transaction fee
equal to an amount which ranges from two and one half percent of the first $1.0
million of the purchase price to one half of one percent of the portion of the
purchase price in excess of $4.0 million for each completed acquisition or
disposition by the Company during the term of the HGI Services Agreement,
subject to a minimum fee per transaction of $125,000.
The Company was included in an insurance program maintained by HGL
providing workers compensation and employer's liability, general liability and
automobile liability and physical damage insurance coverage for all companies
controlled by Harbour Group or its affiliates. The insurance program included a
retrospective rating plan and automatic premium adjustment plan, which provided
for calculations of the premiums for the insurance program based on the
application of rating formulae to actual incurred losses and reserves for future
losses which required adjustment of the premiums retrospectively. The Company
also entered into an Insurance Agreement with HGL pursuant to which it had
agreed to reimburse HGL, and HGL had agreed to reimburse the Company, for their
respective pro rata shares of any retrospective premium adjustment. The Company
substantially ceased participation in the insurance program upon completion of
its initial public offering. The Company continued to participate in a similar
program administered by HGL providing commercial umbrella and excess umbrella
coverage until November 1997. The Company did not experience any difficulty in
obtaining comparable insurance and the costs of such insurance have not been
materially different from that charged under the HGL program.
The Company believes that each of the related party transactions described
herein was on terms no less favorable to the Company than could have been
obtained from unaffiliated third parties.
In connection with the Company's initial public offering in March 1997 and
an additional offering in March 1998, the Company, Investments L.P., Uniquip
L.P. and, solely in connection with the offering in March 1998, Mr. Stiff
entered into indemnification agreements (the "Indemnification Agreements")
providing for indemnification against certain potential liabilities arising in
connection with such offerings, including liabilities under the Securities Act.
The Company has agreed in the Merger Agreement that it shall cause each
contract, agreement or other arrangement between the Company or any of its
subsidiaries and Harbour Group or any of its affiliates to be
15
<PAGE> 37
terminated, effective not later than the consummation of the Offer, without
penalty to, or payment of other consideration by the Company or any of its
subsidiaries; provided that the foregoing shall not apply to: (i) the Insurance
Agreement, dated September 27, 1996 between HGL and the Company; (ii) the
Directors Plan or awards thereunder; or (iii) the Indemnification Agreements.
AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
As described above, Mr. Stiff, on August 16, 1995, acquired 337,500 Shares
for $190,588.24 in cash, a price determined by the Board. In connection with the
purchase of such shares of Common Stock, Mr. Stiff entered into an Investment
Agreement with Investments L.P. and the Company (the "Investment Agreement")
providing for, among other things, restrictions on transfer of such shares,
registration rights with respect to such shares, the grant of an option to
Investments L.P. to purchase such shares in certain circumstances, a right of
first refusal for Investments L.P. in the event of certain offers to purchase
such shares, "tag-along" and "drag-along" rights in the event of certain sales
of the Common Stock by Investments L.P., a right to acquire additional
securities of the Company in order for Mr. Stiff to maintain his percentage of
equity interest in the Company under certain circumstances and a right to make
additional investments in the Company in accordance with his pro rata share of
the issued Common Stock in certain circumstances. In connection with the
Investment Agreement, Mr. Stiff entered into a Participation Agreement with
Investments L.P., pursuant to which Mr. Stiff purchased a 3% interest in
$2,000,000 in principal amount of a junior subordinated note issued by TRAK and
made payable to Investments L.P. The Company repaid the entire balance of the
indebtedness outstanding under such subordinated note from the net proceeds
received by the Company from its initial public offering.
Also as described above, Mr. Stiff, together with Messrs. Laetz, Melin,
Roblee and one other key employee of the Company on September 20, 1995, acquired
Common Stock at prices determined by the Board, and the purchase price therefor
was paid partly in cash and partly by delivery of promissory notes payable to
the Company. The payment obligations of the stockholders under their respective
promissory notes are secured by all or some portion of the purchased shares
pursuant to stock pledge agreements entered into by each stockholder and the
Company. Such notes have a ten-year maturity, bear interest at a fixed rate of
interest of 6.56% per annum and are payable interest only annually, with one
principal payment at maturity. In connection with such promissory notes, the
Company agreed to pay annual bonuses to such stockholders in amounts equal to
the annual interest payments on the notes plus all federal and state income
taxes applicable to such payments. In connection with the purchase of his shares
of the Common Stock, each such stockholder entered into an agreement with the
Company (the "Stockholder Agreements") providing for, among other things,
restrictions on transfer of such shares of the Common Stock owned by such
stockholder, registration rights with respect to such shares, the repurchase of
such shares upon termination of the stockholder's employment at a price based on
a predetermined formula, a right of first refusal for the Company in the event
of certain offers to purchase such shares, a right to acquire additional
securities of the Company in order to maintain the stockholder's percentage of
equity interest in the Company in certain circumstances and "tag-along" and
"drag-along" rights in the event of certain sales of the Common Stock by
Investments L.P. The provisions of the Stockholder Agreements, which are subject
to modification or waiver by the Company, generally permit the sale of 25% of
such shares one year after the Company's initial public offering, 50% of such
shares two years after the Company's initial public offering, 75% of such shares
three years after the Company's initial public offering, and all of such shares
four years after the Company's initial public offering. In November 1998, the
Company agreed to terminate such transfer restrictions upon payment in full of
amounts owed by each stockholder under their respective promissory notes. The
Stockholder Agreements also contain provisions concerning noncompetition and
confidentiality applicable to such stockholders and provisions for payments to
such stockholders, under certain circumstances, following the termination of
their employment with the Company.
16
<PAGE> 38
The following directors and executive officers have promissory notes in
excess of $60,000 outstanding to the Company:
<TABLE>
<CAPTION>
HIGHEST PRINCIPAL
PRINCIPAL AMOUNT
AMOUNT OUTSTANDING INTEREST
NAME POSITION OUTSTANDING AT 8/21/99 RATE DUE DATE
- ---- ------------------------ ----------- ----------- -------- ------------------
<S> <C> <C> <C> <C> <C>
P. Enoch Stiff.......... President, Chief $126,859 $126,859* 6.56% September 20, 2005
Executive Officer and
Director
</TABLE>
- ---------------
* Subsequent to such date such amount was paid in full.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of Shares and other equity
securities of the Company. Executive officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms which they file.
To the Company's knowledge, based solely on review of information furnished
to the Company, reports filed through the Company and representations that no
other reports were required, all Section 16(a) filing requirements applicable to
its directors, executive officers and greater than ten percent beneficial owners
were complied with during the year ended September 30, 1998, except that Curtis
J. Laetz, an executive officer of the Company, failed to timely file a Form 5
relating to the disposition of 200 Shares in December 1997 and the purchase of
100 Shares in September 1998.
17
<PAGE> 39
EXHIBIT 5
MORGAN STANLEY DEAN WITTER
ONE FINANCIAL PLACE
440 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60605
(312) 706-4000
August 21, 1999
Board of Directors
OmniQuip International, Inc.
222 East Main St.
Port Washington, Wisconsin 53074
Members of the Board:
We understand that OmniQuip International, Inc. ("OmniQuip" or the "Company"),
Textron Inc. ("Parent") and Telescope Acquisition Inc., a wholly owned
subsidiary of the Parent ("Purchaser") have entered into an Agreement and Plan
of Merger dated August 21, 1999 (the "Agreement"), which provides, among other
things, for (i) the commencement by Purchaser of a tender offer (the "Offer")
for all outstanding shares of common stock, par value $0.01 per share (the
"Company Common Stock") of OmniQuip for $21 per share net to the seller in cash,
and (ii) the subsequent merger (the "Merger") of Purchaser with and into the
Parent. Pursuant to the Merger, OmniQuip will become a wholly owned subsidiary
of the Parent and each outstanding share of the Company Common Stock other than
shares held in treasury or held by the Parent or any direct or indirect
wholly-owned subsidiary of the Parent or as to which dissenters' rights have
been perfected, will be converted into the right to receive $21 per share in
cash. The terms and conditions of the Offer and the Merger are more fully set
forth in the Agreement.
You have asked for our opinion as to whether the consideration to be received by
the holders of shares of Company Common Stock pursuant to the Agreement is fair
from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management
of the Company;
(iii) analyzed certain financial projections prepared by the management of
the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;
(v) reviewed the reported prices and trading activity for the Company
Common Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Company Common Stock with that of certain
other comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives
of the Company, the Parent and certain other parties and their
financial and legal advisors;
<PAGE> 40
Board of Directors MORGAN STANLEY DEAN WITTER
August 21, 1999
Page 2
(ix) reviewed the Agreement and certain related documents;
(x) considered such other factors as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. In
addition, we have assumed that the Offer and the Merger will be consummated in
accordance with the terms set forth in the Agreement. We have not made any
independent valuation or appraisal of the assets or liabilities of the Company,
nor have we been furnished with any such appraisals. Our opinion is necessarily
based on economic, market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services, including providing senior loans for
the Company and Parent and have received fees for the rendering of these
services.
It is understood that this letter is for the information of the Board of
Directors of the Company only and may not be used for any other purpose without
our prior written consent, except that this opinion may be included in its
entirety in filings with the Securities and Exchange Commission made in
connection with the Offer.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of shares of Company
Common Stock pursuant to the Agreement is fair from a financial point of view to
such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ FRANCIS J. OELERICH III
------------------------------------
Francis J. Oelerich III
Managing Director
<PAGE> 1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TEXTRON INC.,
TELESCOPE ACQUISITION INC.
AND
OMNIQUIP INTERNATIONAL, INC.
DATED AS OF
AUGUST 21, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
THE OFFER................................................. 2
Section 1.1 The Offer.................................... 2
Section 1.2 Company Action............................... 3
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING....................... 4
Section 2.1 The Merger................................... 4
Section 2.2 Effective Time............................... 5
Section 2.3 Closing...................................... 5
ARTICLE III
SURVIVING CORPORATION..................................... 5
Section 3.1 Certificate of Incorporation................. 5
Section 3.2 By-Laws...................................... 5
Section 3.3 Directors.................................... 5
Section 3.4 Officers..................................... 5
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES
IN THE MERGER.......................................... 6
Section 4.1 Share Consideration for the Merger;
Conversion or Cancellation of Shares in the
Merger....................................... 6
Section 4.2 Shareholders' Meeting........................ 6
Section 4.3 Payment for Shares in the Merger............. 7
Section 4.4 Transfer of Shares After the Effective Time;
No Further Ownership Rights in the
Shares....................................... 9
Section 4.5 Stock Options and Other Plans................ 9
Section 4.6 Dissenting Stock............................. 10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 10
Section 5.1 Corporate Organization and Qualification..... 10
Section 5.2 Capitalization............................... 11
Section 5.3 Authority Relative to This Agreement......... 12
Section 5.4 Consents and Approvals; No Violation......... 13
Section 5.5 SEC Reports; Financial Statements............ 13
Section 5.6 Absence of Certain Changes or Events......... 14
Section 5.7 Litigation and Liabilities................... 15
Section 5.8 Information Supplied......................... 15
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 5.9 Employee Benefit Plans; Labor Matters........ 15
Section 5.10 Brokers and Finders.......................... 16
Section 5.11 Compliance with Laws; Permits................ 16
Section 5.12 Takeover Statutes............................ 17
Section 5.13 Rights Plan.................................. 17
Section 5.14 Intellectual Property........................ 17
Section 5.15 Opinion of Financial Advisor................. 17
Section 5.16 Taxes........................................ 18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.... 18
Section 6.1 Corporate Organization and Qualification..... 18
Section 6.2 Authority Relative to This Agreement......... 18
Section 6.3 Consents and Approvals; No Violation......... 18
Section 6.4 Brokers and Finders.......................... 19
Section 6.5 Financing.................................... 19
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS....................... 19
Section 7.1 Conduct of Business of the Company........... 20
Section 7.2 No Solicitation of Transactions.............. 22
Section 7.3 Approvals and Consents; Cooperation.......... 23
Section 7.4 Further Assurances........................... 23
Section 7.5 Access to Information........................ 24
Section 7.6 Publicity.................................... 24
Section 7.7 Indemnification of Directors and Officers.... 24
Section 7.8 Employees.................................... 25
Section 7.9 Notification of Certain Matters.............. 25
Section 7.10 Company Board................................ 26
Section 7.11 Stockholder Approval......................... 27
Section 7.12 Related Parties.............................. 27
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER.................. 27
Section 8.1 Conditions to Each Party's Obligations to
Effect the Merger...................................... 28
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER............................ 28
Section 9.1 Termination by Mutual Consent................ 28
Section 9.2 Termination by Either Parent or the
Company................................................ 28
Section 9.3 Termination by the Company................... 29
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 9.4 Termination by Parent....................... 30
Section 9.5 Effect of Termination and Abandonment....... 30
Section 9.6 Extension; Waiver........................... 31
ARTICLE X
MISCELLANEOUS AND GENERAL................................. 31
Section 10.1 Payment of Expenses......................... 31
Section 10.2 Survival of Representations and Warranties;
Survival of Confidentiality............... 31
Section 10.3 Modification or Amendment................... 32
Section 10.4 Waiver of Conditions........................ 32
Section 10.5 Governing Law............................... 32
Section 10.6 Notices..................................... 33
Section 10.7 Entire Agreement; Assignment................ 34
Section 10.8 Parties in Interest......................... 34
Section 10.9 Certain Definitions......................... 34
Section 10.10 Specific Performance........................ 35
Section 10.11 Obligation of Parent........................ 35
Section 10.12 Validity.................................... 35
Section 10.13 Captions.................................... 35
Section 10.14 Counterparts................................ 35
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August
21, 1999, by and among Textron Inc., a Delaware corporation ("Parent"),
Telescope Acquisition Inc., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Purchaser"), and OmniQuip International, Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the Board of Directors of the Company has unanimously determined
that the terms of the Offer and the Merger (each as defined below) are fair to,
and in the best interests of, the shareholders of the Company and approved and
adopted this Agreement and the transactions contemplated hereby; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser shall make a
tender offer (the "Offer") to acquire all of the outstanding shares (the
"Shares") of common stock, par value $0.01 per share (the "Company Common
Stock"), of the Company, together with the associated Rights (as hereafter
defined), at a price of Twenty-One Dollars ($21) per Share (such amount, or any
greater amount per share paid pursuant to the Offer, being hereinafter referred
to as the "Per Share Amount"), net to the seller in cash, in accordance with the
terms and subject to the conditions of this Agreement;
WHEREAS, as a condition to Parent's and Purchaser's entering into this
Agreement and incurring the obligations set forth herein, concurrently with the
execution and delivery of this Agreement, Parent, Purchaser and the officers of
the Company listed in Annex B hereto (the "Key Employees") are entering into
Share Purchase Agreements (collectively, the "Key Employee Share Purchase
Agreements") whereby such Key Employees are selling Shares to the Purchaser all
upon terms and subject to the conditions set forth in the Key Employee Share
Purchase Agreements; and
WHEREAS, Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, Parent,
Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article IX, Purchaser shall commence the Offer as promptly as
practicable, but in no event later than the fifth business day from and
including the date of initial public announcement of this Agreement. Purchaser
shall accept for payment Shares that have been validly tendered and not
withdrawn pursuant to the Offer at the earliest practicable time following
expiration of the Offer that all conditions to the Offer, as set forth on Annex
A (the "Offer Conditions"), shall have been satisfied or waived by Purchaser.
The obligation of Purchaser to accept for
2
<PAGE> 6
payment, purchase and pay for Shares tendered pursuant to the Offer shall be
subject only to such Offer Conditions and to the further condition that a number
of Shares representing not less than a majority of the Shares then outstanding
on a fully diluted basis shall have been validly tendered and not withdrawn
prior to the final expiration date of the Offer (the "Minimum Condition").
Unless previously approved by the Company in writing, no change in the Offer may
be made (i) which decreases the Per Share Amount payable in the Offer, (ii)
which changes the form of consideration to be paid in the Offer, (iii) which
reduces the maximum number of Shares to be purchased in the Offer or the Minimum
Condition, (iv) which imposes conditions to the Offer in addition to the Offer
Conditions or which modifies the Offer Conditions in a manner adverse to the
holders of Shares or (v) which amends any other term of the Offer in a manner
adverse to the holders of the Shares (it being agreed that a waiver by Purchaser
of any condition other than the Minimum Condition shall not be deemed to be
adverse to the holders of the Shares). Notwithstanding the foregoing, Purchaser
may, without the consent of the Company, (i) extend the Offer on one or more
occasions for up to 10 business days for each such extension beyond the then
scheduled expiration date (the initial scheduled expiration date being 20
business days following commencement of the Offer), if at the then scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation to
accept for payment and pay for the Shares shall not be satisfied or waived,
until such time as such conditions are satisfied or waived (and, at the request
of the Company, Purchaser shall, subject to Purchaser's right to terminate this
Agreement pursuant to Article IX, extend the Offer for additional periods,
unless the only conditions not satisfied or earlier waived on the then scheduled
expiration date are one or more of the Minimum Condition and the conditions set
forth in paragraph (b) of the Offer Conditions, provided that (x) if the only
condition not satisfied is the Minimum Condition, the satisfaction or waiver of
all other conditions shall have been publicly disclosed at least five business
days before termination of the Offer and (y) if paragraph (b) of the Offer
Conditions has not been satisfied and the failure to so satisfy can be remedied,
the Offer shall not be terminated unless the failure is not remedied within 10
calendar days after Purchaser has furnished the Company written notice of such
failure) and (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer and (iii) extend the
Offer for an aggregate period of not more than 5 business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
this sentence if there shall not have been tendered sufficient Shares so that
the Merger could be effected without a meeting of the Company's shareholders in
accordance with Section 253 of the Delaware General Corporation Law (the
"DGCL"). Subject to the terms and conditions of the Offer and this Agreement,
Purchaser shall pay for all Shares validly tendered and not wit hdrawn pursuant
to the Offer that Purchaser becomes obligated to purchase pursuant to the Offer
as soon as practicable after the expiration of the Offer.
(b) As soon as practicable on the date of commencement of the Offer, Parent
or Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1
with respect to the Offer (together with any supplements or amendments thereto,
the "Offer Documents"). The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws, except that no
representation is made by Parent or Purchaser with respect to information
supplied by the Company in writing for inclusion or incorporation by reference
in the Offer Documents. Parent or Purchaser and the Company each agree promptly
to correct any information provided by them for use in the Offer Documents if
and to the extent that it shall have become false or misleading in any material
respect and Purchaser further agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each
3
<PAGE> 7
case as and to the extent required by applicable federal securities laws. Parent
and Purchaser agree to provide the Company and its counsel with any comments
Parent, Purchaser or their counsel receive from the SEC or its staff with
respect to the Offer Documents promptly after receipt of such comments. In
addition, to the extent practicable, the Company and its counsel shall be given
an opportunity to review and comment upon the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC.
Section 1.2 Company Action.
(a) The Company hereby approves of and consents to the Offer and represents
that the Board of Directors of the Company, including all of its disinterested
directors, at a meeting duly called and held, has, subject to the terms and
conditions set forth herein, unanimously (i) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger and (ii)
resolved to recommend that the shareholders of the Company accept the Offer,
tender their Shares and associated Rights thereunder to Purchaser and approve
and adopt this Agreement and the Merger; provided, that such recommendation may
be withdrawn, modified or amended pursuant to Section 7.2. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Board of Directors described in this Section 1.2(a).
(b) The Company hereby agrees to file with the SEC as soon as practicable
on the date of commencement of the Offer a Solicitation/ Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") containing the recommendation described in
Section 1.2(a). The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws, except that no representation
is made by the Company with respect to information supplied by Parent or
Purchaser in writing for inclusion or incorporation by reference in the Schedule
14D-9. The Company, Parent and Purchaser each agree promptly to correct any
information provided by them for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to the holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. Notwithstanding anything to the contrary in this Agreement, the
Board of Directors of the Company may withdraw, modify or amend its
recommendation pursuant to Section 7.2. The Company agrees to provide Parent,
Purchaser and their counsel with any comments the Company or its counsel
receives from the SEC or its staff with respect to Schedule 14D-9 promptly after
receipt of such comments. In addition, to the extent practicable, Parent,
Purchaser and their counsel shall be given an opportunity to review and comment
upon the Schedule 14D-9 and any amendments thereto prior to the filing thereof
with the SEC.
(c) In connection with the Offer, the Company will promptly furnish
Purchaser with mailing labels, security position listings and any available
listing or computer files containing the names and addresses of the record
holders of the Shares as of a recent date and shall furnish Purchaser with such
additional information and assistance (including, without limitation, updated
lists of shareholders, mailing labels and lists of securities positions) as
Purchaser or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Purchaser and its affiliates, associates, agents and advisors shall use the
information contained in any such labels, listings and files only in
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connection with the Offer and the Merger, and, if this Agreement shall be
terminated, will deliver to the Company all copies of such information then in
their possession.
ARTICLE II
THE MERGER; EFFECTIVE TIME; CLOSING
Section 2.1 The Merger. Subject to the terms and conditions of this Agreement
and in accordance with the DGCL, at the Effective Time (as defined in Section
2.2), the Company and Purchaser shall consummate a merger (the "Merger") in
which (a) Purchaser shall be merged with and into the Company and the separate
corporate existence of Purchaser shall thereupon cease, and (b) the Company
shall be the surviving corporation in the Merger and shall continue to be
governed by the laws of the State of Delaware. The corporation surviving the
Merger is sometimes hereinafter referred to as the "Surviving Corporation." The
Merger shall have the effects set forth in Section 259 of the DGCL.
Section 2.2 Effective Time. Parent, Purchaser and the Company will cause an
appropriate Certificate of Merger (the "Certificate of Merger") to be executed
and filed on the date of the Closing (as defined in Section 2.3) (or on such
other date as Purchaser and the Company may agree) as provided in the DGCL. The
Merger shall become effective upon the latest to occur of (i) the date on which
the Certificate of Merger is filed with the Secretary of State of the State of
Delaware or (ii) such later date as is agreed upon by the parties and specified
in the Certificate of Merger, and the time of such effectiveness is hereinafter
referred to as the "Effective Time."
Section 2.3 Closing. The closing of the Merger (the "Closing") shall take place
(a) at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, NY 10017-3954, at 10:00 a.m., local time, on the first business day
following the date on which the last of the conditions set forth in Article VIII
hereof shall be fulfilled or waived in accordance with this Agreement or (b) at
such other place, time and date as Parent and the Company may agree.
ARTICLE III
SURVIVING CORPORATION
Section 3.1 Certificate of Incorporation. The Certificate of Incorporation of
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation, except that the name
of the Surviving Corporation shall be changed to OmniQuip Textron International
Inc.
Section 3.2 By-Laws. The By-Laws of Purchaser, as in effect immediately prior
to the Effective Time, shall be the By-Laws of the Surviving Corporation.
