<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
AND
SCHEDULE 13D
(AMENDMENT NO. 3)
------------------------
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
(Name of subject company)
EATON CORPORATION
EATON ACQUISITION CORPORATION
(Bidders)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of class of securities)
139168 10 8
(CUSIP number of class of securities)
------------------------
GERALD L. GHERLEIN, ESQ.
EATON CORPORATION
EATON CENTER
1111 SUPERIOR AVENUE, N.E.
CLEVELAND, OHIO 44114
(216) 523-5000
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of bidder)
------------------------
COPY TO:
DANIEL A. NEFF, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NY 10019
(212) 403-1000
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$134,749,375 $26,950
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</TABLE>
* Based on the offer to purchase all outstanding shares of Common Stock of the
subject company (other than the 805,000 shares of common stock beneficially
owned by Eaton Corporation), together with the associated preferred stock
purchase rights at an increased price of $12.50 cash per share, and the
number of shares of Common Stock outstanding and issuable under outstanding
options as represented by the subject company in the Agreement and Plan of
Merger dated as of March 27, 1996 (11,584,950).
** 1/50 of 1% of Transaction Valuation.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: $23,485 Filing Party: Eaton Corporation
Form or Registration No.: Schedule 14D-1 Date Filed: March 19, 1996
</TABLE>
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<PAGE> 2
Eaton Corporation ("Eaton") and Eaton Acquisition Corporation (the
"Purchaser") hereby amend and supplement their Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1") originally filed on March 19, 1996, as
heretofore amended, and Eaton hereby amends and supplements its Schedule 13D
originally filed on March 18, 1996, as heretofore amended (the "Schedule 13D"
and together with the Schedule 14D-1, the "Original Filings"), with respect to
the Purchaser's offer to purchase all outstanding shares of Common Stock, par
value $0.01 per share (the "Shares"), of CAPCO Automotive Products Corporation,
a Michigan corporation (the "Company"), together with any associated preferred
stock purchase rights (the "Right"), at an increased price of $12.50 per Share
(and associated Right), 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 March 19, 1996 (the "Offer to Purchase"), as amended and supplemented by
the Supplement thereto, dated March 29, 1996 (the "Supplement") and in the
related original or revised Letters of Transmittal (which, together with the
Offer to Purchase and the Supplement, collectively constitute the "Offer"), as
set forth in this combined Amendment No. 2 to the Schedule 14D-1 and Amendment
No. 3 to the Schedule 13D. Capitalized terms not defined herein have the
meanings assigned thereto in the Original Filings.
ITEM 1. SECURITY AND SUBJECT COMPANY.
Item 1(b) of the Schedule 14D-1 is hereby amended and supplemented as
follows:
The information set forth in the Introduction and Section 1 ("Amended
Terms of the Offer") of the Supplement, attached hereto as Exhibit (a)(12),
is incorporated herein by reference.
Item 1(c) of the Schedule 14D-1 is hereby amended and supplemented as
follows:
The information set forth in Section 3 ("Price Range of the Shares;
Dividends on the Shares") of the Supplement is incorporated herein by
reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
Item 3(b) of the Schedule 14D-1 is hereby amended and supplemented as
follows:
On March 27, 1996, Eaton, the Purchaser and the Company entered into
an Agreement and Plan of Merger, dated as of March 27, 1996 (the "Merger
Agreement"), which provides for, among other matters, the Purchaser to
amend the Offer to increase the price offered to $12.50 per Share (and
associated Right), net to the seller in cash, without interest thereon. The
Merger Agreement is attached hereto as Exhibit (c)(5) and is incorporated
herein by reference.
The information set forth in the Introduction, Section 4 ("Certain
Information Concerning the Company"), Section 5 ("Contacts with the Company
since March 19, 1996; Background of the Amended Offer"), Section 6 ("Plans
for the Company"), Section 7 ("The Merger Agreement") and Section 8
("Certain Conditions of the Offer") of the Supplement is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Each of Items 4(a) and 4(b) of the Schedule 14D-1 is hereby amended and
supplemented as follows:
The information set forth in Section 9 ("Source and Amount of Funds")
of the Supplement is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
Each of Items 5(a) and 5(c)-(g) of the Schedule 14D-1 is hereby amended and
supplemented as follows:
The information set forth in the Introduction, Section 4 ("Certain
Information Concerning the Company"), Section 6 ("Plans for the Company")
and Section 7 ("The Merger Agreement") of the Supplement is incorporated
herein by reference.
<PAGE> 3
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
Item 7 of the Schedule 14D-1 is hereby amended and supplemented as follows:
The information set forth in the Introduction, Section 5 ("Contacts
with the Company since March 19, 1996; Background of the Amended Offer"),
Section 7 ("The Merger Agreement") and Section 8 ("Certain Conditions of
the Offer") of the Supplement is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
Each of Items 10(b), 10(c) and 10(e) of the Schedule 14D-1 is hereby
amended and supplemented as follows:
The information set forth in the Introduction and Section 10 ("Certain
Legal Matters") of the Supplement is incorporated herein by reference.
Item 10(f) of the Schedule 14D-1 is hereby amended and supplemented as
follows:
The information set forth in the Supplement, a copy of which is
attached as Exhibit (a)(12) hereto, and the revised Letter of Transmittal,
a copy of which is attached as Exhibit (a)(13) hereto, is incorporated
herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(12) Supplement to the Offer to Purchase, dated March 29, 1996.
(13) Revised Letter of Transmittal.
(14) Revised Notice of Guaranteed Delivery.
(15) Revised Letter, dated March 29, 1996, to brokers, dealers,
commercial banks, trust companies and other nominees.
(16) Revised Letter to be sent by brokers, dealers, commercial banks,
trust companies and other nominees to their clients.
(17) Summary Advertisement as published on March 29, 1996.
(c)(5) Agreement and Plan of Merger, dated as of March 27, 1996, among
Eaton Corporation, Eaton Acquisition Corporation and CAPCO Automotive Products
Corporation.
<PAGE> 4
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: March 29, 1996
EATON CORPORATION
By: /s/ Gerald L. Gherlein
------------------------------------
Name: Gerald L. Gherlein
Title: Executive Vice President and
General Counsel
By: /s/ Earl R. Franklin
------------------------------------
Name: Earl R. Franklin
Title: Secretary
EATON ACQUISITION CORPORATION
By: /s/ Earl R. Franklin
------------------------------------
Name: Earl R. Franklin
Title: Vice President and Secretary
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
---------- -----------------------------------------------------------------------
<C> <C> <S> <C>
(a) (12) Supplement to the Offer to Purchase, dated March 29, 1996..............
(13) Revised Letter of Transmittal..........................................
(14) Revised Notice of Guaranteed Delivery..................................
(15) Revised Letter, dated March 29, 1996, to brokers, dealers, commercial
banks, trust companies and other nominees............................
(16) Revised Letter to be sent by brokers, dealers, commercial banks, trust
companies and other nominees to their clients........................
(17) Summary Advertisement as published on March 29, 1996...................
(c) (5) Agreement and Plan of Merger, dated as of March 27, 1996, among Eaton
Corporation, Eaton Acquisition Corporation and CAPCO Automotive
Products Corporation.................................................
</TABLE>
<PAGE> 1
Supplement to the Offer to
Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
at
AN INCREASED CASH PRICE OF $12.50 NET PER SHARE
by
EATON ACQUISITION CORPORATION
a wholly owned subsidiary of
EATON CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, APRIL 15, 1996, UNLESS THE OFFER IS EXTENDED.
------------------------
THE BOARD OF DIRECTORS OF CAPCO AUTOMOTIVE PRODUCTS CORPORATION HAS
UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY, HAS APPROVED
THE OFFER, ADOPTED THE MERGER AGREEMENT AND RECOMMENDS THAT THE SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES AND APPROVE THE MERGER AGREEMENT.
------------------------
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the expiration of the Offer that
number of shares of Common Stock, par value $0.01 per share (the "Shares"), of
CAPCO Automotive Products Corporation which, when aggregated with the 805,000
Shares currently owned by Eaton Corporation, represent at least a majority of
the total number of outstanding Shares on a fully diluted basis on the date of
purchase (the "Minimum Tender Condition"). The Offer is also subject to other
terms and conditions contained herein. See "Introduction" and Section 8 of this
Supplement.
------------------------
SHARES PREVIOUSLY TENDERED AND NOT PROPERLY WITHDRAWN HAVE BEEN VALIDLY
TENDERED FOR PURPOSES OF THE OFFER.
(Continued on next page)
------------------------
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
March 29, 1996
<PAGE> 2
(Continued from previous page)
IMPORTANT
ON MARCH 27, 1996, EATON CORPORATION ("PARENT"), EATON ACQUISITION
CORPORATION AND CAPCO AUTOMOTIVE PRODUCTS CORPORATION (THE "COMPANY") ENTERED
INTO AN AGREEMENT AND PLAN OF MERGER (THE "MERGER AGREEMENT") WHICH CONTAINS THE
TERMS AND CONDITIONS DESCRIBED IN SECTION 7 OF THIS SUPPLEMENT.
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (and the associated Rights (as defined herein) and, unless the context
otherwise requires, all references to Shares is deemed to include Rights) should
either (1) complete and sign the related revised GREEN Letter of Transmittal or
original BLUE Letter of Transmittal (or a facsimile of either) in accordance
with the instructions in such Letter of Transmittal and mail or deliver such
Letter of Transmittal (or such facsimile) and any other required documents,
together with the certificate(s) representing the tendered Shares and, if
separate, the certificate(s) representing the associated Rights, to the
Depositary or tender such Shares (and Rights, if applicable) pursuant to the
procedure for book-entry transfer set forth in Section 2 of the Offer to
Purchase or (2) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such shareholder. A
shareholder having Shares and, if applicable, the associated Rights registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such shareholder desires to tender such Shares and, if applicable,
the associated Rights.
The Company has advised Parent that it has taken all necessary action
pursuant to the Rights Agreement (as defined herein) to provide that no
"Triggering Event" or "Distribution Date" (as such terms are defined in the
Rights Agreement) will occur, in each case as a result of the announcement,
commencement or consummation of the Offer or Merger, the execution or delivery
of the Merger Agreement or the consummation of the transactions contemplated
thereby. Unless separate certificates for the Rights are issued, a tender of
Shares will also constitute a tender of the associated Rights. Pursuant to the
Rights Agreement, the Rights will expire upon consummation of the Merger.
A shareholder who desires to tender Shares and Rights and whose
certificates for such Shares (and associated Rights) are not immediately
available or who cannot comply in a timely manner with the procedure for
book-entry transfer prior to the expiration of the Offer, may tender such Shares
(and associated Rights) by following the procedure for guaranteed delivery set
forth in Section 2 of the Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Supplement. Additional copies of
this Supplement, the Offer to Purchase, the Letter of Transmittal and the Notice
of Guaranteed Delivery and other related materials may be obtained from the
Information Agent or from brokers, dealers, commercial banks and trust
companies.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Introduction............................................................................ 1
The Amended Offer....................................................................... 3
1. 3
Amended Terms of the Offer........................................................
2. 3
Procedure for Tendering Shares....................................................
3. 4
Price Range of the Shares; Dividends on the Shares................................
4. 4
Certain Information Concerning the Company........................................
5. 4
Contacts with the Company since March 19, 1996; Background of the Amended Offer...
6. 5
Plans for the Company.............................................................
7. 5
The Merger Agreement..............................................................
8. 15
Certain Conditions of the Offer...................................................
9. 17
Source and Amount of Funds........................................................
10. 17
Certain Legal Matters.............................................................
11. 17
Miscellaneous.....................................................................
</TABLE>
<PAGE> 4
To the Holders of Common Stock
(including the Associated Preferred
Stock Purchase Rights) of
CAPCO Automotive Products Corporation:
INTRODUCTION
The following information amends and supplements the Offer to Purchase
dated March 19, 1996 (the "Offer to Purchase") of Eaton Acquisition Corporation,
a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Eaton
Corporation, an Ohio corporation ("Parent"). Pursuant to this Supplement to the
Offer to Purchase (the "Supplement"), the Purchaser is now offering to purchase
all outstanding shares of Common Stock, par value $0.0l per share (the
"Shares"), of CAPCO Automotive Products Corporation, a Michigan corporation (the
"Company"), together with the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of April 30, 1994,
between the Company and Harris Trust and Savings Bank, as Rights Agent (the
"Rights Agreement"), at a price of $12.50 per Share (and associated Right), net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase, as amended and supplemented
by this Supplement, and in the related original or revised Letters of
Transmittal (which, together with the Offer to Purchase and the Supplement
constitute the "Offer"). ALL REFERENCES HEREIN TO RIGHTS SHALL BE DEEMED TO
INCLUDE ALL BENEFITS THAT MAY INURE TO HOLDERS OF THE RIGHTS PURSUANT TO THE
RIGHTS AGREEMENT AND, UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES
HEREIN TO SHARES SHALL INCLUDE THE ASSOCIATED RIGHTS.
Except as otherwise set forth in this Supplement and in the revised Letter
of Transmittal, the terms and conditions previously set forth in the Offer to
Purchase remain applicable in all respects to the Offer, and the Supplement
should be read in conjunction with the Offer to Purchase. Unless the context
requires otherwise, capitalized terms used herein but not otherwise defined
herein have the meaning given to such terms in the Offer to Purchase.
The Purchaser, Parent and the Company have entered into an Agreement and
Plan of Merger, dated as of March 27, 1996 (the "Merger Agreement"), which
provides for, among other things, (i) an increase in the price per Share to be
paid pursuant to the Offer from $11.00 per Share pursuant to the Offer that was
originally announced on March 19, 1996 (the "Original Offer") to $12.50 per
Share, net to the seller in cash, without interest thereon, (ii) the amendment
and restatement of the conditions to the Offer as set forth in their entirety in
Section 8 of this Supplement and (iii) the merger of the Purchaser with and into
the Company (the "Merger") following the consummation of the Offer. In the
Merger, each then outstanding Share (other than Shares held by Parent, the
Purchaser, any wholly owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly owned subsidiary of the Company) shall
be cancelled and retired and shall be converted into the right to receive cash
in the same amount as is received per Share in the Offer, and the Company would
become a wholly owned subsidiary of Parent. See Section 7 of this Supplement.
THE COMPANY HAS REPRESENTED THAT THE BOARD OF DIRECTORS OF THE COMPANY (THE
"COMPANY BOARD") HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY, HAS
APPROVED THE OFFER, ADOPTED THE MERGER AGREEMENT AND RECOMMENDS THAT THE
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES AND APPROVE THE MERGER
AGREEMENT.
CS First Boston Corporation ("First Boston") has delivered to the Company
Board its written opinion, dated March 27, 1996, that, based upon and subject to
the information contained in such opinion, as of such date, the consideration to
be received by the shareholders of the Company (other than Parent or the
Purchaser) in the Offer and the Merger is fair to such shareholders from a
financial point of view.
In the Merger Agreement, the Company represents and warrants to Parent and
the Purchaser that the Company has taken all necessary action pursuant to the
Rights Agreement to provide that no "Triggering Event" or "Distribution Date"
(as such terms are defined in the Rights Agreement) will occur, in each case as
a result of the announcement, commencement or consummation of the Offer or
Merger, the execution or
1
<PAGE> 5
delivery of the Merger Agreement or the consummation of the transactions
contemplated by the Merger Agreement. Pursuant to the Rights Agreement, the
Rights will expire upon consummation of the Merger. The Company also represents
in the Merger Agreement that Section 780 of Chapter 7A and Chapter 7B of the
Michigan Business Corporation Act (the "MBCA") are not applicable to the Company
and that the Company Board has not taken any action to become subject to the
requirements of such statutes.
THEREFORE, THE OFFER IS NO LONGER SUBJECT TO THE RIGHTS CONDITION, THE
BUSINESS COMBINATION CONDITION OR THE CONTROL SHARE CONDITION (EACH AS DEFINED
IN THE OFFER TO PURCHASE) INCLUDED IN THE OFFER TO PURCHASE. THE OFFER IS NOW
CONDITIONED UPON, AMONG OTHER THINGS, THE MINIMUM TENDER CONDITION OF THERE
BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE
OFFER THAT NUMBER OF SHARES (THE "MINIMUM NUMBER OF SHARES") WHICH, WHEN
AGGREGATED WITH THE 805,000 SHARES CURRENTLY OWNED BY PARENT, REPRESENT AT LEAST
A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON
THE DATE OF PURCHASE. THE OFFER REMAINS SUBJECT TO CERTAIN OTHER TERMS AND
CONDITIONS CONTAINED HEREIN IN ADDITION TO THE MINIMUM TENDER CONDITION. SEE
SECTION 8 OF THIS SUPPLEMENT.