Section 3.3 Directors. The directors of Purchaser at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
Section 3.4 Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-
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Laws. Nothing in the foregoing shall limit the ability of the Parent to cause
the Surviving Corporation to elect or appoint different or additional officers
of the Surviving Corporation.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
Section 4.1 Share Consideration for the Merger; Conversion or Cancellation of
Shares in the Merger. At the Effective Time, by virtue of the Merger and
without any action on the part of the holders of any Shares or capital stock of
Purchaser:
(a) Common Stock; Rights. Each Share, together with any preferred stock
purchase rights (the "Rights"), issued pursuant to the Rights Agreement, dated
as of August 21, 1998, as amended, by and between the Company and First Chicago
Trust Company of New York, as Rights Agent (the "Rights Agreement"), that are
issued and outstanding immediately prior to the Effective Time (other than (i)
Shares (and associated Rights) owned by Parent, Purchaser or any direct or
indirect wholly-owned Subsidiary of Parent (collectively, "Parent Companies") or
any of the Company's direct or indirect wholly-owned Subsidiaries or Company
Common Stock held in the treasury of the Company and (ii) Shares held by
Dissenting Stockholders (as defined in Section 4.6 hereof) shall, by virtue of
the Merger and without any action on the part of Purchaser, the Company or the
holder thereof, be canceled and extinguished and converted into the right to
receive, pursuant to Section 4.3, the Per Share Amount in cash (the "Merger
Consideration"), payable to the holder thereof, without interest thereon, less
any required withholding of taxes, upon the surrender of the certificate
formerly representing such Share.
(b) Parent and Company Owned Shares. Each Share (and associated Right)
issued and outstanding and owned by any of the Parent Companies or any of the
Company's direct or indirect wholly-owned Subsidiaries or authorized but
unissued shares of Company Common Stock held in the treasury of the Company
immediately prior to the Effective Time shall cease to be outstanding, be
canceled and retired without payment of any consideration therefor and cease to
exist.
(c) Capital Stock of Purchaser. Each share of common stock, par value
$1.00 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $1.00 per share, of the Surviving
Corporation.
Section 4.2 Shareholders' Meeting.
(a) The Company, acting through the Board of Directors, shall, if required
by applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its shareholders (the "Shareholders Meeting"), to be held as soon as
practicable after Purchaser shall have purchased Shares pursuant to the
Offer, for the purpose of considering and taking action upon this
Agreement;
(ii) prepare and file with the SEC as soon as practicable a
preliminary proxy statement, together with a form of proxy, or information
statement with respect to the Shareholders Meeting and as promptly as
practicable thereafter, subject to compliance
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with the rules and regulations of the SEC, mail a definitive proxy
statement or information statement to shareholders of the Company (the term
"Proxy Statement" shall mean such proxy statement or information statement
at the time it initially is mailed to the Company's shareholders and all
amendments and supplements thereto, if any, similarly filed and mailed);
(iii) except as provided in Section 7.2, include in the Proxy
Statement the recommendation of the Board of Directors that shareholders of
the Company vote in favor of the adoption and approval of this Agreement
and the transactions contemplated hereby; and
(iv) use all reasonable best efforts (A) to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with Parent and Purchaser, respond promptly to any comments
made by the SEC with respect to the Proxy Statement and any preliminary
version thereof and cause the Proxy Statement to be mailed to its
shareholders at the earliest practicable time following the expiration or
termination of the Offer and (B) except as provided in Section 7.2, obtain
the necessary approvals by its shareholders of this Agreement and the
transactions contemplated hereby.
At the Shareholders Meeting, Parent, Purchaser and their affiliates will
vote all Shares owned by them in favor of adoption and approval of this
Agreement and the transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90 percent (90%) of the then outstanding Shares, the parties
hereto agree, at the request of Purchaser, subject to Article VIII, to 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 shareholders of the Company.
Section 4.3 Payment for Shares in the Merger. The manner of making payment for
Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available to First Chicago
Trust Company of New York (the "Exchange Agent"), or such other exchange agent
selected by Parent and reasonably acceptable to the Company, for the benefit of
the holders of Shares, the funds necessary to make the payments contemplated by
Section 4.1 (the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Merger Consideration out of the Exchange
Fund. The Exchange Fund shall not be used for any other purpose.
(b) As soon as reasonably practicable, after the Effective Time, the
Exchange Agent shall mail to each holder of record (other than holders of
certificates representing Shares referred to in Section 4.1(b)) of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") (i) 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 Exchange Agent) and (ii) instructions for use in effecting the surrender of
the Certificates for payment therefor. Upon surrender of Certificates for
cancellation to the Exchange Agent, together with such letter of transmittal
duly executed and any other required documents, the holder of such Certificates
shall be entitled to receive for each of the Shares represented by such
Certificates the Merger Consideration, without any interest thereon, less any
required withholding of taxes, and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered,
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such Certificates shall represent solely the right to receive the Merger
Consideration with respect to each of the Shares represented thereby, without
any interest thereon. If payment is to be made to a person other than the person
in whose name a Certificate so surrendered is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
(c) Any portion of the Exchange Fund made available to the Exchange Agent
which remains unclaimed by the former shareholders of the Company six (6) months
after the Effective Time shall be delivered (along with any interest received
with respect thereto) to Parent, upon demand, and any former shareholders of the
Company shall thereafter look only to Parent (subject to abandoned property,
escheat or other similar laws) for payment of their claim for the Merger
Consideration for the Shares, but only as general creditors of Parent.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation or the
Exchange Agent shall be liable to any holder of a certificate representing
Shares for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(d) In the event that any certificate representing Shares shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such certificate to be lost, stolen or destroyed and, if
required by Purchaser, the posting by such person of a bond in such reasonable
amount as Purchaser may direct as indemnity against any claim that may be made
against it with respect to such certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed certificate the Merger Consideration
with respect to such certificate, to which such person is entitled pursuant
hereto.
Section 4.4 Transfer of Shares After the Effective Time; No Further Ownership
Rights in the Shares. At the Effective Time, the stock transfer books of the
Company shall be closed, and thereafter no transfers of Shares shall be made on
the stock transfer books of the Company. From and after the Effective Time, the
holders of certificates representing Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided herein or by applicable law. If, after the
Effective Time, certificates representing Shares are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
Section 4.3.
Section 4.5 Stock Options and Other Plans.
(a) Each option granted to a Company employee or director pursuant to the
Company's Amended and Restated 1996 Long-Term Incentive Plan and 1996 Directors
Non-Qualified Stock Option Plan to acquire shares of Company Common Stock (each
such option hereinafter is referred to as an "Option") that is outstanding
immediately prior to the Effective Time, whether or not then vested or
exercisable, with respect to which, as of the Effective Time, the Per Share
Amount exceeds the exercise price per share, shall, effective as of immediately
prior to the Effective Time, be canceled in exchange for a single lump sum cash
payment equal to the product of (1) the number of shares of Company Common Stock
subject to such Option and (2) the excess of the Per Share Amount over the
exercise price per share of such Option (subject to any applicable withholding
taxes).
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(b) Each Option that is outstanding immediately prior to the Effective
Time, whether or not then vested or exercisable, with respect to which, as of
the Effective Time, the Per Share Amount does not exceed the exercise price per
share shall, effective as of immediately prior to the Effective Time, be
canceled and no payments shall be made with respect thereto.
(c) Prior to the Effective Time, the Company shall obtain consents from
holders of Options under the 1996 Directors Non-Qualified Stock Option Plan
necessary to give effect to the provisions of Sections 4.5(a) and 4.5(b), and
shall take the steps set forth in Schedule 4.5(c) to effect the provisions of
Sections 4.5(a) and 4.5(b) with respect to options granted pursuant to the
Company's Amended and Restated 1996 Long-Term Incentive Plan.
(d) Immediately prior to the Effective Time, each Share of Company Common
Stock previously issued in the form of restricted stock pursuant to the
Company's Amended and Restated 1996 Long-Term Incentive Plan shall fully vest
and all restrictions thereon shall be removed.
(e) For purposes of this Agreement, the Company's Amended and Restated 1996
Long-Term Incentive Plan and 1996 Directors Non-Qualified Stock Option Plan are
referred to collectively herein as the "Stock Plans."
Section 4.6 Dissenting Stock. Notwithstanding anything in this Agreement to the
contrary, but only to the extent required by the DGCL, Shares that are issued
and outstanding immediately prior to the Effective Time and are held by holders
of Shares who comply with all the provisions of the DGCL concerning the right of
holders of Shares to dissent from the Merger and require appraisal of their
Shares ("Dissenting Stockholders") shall not be converted into the right to
receive the Merger Consideration but shall become the right to receive such
consideration as may be determined to be due such Dissenting Stockholder
pursuant to the law of the State of Delaware; provided, however, that (i) if any
Dissenting Stockholder shall subsequently deliver a written withdrawal of his or
her demand for appraisal (with the written approval of the Surviving
Corporation, if such withdrawal is not tendered within 60 days after the
Effective Time), or (ii) if any Dissenting Stockholder fails to establish and
perfect his or her entitlement to appraisal rights as provided by applicable
law, or (iii) if within 120 days of the Effective Time neither any Dissenting
Stockholder nor the Surviving Corporation has filed a petition demanding a
determination of the value of all Shares outstanding at the Effective Time and
held by Dissenting Stockholders in accordance with applicable law, then such
Dissenting Stockholder or Stockholders, as the case may be, shall forfeit the
right to appraisal of such Shares and such Shares shall thereupon be deemed to
have been converted into the right to receive, as of the Effective Time, the
Merger Consideration, without interest. The Company shall give Parent and
Purchaser (A) prompt notice of any written demands for appraisal of Shares,
withdrawals of demands for appraisal and any other related instruments received
by the Company, and (B) the opportunity to direct all negotiations and
proceedings with respect to any such demands for appraisal. The Company will
not, except with the prior written consent of Parent, voluntarily make any
payment with respect to any demands for appraisal or settle or offer to settle
any demand.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser that:
Section 5.1 Corporate Organization and Qualification. Each of the Company and
its Subsidiaries (as defined in Section 10.9) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and is qualified and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification, except where
failure to so qualify or be in good standing is not reasonably likely to have a
Material Adverse Effect (as defined in Section 10.9). Each of the Company and
its Subsidiaries has all requisite power and authority (corporate or otherwise)
to own its properties and to carry on its business as it is now being conducted.
The Company has heretofore made available to Parent complete and correct copies
of its and its Subsidiaries' Certificates of Incorporation and By-Laws or other
organizational documents as in effect on the date hereof. Schedule 5.1 of the
disclosure schedules delivered by the Company simultaneously with the execution
and delivery of this Agreement (the "Disclosure Schedules"; reference herein to
a Schedule, unless otherwise indicated to the contrary, being a reference to a
Schedule of the Disclosure Schedules) contains a correct and complete list of
each jurisdiction where the Company and each of its Subsidiaries is organized
and qualified to do business. Exhibit 21 to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1998 and Schedule 5.1 together
include all of the Subsidiaries of the Company. The Company does not directly or
indirectly beneficially own any securities or other beneficial ownership
interests in any other entity (including through joint ventures or partnership
agreements) other than (i) the Subsidiaries of the Company and (ii) as disclosed
in Schedule 5.1.
Section 5.2 Capitalization. The authorized capital stock of the Company
consists of (i) 100,000,000 shares of Company Common Stock of which, as of
August 20, 1999, 14,277,500 Shares were issued and outstanding and (ii)
1,500,000 shares of preferred stock, par value $0.01 per share, none of which is
issued or outstanding. Except as set forth on Schedule 5.2, all of the
outstanding shares of capital stock of the Company and of each Subsidiary of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and all of the Shares which may be exchanged for the Merger
Consideration will be, when so exchanged, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. As of August 20,
1999, (i) 1,822,500 shares of Company Common Stock were reserved for issuance
pursuant to the Stock Plans, and (ii) 350,000 shares of Series A Preferred
Stock, par value $.01 per share, were reserved for issuance in connection with
the Rights. Except as set forth on Schedule 5.2, as of the date hereof all
outstanding shares of capital stock of the Company's Subsidiaries are owned by
the Company or a direct or indirect wholly-owned Subsidiary of the Company, free
and clear of all liens, charges, encumbrances, claims, Options and restrictions
of any nature (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock). Schedule 5.2 sets forth the number of Options
and shares of restricted stock outstanding and, in the case of the Options, the
exercise price thereof. Except as set forth above and on Schedule 5.2, there are
not any outstanding or authorized options, warrants, calls, rights (including
preemptive rights), commitments or any other agreements or arrangements of any
character which the Company or any of its Subsidiaries is a party to, or may be
bound by, requiring it to issue, transfer, sell, purchase, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock of the Company or any of its Subsidiaries (or to cause any of the
foregoing to
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occur). Except as set forth on Schedule 5.2, the Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the shareholders of the Company on any
matter. Except as set forth above or on Schedule 5.2, (i) no shares of the
capital stock or other voting securities of the Company or any of its
Subsidiaries are issued, reserved for issuance or outstanding; and (ii) there
are no stock appreciation rights, phantom stock units, restricted stock grants,
contingent stock grants, or Benefit Plans which grant awards of any of the
foregoing, and there are no outstanding contractual rights to which the Company
or any of its Subsidiaries is a party the value of which is based on the value
of the Shares or which require the issuance of any shares of Company Common
Stock. Except as set forth on Schedule 5.2, there are no programs in place, nor
any outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of the capital stock of the
Company or any of its Subsidiaries.
Section 5.3 Authority Relative to This Agreement.
(a) The Company has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of this Agreement by the shareholders of the Company, including
Purchaser, in accordance with the Company's Certificate of Incorporation). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming this Agreement constitutes the valid and binding agreement of each of
Parent and Purchaser, constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that the enforcement hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
(b) The Board of Directors of the Company has duly and validly approved and
taken all corporate action required to be taken by the Board of Directors for
the consummation of the transactions (including the Offer, the acquisition of
Shares pursuant to the Offer and the Merger) contemplated herein in accordance
with the terms hereof, including but not limited to, all actions required to (i)
render the provisions of Section 203 of the DGCL restricting business
combinations with "interested stockholders" inapplicable to such transactions
and (ii) amend the Rights Agreement to provide that certificates with respect to
the Rights will not be distributed and the Rights will not become exercisable as
a result of any of the execution of this Agreement, the commencement or
consummation of the Offer or the consummation of the Merger.
Section 5.4 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement nor the consummation by the Company of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the respective Certificates of Incorporation or By-Laws of
the Company or any of its Subsidiaries; (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (i) in connection with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"),
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(ii) pursuant to the applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (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 or any of its Subsidiaries is authorized to do business, or
(iv) where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not be reasonably likely
to, in the aggregate, have a Material Adverse Effect or prevent, materially
delay or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement; (c) except as set forth in Schedule
5.4(c), result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, modification or acceleration or lien or other charge
or encumbrance) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation to which the Company or any
of its Subsidiaries or any of their assets may be bound, except for such
violations, breaches and defaults (or rights of termination, cancellation,
modification or acceleration or lien or other charge or encumbrance) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not be reasonably likely to have a Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement; or (d) assuming the consents,
approvals, authorizations or permits and filings or notifications referred to in
this Section 5.4 are duly and timely obtained or made and, with respect to the
Merger, the approval of this Agreement by the Company's shareholders has been
obtained, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its Subsidiaries or to any of
their respective assets, except for violations which would not in the aggregate
be reasonably likely to have a Material Adverse Effect or prevent, materially
delay or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
Section 5.5 SEC Reports; Financial Statements.
(a) The Company has filed all reports, proxy statements, forms and other
documents required to be filed by it with the SEC under the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act (collectively, the
"Company SEC Reports"). As of their respective dates, the Company SEC Reports
filed with the SEC since October 1, 1997 (i) complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such Company SEC Report and (ii) did not contain, and any reports and other
documents filed after the date hereof will not contain, as of their respective
dates, any untrue statement of a material fact required to be stated therein or
any omission to state a material fact necessary to make any statement of fact
contained therein not misleading.
(b) The Company's consolidated statements of operations and cash flows for
the three fiscal years ended September 30, 1998 and the nine months ended June
30, 1999 and the Company's consolidated balance sheets as of September 30, 1998
and June 30, 1999 (including the related notes thereto), all of which have been
heretofore furnished to Parent, present fairly the consolidated financial
position of the Company and its Subsidiaries and the consolidated results of
their operations and cash flows as of, and for the periods ended on, the dates
specified, in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods covered except as specifically
referred to in such financial statements (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
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Section 5.6 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports, as set forth on Schedule 5.6 or as contemplated by this
Agreement, since September 30, 1998 (i) the business of the Company has been
carried on only in the ordinary and usual course; (ii) there has not been any
change in the financial condition, properties, business or results of operations
of the Company and its Subsidiaries or any development or combination of
developments of which the Company has knowledge that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect;
(iii) neither the Company nor any of its Subsidiaries has amended its
Certificate of Incorporation or By-laws; (iv) the Company has not split,
combined or reclassified the Shares or any capital stock of any of its
Subsidiaries; (v) neither the Company nor any of its Subsidiaries has entered
into or amended in any material respect any employment or severance agreement
with any officer, director or key employee of the Company or any of its
Subsidiaries; (vi) except in the ordinary course of business consistent with
past practice, neither the Company nor any of its Subsidiaries has increased the
compensation or fringe benefits of, or paid any bonuses to, any current director
or officer thereof; (vii) neither the Company nor any of its Subsidiaries has
declared or set aside or paid any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that of
any of its Subsidiaries (other than regular quarterly cash dividends on the
Company Common Stock not exceeding $.01 per share or dividends or advances from
a wholly-owned Subsidiary of the Company to its parent or the Company); and
(viii) neither the Company nor any of its Subsidiaries has changed its
accounting methods, except as required by GAAP or the SEC.
Section 5.7 Litigation and Liabilities. Except as disclosed in the Company SEC
Reports or as set forth on Schedule 5.7, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of management of the Company and its Subsidiaries,
threatened against the Company or any of its Subsidiaries; (ii) obligations or
liabilities, whether or not accrued, contingent or otherwise and whether or not
required to be disclosed in the Company SEC Reports, or any other facts or
circumstances of which management of the Company and its Subsidiaries has
knowledge that could result in any claims against, or obligations or liabilities
of, the Company or any of its Subsidiaries; (iii) judgments, decrees,
injunctions or orders of any Governmental Entity or arbitrator outstanding
against the Company or any of its Subsidiaries; or (iv) orders, writs,
judgments, injunctions, decrees, determinations or awards with respect to the
Intellectual Property Rights (as hereinafter defined), except, in the case of
all of the foregoing, for those that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or prevent, materially delay
or materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
Section 5.8 Information Supplied. None of the information supplied by the
Company in writing for inclusion or incorporation by reference in the Offer
Documents or provided by the Company in the Schedule 14D-9 will, at the
respective times that the Offer Documents and the Schedule 14D-9 or any
amendments or supplements thereto are filed with the SEC and are first published
or sent or given to holders of Shares, 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 5.9 Employee Benefit Plans; Labor Matters.
(a) Schedule 5.9 contains an accurate and complete list of all Benefit
Plans maintained or sponsored by the Company, contributed to by the Company, or
covering any employees of
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the Company, to which the Company is obligated to contribute or with respect to
which the Company has any material liability. For purposes of this Agreement,
the term "Benefit Plans" shall mean: (i) employee benefit plans as defined in
Section 3(3) of ERISA (as defined in Section 10.9), (ii) employment agreements,
and (iii) any other plans, policies, programs and arrangements, whether or not
subject to ERISA, and whether or not funded, which provide any benefit for
current or former employees of the Company. The Company has no obligations to
contribute to, and has not suffered or otherwise caused a complete withdrawal or
partial withdrawal as defined in Sections 4203 and 4205 of ERISA with respect
to, any "multiemployer pension plan," as such term is defined in Section 3(37)
of ERISA, or with respect to any employee benefit plan of the type described in
Sections 4063 and 4064 of ERISA or in Section 413(c) of the Code (as defined in
Section 10.9).
(b) Except as set forth on Schedule 5.9, the Company does not contribute to
or have any material liability with respect to any Benefit Plan which provides
health, life insurance, accident or other "welfare-type" benefits to current or
future retirees or current or future former employees, their spouses or
dependents, other than in accordance with Section 4908B of the Code or
applicable state continuation coverage law.
(c) Except as set forth on Schedule 5.9, each material Benefit Plan and all
related trusts, insurance contracts and funds have been maintained, funded and
administered in compliance in all material respects with all reporting and
disclosure requirements and applicable laws and regulations, including but not
limited to ERISA and the Code. No material actions, suits, claims (other than
routine claims for benefits), taxes, penalties or liens with respect or relating
to the Benefit Plans are pending or, to the knowledge of the Company,
threatened, or have been assessed or incurred.
(d) Except as set forth on Schedule 5.9, each material Benefit Plan that is
intended to be qualified under Section 401(a) of the Code, and each trust (if
any) forming a part thereof, has received a current favorable determination
letter from the United States Internal Revenue Service as to the qualification
under the Code of such Benefit Plan and the tax-exempt status of such related
trust, and, to the knowledge of the Company, nothing has occurred since the date
of such determination that could adversely affect the qualification of such
Benefit Plan or the tax-exempt status of such related trust.
(e) Except as disclosed on Schedule 5.9 or included or incorporated by
reference as exhibits to the Company SEC Reports, there are no employment,
consulting, severance, termination, change in control or indemnification
agreements, arrangements or understandings between the Company or any of its
Subsidiaries and any (i) current officer or director of the Company or any of
its Subsidiaries and (ii) former officer or director of the Company or any of
its Subsidiaries which agreement, arrangement or understanding imposes
continuing obligations on the Company or any of its Subsidiaries.
Section 5.10 Brokers and Finders. Except for the fees and expenses payable to
Morgan Stanley & Co. Incorporated (whose fees and expenses will be paid by the
Company in accordance with the Company's agreement with Morgan Stanley & Co.
Incorporated), a true and complete copy of which has been furnished to Parent,
the Company has not employed any investment banker, broker, finder, consultant
or intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to any investment banking, brokerage, finder's
or similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
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Section 5.11 Compliance with Laws; Permits. Except as disclosed in the Company
SEC Reports and as set forth on Schedule 5.11, the Company and its Subsidiaries
are, and since January 1, 1998 have been, in compliance with all applicable
laws, statutes, ordinances, rules, regulations, judgments, orders, injunctions,
decrees, arbitration awards, agency requirements, licenses and permits of any
Governmental Entity (as defined in Annex A), (including, without limitation, all
laws relating to the environment, health and safety), except for violations or
possible violations that, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect.
Section 5.12 Takeover Statutes. The Board of Directors of the Company has
approved the Offer, the Merger and this Agreement and such approval is
sufficient to render inapplicable to the Offer, the Merger, this Agreement and
the other transactions contemplated by this Agreement, the provisions of Section
203 of the DGCL.
Section 5.13 Rights Plan. The Company has amended the Rights Agreement to
provide that Parent shall not be deemed an Acquiring Person (as defined in the
Rights Agreement) and that the Rights will not separate from the Shares as a
result of entering into this Agreement, commencing or consummating the Offer or
consummating the Merger pursuant to the terms of this Agreement. The Company has
taken all action necessary to ensure that this Agreement and the transactions
contemplated hereby will not trigger any "poison pill" or any other anti-
takeover provision adopted by the Company or available to it under applicable
law.
Section 5.14 Intellectual Property. To the knowledge of the management of the
Company and its Subsidiaries, the Company or its Subsidiaries own, or have the
lawful right to use, all intellectual property rights necessary or used in the
operations of the Company or its Subsidiaries (the "Intellectual Property
Rights"), except for such failures to own or have the lawful right to use as
would not, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth on Schedule 5.14: (i) to the knowledge of the management of
the Company and its Subsidiaries, there are no pending oppositions,
cancellations, invalidity proceedings, interferences or re-examination
proceedings with respect to the material Intellectual Property Rights or any
other proceedings pertaining to or challenging the rights of the Company or any
of its Subsidiaries to use any of the material Intellectual Property Rights;
(ii) neither the Company nor its Subsidiaries has received notice during the
past twelve (12) months from any other person or entity pertaining to or
challenging the right of the Company or any of its Subsidiaries to use any of
the material Intellectual Property Rights; and (iii) neither the Company nor any
of its Subsidiaries has made any claim or has knowledge of a violation or
infringement of its right to or in connection with the material Intellectual
Property Rights which, in either case, is still pending.
Section 5.15 Opinion of Financial Advisor. The Company has received the opinion
of Morgan Stanley & Co. Incorporated to the effect that, as of the date of this
Agreement, the Per Share Amount to be received by the shareholders of the
Company is fair to such shareholders from a financial point of view, and a
complete and correct signed copy of such opinion has been, or promptly upon
receipt thereof will be, delivered to Parent.
Section 5.16 Taxes. The Company has filed or caused to be filed all tax returns
that are required to be filed by it and has paid or caused to be paid all taxes
that have become due as indicated thereon, except where such tax is being
contested in good faith or where the failure to so file or pay would not have a
Material Adverse Effect.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser represent and warrant jointly and severally to
the Company that:
Section 6.1 Corporate Organization and Qualification. Each of the Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation and is qualified
and in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification, except where the failure to so qualify or be in such good
standing would not prevent, materially delay or materially impair the ability of
Parent or Purchaser to consummate the transactions contemplated by this
Agreement.
Section 6.2 Authority Relative to This Agreement. Each of the Parent and
Purchaser has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by Parent and Purchaser of the transactions
contemplated hereby have been duly and validly authorized by the respective
Boards of Directors of Parent and Purchaser (and by Parent as the sole
shareholder of Purchaser), and no other corporate proceedings on the part of
Parent and Purchaser are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Purchaser and, assuming this
Agreement constitutes the valid and binding agreement of the Company,
constitutes valid and binding agreements of each of Parent and Purchaser,
enforceable against each of them in accordance with its terms, except that the
enforcement hereof may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
Section 6.3 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Parent or Purchaser nor the consummation by Parent
and Purchaser of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the Certificate of Incorporation or the
By-Laws, respectively, of Parent or Purchaser; (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (i) in connection with the
applicable requirements of the HSR Act, (ii) pursuant to the applicable
requirements of 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 is authorized to do business, or (iv) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not in the aggregate prevent, materially
delay or materially impair the ability of Parent or Purchaser to consummate the
transactions contemplated by this Agreement; (c) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, modification or
acceleration or lien or other charge or encumbrance) under any of the terms,
conditions or provisions of any note, license, agreement or other instrument or
obligation to which Parent or Purchaser may be bound, except for such
violations, breaches and defaults (or rights of termination, cancellation,
modification or acceleration or lien or other charge or encumbrance) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not prevent, materially delay or materially impair the ability of Parent
or Purchaser to consummate the transactions contem-
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plated by this Agreement; or (d) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 6.3 are duly and timely obtained or made, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any of
its Subsidiaries or to any of their respective assets, except for violations
which would not in the aggregate prevent, materially delay or materially impair
the ability of Parent or Purchaser to consummate the transactions contemplated
by this Agreement.
Section 6.4 Brokers and Finders. Except for the fees and expenses payable to
Salomon Smith Barney (whose fees and expenses will be paid by Parent or
Purchaser in accordance with the Parent's agreement with such firm), Parent and
Purchaser have not employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the transactions
contemplated hereby.
Section 6.5 Financing. Purchaser will have, and Parent will cause Purchaser to
have, at the time required, sufficient funds available to purchase all of the
Shares outstanding on a fully diluted basis and to pay all fees and expenses
related to the transactions contemplated by this Agreement.
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
Section 7.1 Conduct of Business of the Company.
(a) The Company agrees that during the period from the date of this
Agreement to the Effective Time (unless the other parties shall otherwise agree
in writing and except as otherwise contemplated by this Agreement), the Company
will, and will cause each of its Subsidiaries to, conduct its operations
according to its ordinary and usual course of business consistent with past
practice. Without limiting the generality of the foregoing, and except as
otherwise permitted in this Agreement or set forth on Schedule 7.1, prior to the
Effective Time, neither the Company nor any of its Subsidiaries will, without
the prior written consent of Parent:
(i) except for shares to be issued or delivered pursuant to awards
outstanding on the date hereof under the Company's Stock Plans, issue,
deliver, sell, dispose of, pledge or otherwise encumber, or authorize or
propose the issuance, sale, disposition or pledge or other encumbrance of
(A) any additional shares of capital stock of any class (including the
Shares), or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of capital stock, or any
rights, warrants, options, calls, commitments or any other agreements of
any character to purchase or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock, or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding capital stock,
including the Shares;
(iii) split, combine, subdivide or reclassify any Shares or declare,
set aside for payment or pay any dividend, or make any other actual,
constructive or deemed
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distribution in respect of any Shares or otherwise make any payments to
shareholders in their capacity as such, other than the payment of a regular
quarterly cash dividend on the Company Common Stock on or about September
30, 1999 of $.01 per share payable to shareholders of record on September
15, 1999 and except for dividends by a wholly-owned Subsidiary of the
Company;
(iv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger);
(v) adopt any amendments to its Certificate of Incorporation or
By-Laws or alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
Subsidiary of the Company;
(vi) make any acquisition, by means of merger, consolidation or
otherwise, or material disposition (other than acquisition or disposition
of inventory, supplies and products in the ordinary course of business,
consistent with past practice), of assets or securities, or permit any
assets to become subject, other than in the ordinary course of business, to
any material lien or encumbrance;
(vii) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or guarantee any
such indebtedness or make any loans, advances or capital contributions to,
or investments in, any other person, other than to the Company or any
wholly-owned Subsidiary of the Company;
(viii) grant any increases in the compensation of any of its
directors, officers or key employees; for the avoidance of doubt
"compensation" being defined to include all stock options, stock
appreciation rights, phantom stock units, restricted stock grants,
contingent stock grants or similar benefits;
(ix) grant any increases in the compensation of any of its employees,
other than employees who are directors, officers or key employees, except
in the ordinary course of business consistent with past practice;
(x) pay or agree to pay or accelerate the payment of any pension,
retirement allowance or other employee benefit not required or contemplated
by any of the existing benefit, severance, termination, pension or
employment plans, agreements or arrangements as in effect on the date
hereof to any director or officer of the Company or any of its
Subsidiaries, whether past or present;
(xi) enter into any new or amend any existing employment or severance
or termination agreement with any such director or officer;
(xii) except as may be required to comply with applicable law, become
obligated under any new pension plan, welfare plan, multiemployer plan,
employee benefit plan, severance plan, benefit arrangement, or similar plan
or arrangement, which was not in existence on the date hereof, or amend any
such plan or arrangement in existence on the date hereof if such amendment
would have the effect of enhancing any benefits thereunder;
(xiii) settle or compromise any material claims (including any claims
in respect of tax liabilities or refunds) or litigation or, except in the
ordinary and usual course of business, modify, amend or terminate any of
its material contracts or waive, release or assign any material rights or
claims;
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(xiv) make any change, other than as required by applicable law,
regulation or change in generally accepted accounting principles, in
accounting policies or procedures applied by the Company (including tax
accounting policies and procedures);
(xv) except as otherwise required by applicable law or regulation,
make any tax election or permit any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated, except in
the ordinary course of business;
(xvi) take any action to amend or alter the Rights Agreement in any
manner adverse to Parent's, Purchaser's or the Company's ability to
commence or consummate the transactions contemplated by this Agreement
pursuant to the terms hereof;
(xvii) incur any capital expenditures, other than in the ordinary
course of business and consistent with past practice; or
(xviii) authorize, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.
Section 7.2 No Solicitation of Transactions. The Company, its affiliates and
their respective officers, directors, employees, representatives and agents
shall immediately cease any existing discussions or negotiations, if any, with
any parties conducted heretofore with respect to any Takeover Proposal (as
hereinafter defined). The Company, its Subsidiaries, directors, employees,
representatives and agents may furnish information and access, in each case only
in response to a request for such information or access to any person made after
the date hereof which was not initiated, solicited or knowingly encouraged by
the Company or any of its affiliates or any of its or their respective officers,
directors, employees, representatives or agents after the date hereof (with
respect to confidential information, pursuant to appropriate confidentiality
agreements), and may participate in discussions and negotiate with such entity
or group concerning any Takeover Proposal, only if such entity or group has
submitted a bona fide proposal to the Board of Directors of the Company relating
to any such transaction and (a) if the Board of Directors of the Company
determines in good faith, after receiving advice from its independent financial
advisor, that such entity or group has submitted to the Company a Takeover
Proposal which is reasonably likely to be a Superior Proposal (as hereinafter
defined), and (b) if the Board of Directors of the Company determines, in its
good faith judgment, based on the opinion of outside legal counsel to the
Company, that failing to take such action would constitute a breach of such
Board's fiduciary obligations under applicable law. The Company shall promptly
notify Parent if any proposal or offer, or any inquiry or contact with any
person with respect thereto, is made and shall, in any such notice to Parent,
indicate in reasonable detail the identity of the offeror and the terms and
conditions of any proposal or offer, or any such inquiry or contact. The Company
will promptly provide to Parent any non-public information concerning the
Company or its Subsidiaries provided to any other person which was not
previously provided to Parent. The Company shall keep Parent promptly advised of
all developments which could reasonably be expected to culminate in the Board of
Directors withdrawing, modifying or amending its recommendation of the Offer,
the Merger and other transactions contemplated by this Agreement. Except as set
forth in this Section 7.2, neither the Company nor any of its affiliates, nor
any of its or their respective officers, directors, employees, representatives
or agents, shall, directly or indirectly, knowingly encourage or solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent and Purchaser, any affiliate or associate of Parent and
Purchaser, or any designees of Parent or Purchaser) concerning any Takeover
Proposal; provided, that nothing in this Section 7.2 shall prevent the Company
or the Board of Directors of the Company from
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taking, and disclosing to the Company's stockholders, a position contemplated by
Rules 14d-9 and 14e-2 promulgated under the Exchange Act; provided further, that
the Board shall not recommend that the stockholders of the Company tender their
Shares in connection with any such tender offer unless the Board of Directors of
the Company determines in its good faith judgment based on the opinion of
independent outside legal counsel to the Company, that failing to take such
action would constitute a breach of the fiduciary duty of the Board of Directors
of the Company under applicable law.
As used in this Agreement, "Takeover Proposal" shall mean any tender or
exchange offer, proposal for a merger, consolidation or other business
combination involving the Company or any Subsidiary of the Company or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets of, the Company or its Subsidiaries other
than transactions contemplated by this Agreement.
Section 7.3 Approvals and Consents; Cooperation. Subject to the other provisions
of this Agreement, the parties hereto shall use their respective reasonable best
efforts, and cooperate with each other, to obtain as promptly as practicable all
governmental and third party authorizations, approvals, consents or waivers,
including, without limitation, pursuant to the HSR Act, required in order to
consummate the transactions contemplated by this Agreement, including, without
limitation, the Offer and the Merger.
Section 7.4 Further Assurances. Subject to the other provisions of this
Agreement, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, the Offer and the Merger, which efforts shall
include, without limitation, Parent, Purchaser and the Company using their
respective reasonable best efforts to prevent any preliminary or permanent
injunction or other order by a court of competent jurisdiction or governmental
entity relating to consummating the transactions contemplated by this Agreement,
and, if issued, to appeal any such injunction or order through the appellate
court or body for the relevant jurisdiction; provided, however, in no event
shall Parent, Purchaser or the Company be obligated to agree or consent to any
divestiture of assets, hold-separate agreement or other similar undertakings
pursuant to any antitrust or similar laws or regulations for the purposes of
consummating or making effective the transactions contemplated by this
Agreement. If at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
hereto shall take or cause to be taken all such necessary action, including,
without limitation, the execution and delivery of such further instruments and
documents as may be reasonably requested by the other party for such purposes or
otherwise to consummate and make effective the transactions contemplated hereby.
Section 7.5 Access to Information. Upon reasonable notice, the Company shall
(and shall cause each of its Subsidiaries to) afford to officers, employees,
counsel, accountants and other authorized representatives of Parent
("Representatives"), reasonable access, during normal business hours (to the
extent feasible without undue interference with or disruption to the operation
of the Company or any of its Subsidiaries) throughout the period prior to the
Effective Time, to its properties, books and records and, during such period,
shall (and shall cause each of its Subsidiaries to) furnish promptly to such
Representatives all information concerning its business, properties and
personnel as may reasonably be requested. Parent agrees that it will not, and
will cause its Representatives not to, use any information obtained pursuant to
this Section 7.5 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. The Confidentiality Agreement,
dated July 9,
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1999 (the "Confidentiality Agreement"), by and between the Company and Parent
shall apply with respect to information furnished by the Company, its
Subsidiaries and the Company's officers, employees, counsel, accountants and
other authorized representatives hereunder.
Section 7.6 Publicity. The parties will consult with each other and will
mutually agree upon any press releases or public announcements pertaining to the
Offer or the Merger and shall not issue any such press releases or make any such
public announcements prior to such consultation and agreement, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange, in which case the party proposing to
issue such press release or make such public announcement shall use its
reasonable efforts to consult in good faith with the other party before issuing
any such press releases or making any such public announcements.
Section 7.7 Indemnification of Directors and Officers.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Certificate of Incorporation and By-Laws of the Company on the date
of this Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at any time
prior to the Effective Time were directors, officers, employees or agents of the
Company in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), unless such modification is required by law; provided, that in
the event any claim or claims are asserted or made within such six-year period,
all rights to indemnification in respect of any such claim or claims shall
continue until disposition of any and all such claims.
(b) Parent shall cause to be maintained in effect for the Indemnified
Parties (as defined below) for not less than six years the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by the Company and the Company's Subsidiaries with respect to matters
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement); provided, that Parent may
substitute therefor policies of substantially the same coverage containing terms
and conditions which are no less advantageous to the Company's present or former
directors or officers or other employees covered by such insurance policies
prior to the Effective Time (the "Indemnified Parties") and provided further
that said substitution does not result in any gaps in coverage with respect to
matters occurring prior to the Effective Time.
(c) This Section 7.7 is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of Parent, Purchaser, the Company
and the Surviving Corporation.
Section 7.8 Employees.
(a) For a period of one year following the Effective Time, Parent agrees to
provide employee benefit plans and programs for the benefit of employees of the
Company and its Subsidiaries (other than those employees covered by collective
bargaining agreements) that are in the aggregate no less favorable than the
employee benefit plans and programs offered to such employees immediately prior
to Closing (excluding plans or programs which provide for issuance of Shares or
options on Shares). All service credited to each employee by the Company through
the Effective Time shall be recognized by Parent for purposes of eligibility
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and vesting under any employee benefit plan provided by Parent for the benefit
of the employees. Employees covered by collective bargaining agreements shall be
provided with such benefits as shall be required under the terms of any
applicable collective bargaining agreement.
(b) Parent hereby agrees to cause the Surviving Corporation to honor and
perform (without modification unless agreed to in writing by the parties
thereto) the written employment agreements, severance agreements and other
agreements listed on Schedule 7.8(b), all as in effect on the date of this
Agreement.
Section 7.9 Notification of Certain Matters. The Company shall give prompt
notice to Parent and Purchaser, and Parent and Purchaser shall give prompt
notice to the Company, of (i) the occurrence, or non-occurrence, of any event
the occurrence, or non-occurrence, of which would be reasonably likely to cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (ii) any failure of the Company, Parent
or Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. Each of
the Company, Parent and Purchaser shall give prompt notice to the other parties
of any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
Section 7.10 Company Board.
(a) Promptly (but in any event within two business days) upon the purchase
by Parent of a majority of the outstanding Shares pursuant to the Offer, either
(a) a majority of the members of the Board of Directors of the Company shall
resign and the remaining members of the Board of Directors of the Company shall
fill all of the Board positions so vacated with persons designated by Parent or
(b) the size of the Board of Directors of the Company shall be expanded and the
vacant seats filled with persons designated by Parent so that Parent's designees
shall constitute a majority of the members of the Board of Directors of the
Company. In either case, at all times thereafter through the Effective Time a
majority of the members of the Board of Directors of the Company shall be
persons designated by Parent.
(b) The Company's obligation to appoint designees to the Board of Directors
of the Company shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to such Section and Rule in order to fulfill its obligations
under this Section 7.10 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill such obligations. Parent or Purchaser
shall supply to the Company and be solely responsible for any information with
respect to either of them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1.
(c) Following the election of designees of Purchaser pursuant to this
Section 7.10, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
waiver of any of the Company's rights hereunder shall require the concurrence of
a majority of the directors of the Company then in office who are directors as
of the date hereof or persons designated by such directors and who were neither
designated by Purchaser nor employees of the Company ("Continuing Directors").
Prior to the Effective
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Time, the Company and Purchaser shall use all reasonable efforts to ensure that
the Company's Board of Directors at all times includes at least three Continuing
Directors.
Section 7.11 Stockholder Approval.
(a) Promptly after the consummation of the Offer, if required by the DGCL
in order to consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law and the Company's
Certificate of Incorporation and By-laws duly call, give notice of and convene a
meeting of the holders of Company Common Stock for the purpose of voting upon
this Agreement and the Merger and the Company agrees that this Agreement and the
Merger shall be submitted at such meeting. The Company shall use its reasonable
best efforts to solicit from its stockholders proxies and, subject always to the
fiduciary obligations of the Company's directors under applicable law, shall
take all other action necessary and advisable, to secure the vote of
stockholders required by applicable law to obtain the approval for this
Agreement and the Merger. Subject always to the fiduciary obligations of the
Company's directors under applicable law, the Company agrees that it will
include in the Proxy Statement the recommendation of its Board of Directors that
holders of Company Common Stock approve and adopt this Agreement and approve the
Merger. Parent and Purchaser will cause all shares of Company Common Stock owned
by them and their Subsidiaries to be voted in favor of the approval and adoption
of this Agreement and the Merger.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the outstanding Company Common Stock, the Company
agrees, at the request of Purchaser, subject to Article VIII, to take all
necessary and appropriate action to cause the Merger to become effective as soon
as reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Section 253 of the DGCL.
Section 7.12 Related Parties. The Company shall cause each contract, agreement
or other arrangement between the Company or any of its Subsidiaries and Harbour
Group Industries Inc. or any of its Affiliates to be terminated, effective not
later than the consummation of the Offer, without penalty to, or payment of
other consideration by, the Company or any of its Subsidiaries; provided that
the foregoing covenant shall not apply to (a) the Insurance Agreement, dated
September 27, 1996, between Harbour Group Ltd. and the Company, (b) the 1996
Directors Non Qualified Stock Option Plan or awards thereunder, (c) the
Indemnification Agreement, dated as of March 20, 1997, by and among Harbour
Group Investments III, L.P., Uniquip-HGI Associates, L.P. and the Company or (d)
the Indemnification Agreement, dated as of March 11, 1998, by and among Harbour
Group Investments III, L.P., Uniquip-HGI Associates, L.P., P. Enoch Stiff and
the Company.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Shareholder Approval. To the extent required by applicable law, this
Agreement and the Merger shall have been duly approved and adopted by the
shareholders of the Company in accordance with applicable law and the
Certificate of Incorporation and By-laws
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<PAGE> 27
of the Company; provided that Parent and Purchaser shall cause all shares of the
Company Common Stock owned by them or their Subsidiaries to be voted in favor of
the approval and adoption of this Agreement and the Merger.
(b) Injunction. There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other order of a
court or governmental or regulatory agency of competent jurisdiction directing
that the transactions contemplated herein not be consummated.
(c) Governmental Filings and Consents. All governmental consents, orders
and approvals legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be in effect at
the Effective Time, except where the failure to obtain any such consent would
not reasonably be expected to have a Material Adverse Effect on Parent and its
Subsidiaries, considered as whole (assuming the Merger had taken place), or on
Parent's ability to own, control and operate the Company and its Subsidiaries,
and the waiting periods under the HSR Act shall have expired or been terminated.
(d) The Offer. Purchaser shall have purchased all Shares tendered pursuant
to the Offer.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
Section 9.1 Termination by Mutual Consent. This Agreement may be terminated and
the Offer and the Merger may be abandoned at any time prior to the Effective
Time, by the mutual written consent of Parent and the Company.
Section 9.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Offer and Merger may be abandoned by Parent or the Company if
(i) any governmental or regulatory agency located or having jurisdiction within
the United States or any country or economic region in which either the Company
or Parent, directly or indirectly, has material assets or operations shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for payment of,
or payment for, shares of Company Common Stock pursuant to the Offer or the
Merger and such order, decree or ruling or other action shall have become final
and nonappealable; or (ii) due to an occurrence or circumstance which would
result in a failure to satisfy any of the Offer Conditions, Purchaser shall have
failed to pay for Shares pursuant to the Offer on or prior to the Outside Date,
unless such failure has been caused by or results from the failure of the party
seeking to terminate this Agreement to perform in any material respect any of
its respective covenants or agreements contained in this Agreement. As used
herein, the term "Outside Date" shall mean the later of (A) 90 days following
the date hereof, or (B) the date on which either the applicable waiting period
under the HSR Act shall have expired or been terminated.
Section 9.3 Termination by the Company. This Agreement may be terminated and
the Offer and the Merger may be abandoned at any time prior to the Effective
Time, by action of the Board of Directors of the Company:
(a) if (i) the Company, based on the advice of outside legal counsel to the
Company that such action is necessary in order for the Board of Directors of the
Company to comply
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<PAGE> 28
with its fiduciary duties under applicable law, subject to complying with the
terms of this Agreement, proposes to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and the Company
notifies Parent in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement to such notice and (ii)
Parent does not make, within five business days of receipt of the Company's
written notification of its intention to enter into a binding agreement for a
Superior Proposal, an offer to enter into an amendment to this Agreement such
that the Board of Directors of the Company determines, in good faith after
consultation with its financial advisors, that this Agreement as so amended is
at least as favorable, from a financial point of view, to the shareholders of
the Company as the Superior Proposal. The Company agrees (A) that it will not
enter into a binding agreement referred to in clause (i) above until at least
the sixth business day after it has provided the notice to Parent required
thereby, (B) to notify Parent promptly if its intention to enter into a written
agreement referred to in its notification shall change at any time after giving
such notification, and (C) that it shall be a condition precedent to the
effectiveness of any termination pursuant to this Section 9.3(a) that the fee
required to be paid pursuant to Section 9.5(b) shall have been paid in full
simultaneously with, or prior to, such termination.
For purposes of this Agreement, the term "Superior Proposal" shall mean a
bona fide proposal made by a third party to acquire all of the outstanding
Shares of the Company pursuant to a tender offer or a merger, or to purchase all
or substantially all of the assets of the Company, on terms which a majority of
the members of the Board of Directors of the Company determines in its good
faith reasonable judgment (based on the advice of its independent financial and
legal advisors) to be more favorable to the Company and its stockholders than
the transactions contemplated hereby, after taking into account all relevant
factors, including, without limitation, (i) the consideration to be paid to
shareholders pursuant thereto, (ii) the time estimated to be required for
consummation, and (iii) financial, regulatory and other risks of
nonconsummation.