Procedures for tendering shares are set forth in Section 2 of this
Supplement and Section 2 of the Offer to Purchase. Tendering shareholders will
not be obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the revised GREEN Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer. However, any tendering shareholder or
other payee who fails to complete and sign the Substitute Form W-9 that is
included in the revised GREEN Letter of Transmittal may be subject to a required
backup federal income tax withholding of 31% after gross proceeds payable to
such shareholder or other payee pursuant to the Offer. See Section 5 of the
Offer to Purchase. The Purchaser will pay all fees and expenses of Smith Barney
Inc. ("Smith Barney"), which is acting as Dealer Manager for the Offer (the
"Dealer Manager"), Chemical Mellon Shareholder Services, L.L.C., which is acting
as the Depositary (the "Depositary"), and Georgeson & Company Inc., which is
acting as Information Agent for the Offer (the "Information Agent"), incurred in
connection with the Offer. See Section 16 of the Offer to Purchase.
Shareholders who have previously validly tendered and not properly
withdrawn their Shares pursuant to the Offer are not required to take any
further action, except as may be required by the Guaranteed Delivery procedure
of Section 2 of the Offer to Purchase if such procedure was utilized. If Shares
are accepted for payment and paid for by the Purchaser pursuant to the Offer,
such shareholders will receive, subject to the conditions of the Offer, the
increased tender price of $12.50 per Share. See Section 3 of the Offer to
Purchase for the procedures to properly withdraw Shares tendered pursuant to the
Offer.
Based on the representations and warranties of the Company contained in the
Merger Agreement, as of March 15, 1996, there were 11,061,350 Shares issued and
outstanding and 523,600 Shares reserved for issuance pursuant to outstanding
stock options granted under the Company's 1994 Stock Incentive Plan. Parent
currently beneficially owns an aggregate of 805,000 Shares, representing
approximately 7.0% of the Shares outstanding on a fully diluted basis based on
such representations and warranties. Based on this information, the Minimum
Tender Condition will be satisfied if at least 4,987,476 Shares are validly
tendered and not properly withdrawn on or prior to the Expiration Date. However,
the actual Minimum Number of Shares will depend on the facts as they exist on
the date of purchase. If the Minimum Tender Condition is satisfied, the
Purchaser will be able to approve the Merger without the affirmative vote of the
holders of any other Shares.
Pursuant to the Merger Agreement, Parent has agreed to withdraw and rescind
its notice dated March 13, 1996 nominating seven directors for election as
directors at the Company's 1996 annual meeting of shareholders and the related
form of proxy statement. Parent has given oral notice to the Commission that it
is withdrawing such proxy statement.
The Offer is conditioned upon the fulfillment or waiver of certain
conditions described herein. See Section 8 of this Supplement. The Offer will
expire at 12:00 Midnight, New York City time, on Monday, April 15, 1996, unless
extended.
THE OFFER TO PURCHASE AND THE REVISED GREEN LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ IN CONJUNCTION WITH THIS SUPPLEMENT
BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
2
<PAGE> 6
THE AMENDED OFFER
1. AMENDED TERMS OF THE OFFER
Sections 1 and 13 of the Offer to Purchase are amended and supplemented by
this Section 1 of this Supplement.
In connection with the Merger Agreement, the price per Share to be paid
pursuant to the Offer has been increased from $11.00 per Share to $12.50 per
Share, net to the seller in cash, without interest thereon. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is further
extended or amended pursuant to the Merger Agreement, the terms and conditions
of any extension or amendment), the Purchaser will accept for payment and pay
the increased price for all of the Shares validly tendered prior to the
Expiration Date (as herein defined) and not theretofore properly withdrawn in
accordance with Section 3 of the Offer to Purchase (including Shares tendered
prior to the date of this Supplement). The term "Expiration Date" means 12:00
Midnight, New York City time, on Monday, April 15, 1996 unless and until the
Purchaser, subject to the terms of the Merger Agreement, shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire. See Section 7 of this Supplement for a
description of the provisions of the Merger Agreement regarding extensions of
the Offer by the Purchaser.
Pursuant to the Merger Agreement, the Company has agreed to furnish the
Purchaser with mailing labels, security position listings, any non-objecting
beneficial owner lists and any available listing or computer list containing the
names and addresses of the record holders of the Shares as of the most recent
practicable date and shall furnish the Purchaser with such additional
information (including, but not limited to, updated lists of holders of Shares
and their addresses, mailing labels and lists of security positions and
non-objecting beneficial owner lists) and such other assistance as the Purchaser
or its agents may reasonably request in communicating the Offer to the Company's
record and beneficial shareholders. This Supplement, the revised GREEN Letter of
Transmittal and other relevant materials will be mailed by the Purchaser to
record holders of Shares whose names appear on the Company's shareholder list
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Tender Condition as set forth above in the Introduction and in Section 8
of this Supplement. The Purchaser reserves the right (but shall not be
obligated) to waive any or all of such conditions, except that the Purchaser may
not waive the Minimum Tender Condition without the prior written consent of the
Company.
2. PROCEDURE FOR TENDERING SHARES
Section 2 of the Offer to Purchase is amended and supplemented by this
Section 2 of this Supplement.
Tendering shareholders should use the revised GREEN Letter of Transmittal
and the revised PINK Notice of Guaranteed Delivery included with this
Supplement. However, to the extent either of the revised GREEN Letter of
Transmittal and the revised PINK Notice of Guaranteed Delivery is not available,
tendering shareholders may continue to use the BLUE Letter of Transmittal and
the GREEN Notice of Guaranteed Delivery that were provided with the Offer to
Purchase. Although such BLUE Letter of Transmittal refers only to the Offer to
Purchase, shareholders using such document to tender their shares will
nevertheless receive $12.50 net per Share in cash for each Share validly
tendered and not properly withdrawn and accepted for payment pursuant to the
Offer, subject to the conditions of the Offer, and will be able to tender their
shares pursuant to the Offer until 12:00 Midnight, New York City time, on
Monday, April 15, 1996 (or such later date to which the Offer may be extended).
In the Merger Agreement, the Company represents and warrants to Parent and
the Purchaser that the Company has taken all necessary action pursuant to the
Rights Agreement to provide that no Triggering Event or Distribution Date will
occur, in each case as a result of the announcement, commencement or
3
<PAGE> 7
consummation of the Offer or Merger, the execution or delivery of the Merger
Agreement or the consummation of the transactions contemplated thereby.
Accordingly, the Rights will continue to be evidenced by the certificates for
Shares and the requirement for a separate tender of Rights described in the
Offer to Purchase will not apply unless a Distribution Date occurs for reasons
unrelated to the Offer and the Merger. Unless separate certificates for Rights
are issued, a tender of Shares will also constitute a tender of the associated
Rights. See Section 2 of the Offer to Purchase for a discussion of the
procedures for tendering Rights in the event that a Distribution Date occurs and
separate certificates for Rights are distributed to shareholders prior to the
date of tender pursuant to the Offer. Pursuant to the Rights Agreement, the
Rights will expire upon consummation of the Merger.
SHAREHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED SHARES PURSUANT TO THE
OFFER USING THE BLUE LETTER OF TRANSMITTAL OR THE GREEN NOTICE OF GUARANTEED
DELIVERY AND WHO HAVE NOT PROPERLY WITHDRAWN SUCH SHARES HAVE VALIDLY TENDERED
SUCH SHARES FOR THE PURPOSES OF THE OFFER, AS AMENDED, AND NEED NOT TAKE ANY
FURTHER ACTION, EXCEPT AS MAY BE REQUIRED BY THE GUARANTEED DELIVERY PROCEDURE
DESCRIBED IN SECTION 2 OF THE OFFER TO PURCHASE IF SUCH PROCEDURE WAS UTILIZED.
IF SHARES ARE ACCEPTED FOR PAYMENT AND PAID FOR BY THE PURCHASER PURSUANT TO THE
OFFER, SUCH SHAREHOLDERS WILL RECEIVE, SUBJECT TO THE CONDITIONS OF THE OFFER,
THE INCREASED TENDER PRICE OF $12.50 PER SHARE, WITHOUT INTEREST THEREON, LESS
ANY APPLICABLE WITHHOLDING TAXES.
See Section 3 of the Offer to Purchase for the procedures for withdrawing
Shares tendered pursuant to the Offer.
3. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
Section 6 of the Offer to Purchase is amended and supplemented by this
Section 3 of this Supplement.
The high and low sales prices per Share on the NYSE reported by the Dow
Jones News Service during the first quarter of the fiscal year ending December
31, 1996 (through March 28, 1996) were $6.50 and $12.75, respectively. On March
26, 1996, the last full trading day prior to the announcement of the execution
of the Merger Agreement, the closing sale price per Share reported on the NYSE
by the Dow Jones News Service was $12.25. On March 28, 1996, the last full
trading day prior to the mailing of this Supplement, the closing sale price per
Share reported on the NYSE by the Dow Jones News Service was $12.375.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
4. CERTAIN INFORMATION CONCERNING THE COMPANY
THE RIGHTS. In the Merger Agreement, the Company represents and warrants
to Parent and the Purchaser that the Company has taken all necessary action
pursuant to the Rights Agreement to provide that no Triggering Event or
Distribution Date will occur, in each case as a result of the announcement,
commencement or consummation of the Offer or Merger, the execution or delivery
of the Merger Agreement or the consummation of the transactions contemplated
thereby. Pursuant to the Rights Agreement, the Rights will expire upon
consummation of the Merger. See Section 7 of this Supplement.
5. CONTACTS WITH THE COMPANY SINCE MARCH 19, 1996; BACKGROUND OF THE AMENDED
OFFER
Section 11 of the Offer to Purchase is amended and supplemented by this
Section 4 of this Supplement.
On March 21, 1996, an outside director of the Company contacted Parent's
Chairman and Chief Executive Officer and suggested that the parties meet to
discuss a possible acquisition of the Company by Parent.
On March 22, 1996, two outside directors of the Company and the Company's
advisors met with Parent's Chairman and Chief Executive Officer and other
representatives of Parent. During that meeting one of the outside directors of
the Company and Parent's Chairman and Chief Executive Officer discussed that it
would be in the best interest of both companies to negotiate an acquisition
transaction, however no agreement was reached with respect to the terms of any
such transaction.
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On March 25, 1996, representatives of Parent and the Company and their
respective legal advisors resumed discussions regarding the proposed terms of an
acquisition of the Company by Parent. Later that day, Parent provided the
Company with a draft of the Merger Agreement. Over the next two days,
representatives of Parent and its legal advisors negotiated the terms and
conditions of the Merger Agreement with representatives of the Company and its
legal advisors.
On the morning of March 27, 1996, the Board of Directors of the Company
approved the Merger Agreement. On March 27, 1996, the Merger Agreement was
executed and the parties issued a joint press release with respect thereto.
6. PLANS FOR THE COMPANY
Section 12 of the Offer to Purchase is amended and supplemented by this
Section 6 of this Supplement.
Pursuant to the Merger Agreement, Parent, the Purchaser and the Company
have agreed, among other things, that Parent shall be entitled to modify the
composition of the Company Board to include nominees of Parent following
consummation of the Offer. See Section 7 of this Supplement.
7. THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is
attached as Exhibit (c)(5) to the Schedule 14D-1 to which this Supplement is an
exhibit and is incorporated herein by reference. Such summary is qualified in
its entirety by reference to the Merger Agreement. Terms not defined herein have
the meaning ascribed to them in the Merger Agreement.
THE AMENDED OFFER. In the Merger Agreement, Parent and the Purchaser
agree, among other things, to amend the Offer (i) to reflect the increase in the
purchase price offered to $12.50 per Share, net to the seller in cash and (ii)
to modify the conditions of the Offer to conform to the conditions to the Offer
as set forth in Section 8 of this Supplement. The obligation of Parent to accept
for payment or pay for any Share tendered pursuant to the Offer is subject only
to the satisfaction of the conditions set forth in Section 8 of this Supplement.
Without the prior written consent of the Company, the Purchaser may not (i)
decrease the price per Share or change the form of consideration payable in the
Offer, (ii) decrease the number of Shares sought to be purchased in the Offer,
(iii) change the conditions set forth in Section 8 of this Supplement, (iv)
waive the Minimum Tender Condition, (v) impose additional conditions to the
Offer, or (vi) amend any other term of the Offer in any manner adverse to the
holders of the Shares. Subject to the terms of the Offer and the Merger
Agreement and the satisfaction of all the conditions of the Offer as of any
expiration date, the Purchaser will accept for payment and pay for all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after such expiration date of the Offer; provided that the Purchaser shall have
the right, in its sole discretion, to extend the Offer from time to time for up
to a maximum of 10 additional business days, notwithstanding the prior
satisfaction of the conditions of the Offer. Each of Parent and the Purchaser
also agreed to use its reasonable best efforts to avoid the occurrence of any
event set forth in Section 8 of this Supplement or to cure any such event that
shall have occurred.
The Company has represented to Parent in the Merger Agreement that the
Company Board, at a meeting duly called and held, has (i) determined by
unanimous vote of its directors that each of the transactions contemplated by
the Merger Agreement, including each of the Offer and the Merger, is fair to and
in the best interests of the Company and its shareholders, (ii) approved the
Offer and adopted the Merger Agreement in accordance with the MBCA, (iii)
recommended acceptance of the Offer and approval of the Merger Agreement by the
Company's shareholders (if such approval is required by applicable law), and
(iv) taken all other action necessary to render the Rights inapplicable to the
Offer and the Merger; provided, however, that such recommendation and approval
may be withdrawn, modified or amended to the extent that the Company Board
determines in good faith, upon advice from its outside counsel, that failure to
take such action would be a breach of the Company Board's fiduciary obligations
under applicable law. The Company further represented that, prior to the
execution of the Merger Agreement, First Boston has delivered to the Company
Board its written opinion that the consideration to be received for the Shares
(other than Shares held by Parent or the Purchaser, any wholly owned subsidiary
of Parent or the Purchaser, in treasury of the Company or by any wholly owned
subsidiary of the Company) pursuant to the Offer and the Merger is fair to the
Company's shareholders from a financial point of view.
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The Merger Agreement provides that Parent, upon the payment by the
Purchaser for Shares pursuant to the Offer, and from time to time thereafter, is
entitled to designate such number of directors, rounded up to the next whole
number, on the Company Board as is equal to the product of the total number of
directors on the Company Board (determined after giving effect to the directors
so elected pursuant to such provision) multiplied by the percentage that the
aggregate number of Shares beneficially owned by Parent or its affiliates bears
to the total number of fully diluted Shares then outstanding. The Company shall,
upon request of Parent, promptly take all actions necessary to cause Parent's
designees to be so elected, including, if necessary, seeking the resignations of
one or more existing directors; provided, however, that prior to the time the
Merger becomes effective (the "Effective Time"), the Company Board shall always
have at least two members who are neither officers, directors, shareholders or
designees of the Purchaser or any of its affiliates ("Purchaser Insiders"). If
the number of directors who are not Purchaser Insiders is reduced below two
prior to the Effective Time, the remaining director who is not a Purchaser
Insider will be entitled to designate a person to fill such vacancy who is not
an officer, director, shareholder or designee of the Purchaser or any of its
affiliates and who will be a director not deemed to be a Purchaser Insider for
all purposes of the Merger Agreement. Following the election or appointment of
Parent's designees and prior to the Effective Time, any amendment of the
Articles of Incorporation or By-Laws of the Company or amendment or 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 the
Purchaser or waiver of any of the Company's rights thereunder or any other
consent or action of the Company Board relating to the transactions contemplated
by the Merger Agreement which would reasonably be expected to have a material
adverse effect on the shareholders of the Company (other than Parent or the
Purchaser), will require the concurrence of a majority of the directors of the
Company then in office who are not Purchaser Insiders (or in the case where
there are two or fewer directors who are not Purchaser Insiders, the concurrence
of one director who is not a Purchaser Insider).
THE MERGER. The Merger Agreement provides that at the Effective Time the
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the surviving corporation (the "Surviving Corporation"). At the
option of Parent, and provided that such amendment does not delay the Effective
Time, the Merger may be structured so that the Company will be merged with and
into the Purchaser or another direct or indirect wholly owned subsidiary of
Parent, with the Purchaser or such other subsidiary of Parent continuing as the
Surviving Corporation; provided, however, that the Company will be deemed not to
have breached any of its representations and warranties under the Merger
Agreement if and to the extent such breach would have been attributable to such
election.
The Articles of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation, until thereafter amended in accordance with the
provisions thereof and of the Merger Agreement and applicable law. Subject to
the provisions of the Merger Agreement relating to indemnification of directors
and officers, the By-Laws of the Purchaser in effect at the time of the
Effective Time shall be the By-Laws of the Surviving Corporation until amended
in accordance with the provisions thereof and applicable law.
Subject to applicable law, the directors of the Purchaser immediately prior
to the Effective Time will be the initial directors of the Surviving Corporation
and will hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal, and the officers of
the Company immediately prior to the Effective Time will be the initial officers
of the Surviving Corporation and will hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
By virtue of the Merger and without any action on the part of the holders
thereof, at the Effective Time, each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares held by Parent, the
Purchaser, any wholly owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly owned subsidiary of the Company which
Shares, by virtue of the Merger and without any action on the part of the holder
thereof, will be cancelled and retired and will cease to exist with no payment
being made with respect thereto) will be cancelled and retired and will be
converted into the right to receive $12.50 net per Share in cash, payable to the
holder thereof, without interest thereon (the "Merger Price"), upon surrender of
the certificate formerly representing such Share. At the Effective Time, each
share
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of common stock of the Purchaser, par value $.01 per share, issued and
outstanding immediately prior to the Effective Time will, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and non-assessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
The Merger Agreement provides that prior to the Effective Time, the Company
Board (or, if appropriate, any Committee thereof) will adopt appropriate
resolutions and take all other actions necessary to provide for the
cancellation, effective at the Effective Time, of all the outstanding stock
options, stock appreciation rights, limited stock appreciation rights and
performance units (the "Options") heretofore granted under any stock option,
performance unit or similar plan of the Company (the "Stock Plans"). Pursuant to
the Merger Agreement, immediately prior to the Effective Time, (i) each Option,
whether or not then vested or exercisable, will no longer be exercisable but
will entitle each holder thereof, in cancellation and settlement therefor, to
payments in cash (subject to any applicable withholding taxes, the "Cash
Payment"), at the Effective Time, equal to the product of (x) the total number
of Shares subject or related to such Option, whether or not then vested or
exercisable, and (y) the excess of the Merger Price over the exercise price per
Share subject or related to such Option, each such Cash Payment to be paid to
each holder of an outstanding Option at the Effective Time; provided,
however,that any Person subject to Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") will be provided with a cash compensation
arrangement providing such individual with the opportunity to receive a cash
payment equal to the benefits of which he or she would be deprived by reason of
Section 16(b) of the Exchange Act, and (ii) each Share previously issued in the
form of grants of restricted stock or grants of contingent shares will fully
vest. As provided in the Merger Agreement, the Stock Plans and any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any subsidiary will terminate
as of the Effective Time. The Company has agreed to take all reasonable steps to
ensure that none of the Parent, the Company or any of their respective
subsidiaries is or will be bound by any Options, other options, warrants, rights
or agreements which would entitle any person, other than Parent or its
affiliates, to own any capital stock of the Surviving Corporation or any of its
subsidiaries or to receive any payment in respect thereof. The Company further
agreed to use its reasonable best efforts to obtain all necessary consents to
ensure that after the Effective Time, the only rights of the holders of Options
to purchase Shares in respect of such Options will be to receive the Cash
Payment in cancellation and settlement thereof.
The Merger Agreement further provides that all Stock Plans will terminate
as of the Effective Time and the Company will ensure that following the
Effective Time no holder of an Option or any participant in any Stock Plans will
have any right thereunder to acquire any capital stock of the Company, Parent or
the Surviving Corporation.
If required by applicable law in order to consummate the Merger, pursuant
to the Merger Agreement, the Company will (i) convene a special meeting of its
shareholders as soon as practicable following the acceptance for payment of and
payment for Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the Merger Agreement; (ii) prepare and file
with the Securities and Exchange Commission (the "Commission") a preliminary
proxy statement relating to the Merger Agreement, and use its reasonable best
efforts (x) to obtain and furnish the information required to be included by the
Commission in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by the
Commission with respect to the preliminary proxy statement and to cause a
definitive proxy statement (the "Proxy Statement") to be mailed to its
shareholders and (y) subject to the fiduciary duties of the Company Board under
applicable law, to obtain the necessary approvals of the Merger and the Merger
Agreement by its shareholders; and (iii) subject to the fiduciary obligations of
the Company Board under applicable law as provided in the Merger Agreement,
include in the Proxy Statement the recommendation of the Company Board that
shareholders of the Company vote in favor of the approval of the Merger
Agreement. Parent has agreed in the Merger Agreement that it will vote, or cause
to be voted, all of the Shares then owned by it, the Purchaser or any of its
other subsidiaries in favor of the approval of the Merger Agreement.
The Merger Agreement further provides that, notwithstanding the foregoing,
if Parent, the Purchaser or any other subsidiary of Parent acquires at least 90%
of the outstanding shares of each outstanding class of
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capital stock of the Company pursuant to the Offer, the parties to the Merger
Agreement will take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the acceptance for payment of and
payment for the Shares by the Purchaser pursuant to the Offer without a meeting
of the shareholders of the Company, in accordance with Section 735 of the MBCA
and Section 253 of the General Corporation Law of Delaware (the "GCL").
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Merger Agreement
contains customary representations and warranties with respect to the Company,
including, among other things, (i) with respect to the organization, corporate
powers and qualifications of the Company and each of its subsidiaries; (ii) with
respect to the capitalization of the Company and its subsidiaries; (iii) that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated therein have been
duly and validly authorized and approved by the Company Board and that no other
corporate proceedings on the part of the Company are necessary to authorize or
approve the Merger Agreement or to consummate the transactions contemplated
therein (other than, with respect to the Merger, the approval of the Merger
Agreement by the affirmative vote of the holders of a majority of the then
outstanding Shares entitled to vote thereon, to the extent required by
applicable law); (iv) with respect to the absence of any conflict between the
terms and provisions of the Merger Agreement and the transactions contemplated
thereby with any laws, regulations, agreements, contracts or other instruments
and obligations; (v) with respect to the accuracy of the documents filed with
the Commission; (vi) with respect to the Company's financial statements and
financial condition; (vii) with respect to the compliance of the Company and its
subsidiaries with certain laws relating to the protection of the environment;
(viii) that the Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities (as
defined in the Merger Agreement) required for the conduct of their respective
businesses and are otherwise in compliance with all applicable laws; (ix) with
respect to the absence of certain litigation with respect to the Company; (x)
with respect to the accuracy and completeness of the information supplied by the
Company in connection with the Offer, the Proxy Statement or any other document
to be filed with the Commission or any other Governmental Entity in connection
with the transactions contemplated by the Merger Agreement; (xi) that Section
780 of Chapter 7A and Chapter 7B of the MBCA are not applicable to the Company
and the Company Board has not taken any action which would subject the Company
to the requirements of such statutes; (xii) with respect to the Company's
employee benefit plans; (xiii) with respect to certain tax returns required to
be filed and certain taxes required to be paid by the Company and its
subsidiaries; (xiv) that the Company has taken all necessary action pursuant to
the Rights Agreement to provide that no Triggering Event or Distribution Date
(as each term is defined in the Rights Agreement) will occur, in each case as a
result of the announcement, commencement or consummation of the Offer or Merger,
the execution or delivery of the Merger Agreement or the consummation of the
transactions contemplated thereby; (xv) with respect to the absence of any
broker or other fees or commissions, other than fees in connection with First
Boston's engagement; and (xvi) the absence of certain events since December 31,
1995 including that there has not been any material adverse effect on the
business, assets, financial condition or results of operations of the Company (a
"Material Adverse Effect") (other than changes in conditions generally
applicable to the industries in which the Company and its subsidiaries are
involved or general economic conditions), and the business of the Company and
each of its subsidiaries have been conducted only in the ordinary course.
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. The Merger
Agreement contains customary representations and warranties by Parent and the
Purchaser, including, among other things, (i) with respect to the organization,
corporate powers and qualifications of Parent and Purchaser; (ii) that each of
Parent and the Purchaser has the necessary corporate power and authority to
execute and deliver the Merger Agreement and to consummate the transactions
contemplated therein; (iii) with respect to the absence of any conflict between
the terms and provisions of the Merger Agreement and the transactions
contemplated thereby with any laws, regulations, agreements, contracts or other
instruments and obligations; and (iv) that Parent has and will cause the
Purchaser to have the funds necessary to consummate the Offer and the Merger and
the transactions contemplated thereby.
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COVENANTS. The Merger Agreement obligates the Company and its
subsidiaries, from the date of the Merger Agreement until the Effective Time, to
conduct their operations only in the ordinary and usual course of business
consistent with past practice and obligates the Company and its subsidiaries to
use their reasonable efforts to preserve intact their business organizations, to
keep available the services of their present officers and key employees and to
preserve the good will of those having business relationships with them. The
Merger Agreement also contains specific covenants as to certain impermissible
activities of the Company prior to the Effective Time, which provide that the
Company will not (and will not permit any of its subsidiaries to) without the
prior written consent of Parent: (i) adopt any amendment to its Articles of
Incorporation or By-Laws or comparable organizational documents or the Rights
Agreement; (ii) (1) issue, reissue, pledge or sell, or authorize the issuance,
reissuance, pledge or sale of (A) additional shares of capital stock of any
class, or securities convertible into capital stock of any class, or any rights,
warrants or options to acquire any convertible securities or capital stock,
other than the issuance of Shares, in accordance with the terms of the
instruments governing such issuance on the date of the Merger Agreement,
pursuant to the exercise of Options outstanding on the date of the Merger
Agreement, or (B) any other securities in respect of, in lieu of, or in
substitution for, Shares outstanding on the date of the Merger Agreement, or (2)
make any other changes in its capital structure; (iii) declare, set aside or pay
any dividend or other distribution (whether in cash, securities or property or
any combination thereof) in respect of any class or series of its capital stock
other than between any of the Company and any of its wholly owned subsidiaries,
except for the regular quarterly dividend on the Shares not in excess of $0.04
per Share with a record and payment date in accordance with recent practice,
provided that such dividend may not be declared if Shares are accepted for
payment in accordance with the Offer and the Merger Agreement prior to June 1,
1996; (iv) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities; (v) except for (1)
increases in salary, wages and benefits granted to employees of the Company or
its subsidiaries (who are not officers) in conjunction with promotions or other
changes in job status or normal compensation reviews in the ordinary course of
business consistent with past practice, or (2) increases in salary, wages and
benefits to employees of the Company pursuant to collective bargaining
agreements entered into in the ordinary course of business consistent with past
practice: increase the compensation or fringe benefits payable or to become
payable to its directors, officers or employees (whether from the Company or any
of its subsidiaries), or pay or award any benefit not required by any existing
plan or arrangement to any officer, director or employee (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units pursuant to the Stock Plans or otherwise),
or grant any severance or termination pay to any officer, director or other
employee of the Company or any of its subsidiaries (other than as required by
existing agreements or policies disclosed to Parent), or enter into any
employment or severance agreement with, any director, officer or other employee
of the Company or any of its subsidiaries or establish, adopt, enter into, amend
or waive any performance or vesting criteria under any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, savings, welfare, deferred compensation, employment,
termination, severance or other employee benefit plan, agreement, trust, fund,
policy or arrangement for the benefit or welfare of any current or former
directors, officers or current or former employees of the Company or its
subsidiaries (any of the foregoing being an "Employee Benefit Arrangement"),
except in each case to the extent required by applicable law or regulation; (vi)
acquire, sell, lease or dispose of any assets or securities, or enter into any
commitment to do any of the foregoing or enter into any commitment or
transaction outside the ordinary course of business other than transactions
between a wholly owned subsidiary of the Company and the Company or another
wholly owned subsidiary of the Company; (vii) (1) incur, assume or pre-pay any
long-term debt or incur or assume any short-term debt, except that the Company
and its subsidiaries may incur or pre-pay debt in the ordinary course of
business in amounts and for purposes consistent with past practice, (2) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in the
ordinary course of business consistent with past practice, or (3) make any
loans, advances or capital contributions to, or investments in, any other person
except in the ordinary course of business consistent with past practice and
except for loans, advances, capital contributions or investments between any
wholly owned subsidiary of the Company and the Company or another wholly owned
subsidiary of the Company; (viii) other than in the ordinary course of business
consistent with past practice, (1) modify, amend or terminate any
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material contract, (2) except as required by law, waive, release, relinquish,
settle, compromise or assign any material contract (or any of the Company's
rights thereunder), right or claim, or (3) cancel or forgive any indebtedness
owed to the Company or any of its subsidiaries, except in ordinary course of
business consistent with past practice; provided, however, that the Company may
not under any circumstance waive or release any of its rights under any written
confidentiality agreement (other than provisions limiting control-related
activities if the Company Board determines in good faith, upon the advice of its
outside counsel, that its fiduciary duties require it to do so) to which it is a
party; (ix) make any material tax election not required by law or, except as
required by law, settle or compromise any material tax liability; (x) acquire
(by merger, consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof; (xi) enter into
any contract or agreement other than in the ordinary course of business that
would be material to the Company and its subsidiaries taken as a whole; (xii)
except as may be required as a result of a change in law or in generally
accepted accounting principles, make any change in its methods of accounting; or
(xiii) agree in writing or otherwise to take any of the foregoing prohibited
actions or any action which would cause any representation or warranty in the
Merger Agreement to be or become untrue or incorrect in any material respect.
ACCESS TO INFORMATION; CONFIDENTIALITY. The Merger Agreement provides that
until the Effective Time, the Company will give Parent and the Purchaser and
their representatives reasonable access, during normal business hours, to the
offices and other facilities and to the books and records of the Company and its
subsidiaries, subject to Parent and the Purchaser maintaining the
confidentiality of any non-public information disclosed to them.
REASONABLE BEST EFFORTS. Subject to the terms and conditions provided in
the Merger Agreement, each of the Company, Parent and the Purchaser shall
cooperate and use their respective reasonable best efforts to make all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by the Merger
Agreement.
Each of the parties also will use its reasonable best efforts to obtain as
promptly as practicable all Consents (as defined in the Merger Agreement) of any
Governmental Entity or any other person required in connection with, and waivers
of any Violations (as defined in the Merger Agreement) that may be caused by,
the consummation of the transactions contemplated by the Offer and the Merger
Agreement.
PUBLIC ANNOUNCEMENTS. The Merger Agreement provides that the Company, on
the one hand, and Parent and the Purchaser, on the other hand, agree to consult
promptly with each other prior to issuing any press release or otherwise making
any public statement with respect to the Original Offer, the Offer, the Merger
and the other transactions contemplated by the Merger Agreement, agree to
provide to the other party for review a copy of any such press release or
statement, and shall not issue any such press release or make any such public
statement prior to such consultation and review, unless required by applicable
law or any listing agreement with a securities exchange.
EMPLOYEE BENEFIT ARRANGEMENTS. With respect to employee benefit matters,
the Merger Agreement provides that the Company will honor and, from and after
the Effective Time, Parent will cause the Surviving Corporation to honor, all
obligations under specified Employee Benefit Arrangements. Notwithstanding the
foregoing, from and after the Effective Time, subject to the remainder of this
paragraph, the Surviving Corporation will have the right to amend, modify, alter
or terminate any Employee Benefit Arrangements, provided that any such action
will not adversely affect the rights or benefits of any employees or other
beneficiaries which shall have arisen thereunder prior to such amendment,
modification, alteration or termination, and shall not affect any rights or
benefits for which the agreement of the other party or a beneficiary is required
as a condition to any such amendment, modification, alteration or termination;
and provided, further, that neither Parent nor any subsidiary of Parent
(including without limitation the Surviving Corporation) will at any time take
any action to amend, modify, alter or terminate the CAPCO Automotive Products
Corporation Directors Unfunded Deferred Fee Plan, as in effect on March 27,
1996, with respect to any individual who is a participant therein as of such
date, without that individual's written consent. Notwithstanding the foregoing,
for a period of one year following the Effective Time, Parent will cause the
Surviving Corporation to continue to provide to individuals who are employees of
the Company and/or its
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subsidiaries immediately prior to the Effective Time (each, a "Company Employee"
and collectively, the "Company Employees") Fringe Benefits (as defined below)
which are in the aggregate no less favorable than those provided to such
employees as of the date of the Merger Agreement; provided that nothing in this
sentence is deemed to limit or otherwise affect the right of the Surviving
Corporation to terminate the employment or change the place of work,
responsibilities, status or designation of any Company Employee or group of
Company Employees as the Surviving Corporation may determine in the exercise of
its business judgment and in compliance with the terms of any applicable
employment or retainer agreement to which the Company and/or any of its
subsidiaries is presently a party and which was disclosed to Parent, and all
applicable laws. For purposes of all Employee Benefit Arrangements (including
without limitation plans or programs of Parent, the Surviving Corporation and
other affiliates of Parent after the Effective Time), all service with the
Company or any of its subsidiaries prior to the Effective Time will be treated
as service with Parent, the Surviving Corporation and other affiliates of Parent
for purposes of eligibility and vesting thereunder, and Parent, the Surviving
Corporation and the other affiliates of Parent will cause all such Employee
Benefit Arrangements (including without limitation plans or programs of Parent,
the Surviving Corporation and the other affiliates of Parent after the Effective
Time) in which Company Employees participate for the first time after the
Effective Time (x) to waive any pre-existing condition limitations otherwise
applicable after the Effective Time to any Company Employee, and (y) to provide
that any expenses incurred by Company Employees (and their dependents) during
the calendar year of the Effective Time will be taken into account for purposes
of satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions (and like adjustments or limitations on coverage) under such Employee
Benefit Arrangements. "Fringe Benefits" means only the following benefits: the
CAPCO Automotive Products Corporation Incentive Compensation Plan for Management
and any health, dental, pension, vacation, sick pay, prescription drug,
professional membership dues, life insurance, disability, severance, retirement
or savings plan, policy, program or arrangement.