(b) if (i) Purchaser shall have (x) failed to commence the Offer within
five business days following the date of the initial public announcement of the
Offer, (y) failed to pay for any Shares pursuant to the Offer to the extent
required under Section 1.1(a), or (z) terminated the Offer without purchasing
Shares pursuant to the Offer, or (ii) there has been a material breach by Parent
or Purchaser of any representation, warranty, covenant or agreement contained in
this Agreement that is not curable or, if curable, is not cured within 10
calendar days after written notice of such breach is given by the Company to the
party committing such breach.
Section 9.4 Termination by Parent. This Agreement may be terminated and the
Offer and Merger may be abandoned at any time prior to the Effective Time by
action of the Parent if (i) the Board of Directors of the Company shall have
withdrawn or adversely modified its approval or recommendation of this Agreement
or failed to reconfirm its recommendation of this Agreement within five business
days after a written request by Parent to do so, (ii) there has been a breach by
the Company of any representation, warranty, covenant or agreement contained in
this Agreement that is qualified as to materiality or there has been a material
breach of any other representation, warranty, covenant or agreement contained in
this Agreement, in any case that is not curable or, if curable, is not cured
within 10 calendar days after written notice of such breach is given by Parent
to the party committing such breach, or (iii) on a scheduled expiration date all
conditions to Purchaser's obligation to accept for payment and pay for Shares
pursuant to the Offer shall have been satisfied or waived other than the Minimum
Condition and Purchaser terminates the Offer without purchasing Shares
25
<PAGE> 29
pursuant to the Offer, provided that the satisfaction or waiver of all other
conditions shall have been publicly disclosed at least five business days before
termination of the Offer, or (iv) Purchaser shall have otherwise terminated the
Offer in accordance with the terms of this Agreement, including Annex A, without
purchasing shares pursuant to the Offer.
Section 9.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article IX, this Agreement (other than, with respect
to the parties hereto, the obligations pursuant to this Section 9.5 and Sections
10.1 and 10.2) shall become void and of no effect with no liability on the part
of any party hereto (or of any of its directors, officers, employees, agents,
legal and financial advisors or other representatives).
(b) In the event that (i) this Agreement is terminated by the Company
pursuant to Section 9.3(a) or (ii) this Agreement is terminated by Parent
pursuant to Section 9.4(i), then the Company shall, simultaneously with or prior
to such termination, pay Parent a termination fee of $20,000,000 and pay, in no
event later than two business days after the date of such termination, Parent
the amount of all documented out-of-pocket expenses of Parent and Purchaser
incurred in connection with the negotiation and execution of this Agreement and
the consummation of the transactions contemplated hereby.
(c) In the event that this Agreement is terminated by Parent pursuant to
Section 9.4(ii), then the Company shall promptly pay, but in no event later than
two days after the date of such termination, a termination fee of $1,000,000
representing liquidated damages for Parent's internal costs and expenses plus
the amount of all documented out-of pocket expenses of Parent and Purchaser
incurred in connection with the negotiation and execution of this Agreement and
the consummation of the transactions contemplated hereby.
(d) In the event that (i) this Agreement is terminated by the Company
pursuant to Section 9.3(b)(i)(x) or (y) or Section 9.3(b)(ii), then Parent shall
promptly, but in no event later than two days after the date of such termination
or event, pay the Company a termination fee of $1,000,000 plus the amount of all
documented out-of-pocket expenses of the Company incurred in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby.
Section 9.6 Extension; Waiver. Subject to the applicable provisions of the DGCL
and the provisions of this Agreement, including Section 7.10, at any time prior
to the Effective Time, each of Parent, Purchaser and the Company may (i) extend
the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
either party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE X
MISCELLANEOUS AND GENERAL
Section 10.1 Payment of Expenses. Except as set forth in the reimbursement
provisions of Sections 9.5, whether or not the Offer and the Merger shall be
consummated, each party
26
<PAGE> 30
hereto shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby.
Section 10.2 Survival of Representations and Warranties; Survival of
Confidentiality. The representations and warranties made herein shall not
survive beyond the earlier of (i) termination of this Agreement and (ii) the
Effective Time, in the case of the representations and warranties of Parent or
Purchaser or the purchase of Shares by Purchaser pursuant to the Offer, in the
case of the representations and warranties of the Company. This Section 10.2
shall not limit any covenant or agreement of the parties hereto which by its
terms contemplates performance after the Effective Time or the purchase of
Shares by Purchaser pursuant to the Offer. The Confidentiality Agreement shall
survive any termination of this Agreement and the provisions of such
Confidentiality Agreement shall apply to all information and material delivered
by any party hereunder.
Section 10.3 Modification or Amendment. Subject to the applicable provisions of
the DGCL and the provisions of this Agreement, including Section 7.10, at any
time prior to the Effective Time, the parties hereto may modify or amend this
Agreement by written agreement executed and delivered by duly authorized
officers of the respective parties.
Section 10.4 Waiver of Conditions. Subject to the applicable provisions of the
DGCL and the provisions of this Agreement, including Section 7.10, the
conditions to each of the parties' obligations to consummate the Merger are for
the sole benefit of such party and may be waived by such party in whole or in
part.
Section 10.5 Governing Law.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
(b) Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in any
court other than a Federal or state court sitting in the State of Delaware.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN
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<PAGE> 31
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 10.5.
Section 10.6 Notices. All notices, requests, consents and other communications
hereunder shall be deemed given: (i) when delivered if delivered personally
(including by courier); (ii) on the third day after mailing, if mailed, postage
prepaid, by registered or certified mail (return receipt requested); (iii) on
the day after mailing if sent by a nationally recognized overnight delivery
service which maintains records of the time, place, and recipient of delivery;
or (iv) upon receipt of a confirmed transmission, if sent by telex, telecopy or
facsimile transmission, in each case to the parties at the following addresses
or to other such addresses as may be furnished in writing by one party to the
others:
(a) if to the Company, to:
OmniQuip International, Inc.
222 East Main Street
Port Washington, Wisconsin 53704
Attention: Chief Executive Officer
(414) 268-8965 (telephone)
(414) 269-3100 (facsimile)
with a copy to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, DC 20037
Attn: Matthew G. Maloney, Esq.
(202) 785-9700 (telephone)
(202) 887-0689 (facsimile)
(b) if to Parent or Purchaser, to:
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: Executive Vice President & General Counsel
(401) 457-2228 (telephone)
(401) 457-3666 (facsimile)
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Richard A. Garvey, Esq.
(212) 455-2578 (telephone)
(212) 455-2502 (facsimile)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
Section 10.7 Entire Agreement; Assignment. This Agreement and 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
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<PAGE> 32
not be assigned by operation of law or otherwise, except that Purchaser may
assign all or any of its rights and obligations hereunder to any direct or
indirect wholly owned Subsidiary or Subsidiaries of Parent, provided that no
such assignment shall relieve the Purchaser of its obligations hereunder if such
assignee does not perform such obligations.
Section 10.8 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective successors
and assigns. Nothing in this Agreement, express or implied, other than the right
to receive the consideration payable in the Merger pursuant to Article IV hereof
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Section 7.7 shall inure to the benefit
of and be enforceable by the Indemnified Parties and the provisions of Section
7.8(b) shall inure to the benefit of and be enforceable by the officers and
directors of the Company.
Section 10.9 Certain Definitions. As used herein:
(a) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Material Adverse Effect" shall mean any adverse change or changes in
the financial condition, properties, business or results of operations of the
Company or any of its Subsidiaries or Parent or any of its Subsidiaries, as the
case may be, which individually or in the aggregate is or are material to the
Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries,
taken as a whole, as the case may be, other than (i) any change or effect
arising out of general economic conditions or (ii) any change or effect which
the Company or Parent, as the case may be, has disclosed in writing, prior to
the date hereof, to Parent or the Company, as the case may be, has occurred or
is likely to occur.
(d) "Subsidiary" shall mean, when used with reference to any entity, any
entity a majority of the outstanding voting securities of which are owned
directly or indirectly by such entity; provided, however, for purposes of this
Agreement, Great Southern Rental & Sales, Inc. shall not be deemed a Subsidiary
of the Company.
(e) Any act or decision of the "Board of Directors of the Company" shall
mean such action or decision by a majority of the disinterested members of the
Board of Directors of the Company.
Section 10.10 Specific Performance.
(a) The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
(b) It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 10.11 Obligation of Parent. Whenever this Agreement requires Purchaser
to take any action, such requirement shall be deemed to include an undertaking
on the part of Parent to take such action and or guarantee of the performance
thereof.
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<PAGE> 33
Section 10.12 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, each of which shall remain in full force and
effect.
Section 10.13 Captions. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Section 10.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. Any such counterpart may be executed by
facsimile signature with only verbal confirmation, and when so executed and
delivered shall be deemed an original and such counterpart(s) together shall
constitute only one original.
[The Remainder of This Page Intentionally Left Blank]
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<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed by their respective duly authorized officers as of the
date first above written.
TEXTRON INC.
By: /s/ WAYNE W. JUCHATZ
-----------------------------------
Name: Wayne W. Juchatz
Title: Executive Vice President
TELESCOPE ACQUISITION INC.
By: /s/ BHIKHAJI MANECKJI
-----------------------------------
Name: Bhikhaji Maneckji
Title: Vice President
OMNIQUIP INTERNATIONAL, INC.
By: /s/ P. ENOCH STIFF
-----------------------------------
Name: P. Enoch Stiff
Title: President and Chief
Executive Officer
31
<PAGE> 35
Annex A
Certain Conditions of the Offer
Notwithstanding any other provision of the Offer and provided that
Purchaser shall not be obligated to accept for payment any Shares until (i)
expiration of all applicable waiting periods under the HSR Act and (ii) the
Minimum Condition shall have been satisfied, Purchaser shall not be required to
accept for payment or pay for, or may delay the acceptance for payment of or
payment for, any Shares tendered pursuant to the Offer, and may, subject to the
terms of the Agreement, terminate or amend the Offer if on or after August 21,
1999, and at or before the time of payment for any of such Shares, any of the
following events shall occur (or become known to Parent) and remain in effect:
(a) there shall have occurred and be continuing as of the then
scheduled expiration date of the Offer: (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange or the Nasdaq National Market; (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States; (iii) a commencement or escalation of a war, armed hostilities or
other international or national calamity directly involving the United
States; or (iv) any material limitation (whether or not mandatory) by any
governmental or regulatory authority, agency or commission, domestic or
foreign ("Governmental Entity"), on the extension of credit by banks or
other lending institutions in the United States;
(b) (i) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Agreement; (ii) any representation or warranty of the Company set forth in
the Agreement which is qualified by materiality shall not have been true
and correct as of the date of the Agreement and as of the then scheduled
expiration date of the Offer as though made on and as of the then scheduled
expiration date of the Offer; or (iii) any representation or warranty of
the Company set forth in the Agreement which is not qualified by
materiality shall not have been true and correct in all material respects
as of the date of this Agreement and as of the then scheduled expiration
date of the Offer as though made on and as of the then scheduled expiration
date of the Offer, except in the case of clauses (ii) and (iii) of this
paragraph (b) for representations and warranties which by their terms speak
only as of another date, which representations and warranties, if qualified
by materiality, shall not have been true and correct as of such date and,
if not qualified, shall not have been true and correct in all material
respects as of such other date;
(c) any court or Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order which is in effect and which: (i)
prevents, prohibits or materially restricts consummation of the Offer or
the Merger; (ii) prohibits or materially limits the ownership or operation
by the Company, Parent or any of their Subsidiaries of all or any material
portion of the business or assets of the Company and its Subsidiaries taken
as a whole, or as a result of the Offer or the Merger compels the Company,
Parent or any of their Subsidiaries to dispose of or hold separate all or
any material portion of their respective business or assets; (iii) imposes
material limitations on the ability of Parent or any Subsidiary of Parent
to exercise effectively full rights of ownership of any Shares, including,
without limitation, the right to vote any Shares acquired by Purchaser
pursuant to the Offer or otherwise on all matters properly presented to the
Company's shareholders including, without limitation, the approval and
adoption of the Agreement
A-1
<PAGE> 36
and the transactions contemplated thereby; or (iv) requires divestiture by
Parent or any affiliate of Parent of any Shares;
(d) any change in the financial condition, properties, business or
results of operations of the Company and its Subsidiaries after the date of
this Agreement that, individually or in the aggregate, has or is reasonably
likely to have a Material Adverse Effect;
(e) the Board of Directors of the Company (or a special committee
thereof) shall have withdrawn or amended, or modified in a manner adverse
to Parent and Purchaser its recommendation of the Offer or the Merger, or
shall have endorsed, approved or recommended any Superior Proposal;
(f) any Person, other than Parent, Purchaser or their affiliates or
any group of which any of them is a member, acquires beneficial ownership
of twenty percent or more of the Shares or rights to acquire twenty percent
or more of the Shares; or
(g) the Agreement shall have been terminated by the Company or Parent
or Purchaser in accordance with its terms or Parent or Purchaser shall have
reached an agreement or understanding in writing with the Company providing
for termination or amendment of the Offer or delay in payment for the
Shares;
which makes it inadvisable, as determined by Purchaser in good faith, to proceed
with the Offer or with such acceptance of payment or payments.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and Purchaser and may be asserted by Parent or Purchaser
or may be waived by Parent or Purchaser, in whole or in part at any time and
from time to time in its sole discretion. The failure of Parent or Purchaser at
any time to enforce any of the foregoing rights shall not be deemed a waiver of
such right, the waiver of such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-2
<PAGE> 37
Annex B
P. Enoch Stiff
Curtis Laetz
B-1
<PAGE> 1
EXHIBIT 2
MORGAN STANLEY DEAN WITTER
ONE FINANCIAL PLACE
440 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60605
(312) 706-4000
July 9, 1999
Mr. John R. Curran
Vice President, Business Development
Industrial Products Segment
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Dear Jack:
In connection with your consideration of a possible negotiated transaction
with OmniQuip International, Inc. and/or its subsidiaries, affiliates or
divisions (collectively, with such subsidiaries, affiliates and divisions, the
"Company"), the Company is prepared to make available to you certain information
concerning the business, financial condition, operations, assets and liabilities
of the Company. As a condition of such information being furnished to you and
your directors, officers, employees, agents or advisors (including, without
limitation, attorneys, accountants, consultants, bankers and financial advisors)
(collectively, "Representatives"), you agree to treat any information concerning
the Company (whether prepared by the Company, its advisors or otherwise and
irrespective of the form of communication) which is furnished to you or to your
Representatives now or in the future by or on behalf of the Company (herein
collectively referred to as the "Evaluation Material") in accordance with the
provisions of this letter agreement, and to take or abstain from taking certain
other actions hereinafter set forth.
The term "Evaluation Material" also shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents prepared by
you or your Representatives which contain, reflect or are based upon, in whole
or in part, the information furnished to you or your Representatives pursuant
hereto. The term "Evaluation Material" does not include information which (i) is
or becomes generally available to the public other than as a result of a
disclosure by you or your Representatives in violation of this agreement; (ii)
was within your possession prior to its being furnished to you by or on behalf
of the Company pursuant hereto, provided that the source of such information was
not known by you to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the Company or
any other party with respect to such information; (iii) becomes available to you
on a non-confidential basis from a source other than the Company or any of its
Representatives, provided that such source is not, to your knowledge, bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any other party with respect to
such information; or (iv) information that was or is developed by you
independently from the information disclosed by the Company or any of its
Representatives.
You hereby agree that you and your Representatives shall use the Evaluation
Material solely for the purpose of evaluating a possible negotiated transaction
between the Company and you, that the Evaluation Material will be kept
confidential and that you and your Representatives will not disclose any of the
Evaluation Material in any manner whatsoever, provided, however, that (i) you
may make any disclosure of such information to which the Company gives its prior
written consent; and (ii) any of such information may be disclosed to your
Representatives who need to know such information for the sole purpose of
evaluating a possible negotiated transaction with the Company, who agree to keep
such information confidential and who are provided with a copy of this letter
agreement and agree to be bound by the terms hereof to the same extent as if
they were parties hereto. In any event, you shall be responsible for any breach
of this letter agreement by
<PAGE> 2
Textron, Inc.
July 9, 1999
Page 2
any of your Representatives and you agree, at your sole expense, to take all
reasonable measures (including but not limited to court proceedings) to restrain
your Representatives from prohibited or unauthorized disclosure or use of the
Evaluation Material.
In addition, you agree that, without the prior written consent of the
Company, you and your Representatives will not disclose to any other person the
fact that the Evaluation Material has been made available to you, that
discussions or negotiations are taking place concerning a possible transaction
involving the Company or any of the terms, conditions or other facts with
respect thereto (including the status thereof), provided that you may make such
disclosure if your General Counsel determines, and advises the Company of such
in writing prior thereto, that such disclosure must be made by you in order that
you not commit a violation of law or stock exchange rules and regulations.
Without limiting the generality of the foregoing, you further agree that,
without the prior written consent of the Company, you will not, directly or
indirectly, enter into any agreement, arrangement or understanding, or any
discussions which might lead to such agreement, arrangement or understanding,
with any person regarding a possible transaction involving the Company. The term
"person" as used in this letter agreement shall be broadly interpreted to
include the media and any corporation, partnership, group, individual or other
entity.
In the event that you or any of your Representatives are requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, you shall provide
the Company with prompt written notice of any such request or requirement so
that the Company may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by the
Company, you or any of your Representatives are nonetheless, in the opinion of
your General Counsel, legally compelled to disclose Evaluation Material to any
tribunal or else stand liable for contempt or suffer other censure of penalty,
you or your Representatives may, without liability hereunder, disclose to such
tribunal only that portion of the Evaluation Material which such counsel advises
you is legally required to be disclosed, provided that you exercise your
reasonable best efforts to preserve the confidentiality of the Evaluation
Material, including, without limitation, by cooperating with the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the Evaluation Material by such
tribunal.
If you decide that you do not wish to proceed with a transaction with the
Company, you will promptly inform the Company of that decision. In that case, or
at any time upon the request of the Company for any reason, you will promptly
deliver to the Company all Evaluation Material (and all copies thereof)
furnished to you or your Representatives by or on behalf of the Company pursuant
hereto. In the event of such a decision or request, all other Evaluation
Material prepared by you or your Representatives shall be destroyed and no copy
thereof shall be retained. Notwithstanding the return or destruction of the
Evaluation Material, you and your Representatives will continue to be bound by
your obligations of confidentiality and other obligations hereunder for a period
of three (3) years after the date this letter is signed by you.
You understand and acknowledge that neither the Company nor any of its
Representatives (including the Company's directors, officers, employees, or
agents) make any representation or warranty, express or implied, as to the
accuracy or completeness of the Evaluation Material. You agree that neither the
Company nor any of its Representatives (including any of the Company's
directors, officers, employees, or agents) shall have any liability to you or to
any of your Representatives relating to or resulting from the use of the
Evaluation Material or any errors therein or omissions therefrom. Only those
representations or warranties which are made in a final definitive agreement
regarding any transactions contemplated hereby, when, as and if executed, and
subject to such limitations and restrictions as may be specified therein, will
have any legal effect.
In consideration of the Evaluation Material being furnished to you, you
hereby agree that, for a period of three (3) years from the date hereof, neither
you nor any of your affiliates will solicit to employ any of the
<PAGE> 3
Textron, Inc.
July 9, 1999
Page 3
current officers or key employees of the Company with whom you have had contact
or who were specifically identified to you during the period of your
investigation of the Company, so long as they are employed by the Company,
without obtaining the prior written consent of the Company; provided that the
foregoing provision shall not prevent you from employing any such person who
contacts you on his or her own initiative and without any solicitation by you,
other than general solicitations not specifically directed towards employees of
the Company.
You agree that, for a period of eighteen (18) months from the date of this
letter agreement, unless such shall have been specifically agreed to in writing
by the Company, neither you nor any of your affiliates (as such term is defined
under the Securities Exchange Act of 1934, as amended (the "1934 Act")) will in
any manner, directly or indirectly, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in any
way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any acquisition of any
securities (or beneficial ownership thereof) or assets of the Company or any of
its subsidiaries; (ii) any tender or exchange offer, merger or other business
combination involving the Company or any of its subsidiaries; (iii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the Company or any of its subsidiaries; or (iv) any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) or consents to vote any voting securities of
the Company; (b) form, join or in any way participate in a "group" (as defined
under the 1934 Act); (c) otherwise act, alone or in concert with others, to seek
to control or influence the management, Board of Directors or policies of the
Company; (d) take any action which might force the Company to make a public
announcement regarding any of the types of matters set forth in (a) above; or
(e) enter into any discussions or arrangements with any third party with respect
to any of the foregoing. Notwithstanding the foregoing, the provisions of this
paragraph shall immediately terminate and be of no further force and effect in
the event that any party (other then you or your affiliates), without the
Company's consent, commences a tender offer (within the meaning of Rule 14d-2 of
the General Rules and Regulations promulgated pursuant to the 1934 Act) for all
or substantially all of the outstanding voting securities of the Company. For
purposes of this paragraph, a company shall not be deemed to be your affiliate
solely because one of your directors is a director of such other company.
You understand and agree that no contract or agreement providing for any
transaction involving the Company shall be deemed to exist between you and the
Company unless and until a final definitive agreement has been executed and
delivered, and you hereby waive, in advance, any claims (including, without
limitation, breach of contract) in connection with any transaction contemplated
by this letter agreement involving the Company unless and until you and the
Company shall have entered into a final definitive agreement. You also agree
that unless and until a final definitive agreement regarding a transaction
between the Company and you has been executed and delivered, neither the Company
nor you will be under any legal obligation of any kind whatsoever with respect
to such a transaction by virtue of this letter agreement except for the matters
specifically agreed to herein. You further acknowledge and agree that the
Company reserves the right, in its sole discretion, to reject any and all
proposals made by you or any of your Representatives with regard to a
transaction between the Company and you, and to terminate discussions and
negotiations with you at any time. You further understand that (i) the Company
and its Representatives shall be free to conduct any process for any transaction
contemplated by this letter agreement involving the Company, if and as they in
their sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a definitive
agreement without prior notice to you or any other person); (ii) any procedures
relating to such process or transaction may be changed at any time without
notice to you or any other person; and (iii) you shall not have any claims
whatsoever against the Company, its Representatives or any of their respective
directors, officers, stockholders, owners, affiliates or agents arising out of
or relating to any transaction contemplated by this letter agreement involving
the Company (other than those as against the parties to a definitive agreement
with you in accordance with the terms thereof). Neither this paragraph nor any
other provision in this letter agreement can be waived or amended except by
written consent of the
<PAGE> 4
Textron, Inc.
July 9, 1999
Page 4
Company, which consent shall specifically refer to this paragraph (or such
provision) and explicitly make such waiver or amendment.
It is understood and agreed that no failure or delay by the Company 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
future exercise thereof or the exercise of any other right, power or privilege
hereunder.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this letter agreement by you or any of your
Representatives and that the Company shall be entitled to seek equitable relief,
including injunction and specific performance, as a remedy for any such breach.