INDEMNIFICATION. Under the Merger Agreement, Parent has agreed that all
rights to indemnification existing in favor of any director or officer of the
Company and its subsidiaries (the "Indemnified Parties"), as provided in their
respective charters or by-laws, will survive the Merger and will continue in
full force and effect for a period of not less than six years from the Effective
Time. After the Effective Time, Parent agrees to cause the Surviving Corporation
to honor all rights to indemnification referred to in the preceding sentence.
Parent has also agreed that the Company, and from and after the Effective Time,
the Surviving Corporation will cause to be maintained in effect for not less
than four years (except as provided in the next immediate sentence) from the
Effective Time the current policies of the directors' and officers' liability
insurance maintained by the Company; provided that the Surviving Corporation may
substitute therefor other policies not less advantageous (other than to a de
minimis extent) to the beneficiaries of the current policies and provided that
such substitution shall not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time; and provided, further,
that the Surviving Corporation shall not be required to pay an annual premium in
excess of 100% of the last annual premium paid by the Company prior to the date
of the Merger Agreement (which the Company represents to be $720,000 for the
12-month period ending May 9, 1996) and if the Surviving Corporation is unable
to obtain the insurance required by this sentence, it shall obtain the greatest
comparable insurance coverage as possible for an annual premium equal to such
maximum amount. Notwithstanding the foregoing, at any time on or after the
second anniversary of the Effective Time, Parent may, at its election, undertake
to provide funds to the Surviving Corporation to the extent necessary so that
the Surviving Corporation may self-insure with respect to the level of insurance
coverage required under the immediately preceding sentence in lieu of causing to
remain in effect any directors' and officers' liability insurance policy.
NOTIFICATION OF CERTAIN MATTERS. Parent and the Company have agreed to
promptly notify each other of (i) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (a) to cause any representation or
warranty contained in the Merger Agreement to be untrue or inaccurate in any
material respect at any time prior to the Effective Time or (b) to cause any
material covenant, condition or agreement under the Merger Agreement not to be
complied with or satisfied in all material respects and (ii) any failure of the
Company or Parent, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under the Merger
Agreement in any material respect; provided, however,
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<PAGE> 15
that no such notification will affect the representations or warranties of any
party or the conditions to the obligations of any party. Each of the Company,
Parent and the Purchaser is also required to 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 the Merger Agreement.
RIGHTS AGREEMENT. The Company covenants and agrees in the Merger Agreement
that it will not (i) redeem the Rights, (ii) amend the Rights Agreement in any
material respect or (iii) take any action which would allow any person other
than Parent or the Purchaser to acquire beneficial ownership of 20% or more of
the Shares without causing a Distribution Date or a Triggering Event to occur.
STATE TAKEOVER LAWS. The Merger Agreement provides that the Company will,
upon the request of the Purchaser, take all reasonable steps to assist in any
challenge by the Purchaser to the validity or applicability to the transactions
contemplated by the Merger Agreement, including the Offer and the Merger, of any
state takeover law.
DISPOSITION OF LITIGATION. Pursuant to the Merger Agreement, the parties
to the Merger Agreement have agreed to immediately dismiss, without prejudice,
with each party bearing its own cost and litigation expenses, all proceedings
pending between them and their affiliates (including their respective
directors), and that each shall thereafter sign and deliver such further papers
as may be necessary to effect such dismissals. The Company further agrees that
it will not settle any litigation currently pending, or commenced after the date
of the Merger Agreement, against the Company or any of its directors by any
shareholder of the Company relating to the Offer, the Merger or the Merger
Agreement, without the prior written consent of Parent. In addition, the Merger
Agreement provides that the Company will not voluntarily cooperate with any
third party which has sought or may hereafter seek to restrain or prohibit or
otherwise oppose the Offer or the Merger and will cooperate with Parent and the
Purchaser to resist any such effort to restrain or prohibit or otherwise oppose
the Offer or the Merger.
PROXY CONTESTS. Pursuant to the Merger Agreement, Parent has agreed to
withdraw and rescind and cause to be withdrawn and rescinded (i) the notice by
Parent, dated March 13, 1996, pursuant to Section 3.5 of the Company's By-Laws,
(ii) the notice by Cede & Co., dated March 14, 1996, pursuant to Section 3.5 of
the Company's By-Laws, and (iii) the Schedule 14A filed with the Commission, in
each case, relating to the nomination of the persons named in such notices for
election to the Company Board at the Annual Meeting of the Company's
Shareholders. Pursuant to the Merger Agreement, the Company announced that it
had indefinitely postponed its annual meeting of shareholders previously
scheduled for May 14, 1996, and to take no action unless compelled by legal
process to reschedule such annual meeting or to call a special meeting of
shareholders of the Company except in accordance with the Merger Agreement,
unless and until the Merger Agreement has been terminated in accordance with its
terms.
NO SOLICITATION. The Merger Agreement requires the Company, its affiliates
and their respective officers, directors, employees, representatives and agents
to immediately cease any existing discussions or negotiations, if any, with any
parties with respect to any acquisition or exchange of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries or any business combination with the Company or any of its
subsidiaries. The Merger Agreement further provides that, prior to the Effective
Time, the Company will not authorize or permit any of its subsidiaries or any of
its or its subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to solicit, initiate, knowingly
encourage or actively facilitate, or furnish or disclose non-public information
in furtherance of, any inquiries or the making of any proposal with respect to
any merger, liquidation, recapitalization, consolidation or other business
combination involving the Company or its subsidiaries or acquisition of any
capital stock or any material portion of the assets (except for acquisitions of
assets in the ordinary course of business consistent with past practice) of the
Company or of its subsidiaries, or any combination of the foregoing (an
"Acquisition Transaction") or negotiate, explore or otherwise engage in
substantive discussions with any person (other than the Purchaser, Parent or
their respective directors, officers, employees, agents and representatives)
with respect to any Acquisition Transaction or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by the
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<PAGE> 16
Merger Agreement; provided that the Company may furnish information to, and
negotiate or otherwise engage in substantive discussions with, any party who
delivers a written proposal for an Acquisition Transaction if the Company Board
determines in good faith by a majority vote, based upon advice from its outside
legal counsel, that failing to take such action would constitute a breach of the
fiduciary duties of the Company Board and such proposal is more favorable to the
Company's shareholders from a financial point of view than the transactions
contemplated by the Merger Agreement. The Merger Agreement further provides
that, from and after the execution of the Merger Agreement, the Company will
promptly advise the Purchaser in reasonable detail of the receipt, directly or
indirectly, of any inquiries, discussions, negotiations or proposals relating to
an Acquisition Transaction, including without limitation identifying the offeror
and the terms of any proposal relating to an Acquisition Transaction, and that
the Company will promptly advise Parent of any material development relating to
such proposal, including results of any discussions or negotiations with respect
thereto.
CONDITIONS TO CONSUMMATION OF THE MERGER. Pursuant to the Merger
Agreement, the respective obligations of Parent, the Purchaser and the Company
to consummate the Merger are subject to the satisfaction, at or before the
Effective Time, of each of the following conditions: (i) the shareholders of the
Company have duly approved the transactions contemplated by the Merger
Agreement, if required by applicable law; (ii) the Purchaser has accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
of the Merger Agreement; provided that this condition will be satisfied with
respect to Parent and the Purchaser if the Purchaser fails to accept for payment
or pay for Shares pursuant to the Offer in violation of the terms of the Offer;
(iii) the consummation of the Merger is not restrained, enjoined or prohibited
by any order, judgment, decree, injunction or ruling of a court of competent
jurisdiction or any Governmental Entity and there is not any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity which prevents the consummation of the Merger or has the
effect of making the purchase of Shares illegal; and (iv) any waiting period
(and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") applicable to the Merger has expired or
terminated.
TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time, notwithstanding approval thereof by the shareholders of
the Company (with any termination by Parent also being an effective termination
by the Purchaser): (i) by the mutual written consent of Parent and the Company;
(ii) by the Company if (1) the Purchaser fails to commence the Offer as provided
in Section 1.01 thereof, (2) the Purchaser has not accepted for payment and paid
for Shares pursuant to the Offer in accordance with the terms thereof on or
before June 30, 1996 (provided that if any Governmental Entity has made a
request for additional information under the HSR Act, such date shall be
extended to a date which is 30 days after substantial compliance with such
request, but in no event later than July 31, 1996) (the latest such date being
referred to as the "Outside Date") or (3) the Purchaser fails to purchase
validly tendered Shares in violation of the terms of the Offer or the Merger
Agreement; (iii) by Parent or the Company if the Offer is terminated or
withdrawn pursuant to its terms without any Shares being purchased thereunder;
provided, however, that neither Parent nor the Company may so terminate the
Merger Agreement if such party will have materially breached the Merger
Agreement or, in the case of Parent, if it or the Purchaser is in material
violation of the terms of the Offer; (iv) by Parent or the Company if any court
or other Governmental Entity has 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, provided, that Parent will, if necessary to prevent the
taking of such action, or the enforcement, promulgation, amendment, issuance or
application of any statute, rule, regulation, legislation, order or injunction,
offer to accept an order to divest such of the Company's or its subsidiaries',
as applicable, or Parent's assets and businesses as may be necessary to
forestall such injunction or order and to hold separate such assets and business
pending such divestiture, but only if the amount of such assets and businesses
is not material in relation to the assets or profitability of the Company and
its subsidiaries taken as a whole; (v) by the Company if, prior to the purchase
of Shares pursuant to the Offer in accordance with the terms of the Merger
Agreement, the Company Board approves an agreement to effect a proposal made by
a third party to acquire all the outstanding Shares pursuant to a tender offer
or a merger, or purchase all or substantially all of the
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<PAGE> 17
assets of the Company, on terms which a majority of the members of the Company
Board have determined in good faith (1) based upon the advice of a nationally
recognized investment banker, to be more favorable to the Company and its
shareholders than the transactions contemplated by the Merger Agreement and (2)
based upon the advice from its outside counsel, that failure to approve such
proposal and terminate the Merger Agreement would constitute a breach of
fiduciary duties of the Company Board under applicable law; provided that such
termination will not be effective unless and until the Company has paid to
Parent all of the fees and expenses described below in "Fees and Expenses"; (vi)
by Parent if the Company breaches its covenant relating to actions with respect
to the Rights Agreement; (vii) by the Company prior to the consummation of the
Offer, if (1) any of the representations and warranties of Parent or the
Purchaser contained in the Merger Agreement were untrue or incorrect in any
material respect when made or have since become, and at the time of termination
remain, incorrect in any material respect which breach adversely affect the
ability of Parent or the Purchaser to consummate the Offer and the Merger, or
(2) Parent or the Purchaser has breached or failed to comply in any material
respect with any of their respective obligations under the Merger Agreement,
which breach will not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two business days prior to the date on
which the Offer expires; (viii) by Parent prior to the purchase of Shares
pursuant to the Offer, if (1) there has been a breach of any representation or
warranty on the part of the Company contained in the Merger Agreement which
would reasonably be expected to have a Material Adverse Effect (as defined in
the Merger Agreement) on the Company or which would reasonably be expected to
prevent (or materially delay) the consummation of the Offer, (2) there has been
a breach of any covenant or agreement on the part of the Company contained in
the Merger Agreement which would reasonably be expected to have a Material
Adverse Effect on the Company or which would reasonably be expected to prevent
(or materially delay) the consummation of the Offer, which has not been cured
prior the earlier of (A) 10 days following notice of such breach and (B) two
business days prior to the date on which the Offer expires, or (3) the Company
Board has withdrawn or modified (including by amendment of the Schedule 14D-9
filed by the Company relating to the Offer) in a manner adverse to the Purchaser
its approval or recommendation of the Offer, the Merger Agreement or the Merger
and has not reinstated such approval or recommendation within three business
days thereof, has approved or recommended another offer or transaction, or has
resolved to effect any of the foregoing; (ix) by Parent prior to the purchase of
Shares pursuant to the Offer if the Minimum Tender Condition has not been
satisfied by the expiration date of the Offer and on or prior to such date any
of the following has occurred: (1) the acquisition of the Company by merger,
tender offer or otherwise by any person other than Parent, the Purchaser or any
affiliate thereof (a "Third Party"); (2) the acquisition by a Third Party of
20.0% or more of the assets of the Company and its subsidiaries, taken as a
whole; (3) the acquisition by a Third Party of beneficial ownership of more than
20.0% of the outstanding Shares; (4) the adoption by the Company of a plan of
liquidation or the declaration or payment of an extraordinary dividend; or (5)
the repurchase by the Company or any of its subsidiaries of 20.0% or more of the
outstanding Shares at a price in excess of $12.50 per Share; or (x) by Parent
prior to the purchase of Shares pursuant to the Offer, if the Minimum Tender
Condition has not been satisfied by the expiration date of the Offer and on or
prior to such date any person (other than Parent or the Purchaser) has made a
proposal or public announcement or communication to the Company with respect to
an Acquisition Transaction.
Pursuant to the Merger Agreement, in the event of the termination of the
Merger Agreement, the Merger Agreement will become void and have no effect,
without any liability on the part of any party or its directors, officers or
shareholders, other than certain specified provisions, which shall survive any
such termination; provided that no party would be relieved from liability for
any breach of the Merger Agreement.
FEES AND EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Offer, the Merger Agreement and the
transactions contemplated by the Merger Agreement will be paid by the party
incurring such expenses. In the event that the Merger Agreement is terminated
pursuant to clauses (v), (vi), (viii)(3) or (ix) in the second preceding
paragraph above, then the Company will promptly (and in any event within one
business day after such termination) reimburse Parent for the expenses of Parent
and the Purchaser (including printing fees, filing fees and fees and expenses of
its legal and financial advisors) related to the Original Offer, the Merger
Agreement, the transactions contemplated thereby and any related financing
(collectively, "Expenses") up to a maximum of $500,000 and
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pay Parent a termination fee of $5,000,000 (the "Termination Fee"). In the event
that the Merger Agreement is terminated pursuant to clause (x) in the second
preceding paragraph above and within 12 months of the date of the termination of
the Merger Agreement a transaction constituting an Acquisition Transaction is
consummated or the Company or any of its subsidiaries enters into an agreement
with respect to, approves or recommends or takes any action to facilitate such a
transaction, the Company will promptly (and in any event within one business day
thereafter) reimburse Parent for its Expenses up to a maximum of $500,000 and
pay Parent the Termination Fee. The prevailing party in any legal action
undertaken to enforce the Merger Agreement or any provision thereof will be
entitled to recover from the other party the costs and expenses (including
attorneys' and expert witness fees) incurred in connection with such action.
AMENDMENT. The Merger Agreement may be amended by the Company, Parent and
the Purchaser at any time before or after any approval of the Merger Agreement
by the shareholders of the Company but, after any such approval, no amendment
will be made which decreases the Merger Price or which adversely affects the
rights of the Company's shareholders thereunder without the approval of such
shareholders. The Merger Agreement provides that any amendment or termination of
the Merger Agreement following the election of Parent's designees to the Company
Board requires the approval of a majority of the directors of the Company Board
who are not Purchaser Insiders.
EXTENSION; WAIVER. At any time prior to the Effective Time, the parties to
the Merger Agreement may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any inaccuracies
in the representations and warranties contained therein by any other party or in
any document, certificate or writing delivered pursuant hereto by any other
party or (iii) waive compliance with any of the agreements of any other party or
with any conditions to its own obligations; provided, that any extension by the
Company of the time for the performance of any of the obligations of Parent or
the Purchaser or waiver by the Company following the election of Parent's
designees to the Company Board requires the approval of a majority of the
directors of the Company Board who are not Purchaser Insiders.
8. CERTAIN CONDITIONS OF THE OFFER
Pursuant to the Merger Agreement, the conditions of the Offer contained,
among other places, in the Introduction, Section 14 and Section 15 of the Offer
to Purchase are hereby amended and restated in their entirety as follows:
Notwithstanding any other provisions of the Offer, the Purchaser shall
not be required to accept for payment or pay for any tendered Shares,
unless (i) there are validly tendered and not properly withdrawn prior to
the Expiration Date for the Offer that number of Shares which, when
aggregated with the 805,000 Shares currently beneficially owned by Parent,
represent at least a majority of the total number of outstanding Shares on
a fully diluted basis on the date of purchase (not taking into account the
Rights) and (ii) any applicable waiting period under the HSR Act or under
any applicable foreign statutes or regulations shall have expired or been
terminated. Furthermore, notwithstanding any other provisions of the Offer,
the Purchaser may, subject to the terms of the Merger Agreement, terminate
or amend the Offer or postpone the acceptance for payment of or payment for
tendered Shares if at any time on or after March 27, 1996 (unless otherwise
indicated below) and before the time of payment for any Shares, any of the
following events (each, an "Event") shall occur:
(a) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, enforced, promulgated, amended, issued or deemed applicable to
the Offer, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or Brazilian,
other than the routine application of the waiting period provisions of
the HSR Act to the Offer or to the Merger, that would reasonably be
expected to: (i) make illegal or otherwise prohibit or materially delay
consummation of the Offer or the Merger or seek to obtain material
damages or make materially more costly the making of the Offer, (ii)
prohibit or materially limit the ownership or operation by Parent or the
Purchaser of all or any material portion of the business or assets of
the Company or any of its subsidiaries taken as a whole or compel Parent
or the Purchaser to dispose of or hold separately all or any material
portion
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of the business or assets of Parent or the Purchaser or the Company or
any of its subsidiaries taken as a whole, or seek to impose any material
limitation on the ability of Parent or the Purchaser to conduct its
business or own such assets, (iii) impose material limitations on the
ability of Parent or the Purchaser effectively to acquire, hold or
exercise full rights of ownership of the shares of Shares, including,
without limitation, the right to vote any Shares acquired or owned by
the Purchaser or Parent on all matters properly presented to the
Company's shareholders, or (iv) require divestiture by Parent or the
Purchaser of any Shares; provided, that Parent shall, if necessary to
prevent the taking of such action, or the enforcement, promulgation,
amendment, issuance or application of any statute, rule, regulation,
legislation, order or injunction, offer to accept an order to divest
such of the Company's or its subsidiaries', as applicable, or Parent's
assets and businesses as may be necessary to forestall such injunction
or order and to hold separate such assets and business pending such
divestiture, but only if the amount of such assets and businesses is not
material in relation to the assets or profitability of the Company and
its subsidiaries taken as a whole; or
(b) there shall have occurred any development that has, or would
reasonably be expected to have, a material adverse effect on the
business, assets, financial condition or results of operations of the
Company and its subsidiaries taken as a whole; or
(c) (i) it shall have been publicly disclosed or Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of more than 20.0% of the outstanding Shares has been
acquired by any person (including the Company or any of its subsidiaries
or affiliates) or group (as defined in Section 13(d)(3) under the
Exchange Act), (ii) the Company Board or any committee thereof shall
have withdrawn, or shall have modified or amended in a manner adverse to
Parent or the Purchaser, the approval, adoption or recommendation, as
the case may be, of the Offer, or the Merger Agreement, or approved or
recommended any other takeover proposal or other acquisition of Shares
other than the Offer and the Merger, (iii) any corporation, partnership,
person or other entity or group shall have entered into a definitive
agreement or an agreement in principle with the Company with respect to
a tender offer or exchange offer for any Shares or a merger,
consolidation or other business combination with or involving the
Company or any of its subsidiaries, or (iv) the Company Board or any
committee thereof shall have resolved to do any of the foregoing; or
(d) the Company and the Purchaser and Parent shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the
Merger Agreement shall have been terminated in accordance with its
terms; or
(e) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality shall
not be true and correct, or any such representations and warranties that
are not so qualified shall not be true and correct in any respect which
would reasonably be expected to have a material adverse effect on the
business, assets, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, in each case as if such
representations and warranties were made at the time of such
determination except as to any such representation or warranty which
speaks as of a specific date, which must be untrue or incorrect in the
foregoing respects as of such specific date; or
(f) the Company shall have failed to perform in any material
respect or to comply in any material respect with any of its
obligations, covenants or agreements under the Merger Agreement; or
(g) there shall have occurred, and continued to exist, (i) any
general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange, (ii) any decline of at least
25% in either the Dow Jones Average of Industrial Stocks or the Standard
& Poor's 500 Index from the close of business on the last trading day
immediately preceding the date of the Merger Agreement, (iii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or Brazil and, in the case of
Brazil, would reasonably be expected to have a material adverse effect
on the business, assets, financial condition or results of operations of
the
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Company and its subsidiaries taken as a whole, (iv) a commencement of a
war, armed hostilities or other national or international crisis
directly or indirectly involving the United States or Brazil and, in the
case of Brazil, would reasonably be expected to have a material adverse
effect on the business, assets, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, or (v)
in the case of any of the foregoing clauses (i) through (iv) existing at
the time of the commencement of the Offer, a material acceleration or
worsening thereof.
The foregoing conditions (including those set forth in clauses (i) and (ii)
of the initial paragraph) are for the benefit of Parent and the Purchaser and
may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such conditions and may be waived by Parent or the Purchaser
in whole or in part at any time and from time to time in their reasonable
discretion, in each case, subject to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Purchaser concerning the events described in this
Section 8 of the Supplement will be final and binding on all parties.
The Offer may be terminated by Purchaser if the Merger Agreement is
terminated pursuant to its terms.
9. SOURCE AND AMOUNT OF FUNDS
Section 10 of the Offer to Purchase is amended and supplemented by this
Section 9 of this Supplement.
The total amount of funds required to purchase pursuant to the Offer and
the Merger the number of Shares that are outstanding (other than the Shares
which are owned by Parent) and to pay fees and expenses related to the Offer and
the Merger is approximately $135 million.
In the Merger Agreement, Parent and the Purchaser represented that Parent
has and will cause the Purchaser to have the funds necessary to consummate the
Offer and the Merger and the transactions contemplated thereby.
10. CERTAIN LEGAL MATTERS
Section 15 of the Offer to Purchase is amended and supplemented by this
Section 10 of this Supplement.
CERTAIN LITIGATION. Pursuant to the Merger Agreement, each of Parent, the
Purchaser and the Company has agreed to immediately dismiss, without prejudice,
with each party bearing its own cost and litigation expenses, all proceedings
pending between them and their affiliates (including their respective
directors), including the action filed by Parent against the Company and its
directors on March 13, 1996, and that each shall thereafter sign and deliver
such further papers as may be necessary to effect such dismissals.
On March 18, 1996, plaintiff Eagle Capital Investment Club filed a
complaint-in-intervention in the above referenced Parent action, seeking to
represent a proposed class consisting of the "public" shareholders of the
Company. The allegations of the complaint are, among other things, that the
Company Board is breaching its fiduciary duties by failing to negotiate with
Parent and by failing to auction the Company to the highest bidder.
ANTITRUST. On March 22, 1996, Parent filed with the Federal Trade
Commission and the Antitrust Division a Premerger Notification and Report Form
in connection with the purchase of Shares pursuant to the Offer. The waiting
period required by the HSR Act is scheduled to expire at 11:59 p.m. on April 6,
1996.
11. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
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In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
Parent and the Purchaser have filed with the Commission amendments to the
Tender Offer Statement on Schedule 14D-1 pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act furnishing certain additional
information with respect to the Offer, and may file further amendments thereto.
The Tender Offer Statement on Schedule 14D-1 and any and all amendments thereto,
including exhibits, may be examined and copies may be obtained from the
Commission in the same manner as described in Section 8 of the Offer to Purchase
with respect to information concerning the Company (except that the amendments
will not be available at the regional offices of the Commission).
Except as modified by this Supplement, the terms and conditions set forth
in the Offer to Purchase remain applicable in all respects to the Offer, and
this Supplement should be read in conjunction with the Offer to Purchase and the
related Letter of Transmittal.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THE OFFER
TO PURCHASE AND HEREIN OR IN THE RELATED LETTERS OF TRANSMITTAL AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
EATON ACQUISITION CORPORATION
March 29, 1996
18
<PAGE> 22
Manually signed facsimile copies of the revised GREEN Letter of Transmittal
or the original BLUE Letter of Transmittal will be accepted. The Letter of
Transmittal, certificate for Shares and any other required documents should be
sent or delivered by each shareholder of the Company or by such shareholder's
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
P.O. Box 798 85 Challenger Road 120 Broadway - 13th Floor
Midtown Station Ridgefield Park, NJ 07660 New York, NY 10271
New York, NY 10018 Attention: Reorganization Attention: Reorganization
Attention: Reorganization Department Department
Department
Facsimile Transmission:
(201) 296-4293
(For Eligible Institutions Only)
Confirmation of Facsimile Transmission:
(201) 296-4209
</TABLE>
Questions and requests for assistance or for additional copies of this
Supplement, the Offer to Purchase, the revised Letter of Transmittal and the
revised Notice of Guaranteed Delivery may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth below. You may also contact your broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
88 Pine Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-8530 (Call Collect)
19
<PAGE> 1
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
at
$12.50 NET PER SHARE
Pursuant to the Offer to Purchase dated March 19, 1996
and the Supplement thereto dated March 29, 1996
by
EATON ACQUISITION CORPORATION
a wholly owned subsidiary of
EATON CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, APRIL 15, 1996, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
P.O. Box 798 85 Challenger Road 120 Broadway - 13th Floor
Midtown Station Ridgefield Park, NJ 07660 New York, NY 10271
New York, NY 10018 Attention: Reorganization Attention: Reorganization
Attention: Reorganization Department Department
Department
</TABLE>
By Facsimile Transmission:
(201) 296-4293
(For Eligible Institutions Only)
Confirmation of Facsimile Transmission:
(201) 296-4209
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
This revised Letter of Transmittal or the previously circulated original
BLUE Letter of Transmittal is to be used either if certificates for Shares
and/or Rights (as such terms are defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined below) is utilized, if delivery of Shares
and/or Rights is to be made by book-entry transfer (in the case of Rights, if
available) to an account maintained by the Depositary at a Book-Entry Transfer
Facility as defined in and pursuant to the procedures set forth in Section 2 of
the Offer to Purchase.
The Company has advised Parent that it has taken all necessary action
pursuant to the Rights Agreement to provide that no Triggering Event or
Distribution Date (as each term is defined in the Rights Agreement) will occur,
in each case as a result of the announcement, commencement or consummation of
the Offer or Merger (as defined in the Supplement), the execution or delivery of
the Merger Agreement (as defined in the Supplement) or the consummation of the
transactions contemplated thereby. Accordingly, the Rights will continue to be
evidenced by the certificates for Shares and the requirement for a separate
tender of Rights described in the Offer to Purchase will not apply unless a
Distribution Date occurs for reasons unrelated to the Offer and the Merger. If
the Distribution Date does not occur prior to the Expiration Date (as defined in
the Offer to Purchase), a tender of Shares will also constitute a tender of the
associated Rights. Shareholders who deliver Shares and/or Rights by book-entry
transfer are referred to herein as "Book-Entry Shareholders" and other
shareholders are referred to herein as "Certificate Shareholders".
Shareholders whose certificates for Shares and/or Rights are not
immediately available or who cannot deliver either the certificates for, or a
Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase) with
respect to, their Shares and/or Rights and all other documents required hereby
to the Depositary on or prior to the Expiration Date must tender their Shares
and/or Rights in accordance with the guaranteed delivery procedures set forth in
Section 2 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 3
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARES TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
Total Shares
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares being
delivered to the Depositary are being tendered. See Instruction 4.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF RIGHTS TENDERED(1)
- ----------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) RIGHTS TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL NUMBER
OF RIGHTS NUMBER
CERTIFICATE REPRESENTED BY OF RIGHTS
NUMBER(S)(2)(3) CERTIFICATE(S)(3) TENDERED(4)
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
Total Rights
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed if the Distribution Date has not occurred.
(2) If the tendered Rights are represented by separate certificates, complete
using the certificate numbers of such certificates for Rights. If the
tendered Rights are not represented by separate certificates, or if such
certificates have not been distributed, complete using the certificate
numbers of the Shares with respect to which the Rights were issued.
Shareholders tendering Rights that are not represented by separate
certificates should retain a copy of this description in order to
accurately complete the Notice of Guaranteed Delivery if the Distribution
Date occurs.
(3) Need not be completed by Book-Entry Shareholders who are delivering
Rights by book-entry transfer (if available).
(4) Unless otherwise indicated, it will be assumed that all Rights being
delivered to the Depositary are being tendered. See Instruction 4.
- -------------------------------------------------------------------------------
------------------------
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Shares and/or Rights tendered hereby. The certificates and number of Shares
and/or Rights that the undersigned wishes to tender should be indicated in the
appropriate boxes.
<PAGE> 4
/ / CHECK HERE IF TENDERED SHARES AND/OR RIGHTS ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS
IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES AND/OR RIGHTS BY
BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
--------------------------------------------------
Check box of Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number
-------------------------------------------------------------
Transaction Code Number
----------------------------------------------------
/ / CHECK HERE IF TENDERED SHARES AND/OR RIGHTS ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
--------------------------------------------
Window Ticket Number (if any):
---------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------
Name of Institution that Guaranteed Delivery:
------------------------------
If delivered by book-entry transfer check box of Book-Entry Transfer
Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number
-------------------------------------------------------------
Transaction Code Number
----------------------------------------------------
<PAGE> 5
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Eaton Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Eaton
Corporation, an Ohio corporation, the above-described shares of Common Stock,
par value $0.01 per share (the "Shares"), of CAPCO Automotive Products
Corporation, a Michigan corporation (the "Company"), together with an equal
number of the associated preferred stock purchase rights (the "Rights") issued
pursuant to the Rights Agreement (the "Rights Agreement") between the Company
and Harris Trust and Savings Bank, as Rights Agent, upon the terms and subject
to the conditions set forth in the Purchaser's Offer to Purchase dated March 19,
1996, as amended and supplemented by the Supplement thereto dated March 29, 1996
(the "Supplement") and in this revised Letter of Transmittal (which, together
with the Offer to Purchase and the Supplement constitute the "Offer"), receipt
of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares and Rights tendered herewith in
accordance with the terms and subject to the conditions of the Offer (including
if the Offer is extended or amended, the terms of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Shares
and Rights that are being tendered hereby and any and all dividends (other than
regular quarterly cash dividends, not in excess of $0.04 per Share, having a
customary and usual record and payment date prior to the Purchaser purchasing
and becoming a record holder of such Shares), distributions, other Shares,
Rights or other securities or rights issued or issuable in respect thereof on or
after March 18, 1996 (other than the $0.01 redemption price per Right if the
Rights are redeemed in accordance with the Rights Agreement as publicly
disclosed to be in effect on March 15, 1996), and irrevocably constitutes and
appoints Chemical Mellon Shareholder Services, L.L.C. (the "Depositary"), the
true and lawful agent and attorney-in-fact of the undersigned, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to the full extent of the undersigned's rights with
respect to such Shares and Rights (and any such other Shares, Rights or
securities or rights), to (a) deliver certificates for such Shares and Rights
(and any such other Shares, Rights or securities or rights) or transfer
ownership of such Shares and Rights (and any such other Shares, Rights or
securities or rights) on the account books maintained by a Book-Entry Transfer
Facility together, in any such case, with all accompanying evidences of transfer
and authenticity to, or upon the order of, the Purchaser, (b) present such
Shares and Rights (and any such other Shares, Rights or securities or rights)
for transfer on the Company's books and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares and Rights (and any
such other Shares, Rights or securities or rights), all in accordance with the
terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares and Rights and any and all other Shares, Rights or other securities or
rights issued or issuable in respect of such Shares or Rights on or after March
18, 1996 and, when the same are accepted for payment by the Purchaser, the
Purchaser will acquire good title thereto, free and clear of all liens,
restrictions, claims and encumbrances, and the same will not be subject to any
adverse claim. The undersigned will, upon request, execute any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares and Rights
and any and all other Shares, Rights or other securities or rights issued or
issuable in respect thereof on or after March 18, 1996.