Such remedies shall not be deemed to be the exclusive remedies for a breach by
you or this letter agreement but shall be in addition to all other remedies
available at law or equity to the Company. In the event of litigation relating
to this letter agreement, if a court of competent jurisdiction determines that
there has been a breach of this letter agreement, then the breaching party shall
pay to the other party the reasonable legal fees incurred by the non-breaching
party in connection with such litigation, including any appeal therefrom.
During consideration of a possible transaction, you may provide to the
Company and/or its officers, directors, employees, Agents, or consultants
(collectively "OmniQuip" certain non-public, confidential information concerning
Textron Inc. If that occurs, OmniQuip agrees that the receipt and use of such
information by OmniQuip will be subject to all of the confidentiality
obligations of this letter agreement in the same manner as they are applicable
to receipt and use of the Evaluation Material by you.
This letter agreement shall supersede any prior letter agreement entered
into by or on behalf of the Company and you and your Representatives concerning
the subject matter hereof.
This letter agreement is for the benefit of the Company and its directors,
officers, stockholder, owners, affiliates, and agents, and shall be governed by
and construed in accordance with the laws of the State of New York without
regard to such jurisdiction's conflict of laws principles.
<PAGE> 5
Textron, Inc.
July 9, 1999
Page 5
Please confirm your agreement with the foregoing by signing and returning
one copy of this letter to the undersigned, whereupon this letter agreement
shall become a binding agreement between you and the Company.
Very truly yours,
OMNIQUIP INTERNATIONAL, INC.
By: MORGAN STANLEY & CO.
INCORPORATED
By: /s/ FRANCIS J. OELERICH III
------------------------------------
Francis J. Oelerich III
Managing Director
Accepted and agreed as
of the date first written above:
TEXTRON INC.
By: /s/ JOHN R. CURRAN
----------------------------------
Name: John R. Curran
Title: Vice President
Business Development
<PAGE> 1
EXHIBIT 3
- ------------------------------------------------------ ---------------------
TEXTRON NEWS
- ------------------------------------------------------ ---------------------
Corporate Communications
Department
TEXTRON INC.
40 Westminister Street
Providence, R.I. 02903-2596
(401) 421-2800
CONTACT INFORMATION:
Mary Lovejoy (Textron Investor Contact): 401-457-6009
Brian Sullivan (Textron Media Contact): 401-457-2502
Tom Breslin (OmniQuip Contact): 414-268-3105
FOR IMMEDIATE RELEASE
TEXTRON AGREES TO ACQUIRE OMNIQUIP INTERNATIONAL
ACQUISITION PROVIDES NEW GROWTH PLATFORM, SYNERGY OPPORTUNITIES
PROVIDENCE, RI AND PORT WASHINGTON, WI - AUGUST 23, 1999 - Textron Inc.
(NYSE: TXT) and OmniQuip International, Inc. (NASDAQ: OMQP) today announced the
signing of a definitive merger agreement whereby Textron will acquire the entire
outstanding capital stock of OmniQuip for $21 per share in a cash transaction
valued at approximately $477 million including the assumption of debt. The
agreement has been approved by the Boards of Directors of both companies.
The Agreement provides for an all-cash tender offer by Textron for all of
OmniQuip's outstanding shares of common stock to commence within five business
days. The tender is expected to close by September 24, unless extended, and is
subject to the valid tender of at least a majority of the outstanding OmniQuip
shares on a fully diluted basis, and to customary government filings and other
customary conditions.
-more-
<PAGE> 2
Textron Agrees to Acquire OmniQuip/Page 2
With estimated fiscal 1999 sales of approximately $520 million, OmniQuip
is a leading manufacturer of light construction equipment including telescopic
material handlers, aerial work platforms and skid steer loaders. Over the past
three years, OmniQuip has achieved strong, consistent revenue growth through
acquisitions as well as increased sales, primarily to the fast-growing
rental-fleet sector of the market.
"With demand for its products expected to increase 10-20% per year,
OmniQuip establishes a promising growth platform within our Industrial segment
while being accretive to Textron's earnings in the first year," said Textron
Chairman and Chief Executive Officer Lewis B. Campbell.
"Textron's strategy is to buy good businesses and make them better," said
Textron President and Chief Operating Officer John A. Janitz. "OmniQuip will
benefit from Textron's manufacturing processes, materials sourcing and
distribution networks in international markets. Further opportunities to provide
leasing and financing for OmniQuip's products could also be realized with
Textron Financial Corporation, our commercial finance operation," Janitz added.
"This is an excellent strategic move for OmniQuip. With Textron's strong
financial backing, we will be able to grow OmniQuip's business at a much faster
pace than we would have been able to on our own. We will be actively pursuing
opportunities to improve and further develop our existing brands, while
acquiring new, complementary product lines that will offer our customers a broad
range of light construction equipment," said P. Enoch Stiff, President and Chief
Executive Officer of OmniQuip.
-more-
<PAGE> 3
Textron Agrees to Acquire OmniQuip/Page 3
"This merger provides tremendous growth opportunities for OmniQuip which
will in turn benefit our employees, customers and suppliers. From attractive
financing programs to opportunities to enhance the product line, the merger puts
OmniQuip in a solid position to strengthen its relationships with the large
national rental fleets and aggressively grow this new line of business for
Textron," said Stiff.
Since 1992 Textron has made 39 acquisitions with proforma revenues of
approximately $6.5 billion. With $2.9 billion in after-tax proceeds from the
divestiture of its consumer finance operation, Textron plans to spend $1 billion
per year on strategic acquisitions and is on track to meet or exceed this target
for 1999.
"Our rigorous acquisition criteria ensures that each transaction is
undertaken with keen attention to shareholder and customer value. OmniQuip is a
perfect fit for Textron and is wholly supportive of our acquisition strategy,"
said Campbell. "The strength and expertise of OmniQuip's management team will be
a great asset to Textron as we actively pursue growth opportunities in this
business," he added.
The tender offer for shares of OmniQuip common stock will be made only
through definitive tender offer documents, which will be filed with the
Securities and Exchange Commission and mailed to the shareholders of OmniQuip.
Following completion of the tender offer, it is contemplated that the holders of
any then-outstanding shares of common stock will receive, in a second-step
merger, the same $21 per share cash consideration as holders will receive in the
tender offer.
-more-
<PAGE> 4
Textron Agrees to Acquire OmniQuip/Page 4
OmniQuip, which has approximately 1600 employees at 16 locations in the
U.S., U.K., Australia and New Zealand, is the largest North American producer of
telescopic material handlers. The company also manufactures aerial work
platforms, skid steer loaders, power lifters and power haulers and markets a
line of mini-excavators. OmniQuip's products are used in a wide variety of
applications by commercial and residential building contractors, as well as by
customers in other construction, military, industrial and agricultural markets.
Additional information is available at www.omniquip.com.
Textron Inc. is a $10 billion, global, multi-industry company with
market-leading businesses in Aircraft, Automotive, Industrial and Finance.
Textron has a workforce of over 64,000 employees and major manufacturing
facilities in 23 countries. Textron is among Fortune magazine's "America's Most
Admired Companies." Additional information is available at www.textron.com.
###
Forward-looking Information: Certain statements in this release are
forward-looking statements including those that discuss strategies, goals,
outlook or other non-historical matters; or projected revenues, income, returns
or other financial measures. These forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ materially from
those contained in the statements, and are detailed in Textron's and OmniQuip's
Annual Reports and other filings under the Securities Exchange Act of 1934.
<PAGE> 1
[OmniQuip Logo]
CORPORATE OFFICES
222 East Main Street
Port Washington, WI 53074
Telephone: 414-268-8965
Fax: 414-268-3100
August 27, 1999
Dear Stockholder:
We are pleased to report that on August 21, 1999, OmniQuip International,
Inc. entered into an Agreement and Plan of Merger with Textron Inc. and one of
its subsidiaries, Telescope Acquisition Inc. (the "Merger Agreement"), that
provides for the acquisition of OmniQuip at a price of $21.00 per share in cash.
Under the terms of the proposed transaction, Telescope Acquisition Inc. has
today commenced a cash tender offer for all of the outstanding shares of
OmniQuip common stock at $21.00 per share. Following the completion of the
tender offer, and any approvals required by law, Telescope Acquisition Inc. will
be merged with and into OmniQuip and all shares not purchased in the tender
offer (other than those owned by Textron Inc. or by holders who have perfected
appraisal rights) will be converted into the right to receive $21.00 per share
in cash in the merger.
YOUR BOARD OF DIRECTORS HAS (i) UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
(ii) DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, OMNIQUIP AND ITS STOCKHOLDERS, AND (iii) RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES TO TELESCOPE ACQUISITION INC.
AND APPROVE AND ADOPT THE MERGER AGREEMENT AND MERGER, IF REQUIRED.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors. Among other things, these factors include
the opinion of Morgan Stanley & Co. Incorporated, financial advisor to OmniQuip,
that, as of the date of the opinion, the consideration to be received by the
stockholders pursuant to the Merger Agreement is fair to such stockholders from
a financial point of view.
Accompanying this letter is a copy of OmniQuip's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is
Textron Inc.'s Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering shares. We urge you to read the enclosed
materials carefully. The management and directors of OmniQuip thank you for the
support you have given the Company.
On behalf of the Board of Directors.
Sincerely,
/s/ DONALD E. NICKELSON
Donald E. Nickelson
Chairman of the Board
/s/ P. ENOCH STIFF
P. Enoch Stiff
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 5
MORGAN STANLEY DEAN WITTER
ONE FINANCIAL PLACE
440 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60605
(312) 706-4000
August 21, 1999
Board of Directors
OmniQuip International, Inc.
222 East Main St.
Port Washington, Wisconsin 53074
Members of the Board:
We understand that OmniQuip International, Inc. ("OmniQuip" or the "Company"),
Textron Inc. ("Parent") and Telescope Acquisition Inc., a wholly owned
subsidiary of the Parent ("Purchaser") have entered into an Agreement and Plan
of Merger dated August 21, 1999 (the "Agreement"), which provides, among other
things, for (i) the commencement by Purchaser of a tender offer (the "Offer")
for all outstanding shares of common stock, par value $0.01 per share (the
"Company Common Stock") of OmniQuip for $21 per share net to the seller in cash,
and (ii) the subsequent merger (the "Merger") of Purchaser with and into the
Parent. Pursuant to the Merger, OmniQuip will become a wholly owned subsidiary
of the Parent and each outstanding share of the Company Common Stock other than
shares held in treasury or held by the Parent or any direct or indirect
wholly-owned subsidiary of the Parent or as to which dissenters' rights have
been perfected, will be converted into the right to receive $21 per share in
cash. The terms and conditions of the Offer and the Merger are more fully set
forth in the Agreement.
You have asked for our opinion as to whether the consideration to be received by
the holders of shares of Company Common Stock pursuant to the Agreement is fair
from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management
of the Company;
(iii) analyzed certain financial projections prepared by the management of
the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;
(v) reviewed the reported prices and trading activity for the Company
Common Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Company Common Stock with that of certain
other comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives
of the Company, the Parent and certain other parties and their
financial and legal advisors;
<PAGE> 2
Board of Directors MORGAN STANLEY DEAN WITTER
August 21, 1999
Page 2
(ix) reviewed the Agreement and certain related documents;
(x) considered such other factors as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. In
addition, we have assumed that the Offer and the Merger will be consummated in
accordance with the terms set forth in the Agreement. We have not made any
independent valuation or appraisal of the assets or liabilities of the Company,
nor have we been furnished with any such appraisals. Our opinion is necessarily
based on economic, market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services, including providing senior loans for
the Company and Parent and have received fees for the rendering of these
services.
It is understood that this letter is for the information of the Board of
Directors of the Company only and may not be used for any other purpose without
our prior written consent, except that this opinion may be included in its
entirety in filings with the Securities and Exchange Commission made in
connection with the Offer.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of shares of Company
Common Stock pursuant to the Agreement is fair from a financial point of view to
such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ FRANCIS J. OELERICH III
------------------------------------
Francis J. Oelerich III
Managing Director
<PAGE> 1
EXHIBIT 6
OMNIQUIP INTERNATIONAL, INC.
AMENDED AND RESTATED
1996 LONG-TERM INCENTIVE PLAN
1. ADOPTION AND PURPOSE
OmniQuip International, Inc. (the "Company") on August 20, 1999 hereby adopts
this Amended and Restated 1996 Long-Term Incentive Plan, originally dated
September 30, 1996 (the "Plan"). The purposes of the Plan are to promote the
interests of the Company and its stockholders by (a) attracting and retaining
exceptional executive personnel and other key employees of the Company and its
Subsidiaries (as defined below); (b) motivating such employees by means of
performance-related incentives to achieve long-range performance goals; and (c)
enabling such employees to participate in the long-term growth and financial
success of the Company.
2. DEFINITIONS
The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:
"Award" means, individually or collectively, a grant under this Plan of Options
or Restricted Shares or a Performance Stock Award. The issuance of Restricted
Shares pursuant to a Performance Stock Award shall not be a new Award under this
Plan.
"Award Agreement" means a written agreement entered into between the Company and
a Participant setting forth the terms and conditions of an Award made to such
Participant under this Plan, in the form prescribed by the Committee.
"Board" means the Board of Directors of the Company.
"Change of Control" shall have the meaning specified in Section 12(b).
"Code" means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Committee" means a committee appointed by the Board, each member of which shall
be a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange
Act and shall be an "outside director" within the meaning of Section 162(m) of
the Code. The Committee shall be composed of at least two (2) such directors,
and shall be formed no later than the date of the first duly held meeting of the
Board occurring after the first duly held annual meeting of the Company's
shareholders following the Initial Public Offering.
"Common Stock" means the common stock of the Company.
"Company" means OmniQuip International, Inc., a Delaware corporation
headquartered in Port Washington, Wisconsin.
"Effective Date" means the effective date of this Plan as defined in Section 17.
"Employee" means a key employee of the Company or a Subsidiary.
"Employee Award" means an Award to an Employee under this Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended. Reference
to a specific section of the Exchange Act or regulation thereunder shall include
such section or regulation, any valid regulation
<PAGE> 2
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or
regulation.
"Fair Market Value" means the closing price of the Common Stock as reported on
the NASDAQ "National Market" on the relevant valuation date or, if there were no
Common Stock transactions on the valuation date, on the next preceding date on
which there were Common Stock transactions.
"Incentive Stock Option" has the meaning specified in Section 6(b).
"Initial Public Offering" means the closing of the first offering of Common
Stock pursuant to a registration under the Securities Act.
"Negative Discretion" means other factors to be applied by the Committee in
reducing the number of Restricted Shares to be issued pursuant to a Performance
Stock Award if the Performance Goals have been met or exceeded if, in the
Committee's sole judgment, such application is appropriate in order to act in
the best interest of the Company and its shareholders.
"Participant" means an Employee who has been granted an Award under this Plan.
"Performance Goals" means, with respect to any Performance Period, performance
goals based on any of the following criteria and established by the Committee
prior to the beginning of such Performance Period or performance goals based on
any of the following criteria and established by the Committee after the
beginning of such Performance Period that meet the requirements to be considered
pre-established performance goals under Section 162(m) of the Code: earnings or
earnings growth; earnings per share; return on equity, assets, capital employed
or investment; revenues or revenue growth; gross profit; gross margin; operating
profit; operating margin; operating cash flow; stock price appreciation and
total shareholder return. Such Performance Goals may be particular to an
Employee or the division, department, branch, line of business, Subsidiary or
other unit in which the Employee works, or may be based on the performance of
the Company generally.
"Performance Period" means the period of time designated by the Committee
applicable to a Performance Stock Award during which the Performance Goals shall
be measured.
"Performance Stock Award" shall have the meaning specified in Section 6(d).
"Plan" means this OmniQuip International, Inc. Amended and Restated 1996
Long-Term Incentive Plan.
"Plan Year" means an annual period coinciding with the Company's fiscal year.
"Reporting Person" means an officer or director of the Company subject to the
reporting requirements of Section 16 of the Exchange Act.
"Restricted Shares" have the meaning specified in Section 6(c).
"Securities Act" means the Securities Act of 1933, as amended. Reference to a
specific section of the Securities Act or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
"Stock Option" has the meaning specified in Section 6(a).
"Subsidiary" means any corporation or other entity, whether domestic or foreign,
in which the Company has or obtains, directly or indirectly, a proprietary
interest of more than 50% by reason of stock ownership or otherwise.
3. ELIGIBILITY
Any Employee selected by the Committee is eligible to receive an Employee Award.
2
<PAGE> 3
3A. AWARDS PRIOR TO INITIAL PUBLIC OFFERING
No Awards under the Plan, other than those Awards made pursuant to this Section
3A, shall be made prior to the Initial Public Offering. Notwithstanding anything
contained herein to the contrary, the Board shall have the authority to make
Awards under the Plan prior to the Initial Public Offering subject to the
following terms and conditions:
(a) The term "Board" shall be substituted for the term "Committee" as necessary
throughout the Plan (other than in this Section 3A) with respect to Awards
made pursuant to this Section 3A, until such time as the Committee is duly
formed.
(b) The Board shall only make Awards of Stock Options as described in Section
6(a). In addition to any other termination provisions that may apply, all
such Awards shall terminate in the event that the Initial Public Offering
does not occur on or before June 30, 1997.
(c) The exercise price per share for such Awards of Stock Options shall be
equal to the price at which the Company's Common Stock is sold in the
Initial Public Offering.
(d) The term Change of Control with respect to such Awards of Stock Options
shall mean a Change of Control which occurs subsequent to the formation of
the Committee.
4. PLAN ADMINISTRATION
(a) This Plan shall be administered by the Committee. The Committee shall
periodically make determinations with respect to the participation of
Employees in this Plan and, except as otherwise required by law or this
Plan, the grant terms of Awards including vesting schedules, price,
performance standards (including Performance Goals), length of relevant
performance, restriction or option period, dividend rights, post-retirement
and termination rights, payment alternatives such as cash, stock,
contingent awards or other means of payment consistent with the purposes of
this Plan, and such other terms and conditions as the Committee deems
appropriate. Except as otherwise required by this Plan, the Committee shall
have authority to interpret and construe the provisions of this Plan and
the Award Agreements and make determinations pursuant to any Plan provision
or Award Agreement which shall be final and binding on all persons.
(b) The Committee, in its sole discretion and on such terms and conditions as
it may provide, may delegate all or any part of its authority and powers
under this Plan to one or more directors or officers of the Company;
provided, however, that the Committee may not delegate its authority and
powers (i) with respect to Reporting Persons, or (ii) in any way which
would jeopardize this Plan's qualification under Section 162(m) of the Code
or Rule 16b-3 of the Exchange Act.
(c) All determinations and decisions made by the Committee and any delegate of
the Committee pursuant to Section 4(b) shall be final, conclusive, and
binding on all persons, and shall be given the maximum deference permitted
by law.
5. STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN
(a) The stock subject to the provisions of this Plan shall either be shares of
authorized but unissued Common Stock, shares of Common Stock held as
treasury stock or previously issued shares of Common Stock reacquired by
the Company, including shares purchased on the open market. Subject to
adjustment in accordance with the provisions of Section 10, (i) the total
number of shares of Common Stock with respect to which Awards may be
granted under this Plan may not exceed 1,600,000 shares, (ii) the total
number of shares of Common Stock with respect to which Awards may be
granted in any Plan Year may not exceed 400,000 shares and (iii) the total
number of Restricted Shares with respect to which Awards may be granted in
any Plan Year shall not exceed 100,000 shares.
(b) Subject to adjustment in accordance with Section 10, and subject to Section
5(a), (i) the total number of shares of Common Stock with respect to which
Awards may be granted in any Plan Year
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to any Employee shall not exceed 100,000 shares and (ii) the total number
of Restricted Shares with respect to which Awards may be granted in any
Plan Year to any Employee shall not exceed 50,000 shares.
(c) For purposes of calculating the total number of shares of Common Stock
available for grants of Awards, the grant of an Award of Restricted Shares
or a Performance Stock Award shall be deemed to be equal to the maximum
number of shares of Common Stock which may be issued under the Award.
(d) Subject to clauses (ii) and (iii) of Section 5(a) and subject to Section
5(b), there shall again be available for Awards under this Plan, all of the
following: (i) shares of Common Stock represented by Awards which have been
canceled, forfeited, surrendered, terminated or expire unexercised during
preceding Plan Years; and (ii) the excess amount of variable Awards which
become fixed at less than their maximum limitations.
6. EMPLOYEE AWARDS UNDER THIS PLAN
Subject to the provisions of this Plan, the Committee shall have the sole and
complete authority to determine the Employees to whom Awards shall be granted
and the type, terms and conditions of such Awards. As the Committee may
determine, the following types of Awards may be granted under this Plan to
Employees on a stand alone, combination or tandem basis:
(a) Stock Option. A right to buy a specified number of shares of Common Stock
at a fixed exercise price during a specified time, and subject to such
other terms and conditions, all as the Committee may determine; provided
that the exercise price of any Stock Option shall not be less than 100% of
the Fair Market Value of the Common Stock on the date of grant of the
Award.
(b) Incentive Stock Option. An award in the form of a Stock Option which shall
comply with the requirements of Section 422 of the Code or any successor
Section as it may be amended from time to time.
(c) Restricted Shares. A transfer of shares of Common Stock to a Participant,
subject to such restrictions, if any, on transfer or other incidents of
ownership, for such periods of time (with respect to each Award, a
"Restriction Period") as the Committee may determine. The stock certificate
or certificates representing Restricted Shares shall be registered in the
name of the Participant to whom such Restricted Shares shall have been
awarded. During the Restriction Period, certificates representing the
Restricted Shares shall bear a restrictive legend to the effect that
ownership of the Restricted Shares, and the enjoyment of all rights
appurtenant thereto, are subject to the restrictions, terms and conditions
provided in the Plan and the applicable Award Agreement. Such certificates
shall remain in the custody of the Company and the Participant shall
deposit with the Company stock powers or other instruments of assignment,
each endorsed in blank, so as to permit retransfer to the Company of all or
any portion of the Restricted Shares that shall be forfeited or otherwise
not become vested in accordance with the Plan and the applicable Award
Agreement.
Restricted Shares shall constitute issued and outstanding shares of Common
Stock for all corporate purposes. The Participant will have the right to
vote such Restricted Shares, to receive and retain all dividends and
distributions paid or distributed on such Restricted Shares, and to
exercise all other rights, powers and privileges of a holder of Common
Stock with respect to such Restricted Shares; except, that (i) the
Participant will not be entitled to delivery of the stock certificate or
certificates representing such Restricted Shares until the Restriction
Period shall have expired and unless all other vesting requirements with
respect thereto shall have been fulfilled or waived; (ii) the Company will
retain custody of the stock certificate or certificates representing the
Restricted Shares during the Restriction Period; (iii) any such dividends
and distributions paid in shares of Common Stock shall constitute
Restricted Shares and be subject to all of the same restrictions during the
Restriction Period as the Restricted Shares with respect to which they were
paid; (iv) the Participant may not sell, assign, transfer, pledge,
exchange, encumber or dispose of the Restricted Shares or his or her
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<PAGE> 5
interest in any of them during the Restriction Period; and (v) a breach of
any restrictions, terms or conditions provided in the Plan or established
by the Committee with respect to any Restricted Shares will cause a
forfeiture of such Restricted Shares.