The Company has advised Parent that it has taken all necessary action
pursuant to the Rights Agreement to provide that no Triggering Event or
Distribution Date (as each term is defined in the Rights Agreement) will occur,
in each case as a result of the announcement, commencement or consummation of
the Offer or Merger (as defined in the Supplement), the execution or delivery of
the Merger Agreement (as defined in the Supplement) or the consummation of the
transactions contemplated thereby. Accordingly, the Rights will continue to be
evidenced by the certificates for Shares and the requirement for a separate
tender of Rights described in the Offer to Purchase will not apply unless a
Distribution Date occurs for reasons unrelated to the Offer and the Merger. If
the Distribution Date does not occur prior to the Expiration Date, a tender of
Shares will also constitute a tender of the associated Rights.
If the Distribution Date occurs and certificates representing the Rights
("Rights Certificates") are distributed by the Company or the Rights Agent to
holders of Shares prior to the time Shares are tendered herewith, in order for
Rights (and the corresponding Shares) to be validly tendered, Rights
Certificates representing a number of Rights equal to the number of Shares being
tendered herewith must be delivered to the Depositary or, if available, a
Book-Entry Confirmation must be received by the Depositary with respect thereto.
If the Distribution Date occurs and Rights Certificates are not distributed
prior to the time Shares are tendered herewith, Rights may be tendered prior to
a shareholder receiving Rights Certificates by use of the guaranteed delivery
procedure described in Section 2 of the Offer to Purchase. In any case, a tender
of Shares constitutes an agreement by the tendering shareholder to deliver
Rights
<PAGE> 6
Certificates representing a number of Rights equal to the number of Shares
tendered pursuant to the Offer to the Depositary within three business days
after the date Rights Certificates are distributed. The Purchaser reserves the
right to require that the Depositary receive Rights Certificates, or a
Book-Entry Confirmation, if available, with respect to such Rights, prior to
accepting the related Shares for payment pursuant to the Offer if the
Distribution Date occurs prior to the Expiration Date.
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints designees of the Purchaser and
each of them as the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to the full extent of the undersigned's rights with
respect to the Shares and Rights tendered hereby that have been accepted for
payment by the Purchaser and with respect to any and all other Shares, Rights or
other securities or rights issued or issuable in respect of such Shares and
Rights on or after March 18, 1996. All such powers of attorney and proxies will
be considered irrevocable and coupled with an interest in the tendered Shares
and Rights. This appointment is effective when, and only to the extent that, the
Purchaser accepts for payment such Shares and Rights tendered as provided in the
Offer to Purchase, as amended and supplemented by the Supplement. Upon such
acceptance for payment, all prior powers of attorney, proxies and consents given
by the undersigned with respect to such Shares, Rights (and other securities or
rights) will, without further action, be revoked and no subsequent powers of
attorney, proxies, consents or revocations may be given (and, if given, will not
be deemed effective) by the undersigned. The designees of the Purchaser will be
empowered to exercise all voting and other rights with respect to such Shares,
Rights and other securities or rights in respect of any annual, special or
adjourned meeting of the Company's shareholders, actions by written consent in
lieu of any such meeting or otherwise, as they in their sole discretion may deem
proper. The Purchaser reserves the right to require that, in order for Shares
and Rights to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment for such Shares and Rights the Purchaser must be able to
exercise full voting, consent or other rights with respect to such Shares,
Rights and other securities or rights, including voting at any meeting of
shareholders.
The undersigned understands that the valid tender of Shares and, if
applicable, Rights pursuant to any of the procedures described in Section 2 of
the Offer to Purchase, as amended and supplemented by the Supplement, and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, as amended and supplemented by the Supplement, the Purchaser may
not be required to accept for payment any of the Shares and Rights tendered
hereby. Without limiting the foregoing, if the price to be paid in the Offer is
amended in accordance with the Offer, the price to be paid to the undersigned
will be the amended price notwithstanding the fact that a different price is
stated in this Letter of Transmittal.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates for
Shares or Rights not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered" and
"Description of Rights Tendered", respectively. Similarly, unless otherwise
indicated under "Special Delivery Instructions", please mail the check for the
purchase price and/or return any certificates for Shares or Rights not tendered
or accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered" and "Description of Rights Tendered", respectively. In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or return any
certificates for Shares or Rights not tendered or accepted for payment (and any
accompanying documents, as appropriate) in the name of, and deliver such check
and/or return such certificates (and any accompanying documents, as appropriate)
to, the person or persons so indicated. Please credit any Shares and Rights
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility (as defined herein)
designated above. The undersigned recognizes that the Purchaser has no
obligation pursuant to the Special Payment Instructions to transfer any Shares
or Rights from the name of the registered holder thereof if the Purchaser does
not accept for payment any of the Shares or Rights, respectively, so tendered.
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates:
-------
<PAGE> 7
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares or Rights not tendered or not
accepted for payment and/or the check for the purchase price of Shares or Rights
accepted for payment are to be issued in the name of someone other than the
undersigned.
Issue: / / Check / / Certificate(s) to:
Name
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares or Rights not tendered or not
accepted for payment and/or the check for the purchase price of Shares or Rights
accepted for payment are to be sent to someone other than the undersigned, or to
the undersigned at an address other than that above.
Mail: / / Check / / Certificate(s) to:
Name
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(EMPLOYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
<PAGE> 8
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF SHAREHOLDER(S))
Dated: , 1996
------------ ---
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or Rights or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s)
----------------------------------------------------------------------
----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title)
----------------------------------------------------------
Address
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No. ( )
--- --------------------------------------
Employer Identification or Social Security Number
-------------------------------
(COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
------------------------------------------------------------
Name
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title
--------------------------------------------------------------------------
Name of Firm
-------------------------------------------------------------------
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No. ( )
--- ----------------------------------------------
Dated: , 1996
------------ --
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Signature Guarantee. No signature guarantee is required on this Letter
of Transmittal (a) if this Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares and Rights
tendered herewith, unless such registered holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares and Rights are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"). In all other cases, all signatures on this Letter
of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
If the certificates for Shares or Rights are registered in the name of a person
other than the signer of this Letter of Transmittal, or if payment is to be made
or certificates for Shares or Rights not tendered or not accepted for payment
are to be returned to a person other than the registered owner(s) of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates, with
the signatures on the certificates or stock powers guaranteed as aforesaid. See
Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by shareholders either if certificates are to be forwarded herewith or, unless
an Agent's Message (as defined below) is utilized, if delivery of Shares and/or
Rights is to be made pursuant to the procedures for book-entry transfer set
forth in Section 2 of the Offer to Purchase. For a shareholder validly to tender
Shares and Rights pursuant to the Offer, either (a) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date and either certificates for tendered Shares and Rights must be
received by the Depositary at one of such addresses or Shares and Rights must be
delivered pursuant to the procedures for book-entry transfer set forth herein
(and a Book-Entry Confirmation received by the Depositary), in each case on or
prior to the Expiration Date, or (b) the tendering shareholder must comply with
the guaranteed delivery procedures set forth below and in Section 2 of the Offer
to Purchase.
The Company has taken all necessary action pursuant to the Rights Agreement
to provide that no Triggering Event or Distribution Date (as each term is
defined in the Rights Agreement) will occur, in each case as a result of the
announcement, commencement or consummation of the Offer or Merger (as defined in
the Supplement), the execution or delivery of the Merger Agreement (as defined
in the Supplement) or the consummation of the transactions contemplated thereby.
Accordingly, the Rights will continue to be evidenced by the certificates for
Shares and the requirement for a separate tender of Rights described in the
Offer to Purchase will not apply unless a Distribution Date occurs for reasons
unrelated to the Offer and the Merger. If the Distribution Date does not occur
prior to the Expiration Date, a tender of Shares will also constitute a tender
of the associated Rights.
If a shareholder desires to tender Shares and Rights pursuant to the Offer
and such shareholder's certificates for Shares or Rights are not immediately
available (including because Rights Certificates have not yet been distributed
by the Company or the Rights Agent) or the procedure for book-entry transfer
cannot be completed prior to the Expiration Date or time will not permit all
required documents to reach the Depositary prior to the Expiration Date, such
shareholder may tender such Shares and Rights by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser, must be received by the
Depositary on or prior to the Expiration Date and (c) the certificates for all
tendered Shares and/or Rights, in proper form for transfer (or a Book-Entry
Confirmation with respect to all such Shares and/or Rights), together with a
properly
<PAGE> 10
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents are received by the Depositary
within (a) in the case of Shares, three trading days after the date of execution
of such Notice of Guaranteed Delivery or (b) in the case of Rights, a period
ending on the later of (1) three trading days after the date of execution of
such Notice of Guaranteed Delivery or (2) three business days (as defined in the
Offer to Purchase) after the date Rights Certificates are distributed to
shareholders by the Company or the Rights Agent, all as provided in Section 2 of
the Offer to Purchase. A "trading day" is any day on which the New York Stock
Exchange is open for business. The Notice of Guaranteed Delivery may be
delivered by hand to the Depositary or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution and a representation that the shareholder owns the Shares
and, if applicable, Rights tendered within the meaning of, and that the tender
of the Shares and, if applicable, Rights effected thereby complies with, Rule
14e-4 under the Securities Exchange Act of 1934, as amended, each in the form
set forth in such Notice of Guaranteed Delivery. Shareholders may not extend the
foregoing time period for delivery of Rights to the Depositary by providing a
second Notice of Guaranteed Delivery with respect to such Rights.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares and the
Rights tendered hereby whether or not such Rights are delivered simultaneously
with such Shares.
THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES AND
RIGHTS WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares or Rights will be purchased. All tendering shareholders, by
execution of this Letter of Transmittal (or facsimile thereof), waive any right
to receive any notice of the acceptance of their Shares or Rights for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares or Rights should be listed on a
separate schedule attached hereto.
4. Partial Tenders (Applicable to Certificate Shareholders Only). If fewer
than all the Shares or Rights evidenced by any certificate submitted are to be
tendered, fill in the number of Shares or Rights that are to be tendered in the
box entitled "Number of Shares Tendered" or "Number of Rights Tendered", as
appropriate. In any such case, new certificate(s) for the remainder of the
Shares or Rights that were evidenced by the old certificate(s) will be sent to
the registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares and Rights represented by certificates delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder of the Shares and
Rights tendered hereby, the signature must correspond with the name as written
on the face of the certificate(s) without any change whatsoever.
If any of the Shares or Rights tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares or Rights are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares and Rights listed and transmitted hereby, no endorsements of certificates
or separate stock powers are required unless payment or certificates for Shares
or Rights not tendered or accepted for payment are to be issued to a person
other than the registered owner(s). Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed or if payment is to be made or
certificates for Shares or Rights not tendered or not accepted for payment are
to be returned to a
<PAGE> 11
person other than the registered owner(s) of the certificates surrendered, the
tendered certificates must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name or names of the registered
owner or owners appear on the certificates. Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6, the
Purchaser will pay (or cause to be paid) any stock transfer taxes with respect
to the transfer and sale of Shares or Rights to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares or Rights not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered holder(s), or
if tendered certificates are registered in the name(s) of any person(s) other
than the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such person(s))
payable on account of the transfer to such person(s) will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of, and/or certificates for Shares or Rights not accepted for
payment are to be returned to, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. Waiver of Conditions. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares or Rights tendered.
9. 31% Backup Withholding. In order to avoid "backup withholding" of
Federal income tax on payments of cash pursuant to the Offer, a shareholder
surrendering shares in the Offer must, unless an exemption applies, provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify under
penalties of perjury that such TIN is correct and that such shareholder is not
subject to backup withholding. If a shareholder does not provide such
shareholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on such
shareholder and payment of cash to such shareholder pursuant to the Offer may be
subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the Federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the shareholder upon filing an income tax
return.
The shareholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
shareholder if a TIN is provided to the Depositary within 60 days.
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign shareholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase, the Supplement,
the Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 may
be directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
<PAGE> 12
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing Shares or Rights has been lost, destroyed or stolen, the
shareholder should promptly notify the Depositary by checking the box
immediately preceding the special payment/special delivery instructions and
indicating the number of Shares or Rights lost. The shareholder will then be
instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR THE ORIGINAL BLUE LETTER OF
TRANSMITTAL (OR FACSIMILE OF EITHER), TOGETHER WITH ANY REQUIRED SIGNATURE
GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND
ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO
THE EXPIRATION DATE OF THE OFFER AND EITHER CERTIFICATES FOR TENDERED SHARES AND
RIGHTS MUST BE RECEIVED BY THE DEPOSITARY OR SHARES AND RIGHTS MUST BE DELIVERED
PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE ON OR PRIOR TO
THE EXPIRATION DATE, OR THE TENDERING SHAREHOLDER MUST COMPLY WITH THE
PROCEDURES FOR GUARANTEED DELIVERY.
<PAGE> 13
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
- ---------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY ----------------------------
DEPARTMENT OF THE TREASURY BY SIGNING AND DATING BELOW Social Security Number(s)
INTERNAL REVENUE SERVICE
OR
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION ----------------------------
NUMBER (TIN) Employer Identification
Number(s)
-----------------------------------------------------------------------------
PART 2 -- Certification -- Under penalties of
perjury, I certify that:
(1) the number shown on this form is my correct PART 3 --
Taxpayer Identification Number (or I am waiting Awaiting TIN
for a number to be issued to me) and / /
(2) I am not subject to backup withholding ------------------------
because (a) I am exempt from backup withholding
or (b) I have not been notified by the PART 4 --
Internal Revenue Service (the "IRS") that I Exempt TIN
am subject to backup withholding as a result / /
of a failure to report all interest or dividends
or (c) the IRS has notified me that I am no
longer subject to backup withholding.
-----------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if
you have been notified by the IRS that you are subject to backup withholding
because of under reporting interest or dividends on your tax returns.
However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS stating that you
are no longer subject to backup withholding, do not cross out such item (2).
If you are exempt from backup withholding, check the box in Part 4 above.
- ---------------------------------------------------------------------------------------------------------
Signature Date , 1996
------------------------------------------------------------------------- -----------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, 31% of all reportable payments made to me will be withheld, but
will be refunded if I provide a certified taxpayer identification number
within 60 days.
- ----------------------------------------- -------------------------------------
Signature Date
- -----------------------------------------
Name (Please Print)
- --------------------------------------------------------------------------------
<PAGE> 14
Questions and requests for assistance or additional copies of the Offer to
Purchase, the Supplement, the Letter of Transmittal, and other tender materials,
may be directed to the Information Agent or the Dealer Manager as set forth
below:
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. Logo]
Wall Street Plaza
88 Pine Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-8530 (Call Collect)
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
to
EATON ACQUISITION CORPORATION
a wholly owned subsidiary of
EATON CORPORATION
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for shares of Common Stock, par value $0.01 per
share (the "Shares") of CAPCO Automotive Products Corporation, a Michigan
corporation (the "Company"), and/or certificates for the associated preferred
stock purchase rights (the "Rights") issued pursuant to the Rights Agreement
between the Company and Harris Trust and Savings Bank, as Rights Agent (the
"Rights Agent"), are not immediately available (including because certificates
for Rights have not yet been distributed by the Company or the Rights Agent) or
if the procedure for book-entry transfer cannot be completed on a timely basis
or time will not permit all required documents to reach the Depositary prior to
the Expiration Date (as defined in the Offer to Purchase). This form may be
delivered by hand to the Depositary or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution (as defined in the Offer to Purchase) and a representation
that the shareholder owns the Shares and, if applicable, Rights tendered within
the meaning of, and that the tender of the Shares and, if applicable, Rights
effected thereby complies with, Rule 14e-4 under the Securities Exchange Act of
1934, as amended, each in the form set forth in such Notice of Guaranteed
Delivery. See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
P.O. Box 798 85 Challenger Road 120 Broadway - 13th Floor
Midtown Station Ridgefield Park, NJ 07660 New York, NY 10271
New York, NY 10018 Attention: Reorganization Attention: Reorganization
Attention: Reorganization Department Department
Department
</TABLE>
By Facsimile Transmission:
(201) 296-4293
(for Eligible Institutions only)
Confirmation of Facsimile Transmission:
(201) 296-4209
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX IN THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tender(s) to Eaton Acquisition Corporation, a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Eaton
Corporation, an Ohio corporation, upon the terms and subject to the conditions
set forth in the Purchaser's Offer to Purchase dated March 19, 1996 (the "Offer
to Purchase"), as amended and supplemented by the Supplement thereto dated March
29, 1996 (the "Supplement"), and in the related original or revised Letters of
Transmittal, receipt of which is hereby acknowledged, the number of Shares and
Rights (as such terms are defined in the Offer to Purchase) set forth below, all
pursuant to the guaranteed delivery procedures set forth in Section 2 of the
Offer to Purchase.
Number of Shares Name(s) of Record Holder(s)
--------------------------- ---------------------------------
Number of Rights ---------------------------------
--------------------------- Please Print
Certificate Nos. (if available):
- ------------------------------------------- Address(es):
- ------------------------------------------- --------------------
(Check one box if Shares or ---------------------------------
Rights will be tendered by Zip Code
book-entry transfer) Area Code and
/ / The Depository Trust Company Tel. No.:
/ / Midwest Securities Trust Company ------------------------
/ / Philadelphia Depository Trust Company Signature(s):
Account Number --------------------
---------------------------- ---------------------------------
Dated: , 1996
--------------------
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby (a) represents that the above named
person(s) "own(s)" the Shares and/or Rights tendered hereby within the meaning
of Rule 14e-4 under the Securities Exchange Act of 1934, as amended ("Rule
14e-4"), (b) represents that such tender of Shares complies with Rule 14e-4, (c)
guarantees to deliver to the Depositary either the certificates evidencing all
tendered Shares, in proper form for transfer, or to deliver Shares pursuant to
the procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"),
in either case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other required documents, all within three New York
Stock Exchange, Inc. ("NYSE") trading days after the date hereof and (d)
guarantees, if applicable, to deliver certificates representing the Rights
("Rights Certificates") in proper form for transfer, or to deliver such Rights
pursuant to the procedure for book-entry transfer into the Depositary's account
at a Book-Entry Transfer Facility together with, if Rights are forwarded
separately, the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed with any required signature guarantees or an Agent's
Message in the case of a book-entry delivery, and any other required documents,
all within a period ending on the later of (i) three NYSE trading days after the
date hereof or (ii) three business days (as defined in the Offer to Purchase)
after the date Rights Certificates are distributed to shareholders by the
Company or the Rights Agent.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares and/or Rights to the Depositary within the time period
shown herein. Failure to do so could result in a financial loss to such Eligible
Institution. All terms used herein have the meanings set forth in the Offer to
Purchase.
Name of Firm: AUTHORIZED SIGNATURE
--------------------------
- --------------------------------------- -------------------------------------
Address:
------------------------------- PLEASE PRINT
Name:
- --------------------------------------- -------------------------------
Title:
- --------------------------------------- -------------------------------
Zip Code
Area Code and
Tel. No.: Dated: , 1996
------------------------------ -----------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES AND/OR RIGHTS WITH THIS NOTICE;
CERTIFICATES FOR SHARES AND/OR RIGHTS SHOULD BE SENT WITH YOUR LETTER
OF TRANSMITTAL.
<PAGE> 1
SMITH BARNEY INC. Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
(212) 816-8530
(Call Collect)
Supplement to the Offer to Purchase
Dated March 19, 1996
EATON ACQUISITION CORPORATION
a wholly owned subsidiary of
EATON CORPORATION
Has Amended its Offer to Purchase to Increase the Price for
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
to
$12.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, APRIL 15, 1996, UNLESS THE OFFER IS EXTENDED.
March 29, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Eaton Corporation, an Ohio corporation ("Parent")
to act as Dealer Manager in connection with the offer by Eaton Acquisition
Corporation, a Delaware corporation (the "Purchaser"), to purchase all the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
CAPCO Automotive Products Corporation, a Michigan corporation (the "Company"),
together with the associated preferred stock purchase rights (the "Rights")
issued pursuant to the Rights Agreement between the Company and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agreement"), at a price of $12.50 per
Share (and associated Right), 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 March 19, 1996 (the "Offer to Purchase"), as amended and
supplemented by the Supplement thereto dated March 29, 1996 (the "Supplement"),
and in the related original or revised Letters of Transmittal (which, together
with the Offer to Purchase and the Supplement constitute the "Offer"). Please
furnish copies of the enclosed materials to those of your clients for whose
accounts you hold Shares and/or Rights registered in your name or in the name of
your nominee.
The Company has advised Parent that it has taken all necessary action
pursuant to the Rights Agreement to provide that no Triggering Event or
Distribution Date (as each term is defined in the Rights Agreement) will occur,
in each case as a result of the announcement, commencement or consummation of
the Offer or Merger (as defined in the Supplement), the execution or delivery of
the Merger Agreement (as defined in the Supplement) or the consummation of the
transactions contemplated thereby. Accordingly, the Rights will continue to be
evidenced by the certificates for Shares and the requirement for a separate
tender of Rights described in the Offer to Purchase will not apply unless a
Distribution Date occurs for reasons unrelated to the Offer and the Merger. If
the Distribution Date does not occur prior to the Expiration Date (as defined in
the Offer to Purchase), a tender of Shares will also constitute a tender of the
associated Rights.
<PAGE> 2
Enclosed herewith for your information and for forwarding to your clients,
for whom you hold Shares registered in your name or in the name of your nominee,
or who hold Shares registered in their own names, are copies of the following
documents:
1. The Supplement, dated March 29, 1996.
2. The revised GREEN Letter of Transmittal to be used by holders of
Shares in accepting the Offer and tendering Shares (and associated Rights)
for your use and for the information of your clients. The original BLUE
Letter of Transmittal (or facsimile copies of the revised GREEN or original
BLUE Letter of Transmittal) also may be used to tender Shares (and
associated Rights).
3. The revised PINK Notice of Guaranteed Delivery to be used to accept
the Offer if certificates for Shares are not immediately available or time
will not permit all required documents to reach the Depositary by the
Expiration Date or if the procedure for book-entry transfer cannot be
completed on a timely basis.
4. A letter which may be sent to your clients for whose accounts you
hold Shares and/or Rights registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
6. Return envelope addressed to Chemical Mellon Shareholder Services,
L.L.C., the Depositary.
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the Expiration Date that number of
Shares which, together with the Shares owned by Eaton, constitutes a majority of
all outstanding Shares on a fully diluted basis on the date of purchase. The
Offer is no longer subject to the Rights Condition, the Business Combination
Condition or the Control Share Condition (each as defined in the Offer to
Purchase). The Offer is also subject to other terms and conditions contained in
the Offer to Purchase, as amended and supplemented by the Supplement. See the
Introduction and Section 8 of the Supplement.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
APRIL 15, 1996, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares and/or Rights
should be delivered or such Shares and/or Rights should be tendered by
book-entry transfer, all in accordance with the Instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 2, "Procedure for Tendering Shares and
Rights" in the Offer to Purchase.
The Purchaser will pay or cause to be paid any stock transfer taxes with
respect to the transfer and sale of Shares or Rights to it or its order pursuant
to the Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Neither the Purchaser nor Parent will pay any commissions or fees to any
broker, dealer or other person (other than the Dealer Manager, the Depositary
and Georgeson & Company Inc. (the "Information Agent") as described in the Offer
to Purchase) for soliciting tenders of Shares and Rights pursuant to the Offer.
You will be reimbursed upon request for customary mailing and handling expenses
incurred by you in forwarding the enclosed materials to your clients.
Additional copies of the enclosed materials may be obtained by contacting
the Dealer Manager or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover of the Supplement or from brokers,
dealers, commercial banks or trust companies.
Very truly yours,
SMITH BARNEY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEALER MANAGER, THE
COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
Supplement to the Offer to Purchase
Dated March 19, 1996
EATON ACQUISITION CORPORATION
a wholly owned subsidiary of
EATON CORPORATION
Has Amended its Offer to Purchase to Increase the Price for
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
to
$12.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, APRIL 15, 1996, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is a Supplement dated March 29, 1996 (the
"Supplement") to the Offer to Purchase dated March 19, 1996 (the "Offer to
Purchase") and the related revised Letter of Transmittal (which, together with
the Offer to Purchase and the Supplement constitute the "Offer") relating to the
Offer by Eaton Acquisition Corporation, a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Eaton Corporation, an Ohio corporation
("Parent"), to purchase all outstanding shares of Common Stock, par value $0.01
per share (the "Shares"), of CAPCO Automotive Products Corporation, a Michigan
corporation (the "Company"), together with the associated preferred stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement between
the Company and Harris Trust and Savings Bank, as Rights Agent (the "Rights
Agreement"), at a price of $12.50 per Share (and associated Right), net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, as amended and supplemented by
the Supplement, and in the related original or revised Letters of Transmittal.
The Company has advised Parent that it has taken all necessary action
pursuant to the Rights Agreement to provide that no Triggering Event or
Distribution Date (as each term is defined in the Rights Agreement) will occur,
in each case as a result of the announcement, commencement or consummation of
the Offer or Merger (as defined in the Supplement), the execution or delivery of
the Merger Agreement (as defined in the Supplement) or the consummation of the
transactions contemplated thereby. Accordingly, the Rights will continue to be
evidenced by the certificates for Shares and the requirement for a separate
tender of Rights described in the Offer to Purchase will not apply unless a
Distribution Date occurs for reasons unrelated to the Offer and the Merger. If
the Distribution Date does not occur prior to the Expiration Date (as defined in
the Offer to Purchase), a tender of Shares will also constitute a tender of the
associated Rights.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES AND
RIGHTS HELD BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE
HOLDER OF RECORD OF SHARES AND RIGHTS HELD BY US FOR YOUR ACCOUNT. A TENDER OF
SUCH SHARES AND RIGHTS CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES OR RIGHTS HELD BY US
FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares and Rights held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is directed to the following:
1. The offer price is $12.50 per Share (and associated Right), net to
the seller in cash, without interest thereon, upon the terms and subject to
the conditions of the Offer.
2. The Offer is being made for all outstanding Shares and Rights.
<PAGE> 2
3. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, APRIL 15, 1996, UNLESS THE OFFER IS EXTENDED BY THE
PURCHASER.
4. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the Expiration Date
(as defined in the Offer to Purchase) that number of Shares which, together
with the Shares owned by Parent, constitutes a majority of all outstanding
Shares on a fully diluted basis on the date of purchase. The Offer is also
subject to other terms and conditions contained in the Offer to Purchase,
as amended and supplemented by the Supplement. See the Introduction and
Section 8 of the Supplement.
5. Any stock transfer taxes applicable to a transfer of Shares or
Rights to the Purchaser will be paid or caused to be paid by the Purchaser,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the expiration of the Offer.
If you wish to have us tender any or all the Shares and Rights held by us
for your account, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. An envelope
to return your instructions to us is enclosed. If you authorize the tender of
your Shares and Rights, all such Shares and Rights will be tendered unless
otherwise specified on the detachable part hereof. Your instructions should be
forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
Payment for Shares accepted for payment pursuant to the Offer will be in
all cases be made only after timely receipt by Chemical Mellon Shareholder
Services, L.L.C. (the "Depositary"), of (a) certificates for (or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to)
such Shares and, if the Distribution Date occurs, certificates for (or a timely
Book-Entry Confirmation, if available, with respect to) the associated Rights,
(b) a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer effected pursuant to the procedure set forth in Section 2 of
the Offer to Purchase, an Agent's Message, and (c) any other documents required
by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at
different times depending upon when certificates for Shares (or Rights) or
Book-Entry Confirmations with respect to Shares (or Rights, if available) are
actually received by the Depositary. Under no circumstances will interest be
paid on the purchase price of the Shares to be paid by the Purchaser, regardless
of any extension of the Offer or any delay in making such payment.
Shareholders who have previously validly tendered and not properly
withdrawn their Shares pursuant to the Offer are not required to take any
further action, except as may be required by the procedure for guaranteed
delivery if such procedure was utilized. If Shares are accepted for payment and
paid for by the Purchaser pursuant to the Offer, such shareholders will receive,
subject to the conditions of the Offer, the increased price of $12.50 per Share.
See Section 3 of the Offer to Purchase for the procedures for withdrawing Shares
tendered pursuant to the Offer.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares and Rights in any jurisdiction in which the making
or acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
The undersigned acknowledge(s) receipt of your letter enclosing the
Supplement dated March 29, 1996 (the "Supplement") to the Offer to Purchase
dated March 19, 1996, and the revised GREEN Letter of Transmittal (which,
together with the Offer to Purchase, the Supplement and the original BLUE Letter
of Transmittal, constitute the "Offer") pursuant to an offer by Eaton
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Eaton Corporation, an Ohio corporation, to purchase all outstanding shares of
Common Stock, $0.01 par value per share (the "Shares"), of CAPCO Automotive
Products Corporation, a Michigan corporation, together with the associated
preferred stock purchase rights (the "Rights").
This will instruct you to tender the number of Shares and Rights indicated
below (or, if no number is indicated below, all Shares and Rights) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer to Purchase, as amended and supplemented
by the Supplement, and in the related Letter of Transmittal.
SIGN HERE
Number of Shares to be Tendered:(1) _______________________________________
_______________________________________
____________________________ Shares Signature(s)
_______________________________________
Number of Rights to be Tendered:(1)
_______________________________________
(Please Print Name(s))
____________________________ Rights
_______________________________________
Account Number: ___________________ (Please type or print address(es) here)
_______________________________________
Area Code and Telephone Number
Dated: ______________________, 1996
_______________________________________
Tax Identification or
Social Security Number(s)
- ---------------
(1) The Company has advised Parent that it has taken all necessary action
pursuant to the Rights Agreement to provide that no Triggering Event or
Distribution Date (as each term is defined in the Rights Agreement) will
occur, in each case as a result of the announcement, commencement or
consummation of the Offer or Merger (as defined in the Supplement), the
execution or delivery of the Merger Agreement (as defined in the Supplement)
or the consummation of the transactions contemplated thereby. Accordingly,
the Rights will continue to be evidenced by the certificates for Shares and
the requirement for a separate tender of Rights described in the Offer to
Purchase will not apply unless a Distribution Date occurs for reasons
unrelated to the Offer and the Merger. If the Distribution Date does not
occur prior to the Expiration Date (as defined in the Offer to Purchase), a
tender of Shares will also constitute a tender of the associated Rights.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares or Rights. The Offer is made solely by the Offer to Purchase
dated March 19, 1996, as amended and supplemented by the Supplement to the Offer
to Purchase, dated March 29, 1996 (the "Supplement"), and the related Letters of
Transmittal and is being made to all holders of Shares and Rights. The Offer is
not being made to (nor will tenders be accepted from or on behalf of) holders of
Shares or Rights in any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdictions where securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on behalf of Eaton Acquisition Corporation by Smith Barney Inc. or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
EATON ACQUISITION CORPORATION
a wholly owned subsidiary of
EATON CORPORATION
Has Amended its Offer to Increase
the Cash Price for
All Outstanding Shares of Common Stock
(including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE
PRODUCTS CORPORATION
to
$12.50 NET PER SHARE
Eaton Acquisition Corporation, a Delaware corporation (the "Purchaser"),
which is a wholly owned subsidiary of Eaton Corporation, an Ohio corporation
("Eaton"), is now offering to purchase all outstanding shares of Common Stock,
par value $0.01 per share (the "Shares"), of CAPCO Automotive Products
Corporation, a Michigan corporation (the "Company"), together with the
associated preferred stock purchase rights (the "Rights") issued pursuant to the
Rights Agreement dated as of April 30, 1994 between the Company and Harris Trust
and Savings Bank, as Rights Agent (the "Rights Agreement"), at a price of $12.50
per Share (and associated Right), 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 March 19, 1996 (the "Offer to Purchase"), as amended and
supplemented by the Supplement thereto, dated March 29, 1996 (the "Supplement"),
and in the related original or revised Letters of Transmittal (which, together
with the Offer to Purchase and the Supplement constitute the "Offer"). Unless
the context otherwise requires, all references herein to Shares shall include
the associated Rights and all references to the Rights shall include all
benefits that may inure to holders of the Rights pursuant to the Rights
Agreement. Shares previously validly tendered and not properly withdrawn
constitute valid tenders for purposes of the Offer.