(d) Performance Stock Awards. A right, granted to an Employee, to receive
Restricted Shares (as defined in Section 6(c) hereof) that are not to be
issued to the Employee until after the satisfaction of the Performance
Goals during a Performance Period.
7. PERFORMANCE STOCK AWARDS.
(a) Administration. Performance Stock Awards may be granted to Employees either
alone or in addition to other Awards granted under this Plan. The Committee
shall determine the Employees to whom Performance Stock Awards shall be
awarded for any Performance Period, the duration of the applicable
Performance Period, the number of Restricted Shares to be awarded at the
end of a Performance Period to Employees if the Performance Goals are met
or exceeded and the terms and conditions of the Performance Stock Award in
addition to those contained in this Section 7.
(b) Payment of Award. During or after the end of a Performance Period, the
financial performance of the Company during such Performance Period shall
be measured against the Performance Goals. If the Performance Goals are not
met, no Restricted Shares shall be issued pursuant to the Performance Stock
Award. If the Performance Goals are met or exceeded, the Committee shall
certify that fact in writing in the Committee minutes or elsewhere and
certify the number of Restricted Shares to be issued under each Performance
Stock Award in accordance with the related Award Agreement. The Committee
may, in its sole discretion, apply Negative Discretion to reduce the number
of Restricted Shares to be issued under a Performance Stock Award.
(c) Requirement of Employment. To be entitled to receive a Performance Stock
Award, an Employee must remain in the employment of the Company or its
Subsidiaries through the end of the Performance Period, except that the
Committee may provide for partial or complete exceptions to this
requirement as it deems equitable in its sole discretion.
8. OTHER TERMS AND CONDITIONS
(a) Assignability. No Stock Option or Performance Stock Award shall be
assignable or transferable except by will or by the laws of descent and
distribution and during the lifetime of a Participant, Stock Options shall
be exercisable only by such Participant.
(b) Award Agreement. Each Award under this Plan shall be evidenced by an Award
Agreement.
(c) Rights As A Shareholder. Except as otherwise provided in this Plan or in
any Award Agreement, a Participant shall have no rights as a shareholder
with respect to shares of Common Stock covered by an Award until the date
the Participant is the holder of record of such shares.
(d) No Obligation to Exercise. The grant of an Award shall impose no obligation
upon the Participant to exercise the Award.
(e) Payments by Participants. The Committee may determine that Awards for which
a payment is due from a Participant may be payable: (i) in U.S. dollars by
personal check, bank draft or money order payable to the order of the
Company, by money transfers or direct account debits; (ii) through the
delivery or deemed delivery based on attestation to the ownership of shares
of Common Stock with a Fair Market Value equal to the total payment due
from the Participant; (iii) by a combination of the methods described in
(i) and (ii) above; or (iv) by such other methods as the Committee may deem
appropriate.
(f) Tax Withholding. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required to be withheld with respect to an
Award or any dividends or other distributions payable with respect thereto.
Subject to the requirements of
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<PAGE> 6
Rule 16b-3 of the Exchange Act, the Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit
a Participant to satisfy such tax withholding obligation, in whole or in
part, by (i) electing to have the Company withhold otherwise deliverable
shares of Common Stock having a Fair Market Value not exceeding the minimum
amount required to be withheld, or (ii) delivering to the Company shares of
Common Stock then owned by the Participant. The amount of the withholding
obligation satisfied by shares of Common Stock withheld or delivered shall
be the Fair Market Value of such shares determined as of the date that the
taxes are required to be withheld.
(g) Restrictions On Sale and Exercise. If and to the extent required to comply
with rules promulgated under Section 16 of the Exchange Act, (i) no Award
providing for exercise, a vesting period, a Restriction Period or the
attainment of performance standards shall permit unrestricted ownership of
shares of Common Stock by the Participant for at least six months from the
date of grant, and (ii) shares of Common Stock acquired pursuant to an
Award granted under this Plan may not be sold or otherwise disposed of for
at least six months after the date of the grant of the Award.
(h) Requirements of Law. The granting of Awards and the issuance of shares of
Common Stock upon the exercise of Awards shall be subject to all applicable
requirements imposed by federal and state securities and other laws, rules
and regulations and by any regulatory agencies having jurisdiction, and by
any stock exchanges (including the Nasdaq Stock Market) upon which the
Common Stock may be listed. As a condition precedent to the issuance of
shares of Common Stock pursuant to the grant or exercise of an Award, the
Company may require the Participant to take any reasonable action to meet
such requirements.
(i) Non-Exclusivity of the Plan. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
and the awarding of stock and cash otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in
specific cases.
(j) Unfunded Plan. Neither the Company nor any Subsidiary shall be required to
segregate any cash or any shares of Common Stock which may at any time be
represented by Awards and the Plan shall constitute an "unfunded" plan of
the Company. Neither the Company nor any Subsidiary shall, by any
provisions of the Plan, be deemed to be a trustee of any Common Stock or
any other property, and the liabilities of the Company and any Subsidiary
to any Employee pursuant to the Plan shall be those of a debtor pursuant
to such contract obligations as are created by or pursuant to the Plan,
and the rights of any Employee, former employee or beneficiary under the
Plan shall be limited to those of a general creditor of the Company or the
applicable Subsidiary, as the case may be. In its sole discretion, the
Board may authorize the creation of trusts or other arrangements to meet
the obligations of the Company under the Plan, provided, however, that the
existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.
(k) Legends. In addition to any legend contemplated by Section 6(c), each
certificate evidencing Common Stock subject to an Award shall bear such
legends as the Committee deems necessary or appropriate to reflect or refer
to any terms, conditions or restrictions of the Award applicable to such
shares, including, without limitation, any to the effect that the shares
represented thereby may not be disposed of unless the Company has received
an opinion of counsel, acceptable to the Company, that such disposition
will not violate any federal or state securities laws.
(l) Company's Rights. The grant of Awards pursuant to the Plan shall not
affect in any way the right or power of the Company to make
reclassifications, reorganizations or other changes of or to its capital
or business structure or to merge, consolidate, liquidate, sell or
otherwise dispose of all or any part of its business or assets.
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<PAGE> 7
(m) Designation of Beneficiaries. If permitted by the Committee, a Participant
may designate a beneficiary or beneficiaries in the event of the death of
the Participant and may change such designation from time to time by filing
a written designation of beneficiary or beneficiaries with the Committee on
a form to be prescribed by it, provided that no such designation shall be
effective unless so filed prior to the death of such Participant.
9. AMENDMENTS
(a) Except as otherwise provided in this Plan, the Board may at any time
terminate and, from time to time, may amend or modify this Plan. Any such
action of the Board may be taken without the approval of the Company's
shareholders, but only to the extent that such shareholder approval is not
required by applicable law or regulation or the requirements of any
securities exchange or market on which the Common Stock is listed or
authorized for quotation, including specifically Rule 16b-3 under the
Exchange Act and Section 162(m) of the Code.
(b) No amendment, modification or termination of this Plan shall in any manner
adversely affect any Awards theretofore granted to a Participant under this
Plan without the consent of such Participant. No amendment or modification
of this Plan may change any Performance Goal, or increase the benefits
payable for achievement of a Performance Goal, once established for a
Performance Stock Award.
10. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards may be granted
to Participants, the number of shares thereof covered by each outstanding Award,
and the price per share thereof in each such Award, shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, stock dividend, combination or exchange of
shares, exchange for other securities, reclassification, reorganization,
redesignation, merger, consolidation, recapitalization or other such change. Any
such adjustment may provide for the elimination of fractional shares.
11. NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the grant of
an Award shall not be construed as giving a Participant the right to be retained
in the employ of the Company or a Subsidiary. Nothing in this Plan shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company or any
Subsidiary.
12. CHANGE OF CONTROL
(a) Notwithstanding anything contained in this Plan or any Award Agreement to
the contrary, in the event of a Change of Control, as defined below, the
following may, in the sole discretion of the Committee (as constituted
prior to the occurrence of the Change of Control), occur with respect to
any and all Employee Awards outstanding as of such Change of Control:
(i) automatic lapse of all restrictions and acceleration of any time
periods relating to the exercise or vesting of Stock Options and
Restricted Shares so that such Awards may be immediately exercised or
vested in full on or before the relevant date fixed in the Award
Agreement; and automatic satisfaction of Performance Goals on a pro
rata basis with respect to the maximum number of Restricted Shares
issuable pursuant to a Performance Stock Award, or on such other
basis as set forth in the Award Agreement, so that such pro rata or
other portion of such Restricted Shares may be immediately vested;
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(ii) Stock Options shall be canceled as follows:
A. if the highest price per share of Common Stock paid in such
transaction or series of transactions by the Purchaser (as
determined by the Committee in its sole discretion) (the
"Transaction Price") is greater than the exercise price per share,
then, in lieu of exercise, the Stock Options shall be canceled and
in lieu of any rights represented by such Stock Option, and in full
consideration thereof, the positive difference (determined by
subtracting the exercise price from the Transaction Price of Common
Stock multiplied by the number of Stock Options held by any
Participant) shall be payable in full in cash upon occurrence of
such Change in Control; or
B. if the Transaction Price is less than the exercise price per share,
then the Stock Options shall be canceled on such date and no
payments shall be made with respect thereto.
(b) A "Change of Control" of the Company shall be deemed to have occurred upon
the happening of any of the following events:
(i) the acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) of beneficial ownership of 25% or more of either
the then outstanding shares of Common Stock of the Company or the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors;
provided, however, that the acquisition of Common Stock or other
outstanding voting securities by one or more underwriters in
connection with a public offering thereof shall not constitute a
Change of Control; and provided, further, that any acquisition by the
Company or any of its Subsidiaries, or any employee benefit plan (or
related trust) of the Company or its Subsidiaries, or any corporation
with respect to which, following such acquisition, more than 50% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Common
Stock and voting securities of the Company immediately prior to such
acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then outstanding shares
of Common Stock of the Company or the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors, as the case may be, shall not
constitute a Change of Control;
(ii) individuals who constitute the Board as of the Effective Date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to such date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors
of the Company (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act); or
(iii) approval by the shareholders of the Company of a reorganization,
merger or consolidation of the Company, in each case, with respect to
which the individuals and entities who were the respective beneficial
owners of the Common Stock and voting securities of the Company
immediately prior to such reorganization, merger or consolidation do
not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of Common Stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization, merger
or
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consolidation, or a complete liquidation or dissolution of the
Company or of the sale or other disposition of all or substantially
all of the assets of the Company.
13. GOVERNING LAW
To the extent that federal laws do not otherwise control, this Plan shall
be construed in accordance with and governed by the law of the State of
Delaware.
14. CAPTIONS
Captions are provided herein for convenience of reference only, and shall
not serve as a basis for interpretation or construction of this Plan.
15. RESERVATION OF SHARES
The Company, during the term of the Plan, will at all times reserve and
keep available the number of shares of Common Stock as shall be sufficient to
satisfy the requirements of the Plan. The inability of the Company to obtain the
necessary approvals from any regulatory body having jurisdiction or approval
deemed necessary by the Company's counsel to the lawful issuance and sale of any
shares of Common Stock under the Plan shall relieve the Company of any liability
in respect of the nonissuance or sale of such shares of Common Stock as to which
such requisite authority shall not have been obtained.
16. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation, including, with respect to those Employees who are Reporting
Persons, Rule 16b-3 under the Exchange Act. In case any one or more of the
provisions of this Plan shall be held invalid, illegal or unenforceable in any
respect under applicable law and regulation (including Rule 16b-3), the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby and the invalid, illegal or
unenforceable provision shall be deemed null and void; however, to the extent
permissible by law, any provision which could be deemed null and void shall
first be construed, interpreted or revised retroactively to permit this Plan to
be construed in compliance with all applicable laws (including Rule 16b-3) so as
to foster the intent of this Plan. Notwithstanding anything in this Plan to the
contrary, the Committee, in its sole and absolute discretion, may bifurcate this
Plan so as to restrict, limit or condition the use of any provision of this Plan
to Participants who are Reporting Persons without so restricting, limiting or
conditioning this Plan with respect to other Participants. All Awards of Stock
Options and Performance Stock Awards are intended not to be subject to the
limitations contained in Section 162(m) of the Code.
17. EFFECTIVE DATE AND TERM
The effective date (the "Effective Date") of this Plan shall be the date of
its approval by the Company's shareholders. If such approval is not obtained on
or before February 1, 1997, this Plan shall terminate on such date. No new
Awards shall be granted under this Plan after the tenth anniversary of the
Effective Date. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under any such
Award shall, continue after the authority for grant of new Awards hereunder has
been exhausted.
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EXHIBIT 7
OMNIQUIP INTERNATIONAL, INC.
1996 DIRECTORS NON-QUALIFIED STOCK OPTION PLAN
1. Adoption and Purpose of the Plan. Omniquip International, Inc. (the
"Company") hereby adopts the 1996 Directors Non-Qualified Stock Option Plan (the
"Plan") dated September 30, 1996 which provides for the granting of
non-qualified stock options ("Options") to purchase shares of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), to members of the
Board of Directors who are not employees of the Company ("Grantees"). This Plan
will give such Grantees added financial incentive to further the Company's
financial well being and increase the Company's value to the benefit of the
Company's shareholders. The Company believes that the Plan will enable it to be
competitive in encouraging directors to remain in its service and to attract
other qualified persons to the Company.
The effective date of the Plan shall be September 30, 1996. Options may be
granted hereunder at any time and from time to time through the date of
termination of the Plan.
2. Plan Administration. The Plan shall be administered and interpreted by
the Board of Directors of the Company (the "Board") or, if determined from time
to time by the Board, any committee of the Board. In addition to grant or award
transactions made pursuant to the formula provisions of Section 4 hereof, grant
or award transactions with Grantees, as well as transactions involving the
disposition or settlement of grants or awards previously made, shall be
effective if approved by any of the following: (i) the Board of Directors of the
Company, either by affirmative vote of a majority of the Board at a meeting duly
held at which a quorum is present or by unanimous written consent; (ii) a
committee of the Board, appointed from time to time (or any successor committee
appointed by the Board), consisting of two or more "Non-Employee Directors" as
defined under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the
"Act") (the "Committee"); or (iii) the affirmative votes of the holders of a
majority of the Common Stock present or represented, and entitled to vote at a
meeting duly held or by the written consent of the holders of a majority of the
Common Stock entitled to vote; provided, however, that transactions may be
authorized and effected with Grantees in any other manner approved by the Board
of Directors; provided, that as a condition to any such transaction, the Grantee
is required to hold the Common Stock so acquired for a period of not less then
six (6) months following the date of acquisition of Common Stock from the
Company.
The foregoing shall not prohibit service on a committee administering this
Plan solely by reason of the receipt of Options granted pursuant to the formula
provisions of Section 4 hereof, or affect the eligibility of committee members
to receive Options granted pursuant to the formula provisions of Section 4.
In administering the Plan, the Board or any authorized committee thereof
may adopt rules and regulations as necessary for carrying out the purposes and
intent of the Plan. Any action taken by the Board or a majority of such
committee in the interpretation or administration of the Plan shall, as between
the Company and the Grantees, be final and conclusive. Members of any such
committee may vote without appearing in person at any meeting of the committee.
The Board or such committee may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel. Within the limitations of the Plan, the
Eligible Directors (as defined below) to whom Options will be granted, the
exercise price and the number of shares of Common Stock for which Options will
be granted from time to time will be as specified in Section 4 below, except
with respect to any other Options granted hereunder, in which case such matters
will be determined in a manner consistent with the provisions of Section 2
hereof.
3. Participants. Options may be granted to directors of the Company who
are not employees of the Company or any subsidiary of the Company (an "Eligible
Director"). As used herein, the term "subsidiary" means any present or future
corporation which is or would be a "subsidiary corporation" within the meaning
of Section 424 of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE> 2
4. Initial Grant of Options.
(a) Each Eligible Director on the date the Company's Registration Statement
on Form S-1 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "33 Act"), with respect to the initial public offering of the
Common Stock becomes effective under the 33 Act (the "Effective Date") shall be
granted an Option with respect to 10,000 shares of Common Stock, at an exercise
price per share equal to the initial public offering price per share set forth
in the Registration Statement at the time it becomes effective.
(b) Each person first becoming an Eligible Director subsequent to the
Effective Date by reason of his or her election or appointment to the Board of
Directors subsequent to such date shall be granted an Option with respect to
10,000 shares of Common Stock on the date such person is first elected or
appointed and duly qualified to serve on the Board of Directors (the
"Qualification Date"), at an exercise price per share equal to the fair market
value thereof as determined in accordance with Section 7 hereof.
(c) In the event the Chairman of the Board of Directors on the Effective
Date is an Eligible Director, he or she shall be granted an additional Option
with respect to 5,000 shares of Common Stock, at an exercise price per share
equal to the initial public offering price per share set forth in the
Registration Statement at the time it becomes effective.
(d) Each person first becoming Chairman of the Board of Directors
subsequent to the Effective Date by reason of election or appointment to such
position after such date, provided he or she is an Eligible Director, shall be
granted an Option with respect to 5,000 shares of Common Stock on the date such
person is first elected or appointed Chairman, at an exercise price per share
equal to the fair market value thereof as determined in accordance with Section
7 hereof.
5. Number of Shares Subject to the Plan. The total number of shares of
Common Stock which may be issued under Options granted pursuant to the Plan
shall not exceed 250,000 shares. Shares of Common Stock issuable upon exercise
of Options granted under the Plan may be either authorized and unissued shares
or previously issued shares reacquired by the Company and held in treasury. If
any Option granted under the Plan is surrendered before exercise, lapses without
exercise, or, for any other reason, ceases to be exercisable, the shares subject
to such Option shall be available for the grant of Options under the Plan.
Subject to the provisions of Section 12 hereof, the Plan shall remain in effect
until all shares of Common Stock now or hereafter subject to the Plan have been
purchased pursuant to the exercise of Options granted under the Plan; provided
that the Plan shall terminate on the (10th) tenth anniversary of the effective
date, and no Option may be granted hereunder after such date.
6. Stock Adjustments. In the event that a dividend shall be declared on
the Common Stock payable in shares of Common Stock, the number of shares of
Common Stock then subject to any outstanding Option under the Plan and the
number of shares of Common Stock reserved for grant of Options pursuant to this
Plan but not yet subject to Option shall be adjusted by adding to each such
share of Common Stock the number of shares of Common Stock which would be
distributable in respect thereof if such shares had been outstanding on the
record date for the issuance of such stock dividend. In the event that the
outstanding shares of Common Stock shall be converted into or exchanged for a
different number of shares or other securities of the Company or of another
corporation, whether through stock split, recapitalization, split-up, merger,
consolidation, reorganization, combination or other issuance or exchange of
shares, then there shall be substituted for each share of Common Stock subject
to any outstanding Option under this Plan and for each share of Common Stock
reserved for the grant of Options pursuant to the Plan but not yet subject to
Option, the number and kind of shares or other securities which each outstanding
share of Common Stock shall have been so converted into or for which each share
shall have been so exchanged. In the case of any substitution or adjustment as
provided in this Section 6, the Option price of any share subject to an
outstanding Option shall be adjusted so that there will be no change in the
aggregate purchase price payable upon exercise of any such Option.
7. Option Price. The purchase price for shares of Common Stock to be
purchased upon the exercise of Options shall be the fair market value of such
shares at the date on which the Option is granted, which,
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<PAGE> 3
in the case of the Options to be granted in accordance with Section 4(a) and (c)
hereof, shall be the initial public offering price per share set forth in the
Registration Statement at the time it becomes effective and in the case of all
other awards the fair market value on such date. For the purposes of this
Section, the fair market value of a share of Common Stock on any date shall be
equal to the closing sale price of a share of the Common Stock as published by a
national securities exchange on which the shares of the Common Stock are traded
on such date or, if there is no sale of the Common Stock on such date, the
average of the bid and asked prices on such exchange at the close of trading on
such date or, if shares of Common Stock are not listed on a national securities
exchange on such date but are authorized for quotation in the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") National
Market ("NM"), the last transaction price per share as reported by NASDAQ NM on
such date or, if shares of Common Stock are not authorized for quotation in
NASDAQ NM on such date, the average of the bid and asked prices in the over the
counter market or, if the Common Stock is not listed on a national securities
exchange, quoted in NASDAQ NM or quoted in the over the counter market, the fair
market value of a share of the Common Stock on such date as shall be determined
in good faith by the Board or any authorized committee thereof. For purposes of
the Plan, the determination of the Board or any committee thereof of the fair
market value of a share shall be conclusive.
8. Exercisability. Except as otherwise set forth in Section 10 hereof,
Options shall become exercisable as follows: a) Of the options granted pursuant
to Section 4(a) and Section 4(b) hereof, options to purchase 5000 shares of
Common Stock shall become exercisable on the first anniversary of the date of
grant and options to purchase the remaining 5000 shares of Common Stock shall
become exercisable in equal amounts on the second, third, fourth and fifth
anniversaries of the date of grant. b) Of the options granted pursuant to
Section 4(c) and 4(d) hereof, options to purchase 2500 shares of Common Stock
shall become exercisable on the first anniversary of the date of grant and
options to purchase the remaining 2500 shares of Common Stock shall become
exercisable in equal amounts on the second, third, fourth and fifth
anniversaries of the date of grant.
No Option may be exercised after the expiration of ten (10) years from the
date of grant of such Option. Options which have become exercisable may be
exercised from time to time, in whole or in part, provided that no partial
exercise will be permitted which would result in the issuance of less than fifty
(50) shares of Common Stock. Upon exercise, the purchase price thereunder shall
be payable in full in cash or in kind, or part in cash and part in kind, by
surrender of currently exercisable Options having a value (determined by
subtracting the exercise price from the fair market value of Common Stock and
multiplying such amount by the number of Options surrendered) on the date of
exercise, equal to the portion of the exercise price so paid. An Option may not
be exercised for fractional shares of Common Stock and any fractional shares
resulting from payment in kind shall be cancelled.
Any issuance of Common Stock pursuant to the exercise of an Option under
the Plan shall not be made until appropriate arrangements satisfactory to the
Board or any committee thereof have been made for the payment of any tax amounts
(federal, state, local or other) that may be required to be withheld or paid by
the Company (or any subsidiary or parent thereof) with respect to such Grantee.
any corporation, person, other entity or group becomes the "beneficial owner"
(as defined in Rule 13d-3 under the 1934 Act) of more than fifty percent (50%)
of the then outstanding voting stock of the Company;
An Option shall be exercised when written notice of such exercise has been
given to the Company by the Grantee, accompanied by payment of the purchase
price. Until the issuance of the stock certificates evidencing the shares of
Common Stock issuable upon such exercise, no right to vote, receive dividends or
any other rights as a shareholder shall exist with respect to such shares
notwithstanding the prior exercise of the Option. No adjustment will be made for
dividends or other rights for which the record date is prior to the date the
stock certificate is issued except as provided in Section 6.
9. Listing and Registration. The Company, in its discretion, may postpone
the issuance and delivery of shares upon any exercise of an Option until
completion of a securities exchange listing or registration or other
qualification of such shares under any state or federal law, rule or regulation
as the Company may consider appropriate. The Company may also require any person
exercising an Option to make such
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<PAGE> 4
representations and furnish such information as it may consider appropriate or
necessary in connection with the issuance of the shares of Common Stock subject
to such Option.
10. Form of Options and Conditions of Exercise. Options shall be evidenced
by stock option agreements in such form, not inconsistent with the provisions of
this Plan, as determined by the Board or any authorized committee thereof.
Options will not be assignable or transferable by the Grantee other than by will
or the laws of descent and distribution and shall be exercisable during the
lifetime of the Grantee only by the Grantee.
Grantees may be granted more than one Option under the Plan. The granting
of an Option under the Plan shall not affect any unexercised Option previously
granted to the Grantee under the Plan or any unexercised Option granted to the
Grantee under any other plan.
Except as otherwise set forth herein, no Option shall be exercisable after
resignation or removal from the Board of Directors.
Upon the removal of a Grantee for cause (as determined by a majority of the
Board), all Options then held by such Grantee, whether or not exercisable on
such date, shall be forfeited and automatically expire on the date of removal.
Upon the voluntary resignation of a Grantee (or the failure of a Grantee to
be re-elected to the Board), all Options held by such Grantee and exercisable as
of the date of resignation shall be exercisable in whole or in part by such
Grantee for a period of thirty (30) days from the date of resignation (or
determination of the election results) but in no event later than ten (10) years
from the date of grant, and all Options held by such Grantee which are not
exercisable on such date of resignation shall be forfeited and automatically
expire on such date. A director on leave of absence may, for purposes of the
Plan, be considered a director of the Company, provided that notwithstanding
such leave of absence, in no event shall an Option be exercised later than ten
(10) years from the date of grant. Upon the death of any Grantee, all Options
exercisable by the Grantee on the date of death may be exercised in whole or
part for a period of one (1) year from the date of such Grantee's death by the
person or persons to whom his or her rights under the Option shall have passed
by will or by the laws of descent and distribution, but in no event later than
ten (10) years from the date of grant and all Options held by such Grantee which
are not exercisable on the date of death shall be forfeited and automatically
expire on such date.
11. Reservation of Shares. The Company, during the term of the Plan, will
at all times reserve and keep available the number of shares of Common Stock as
shall be sufficient to satisfy the requirements of the Plan. The inability of
the Company to obtain the necessary approvals from any regulatory body having
jurisdiction or authority deemed necessary by the Company's counsel to the
lawful issuance and sale of any shares of Common Stock under the Plan shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
12. Amendment of the Plan. The Plan may be terminated or amended at any
time by the Board or any committee thereof authorized to administer the Plan.
13. No Right to Continued Service. The Plan shall not be construed as
giving a Grantee any right to continued service as a member of the Board or to
affect or limit in any way the right of the Company and its stockholders to
remove such Grantee.
14. Governing Law. The Plan and any related documents or instruments shall
be governed and construed in accordance with the laws of the State of Delaware.
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<PAGE> 1
EXHIBIT 8
THIRD AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of August 21, 1999 (this "Amendment"), to the Rights
Agreement, dated as of August 21, 1998, as amended as of October 2, 1998 and as
of February 16, 1999 (the "Rights Agreement"), by and between OmniQuip
International, Inc., a Delaware corporation (the "Company"), and First Chicago
Trust Company of New York, a New York corporation (the "Rights Agent").
WHEREAS, pursuant to and in compliance with Section 27 of the Rights
Agreement, the Company and the Rights Agent desire to amend the Rights Agreement
as set forth in this Amendment;
WHEREAS, it is proposed that the Company enter into an Agreement and Plan
of Merger (the "Merger Agreement"), by and among the Company, Textron, Inc., a
Delaware corporation ("Parent"), and Telescope Acquisition Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Purchaser");
WHEREAS, the Board of Directors of the Company has determined that the
transactions contemplated by the Merger Agreement are fair to and in the best
interests of the Company and its shareholders; and
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company and its shareholders to amend the Rights Agreement to
exempt the Merger Agreement and the transactions contemplated thereby from the
application of the Rights Agreement.
NOW THEREFORE, in consideration of the premises and the mutual agreements
set forth herein and in the Rights Agreement, the parties hereto agree as
follows:
1. Section 1(a) of the Rights Agreement is hereby amended by adding the
following at the end of such Section:
"Notwithstanding anything in this Agreement to the contrary, none of
Textron, Inc., a Delaware corporation ("Parent"), Telescope Acquisition
Inc., a Delaware corporation and a wholly-owned subsidiary of Parent
("Purchaser"), or any Affiliate or Associate of either of them shall be
deemed to be an Acquiring Person solely by reason of the approval,
execution, delivery or performance of that certain Agreement and Plan of
Merger, dated as of August 21, 1999, by and among the Company, Parent and
Purchaser (as it may be amended, supplemented or restated, the "Merger
Agreement") or the Key Employee Share Purchase Agreements (as defined in
the Merger Agreement) or the consummation of the transactions contemplated
by the Merger Agreement or the Key Employee Share Purchase Agreements."
2. The Rights Agreement is hereby further amended by adding a new Section
35 to the Agreement, which shall read in its entirety as follows:
"Section 35. Merger Agreement. Nothing in this Agreement shall be
construed to create or cause a Distribution Date or Stock Acquisition Date
or to constitute a Triggering Event or give any holder of Rights or any
other Person any legal or equitable rights, remedy or claim under the
Agreement, and neither the Parent nor the Purchaser shall be deemed an
Acquiring Person, solely as a result of or in connection with the execution
of the Merger Agreement or the Key Employee Share Purchase Agreements or
the commencement or consummation of the transactions contemplated by the
Merger Agreement or the Key Employee Share Purchase Agreements."
3. Section 7(a) of the Rights Agreement is hereby amended by replacing such
Section in its entirety with the following:
"(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section
23(a) hereof)
<PAGE> 2
in whole or in part at any time after the Distribution Date upon surrender
of the Rights Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect
to the total number of Units (or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then exercisable,
at or prior to the earlier of (i) the Close of Business on the Final
Expiration Date, (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof or (iii) immediately prior to the Effective Time of
the Merger (each as defined in the Merger Agreement) (the earlier of (i),
(ii) and (iii) being herein referred to as the "Expiration Date"). Upon the
Expiration Date, the Rights shall expire."
4. This Amendment shall be governed by and construed in accordance with the
laws of the State of Delaware.
5. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument. Any such counterpart may be executed by facsimile signature
with only verbal confirmation, and when so executed and delivered shall be
deemed an original and such counterpart(s) together shall constitute only one
original.
6. Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and affect.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 3
IN WITNESS WHEREOF, the parties have caused this Third Amendment to Rights
Agreement to be duly executed and attested as of the date first above written.
Attest: OMNIQUIP INTERNATIONAL, INC.
By: /s/ CURTIS J. LAETZ By: /s/ P. ENOCH STIFF
---------------------------------- ----------------------------------
Curtis J. Laetz P. Enoch Stiff
Senior Vice President President and Chief Executive
and Chief Administrative Officer Officer
Attest: FIRST CHICAGO TRUST COMPANY OF
NEW YORK
By: /s/ KATHLEEN M. VOSS By: /s/ ANITA L. FLETCHER
---------------------------------- ----------------------------------
Kathleen M. Voss Anita L. Fletcher
Manager, Client Support Assistant Vice President
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<PAGE> 1
EXHIBIT 9
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of August
20, 1999, is entered into between P. Enoch Stiff, (the "Seller") and Telescope
Acquisition Inc., a Delaware corporation (the "Purchaser").
WHEREAS, the Seller owns, beneficially and of record, whether or not
subject to restrictions, 562,550 shares of common stock, par value $0.01 per
share, together with the associated preferred stock purchase rights (the
"Rights"), issued pursuant to the Rights Agreement, dated as of August 21, 1998,
as amended, by and between Omniquip International, Inc., a Delaware corporation
(the "Company") and First Chicago Trust Company of New York as Rights Agent,
(the "Shares") of the Company, and options, whether vested or unvested, to
purchase 130,000 Shares of the Company at a price equal to or less than $21 per
Share pursuant to the Company's Amended and Restated 1996 Long-Term Incentive
Plan; and
WHEREAS, the Purchaser desires to purchase from the Seller, and the
Seller desires to sell to the Purchaser, 346,275 Shares owned by the Seller (the
"Seller Shares") upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 Transfer by Seller of Shares. Simultaneously with the execution
of this Agreement and subject to the terms and conditions set forth in this
Agreement, the Seller is selling, assigning, transferring and delivering to the
Purchaser the Seller Shares, free and clear of all options, pledges, mortgages,
security interests, liens, restrictions on voting or transfer or other
encumbrances of any nature ("Encumbrances"), other than the restrictions imposed
by Federal and state securities laws.
1.2 Consideration. Simultaneously with the execution of this
Agreement and subject to the terms and conditions set forth in this Agreement,
in reliance on the representations, warranties, covenants and agreements of the
parties contained herein and in consideration of the sale, assignment, transfer
and delivery of the Seller Shares, the Purchaser is paying the consideration set
forth in Section 1.3(b) hereof (the "Purchase Price").
1.3 The Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement is taking place at the offices of Michael, Best &
Friedrich in Milwaukee, Wisconsin, simultaneously with the execution of this
Agreement by all the parties hereto.
(a) Deliveries by Seller. At the Closing, the Seller is delivering
or causing to be delivered to the Purchaser the following:
<PAGE> 2
2
(i) certificates evidencing the Seller Shares, which certificates
are properly endorsed for transfer or accompanied by duly executed stock
powers, in either case executed in blank or in favor of the Purchaser, and
otherwise in a form acceptable for transfer on the books of the Company;
and
(ii) all other previously undelivered documents required by this
Agreement to be delivered by the Seller to the Purchaser at the Closing in
connection with the transactions contemplated hereby.
(b) Deliveries by the Purchaser. At or prior to the Closing, the
Purchaser is delivering or causing to be delivered to or for the benefit of the
Seller the following:
(i) to the Seller, as full an complete consideration for the Seller
Shares an aggregate amount equal to $ $7,271,775 (less (A) the Deposit (as
defined in Section 1.4) which is being delivered to the Escrow Agent
pursuant to Section 1.4 and (B) any amounts paid to Robert W. Baird & Co.,
Inc. as previously directed by the Seller), by bank check;
(ii) all other previously undelivered documents required by this
Agreement to be delivered by the Purchaser to the Seller at the Closing in
connection with the transactions contemplated hereby; and
(iii) the Deposit to the Escrow Agent as set forth in Section 1.4.
1.4 Escrow Arrangements.
(a) Concurrently with the execution of this Agreement, (x) (a) the
Purchaser, the Parent, the Seller, and LaSalle Bank National Association, a
national banking corporation (the "Escrow Agent") are entering into an Escrow
Agreement in substantially the form attached hereto as Exhibit 1.4 (the "Escrow
Agreement") pursuant to which the Purchaser and the Seller are establishing an
interest-bearing escrow account (the "Escrow Account") with Escrow Agent and (b)
the Purchaser acting at the direction of the Seller (which is hereby irrevocably
given ) is depositing Two Million Seventy Seven Thousand Six Hundred Fifty
dollars ($2,077,650) from the Purchase Price (the "Deposit") into the Escrow
Account, which Deposit shall be held by the Escrow Agent pursuant to the
provisions of the Escrow Agreement. The Deposit, together with interest thereon
(it being the intent of the parties that as principal is distributed, interest
will be distributed proportionately), is referred to herein as the "Escrow
Amount". The parties agree that any losses to the principal amount on deposit in
the Escrow Account shall be shared equally and that in the event of any such
loss all payments hereunder will be reduced accordingly.
1.5 Application of Escrow Amount.
Except as set forth in Section 1.9, the Escrow Amount shall be
applied as follows:
<PAGE> 3
3
(i) if the Cumulative Performance Benchmark is less than the Minimum
Cumulative Escrow Performance Benchmark, then the Escrow Amount shall be
paid to the Parent; or
(ii) if the Cumulative Performance Benchmark equals or exceeds the
Minimum Cumulative Escrow Performance Benchmark, then the Escrow Amount as
set forth on Exhibit 1.5 against the level of Cumulative Performance
Benchmark which is the closest to the Cumulative Performance Benchmark
achieved shall be paid to Seller promptly following the Instruction Date,
and any remaining Escrow Amount shall be paid to the Parent; or
(iii) if, Purchaser fails to commence the Offer or for any reason,
or Purchaser's Offer is terminated without Shares being purchased pursuant
to the Offer for any reason other than a sale of the Company at a price
higher than Purchaser's Offer, the Escrow Amount shall be paid to the
Parent on demand (with all interest earned thereon).
1.6 Instructions to Escrow Agent. Purchaser and Seller each hereby
agrees to instruct the Escrow Agent to apply the amounts in the Escrow Account
in accordance with Section 1.5 and each acknowledges and agrees that the Escrow
Account shall only be used as provided herein and shall not be used for any
other purposes whatsoever.
1.7 Specific Performance. Each of the parties agrees that monetary
damages would be inadequate for any breach of Sections 1.5 and 1.9 and that the
other party shall be entitled to specific performance in the event of any such
breach. The fees and expenses of the Escrow Agent shall be borne by the
Purchaser.
1.8 Payment Not Compensation. It is expressly agreed that any
payment to the Seller from the Escrow Account shall not be treated as or deemed
to constitute "compensation" for any purpose, other than as required by law or
generally accepted accounting principles.
1.9 Termination of Employment.
(a) Notwithstanding any of the foregoing to the contrary, in the
event the Seller terminates his employment without good reason or is terminated
for cause (as defined in an Employment Agreement between the Seller and the
Company) at any time prior to December 31, 2002, the Seller shall receive, from
the Escrow Account, an amount equal to the lesser of (a) a pro rata portion of
the Escrow Amount that the Seller would have been entitled to receive pursuant
to Section 1.5 hereof based upon the percentage of the full calendar months in
the period from the Effective Date to December 31, 2002 (the "Employment Term")
that shall have elapsed through the date of Seller's termination of employment,
and (b) the fraction of the Escrow Amount, the numerator of which is the number
of full calendar months between the Merger Date and the end of the month
immediately prior to the date on which the Seller's employment with the Company
is terminated, and the denominator of which is the number of
<PAGE> 4
4
full calendar months in the period from the Merger Date to December 31, 2002, in
either case payable when the payment pursuant to Section 1.5 would have
otherwise been payable had the Seller's employment not terminated, in each case
plus interest on such sum as earned by the Escrow Account from the date the
Seller's employment terminated to the date of payment. The remainder shall be
paid to Parent.
(b) If the Seller's employment by the Company terminates for any
reason other than a reason described in Section 1.9(a) above, the Escrow Amount
shall be paid to the Seller.
1.10 Tax Liability Loans.
(i) If requested by the Seller not earlier than the date upon which
any taxes are due, based upon the good faith advice of the Seller's tax
advisor, the Purchaser shall provide a loan (the "Loan") to the Seller to
enable the Seller to pay any 1999 tax liability that is incurred by the
Seller by virtue of the Escrow Amount.
(ii) The Loans will (i) have a scheduled maturity date of 4 years
from the date of issuance, (ii) accrue interest at the lowest permissible
rate without imputation of income, compounded annually (currently
approximately 4.8%), (iii) become payable in full (together with accrued
interest) upon the earliest to occur of (A) the scheduled maturity date,
(B) 30 days following the Seller's termination of employment for any
reason, and (C) upon the occurrence of a default or insolvency or
bankruptcy of the Seller and (iv) become payable with respect to the
amount of any after-tax proceeds received by the Seller from the Escrow
Amount.
1.11 Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"Cumulative Performance Benchmark" shall mean the cumulative
consolidated Performance Benchmark of the Company and its subsidiaries for
the period beginning on the Effective Date and ending on December 31,
2002, as reported to the Parent as part of the Company's normal financial
reporting and based on the Company's consolidated financial statements for
the period from the Effective Date through December 31, 1999, and the
years ended December 31, 2000, 2001 and 2002. Such calculation and report
shall be final and binding on all parties.
"Determination Date" shall mean the date that the Chief Financial
Officer of the Parent finally determines the Cumulative Performance
Benchmark, which date shall be no more than five business days after the
Company's consolidated financial statements for the year ended December
31, 2002 have been approved by the Parent as part of its normal financial
reporting.
<PAGE> 5
5
"Effective Date" shall mean October 1, 1999.
"Employment Agreement" shall mean an Employment Agreement between
the Company and the Seller which may be entered into after the Tender
Offer Closing Date.
"Instruction Date" shall mean the date that the Seller and the Chief
Financial Officer of the Parent notify the Escrow Agent the amount of the
Cumulative Performance Benchmark and whether or not the Cumulative
Performance Benchmark exceeded the Minimum Cumulative Escrow Performance
Benchmark.
"Merger Date" shall mean the date of the Effective Time of the
Merger (as defined in the Merger Agreement).
"Minimum Cumulative Escrow Performance Benchmark" shall mean a
Cumulative Performance Benchmark of at least $164,600,000.
"Offer" shall have the meaning assigned to such term in the Merger
Agreement.
"Performance Benchmark" shall mean, net sales less finance charges
less cost of sales less sales, general and administrative expenses (SG&A)
of the Company and its subsidiaries on a consolidated basis. For the
avoidance of doubt, Performance Benchmark shall include acquisition
goodwill amortization of the Company (including its consolidated
subsidiaries) for acquisition goodwill created prior to the Tender Offer
Closing Date of $4.152 million; and shall exclude (i) interest expense,
(ii) the Parent's corporate expenses; (iii) the goodwill amortization of
the Parent relating to the Merger and related purchase price adjustments;
(iv) additional depreciation expense resulting from the write up of assets
following the Merger; (iv) expenses relating to the period after the
Merger for environmental, health and safety expenses, plant
reorganization, product liability insurance savings; (v) savings resulting
from the elimination of the obligation of the Company to report its
financial results publicly; and (vi) the effect of acquisitions by the
Company or its subsidiaries after the Merger Date or of the transfer by
the Parent of any business or product line to the Company or its
subsidiaries.
"Tender Offer Closing Date" shall mean the date of Purchaser's
purchase of Shares pursuant to the Offer.
Should the Employment Agreement contain definitions of the foregoing
terms which are different from those set forth above, this Agreement will be
deemed to have been amended to contain such different definitions.
1.12 Further Assurances. After the Closing, each party hereto shall
from time to time, at the request of the other party and without further cost or
expense to such other party, execute and deliver such other instruments of
conveyance and transfer and take such other actions as such other party may
reasonably request in order to more effectively consummate the
<PAGE> 6
6
transactions contemplated hereby and to vest in the Purchaser good and valid
title to the Seller Shares.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to the Purchaser as
follows:
2.1 Ownership of Stock. Seller is the record and beneficial owner of
the Seller Shares. The Seller Shares are owned free and clear of all
Encumbrances, other than the restrictions imposed by Federal and state
securities laws. At the Closing, Purchaser is acquiring a title to the Seller
Shares free and clear of all Encumbrances, other than the restrictions imposed
by Federal and state securities laws and Encumbrances arising as a result of any
action taken by the Purchaser or any of its affiliates ("Affiliates") as defined
in Rule 12b-2 of the regulations promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
2.2 Authorization, Etc. Seller has full power and authority to
execute and deliver this Agreement and to carry out the transactions
contemplated hereby. This Agreement has been duly and validly executed by Seller
and, assuming this Agreement constitutes the legal, valid and binding agreement
of the other parties hereto, constitutes a legal, valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except that (i)
the enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.3 No Approvals or Conflicts. The execution, delivery and
performance by the Seller of this Agreement and the consummation by the Seller
of the transactions contemplated hereby will not (i) violate, conflict with or
result in a breach of any provision of, or constitute a default by the Seller
(or an event which, with notice or lapse of time or both, would constitute a
default) or give rise to any right of termination, cancellation or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties of the Company or on the Seller's
interest in the Seller Shares under, any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, lease, contract, agreement or other
instrument to which any of the Seller, or any of Seller's properties may be
bound, (iii) violate or result in a breach of any order, injunction, judgment,
ruling, law or regulation of any court or governmental authority applicable to
the Seller or any of Seller's properties or (iv) require any order, consent,
approval or authorization of, or notice to, or declaration, filing, application,
qualification or registration with, any governmental or regulatory authority.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Seller as
follows:
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3.1 Organization. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
3.2 Authorization Etc. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby to be carried out by it. The execution and
delivery by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby have been duly approved and
authorized by all necessary corporate action on the part of the Purchaser, and
no other proceedings on the part of the Purchaser are necessary to approve and
authorize the execution and delivery by the Purchaser of this Agreement and the
consummation by the Purchaser of the transactions contemplated hereby. This
Agreement has been duly and validly executed by the Purchaser and, assuming this
Agreement constitutes the legal, valid and binding agreement of the other
parties hereto, constitutes a legal, valid and binding agreement of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except that (i) the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
3.3 No Approvals or Conflicts. The execution, delivery and performance by the
Purchaser of this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby to be consummated by it will not (i) violate,
conflict with or result in a breach by the Purchaser of any provision of the
Certificate of Incorporation or By-laws of the Purchaser, (ii) violate, conflict
with or result in a breach of any provision of, or constitute a default by the
Purchaser (or an event which, with notice or lapse of time or both, would
constitute a default) or give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the Purchaser's properties under, any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement or other instrument to which the Purchaser or any of its
properties may be bound, (iii) violate or result in a breach of any order,
injunction, judgment, ruling, law or regulation of any court or governmental
authority applicable to the Purchaser or any of its properties, or (iv) require
any order, consent, approval or authorization of, or notice to, or declaration,
filing, application, qualification or registration with, any governmental or
regulatory authority.
4. MISCELLANEOUS
4.1 Transfer and Conveyance Taxes. The Seller shall be liable for
and shall pay all applicable, transfer, recording, stamp and other similar
taxes, resulting from the consummation of the transactions contemplated by this
Agreement.
4.2 Fees and Expenses. Except as otherwise provided in this
Agreement, the Seller shall bear its own expenses and the Purchaser shall bear
its own expenses in connection with the preparation and negotiation of this
Agreement and the consummation of the transactions
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contemplated by this Agreement. The Seller and the Purchaser shall bear the fees
and expenses of any broker or finder retained by such party or parties and their
respective affiliates in connection with the transactions contemplated herein.
4.3 Governing Law. This Agreement shall be construed under and
governed by the laws of the State of Wisconsin.
4.4 Amendment. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written agreement
executed by the Purchaser and the Seller.
4.5 Survival of Representations and Warranties. The representations
and warranties of the parties contained in this Agreement or in any instrument
delivered pursuant hereto will survive the Closing and remain in full force and
effect.
4.6 No Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the Purchaser, in the case of assignment by the
Seller, and the Seller, in the case of any assignment by the Purchaser; provided
that the Purchaser may assign its rights and interests under this Agreement to
any of its Affiliates.
4.7 Waiver. Any of the terms or conditions of this Agreement which
may be lawfully waived may be waived in writing at any time by each party which
is entitled to the benefits thereof. Any waiver of any of the provisions of this
Agreement by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
4.8 Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if (a) personally delivered,
(b) mailed by registered or certified first-class mail, prepaid with return
receipt requested, (c) sent by a nationally recognized overnight courier
service, to the recipient at the address below indicated or (d) delivered by
facsimile which is confirmed in writing by sending a copy of such facsimile to
the recipient thereof pursuant to clause (a) or (c) above:
If to the Purchaser:
c/o Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: Vice President & General Counsel,
Textron Industrial Products
<PAGE> 9
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If to the Seller:
c/o Hill & Barlow
One International Place
Boston, Mass. 92110
Attention: T. Mahoney, Esquire
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner.
Except as otherwise provided herein, any notice under this Agreement
will be deemed to have been given (x) on the date such notice is personally
delivered or delivered by facsimile, (y) four days after the date of mailing if
sent by certified or registered mail or (z) the next succeeding business day
after the date such notice is delivered to the overnight courier service if sent
by overnight courier; provided that in each case notices received after 4:00
p.m. (local time of the recipient) shall be deemed to have been duly given on
the next business day.
4.9 Complete Agreement. This Agreement and the other documents and
writings referred to herein or delivered pursuant hereto contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and thereof.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
4.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
4.11 Publicity. The Seller and the Purchaser will consult with each
other and will mutually agree upon any publication or press release of any
nature with respect to this Agreement or the transactions contemplated hereby
and shall not issue any such publication or press release prior to such
consultation and agreement except as may be required by applicable law or by
obligations pursuant to any listing agreement with any securities exchange or
any securities exchange regulation, in which case the party proposing to issue
such publication or press release shall make all reasonable efforts to consult
in good faith with the other party or parties before issuing any such
publication or press release and shall provide a copy thereof to the other party
or parties prior to such issuance.
4.12 Headings. The headings contained in this Agreement are for
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
4.13 Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions
<PAGE> 10
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hereof in such jurisdiction or rendering that or any other provision of this
Agreement invalid, illegal or unenforceable in any other jurisdiction.
4.14 Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or corporation, other than the parties hereto
and their permitted successors or assigns, any rights or remedies under or by
reason of this Agreement.
4.15 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE PARTIES
HERETO HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE AREA ENCOMPASSED BY MILWAUKEE COUNTY, WISCONSIN AND IRREVOCABLY AGREE
THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES HERETO EACH ACCEPT FOR ITSELF AND
HIMSELF, AS THE CASE MAY BE, AND IN CONNECTION WITH ITS OR HIS, AS THE CASE MAY
BE, RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION AND VENUE OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM
NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY NON-APPEALABLE JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE SELLER DESIGNATES CT
CORPORATION SYSTEM AND SUCH OTHER PERSON AS MAY HEREINAFTER BE SELECTED BY THE
SELLER WHO IRREVOCABLY AGREES IN WRITING TO SO SERVE AS AGENT FOR THE SELLER TO
RECEIVE ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY THE PARTIES HERETO TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED
BY REGISTERED MAIL TO THE PARTIES HERETO, AS PROVIDED HEREIN, EXCEPT THAT UNLESS
OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT
AFFECT THE VALIDITY OF SERVICE OF PROCESS.
4.16 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW,
THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE
PARTIES HERETO ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH
MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY OF THE OTHER PARTIES. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT
MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
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INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. THE PARTIES HERETO FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS OR HIS, AS THE CASE MAY
BE, LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS OR HIS, AS
THE CASE MAY BE, JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
[THE REMAINDER OF THIS PAGE IS INTENDED TO BE BLANK]
<PAGE> 12
IN WITNESS WHEREOF, the Seller has executed this Agreement, and the
Purchaser has caused this Agreement to be executed by its duly authorized
officer, in each case as of the day and year first above written.
/s/ P. Enoch Stiff
___________________________________
P. Enoch Stiff
Telescope Acquisition Inc.
By: /s/ Bhikhaji Maneckji
____________________________
Name: Bhikhaji Maneckji
Title: Vice President
<PAGE> 1
EXHIBIT 10
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of
August 20, 1999, is entered into between Curtis Laetz and Linda Laetz,
(collectively, the "Seller") and Telescope Acquisition Inc., a Delaware
corporation (the "Purchaser").
WHEREAS, the Seller owns, beneficially and of record, whether or
not subject to restrictions, 84,375 shares of common stock, par value $0.01 per
share, together with the associated preferred stock purchase rights (the
"Rights"), issued pursuant to the Rights Agreement, dated as of August 21, 1998,
as amended, by and between Omniquip International, Inc., a Delaware corporation
(the "Company") and First Chicago Trust Company of New York as Rights Agent,
(the "Shares") of the Company, and options, whether vested or unvested, to
purchase 43,500 Shares of the Company at a price equal to or less than $21 per
Share pursuant to the Company's Amended and Restated 1996 Long-Term Incentive
Plan; and
WHEREAS, the Purchaser desires to purchase from the Seller, and
the Seller desires to sell to the Purchaser, 63,938 Shares owned by the Seller
(the "Seller Shares") upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants contained herein, the parties hereto agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 Transfer by Seller of Shares. Simultaneously with the
execution of this Agreement and subject to the terms and conditions set forth in
this Agreement, the Seller is selling, assigning, transferring and delivering to
the Purchaser the Seller Shares, free and clear of all options, pledges,
mortgages, security interests, liens, restrictions on voting or transfer or
other encumbrances of any nature ("Encumbrances"), other than the restrictions
imposed by Federal and state securities laws.
1.2 Consideration. Simultaneously with the execution of this
Agreement and subject to the terms and conditions set forth in this Agreement,
in reliance on the representations, warranties, covenants and agreements of the
parties contained herein and in consideration of the sale, assignment, transfer
and delivery of the Seller Shares, the Purchaser is paying the consideration set
forth in Section 1.3(b) hereof (the "Purchase Price").
1.3 The Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement is taking place at the offices of Michael, Best &
Friedrich in Milwaukee, Wisconsin, simultaneously with the execution of this
Agreement by all the parties hereto.
(a) Deliveries by Seller. At the Closing, the Seller is
delivering or causing to be delivered to the Purchaser the following:
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(i) certificates evidencing the Seller Shares, which certificates
are properly endorsed for transfer or accompanied by duly executed stock
powers, in either case executed in blank or in favor of the Purchaser,
and otherwise in a form acceptable for transfer on the books of the
Company; and
(ii) all other previously undelivered documents required by this
Agreement to be delivered by the Seller to the Purchaser at the Closing
in connection with the transactions contemplated hereby.
(b) Deliveries by the Purchaser. At or prior to the Closing, the
Purchaser is delivering or causing to be delivered to or for the benefit of the
Seller the following:
(i) to the Seller, as full and complete consideration for the
Seller Shares an aggregate amount equal to $1,342,698 (less (A) the
Deposit (as defined in Section 1.4) which is being delivered to the
Escrow Agent pursuant to Section 1.4 and (B) any amounts paid to Robert
W. Baird & Co., Inc. as directed by Seller), by bank check;
(ii) all other previously undelivered documents required by this
Agreement to be delivered by the Purchaser to the Seller at the Closing
in connection with the transactions contemplated hereby;
(iii) the Deposit to the Escrow Agent as set forth in Section
1.4.
1.4 Escrow Arrangements.
(a) Concurrently with the execution of this Agreement, (x) (a)
the Purchaser, the Parent, the Seller, and LaSalle Bank National Association, a
national banking corporation (the "Escrow Agent") are entering into an Escrow
Agreement in substantially the form attached hereto as Exhibit 1.4 (the "Escrow
Agreement") pursuant to which the Purchaser and the Seller are establishing an
interest-bearing escrow account (the "Escrow Account") with Escrow Agent and (b)
the Purchaser acting at the direction of the Seller (which is hereby irrevocably
given ) is depositing Three Hundred Eighty-Three Thousand Six Hundred
Twenty-Eight dollars ($383,628) from the Purchase Price (the "Deposit") into the
Escrow Account, which Deposit shall be held by the Escrow Agent pursuant to the
provisions of the Escrow Agreement. The Deposit, together with interest thereon
(it being the intent of the parties that as principal is distributed, interest
will be distributed proportionately), is referred to herein as the "Escrow
Amount". The parties agree that any losses to the principal amount on deposit in
the Escrow Account shall be shared equally and that in the event of any such
loss all payments hereunder will be reduced accordingly.
1.5 Application of Escrow Amount.
Except as set forth in Section 1.9, the Escrow Amount shall be
applied as follows:
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if the Cumulative Performance Benchmark is less than the Minimum Cumulative
Escrow Performance Benchmark, then the Escrow Amount shall be paid to the
Parent; or
(i) if the Cumulative Performance Benchmark equals or exceeds the
Minimum Cumulative Escrow Performance Benchmark, then the Escrow Amount
as set forth on Exhibit 1.5 against the level of Cumulative Performance
Benchmark which is the closest to the Cumulative Performance Benchmark
achieved shall be paid to Seller promptly following the Instruction
Date, and any remaining Escrow Amount shall be paid to the Parent; or
(ii) if, Purchaser fails to commence the Offer or for any reason,
or Purchaser's Offer is terminated without Shares being purchased
pursuant to the Offer for any reason other than a sale of the Company at
a price higher than Purchaser's Offer, the Escrow Amount shall be paid
to the Parent on demand (with all interest earned thereon).
1.6 Instructions to Escrow Agent. Purchaser and Seller each
hereby agrees to instruct the Escrow Agent to apply the amounts in the Escrow
Account in accordance with Section 1.5 and each acknowledges and agrees that the
Escrow Account shall only be used as provided herein and shall not be used for
any other purposes whatsoever.
1.7 Specific Performance. Each of the parties agrees that
monetary damages would be inadequate for any breach of Sections 1.5 and 1.9 and
that the other party shall be entitled to specific performance in the event of
any such breach. The fees and expenses of the Escrow Agent shall be borne by the
Purchaser.
1.8 Payment Not Compensation. It is expressly agreed that any
payment to the Seller from the Escrow Account shall not be treated as or deemed
to constitute "compensation" for any purpose, other than as required by law or
generally accepted accounting principles.
1.9 Termination of Employment.
(a) Notwithstanding any of the foregoing to the contrary, in the
event Curtis Laetz terminates his employment without good reason or is
terminated for cause (as defined in an Employment Agreement between Curtis Laetz
and the Company) at any time prior to December 31, 2002, the Seller shall
receive, from the Escrow Account, an amount equal to the lesser of (a) a pro
rata portion of the Escrow Amount that the Seller would have been entitled to
receive pursuant to Section 1.5 hereof based upon the percentage of the full
calendar months in the period from the Effective Date to December 31, 2002 (the
"Employment Term") that shall have elapsed through the date of Seller's
termination of employment, and (b) the fraction of the Escrow Amount, the
numerator of which is the number of full calendar months between the Merger Date
and the end of the month immediately prior to the date on which Curtis Laetz'
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employment with the Company is terminated, and the denominator of which is the
number of full calendar months in the period from the Merger Date to December
31, 2002, in either case payable when the payment pursuant to Section 1.5 would
have otherwise been payable had Curtis Laetz' employment not terminated, in each
case plus interest on such sum as earned by the Escrow Account from the date the
Curtis Laetz' employment terminated to the date of payment. The remainder shall
be paid to Parent.
(b) If Curtis Laetz' employment by the Company terminates for any
reason other than a reason described in Section 1.9(a) above, the Escrow Amount
shall be paid to the Seller.
1.10 Tax Liability Loans.
(a) If requested by the Seller not earlier than the date upon
which any taxes are due, based upon the good faith advice of the Seller's tax
advisor, the Purchaser shall provide a loan (the "Loan") to the Seller to enable
the Seller to pay any 1999 tax liability that is incurred by the Seller by
virtue of the Escrow Amount.
(b) The Loans will (i) have a scheduled maturity date of 4 years
from the date of issuance, (ii) accrue interest at the lowest permissible rate
without imputation of income, compounded annually (currently approximately
4.8%), (iii) become payable in full (together with accrued interest) upon the
earliest to occur of (A) the scheduled maturity date, (B) 30 days following the
Seller's termination of employment for any reason, and (C) upon the occurrence
of a default or insolvency or bankruptcy of either Seller and (iv) become
payable with respect to the amount of any after-tax proceeds received by the
Seller from the Escrow Amount.
1.11 Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"Cumulative Performance Benchmark" shall mean the cumulative
consolidated Performance Benchmark of the Company and its subsidiaries
for the period beginning on the Effective Date and ending on December
31, 2002, as reported to the Parent as part of the Company's normal
financial reporting and based on the Company's consolidated financial
statements for the period from the Effective Date through December 31,
1999, and the years ended December 31, 2000, 2001 and 2002. Such
calculation and report shall be final and binding on all parties.
"Determination Date" shall mean the date that the Chief Financial
Officer of the Parent finally determines the Cumulative Performance
Benchmark, which date shall be no more than five business days after the
Company's consolidated financial statements for the year ended December
31, 2002 have been approved by the Parent as part of its normal
financial reporting.
"Effective Date" shall mean October 1, 1999.
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"Employment Agreement" shall mean an Employment Agreement between
the Company and Curtis Laetz which may be entered into after the Tender
Offer Closing Date.
"Instruction Date" shall mean the date that the Seller and the
Chief Financial Officer of the Parent notify the Escrow Agent of the
amount of the Cumulative Performance Benchmark and whether or not the
Cumulative Performance Benchmark exceeded the Minimum Cumulative Escrow
Performance Benchmark.
"Merger Date" shall mean the date of the Effective Time of the
Merger (as defined in the Merger Agreement).
"Minimum Cumulative Escrow Performance Benchmark" shall mean a
Cumulative Performance Benchmark of at least $164,600,000.
"Offer" shall have the meaning assigned to such term in the
Merger Agreement.
"Performance Benchmark" shall mean, net sales less finance
charges less cost of sales less sales, general and administrative
expenses (SG&A) of the Company and its subsidiaries on a consolidated
basis. For the avoidance of doubt, Performance Benchmark shall include
acquisition goodwill amortization of the Company (including its
consolidated subsidiaries) for acquisition goodwill created prior to the
Tender Offer Closing Date of $4.152 million; and shall exclude (i)
interest expense, (ii)the Parent's corporate expenses; (iii) the
goodwill amortization of the Parent relating to the Merger and related
purchase price adjustments; (iv) additional depreciation expense
resulting from the write up of assets following the Merger; (iv)
expenses relating to the period after the Merger for environmental,
health and safety expenses, plant reorganization, product liability
insurance savings; (v) savings resulting from the elimination of the
obligation of the Company to report its financial results publicly; and
(vi) the effect of acquisitions by the Company or its subsidiaries after
the Merger Date or of the transfer by the Parent of any business or
product line to the Company or its subsidiaries.
"Tender Offer Closing Date" shall mean the date of Purchaser's
purchase of Shares pursuant to the Offer.
Should the Employment Agreement contain definitions of the
foregoing terms which are different from those set forth above, this Agreement
will be deemed to have been amended to contain such different definitions.
1.12 Further Assurances. After the Closing, each party hereto
shall from time to time, at the request of the other party and without further
cost or expense to such other party, execute and deliver such other instruments
of conveyance and transfer and take such other actions as such other party may
reasonably request in order to more effectively consummate the
<PAGE> 6
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transactions contemplated hereby and to vest in the Purchaser good and valid
title to the Seller Shares.
2. REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller hereby represents and warrants to the Purchaser as
follows:
2.1 Ownership of Stock. Seller is the record and beneficial owner
of the Seller Shares. The Seller Shares are owned free and clear of all
Encumbrances, other than the restrictions imposed by Federal and state
securities laws. At the Closing, Purchaser is acquiring a title to the Seller
Shares free and clear of all Encumbrances, other than the restrictions imposed
by Federal and state securities laws and Encumbrances arising as a result of any
action taken by the Purchaser or any of its affiliates ("Affiliates") as defined
in Rule 12b-2 of the regulations promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
2.2 Authorization, Etc. Seller has full power and authority to
execute and deliver this Agreement and to carry out the transactions
contemplated hereby. This Agreement has been duly and validly executed by Seller
and, assuming this Agreement constitutes the legal, valid and binding agreement
of the other parties hereto, constitutes a legal, valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except that (i)
the enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.3 No Approvals or Conflicts. The execution, delivery and
performance by the Seller of this Agreement and the consummation by the Seller
of the transactions contemplated hereby will not (i) violate, conflict with or
result in a breach of any provision of, or constitute a default by the Seller
(or an event which, with notice or lapse of time or both, would constitute a
default) or give rise to any right of termination, cancellation or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties of the Company or on the Seller's
interest in the Seller Shares under, any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, lease, contract, agreement or other
instrument to which any of the Seller, or any of Seller's properties may be
bound, (iii) violate or result in a breach of any order, injunction, judgment,
ruling, law or regulation of any court or governmental authority applicable to
the Seller or any of Seller's properties or (iv) require any order, consent,
approval or authorization of, or notice to, or declaration, filing, application,
qualification or registration with, any governmental or regulatory authority.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Seller as
follows:
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3.1 Organization. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
3.2 Authorization Etc. The Purchaser has full corporate power
and authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby to be carried out by it. The execution and
delivery by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby have been duly approved and
authorized by all necessary corporate action on the part of the Purchaser, and
no other proceedings on the part of the Purchaser are necessary to approve and
authorize the execution and delivery by the Purchaser of this Agreement and the
consummation by the Purchaser of the transactions contemplated hereby. This
Agreement has been duly and validly executed by the Purchaser and, assuming this
Agreement constitutes the legal, valid and binding agreement of the other
parties hereto, constitutes a legal, valid and binding agreement of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except that (i) the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
3.3 No Approvals or Conflicts. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby to be consummated by it will
not (i) violate, conflict with or result in a breach by the Purchaser of any
provision of the Certificate of Incorporation or By-laws of the Purchaser, (ii)
violate, conflict with or result in a breach of any provision of, or constitute
a default by the Purchaser (or an event which, with notice or lapse of time or
both, would constitute a default) or give rise to any right of termination,
cancellation or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the Purchaser's properties
under, any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, lease, contract, agreement or other instrument to which the Purchaser or
any of its properties may be bound, (iii) violate or result in a breach of any
order, injunction, judgment, ruling, law or regulation of any court or
governmental authority applicable to the Purchaser or any of its properties, or
(iv) require any order, consent, approval or authorization of, or notice to, or
declaration, filing, application, qualification or registration with, any
governmental or regulatory authority.
4. MISCELLANEOUS
4.1 Transfer and Conveyance Taxes. The Seller shall be liable for
and shall pay all applicable, transfer, recording, stamp and other similar
taxes, resulting from the consummation of the transactions contemplated by this
Agreement.
4.2 Fees and Expenses. Except as otherwise provided in this
Agreement, the Seller shall bear its own expenses and the Purchaser shall bear
its own expenses in connection
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with the preparation and negotiation of this Agreement and the consummation of
the transactions contemplated by this Agreement. The Seller and the Purchaser
shall bear the fees and expenses of any broker or finder retained by such party
or parties and their respective affiliates in connection with the transactions
contemplated herein.
4.3 Governing Law. This Agreement shall be construed under and
governed by the laws of the State of Wisconsin.
4.4 Amendment. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written agreement
executed by the Purchaser and the Seller.
4.5 Survival of Representations and Warranties. The
representations and warranties of the parties contained in this Agreement or in
any instrument delivered pursuant hereto will survive the Closing and remain in
full force and effect.
4.6 No Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the Purchaser, in the case of assignment by the
Seller, and the Seller, in the case of any assignment by the Purchaser; provided
that the Purchaser may assign its rights and interests under this Agreement to
any of its Affiliates.
4.7 Waiver. Any of the terms or conditions of this Agreement
which may be lawfully waived may be waived in writing at any time by each party
which is entitled to the benefits thereof. Any waiver of any of the provisions
of this Agreement by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
4.8 Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if (a) personally delivered,
(b) mailed by registered or certified first-class mail, prepaid with return
receipt requested, (c) sent by a nationally recognized overnight courier
service, to the recipient at the address below indicated or (d) delivered by
facsimile which is confirmed in writing by sending a copy of such facsimile to
the recipient thereof pursuant to clause (a) or (c) above:
If to the Purchaser:
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c/o Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: Vice President & General Counsel,
Textron Industrial Products
If to the Seller:
c/o Hill & Barlow
One International Place
Boston, Mass 02110
Attention: T. Mahoney, Esquire
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner.
Except as otherwise provided herein, any notice under this
Agreement will be deemed to have been given (x) on the date such notice is
personally delivered or delivered by facsimile, (y) four days after the date of
mailing if sent by certified or registered mail or (z) the next succeeding
business day after the date such notice is delivered to the overnight courier
service if sent by overnight courier; provided that in each case notices
received after 4:00 p.m. (local time of the recipient) shall be deemed to have
been duly given on the next business day.
4.9 Complete Agreement. This Agreement and the other documents
and writings referred to herein or delivered pursuant hereto contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and thereof.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
4.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
4.11 Publicity. The Seller and the Purchaser will consult with
each other and will mutually agree upon any publication or press release of any
nature with respect to this Agreement or the transactions contemplated hereby
and shall not issue any such publication or press release prior to such
consultation and agreement except as may be required by applicable law or by
obligations pursuant to any listing agreement with any securities exchange or
any securities exchange regulation, in which case the party proposing to issue
such publication or press release shall make all reasonable efforts to consult
in good faith with the other party or parties before issuing any such
publication or press release and shall provide a copy thereof to the other party
or parties prior to such issuance.
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10
4.12 Headings. The headings contained in this Agreement are for
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
4.13 Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
4.14 Third Parties. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or corporation, other than the parties
hereto and their permitted successors or assigns, any rights or remedies under
or by reason of this Agreement.
4.15 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE PARTIES
HERETO HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE AREA ENCOMPASSED BY MILWAUKEE COUNTY, WISCONSIN AND IRREVOCABLY AGREE
THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES HERETO EACH ACCEPT FOR ITSELF AND
HIMSELF, AS THE CASE MAY BE, AND IN CONNECTION WITH ITS OR HIS, AS THE CASE MAY
BE, RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION AND VENUE OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM
NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY NON-APPEALABLE JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE SELLER DESIGNATES CT
CORPORATION SYSTEM AND SUCH OTHER PERSON AS MAY HEREINAFTER BE SELECTED BY THE
SELLER WHO IRREVOCABLY AGREES IN WRITING TO SO SERVE AS AGENT FOR THE SELLER TO
RECEIVE ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY THE PARTIES HERETO TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED
BY REGISTERED MAIL TO THE PARTIES HERETO, AS PROVIDED HEREIN, EXCEPT THAT UNLESS
OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT
AFFECT THE VALIDITY OF SERVICE OF PROCESS.
4.16 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE
PARTIES HERETO ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH
MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY OF THE OTHER PARTIES. THE SCOPE
OF
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THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS OR HIS, AS THE CASE MAY BE, LEGAL COUNSEL, AND
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS OR HIS, AS THE CASE MAY BE, JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
4.17 For all purposes pursuant to this Agreement, including the
receipt of funds, Curtis Laetz shall act on behalf of himself and Linda Laetz,
and Purchaser shall be entitled to rely thereon.
[THE REMAINDER OF THIS PAGE IS INTENDED TO BE BLANK]
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IN WITNESS WHEREOF, the Seller has executed this Agreement, and
the Purchaser has caused this Agreement to be executed by its duly authorized
officer, in each case as of the day and year first above written.
/s/ Curtis J. Laetz
_______________________________
Curtis Laetz
/s/ Linda M. Laetz
_______________________________
Linda Laetz
Telescope Acquisition Inc.
/s/ Bhikhaji Maneckji
By: ____________________________
Name: Bhikhaji M. Maneckji
Title: Vice President