- -----------------------------------------------------------------------------
/ THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK /
/ CITY TIME, ON MONDAY, APRIL 15, 1996, UNLESS THE OFFER IS EXTENDED. /
- -----------------------------------------------------------------------------
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the Expiration Date (as defined
below) the number of Shares which, together with the 805,000 Shares currently
owned by Eaton, constitutes a majority of all outstanding Shares on a fully
diluted basis on the date of purchase. The Offer is also subject to other terms
and conditions. See the Introduction and Section 8 of the Supplement.
The Offer is being amended and supplemented pursuant to an Agreement and
Plan of Merger, dated as of March 27, 1996 (the "Merger Agreement"), among
Eaton, the Purchaser and the Company which provides for, among other things, (i)
an increase in the price per Share to be paid pursuant to the Offer from $11.00
per Share to $12.50 per Share, (ii) the amendment of conditions to the Offer as
set forth in their entirety in Section 8 of the Supplement and (iii) the merger
of the Purchaser with and into the Company (the "Merger") following the
consummation of the Offer. In the Merger, each Share (other than Shares held in
the treasury of the Company, or Shares owned by Eaton, the Purchaser or any
direct or indirect subsidiary of Eaton or of the Company) shall be cancelled,
extinguished and converted into the right to receive $12.50 per Share in cash
without interest thereon.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS
OF THE COMPANY, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
Chemical Mellon Shareholder Services, L.L.C. ("the Depositary"), of the
Purchaser's acceptance for payment of such Shares. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
shareholders. Under no circumstances will interest be paid on the purchase price
of the Shares to be paid by the Purchaser, regardless of any delay in making
such payment. In all cases, payment for Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates for (or a timely Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to) such Shares and, if the Distribution Date occurs,
Rights Certificates for (or a timely Book-Entry Confirmation with respect to)
the associated Rights, (ii) the Letter of Transmittal delivered with the Offer
to Purchase or the revised Letter of Transmittal delivered with the Supplement
(or facsimile of either), properly completed and duly executed, with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase), and (iii) any other
documents required by such Letter of Transmittal.
The Purchaser expressly reserves the right, in its sole discretion, subject
to the terms of the Merger Agreement, at any time or from time to time, to
extend the period of time during which the Offer is open for any reason,
including the occurrence of any of the events specified in Section 8 of the
Supplement, by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed as promptly as practicable by
public announcement thereof, and such announcement in the case of an extension
will be made no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Monday, April 15, 1996, unless and until the Purchaser, in its sole discretion,
shall have extended the period of time during which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by the Purchaser, will expire.
Except as otherwise provided below, tenders of Shares and Rights are
irrevocable. Shares and Rights tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless theretofore accepted for
payment and paid for by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after May 18, 1996. If the Purchaser extends the Offer, is
delayed in its acceptance for payment of Shares and Rights or is unable to
purchase Shares and Rights validly tendered pursuant to the Offer for any
reason, then without prejudice to the Purchaser's rights under the Offer, the
Depositary may nevertheless, on behalf of the Purchaser, retain tendered Shares
and Rights and such Shares and Rights may not be withdrawn except to the extent
that tendering shareholders are entitled to withdrawal rights as described in
the Offer to Purchase. Any such delay will be accompanied by an extension of the
Offer to the extent required by law. Shares or Rights may not be withdrawn
unless the associated Rights or Shares, as the case may be, are also withdrawn.
A withdrawal of Shares or Rights will also constitute a withdrawal of the
associated Rights or Shares, as the case may be. For a withdrawal to be
effective, a written or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses as set forth on the
back cover of the Offer to Purchase and must specify the name of the person
having tendered the Shares and Rights to be withdrawn, the number of Shares and
Rights to be withdrawn and the name of the registered holder of the Shares and
Rights to be withdrawn, if different from the name of the person who tendered
the Shares and Rights. If certificates for Shares or Rights have been delivered
or otherwise identified to the Depositary, then, prior to the physical release
of such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares or Rights have been tendered
by an Eligible Institution (as defined in Section 2 of the Offer to Purchase),
the signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares or Rights have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility (as defined in the Offer to Purchase)
to be credited with the withdrawn Shares or Rights and otherwise comply with
such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares
and Rights may not be rescinded, and any Shares and Rights properly withdrawn
will thereafter be deemed not validly tendered for any purposes of the Offer.
However, withdrawn Shares and Rights may be retendered by again following one of
the procedures described in Section 2 of the Offer to Purchase at any time prior
to the Expiration Date. All questions as to the form and validity (including
time of receipt) of notices of withdrawal will be determined by the Purchaser in
its sole discretion, which determination will be final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, is contained in the Supplement and the Offer to
Purchase and is incorporated herein by reference.
The Supplement, the related revised Letter of Transmittal and, if required,
other relevant materials will be mailed to record holders of Shares and Rights
whose names appear on the Company's list of shareholders, if required, and will
be furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
lists, or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE, THE SUPPLEMENT AND THE RELATED LETTERS OF
TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance or for copies of the Offer to
Purchase, the Supplement and the related Letters of Transmittal and other tender
offer documents may be directed to the Information Agent or the Dealer Manager,
as set forth below, and copies will be furnished at the Purchaser's expense. No
fees or commissions will be payable to brokers, dealers or other persons other
than the Dealer Manager and the Information Agent for soliciting tenders of
Shares and Rights pursuant to the Offer.
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. Logo]
Wall Street Plaza
88 Pine Street
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
The Dealer Manager for the Offer is:
[SMITH BARNEY INC. Logo]
388 Greenwich Street
New York, New York 10013
(212) 816-8530 (Call Collect)
March 29, 1996
<PAGE> 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
March 27, 1996, by and among Eaton Corporation, an Ohio corporation ("Parent"),
Eaton Acquisition Corporation, a Delaware corporation and a subsidiary of Parent
(the "Purchaser"), and CAPCO Automotive Products Corporation, a Michigan
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, on March 19, 1996, the Purchaser commenced a tender offer
(the "Initial Offer") to purchase all of the shares of the Company's common
stock, par value $.01 per share (the "Common Shares") (including the associated
preferred share purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of April 30, 1994, between the Company and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agreement"), which Rights together
with the Common Shares are hereinafter referred to as the "Shares"), at a price
per Common Share of $11.00 net to the seller in cash subject to the conditions
set forth in the Offer to Purchase, dated March 19, 1996 and in the related
letter of transmittal;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has (i) approved the Initial Offer as amended pursuant to this Agreement (the
"Amended Offer") in order to, among other things, increase to $12.50 net to the
seller in cash, the price to be paid thereunder for each outstanding Common
Share (the "Offer Price"), and (ii) adopted this Agreement and is recommending
that the Company's shareholders accept the Amended Offer, tender their Shares to
the Purchaser and approve this Agreement;
WHEREAS, the respective Boards of Directors of the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth below (the "Merger"), in accordance with the Michigan
Business Corporation Act (the "MBCA") and the General Corporation Law of
Delaware (the "GCL") and upon the terms and subject to the conditions set forth
in this Agreement, whereby each of the issued and outstanding Common Shares not
owned directly or indirectly by Parent, the Purchaser or the Company will be
converted into the right to receive the Offer Price in cash;
<PAGE> 2
WHEREAS, Parent, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Amended Offer and the Merger and also to prescribe various conditions to the
Amended Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Parent, the Purchaser and the Company agree as follows:
ARTICLE I
THE AMENDED OFFER
SECTION 1.01 The Amended Offer.
(a) As promptly as practicable following the execution hereof,
Parent and the Purchaser shall issue a press release announcing that the
Purchaser is increasing the price to be paid for each outstanding Common Share
to $12.50 net to the seller in cash. Provided that this Agreement shall not have
been terminated in accordance with Article VIII hereof and so long as none of
the events set forth in Annex I hereto (the "Tender Offer Conditions") shall
have occurred and no circumstance shall exist which would result in a failure to
satisfy any of the Tender Offer Conditions, as promptly as practicable but in no
event later than the fifth business day after the date of this Agreement, the
Purchaser shall file with the Securities and Exchange Commission (the "SEC") an
amendment to the Purchaser's Tender Offer Statement on Schedule 14D-1 (together
with any supplements or amendments thereto, the "Offer Documents"), which shall
contain (as an exhibit) a supplement to the Purchaser's Offer to Purchase dated
March 19, 1996 (the "Offer to Purchase") which shall be mailed to the holders of
Shares with respect to the Amended Offer, which shall amend the Initial Offer as
described in the preceding sentence and shall amend Section 14 of the Offer to
Purchase to modify the conditions of the Amended Offer to conform to the Tender
Offer Conditions; it being understood that, except for the foregoing amendments
or as otherwise provided herein, the Amended Offer shall be on the same terms
and subject to the same conditions as the Initial Offer. The obligation of the
Purchaser to accept for payment or pay for any Common Shares tendered pursuant
to the Amended Offer will be subject only to the satisfaction of the conditions
set forth in Annex I hereto. Without the prior
- 2 -
<PAGE> 3
written consent of the Company, the Purchaser shall not decrease the price per
Common Share or change the form of consideration payable in the Amended Offer,
decrease the number of Shares sought to be purchased in the Amended Offer,
change the conditions set forth in Annex I, waive the Minimum Condition (as
defined in Annex I), impose additional conditions to the Amended Offer or amend
any other term of the Amended Offer in any manner adverse to the holders of
Common Shares. Subject to the terms of the Amended Offer and this Agreement and
the satisfaction of all the conditions of the Amended Offer set forth in Annex I
hereto as of any expiration date, the Purchaser will accept for payment and pay
for all Common Shares validly tendered and not withdrawn pursuant to the Amended
Offer as soon as practicable after such expiration date of the Amended Offer;
provided that the Purchaser shall have the right, in its sole discretion, to
extend the Amended Offer from time to time for up to a maximum of 10 additional
business days, notwithstanding the prior satisfaction of the Tender Offer
Conditions. Each of Parent and the Purchaser shall use its reasonable best
efforts to avoid the occurrence of any event specified in Annex I or to cure any
such event that shall have occurred.
(b) The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information supplied by the Company in writing
for inclusion in the Offer Documents. Each of Parent and the Purchaser, on the
one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and the
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
shareholders of the Company, in each case, as and to the extent required by
applicable federal securities laws.
SECTION 1.02 Company Actions.
(a) The Company shall file with the SEC and mail to the holders
of Shares, as promptly as practicable on
- 3 -
<PAGE> 4
the date of the filing by Parent and the Purchaser of the Offer Documents, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") reflecting the
recommendation of the Company Board that holders of Shares tender their Shares
pursuant to the Amended Offer and shall disseminate the Schedule 14D-9 as
required by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Schedule 14D-9 will set forth, and the Company
hereby represents, that the Company Board, at a meeting duly called and held,
has (i) determined by unanimous vote of its directors that each of the
transactions contemplated hereby, including each of the Amended Offer and the
Merger, is fair to and in the best interests of the Company and its
shareholders, (ii) approved the Amended Offer and adopted this Agreement in
accordance with the MBCA, (iii) recommended acceptance of the Amended Offer and
approval of this Agreement by the Company's shareholders (if such approval is
required by applicable law), and (iv) taken all other action necessary to render
the Rights inapplicable to the Amended Offer and the Merger; provided, however,
that such recommendation and approval may be withdrawn, modified or amended to
the extent that the Company Board determines in good faith, upon advice from its
outside counsel, that failure to take such action would be a breach of the
Company Board's fiduciary obligations under applicable law. The Company further
represents that, prior to the execution hereof, CS First Boston Corporation
("First Boston") has delivered to the Company Board its written opinion that the
consideration to be received for the Common Shares (other than Common Shares
held by Parent or the Purchaser, any wholly-owned subsidiary of Parent or the
Purchaser, in the treasury of the Company or by any wholly-owned subsidiary of
the Company) pursuant to the Amended Offer and the Merger is fair to the
Company's shareholders from a financial point of view. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Company Board described in this Section 1.02(a).
(b) The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information supplied by Parent or the Purchaser in
writing for inclusion in the Schedule
- 4 -
<PAGE> 5
14D-9. Each of the Company, on the one hand, and Parent and the Purchaser, on
the other hand, agree promptly to correct any information provided by either of
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 to be disseminated to the holders of Shares, in
each case, as and to the extent required by applicable federal securities law.
(c) In connection with the Amended Offer, the Company will
promptly furnish the Purchaser with mailing labels, security position listings,
any non-objecting beneficial owner lists and any available listing or computer
list containing the names and addresses of the record holders of the Common
Shares as of the most recent practicable date and shall furnish the Purchaser
with such additional information (including, but not limited to, updated lists
of holders of Common Shares and their addresses, mailing labels and lists of
security positions and non-objecting beneficial owner lists) and such other
assistance as the Purchaser or its agents may reasonably request in
communicating the Amended Offer to the Company's record and beneficial
shareholders. 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, Parent, the Purchaser and their
affiliates, associates, agents and advisors, shall keep such information
confidential and use the information contained in any such labels, listings and
files only in connection with the Amended 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.
SECTION 1.03 Directors.
(a) Subject to compliance with applicable law, promptly upon
the payment by the Purchaser for the Common Shares pursuant to the Amended
Offer, and from time to time thereafter, Parent shall be entitled to designate
such number of directors, rounded up to the next whole number, on the Company
Board as is equal to the product of the total number of directors on the Company
Board (determined after giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Common
Shares beneficially owned by Parent or its affiliates bears to the total number
of fully diluted Common Shares then outstanding, and the Company shall, upon
request of Parent, promptly take all actions necessary to cause Parent's
- 5 -
<PAGE> 6
designees to be so elected, including, if necessary, seeking the resignations of
one or more existing directors; provided, however, that prior to the Effective
Time (as defined in Section 2.02), the Company Board shall always have at least
two members who are neither officers, directors, shareholders or designees of
the Purchaser or any of its affiliates ("Purchaser Insiders"). If the number of
directors who are not Purchaser Insiders is reduced below two prior to the
Effective Time, the remaining director who is not a Purchaser Insider shall be
entitled to designate a person to fill such vacancy who is not an officer,
director, shareholder or designee of the Purchaser or any of its affiliates and
who shall be a director not deemed to be a Purchaser Insider for all purposes of
this Agreement.
(b) The Company's obligations to appoint Parent's designees to
the Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.03. Parent will
supply and be solely responsible for any information with respect to itself and
its officers, directors and affiliates required by such Section and Rule to the
Company.
(c) Following the election or appointment of Parent's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment of
the Articles of Incorporation or By-laws of the Company or amendment or
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 the Purchaser or waiver of any of the Company's rights hereunder or any other
consent or action of the Company Board relating to the transactions contemplated
by this Agreement which would reasonably be expected to have a material adverse
effect on the shareholders of the Company (other than Parent or the Purchaser),
will require the concurrence of a majority of the directors of the Company then
in office who are not Purchaser Insiders (or in the case where there are two or
fewer directors who are not Purchaser Insiders, the concurrence of one director
who is not a Purchaser Insider).
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ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the MBCA, at the Effective Time the
Purchaser shall be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation"). At the
option of Parent, and provided that such amendment does not delay the Effective
Time, the Merger may be structured so that, and this Agreement shall thereupon
be amended to provide that, the Company shall be merged with and into the
Purchaser or another direct or indirect wholly owned subsidiary of Parent, with
the Purchaser or such other subsidiary of Parent continuing as the Surviving
Corporation; provided, however, that the Company shall be deemed not to have
breached any of its representations and warranties herein if and to the extent
such breach would have been attributable to such election. In such event, the
parties agree to execute an appropriate amendment to this Agreement in order to
reflect the foregoing and, where appropriate, to provide that the Purchaser
shall be the Surviving Corporation.
SECTION 2.02 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.01(a) and
7.01(b), but subject to Section 7.01(c) and 7.01(d), the Company shall execute,
in the manner required by the MBCA and the GCL, as the case may be, and deliver
to the Department of Commerce of the State of Michigan and the Secretary of
State of the State of Delaware a duly executed and verified certificate of
merger, and the parties shall take such other and further actions as may be
required by law to make the Merger effective. The time the Merger becomes
effective in accordance with applicable law is referred to as the "Effective
Time."
SECTION 2.03 Effects of the Merger. The Merger shall have the effects
set forth in the MBCA and the GCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and the Purchaser shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and the Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
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<PAGE> 8
SECTION 2.04 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended in accordance with the
provisions thereof and hereof and applicable law.
(b) Subject to the provisions of Section 6.06 of this
Agreement, the By-Laws of the Purchaser in effect at the Effective Time shall be
the By-Laws of the Surviving Corporation until amended in accordance with the
provisions thereof and applicable law.
SECTION 2.05 Directors. Subject to applicable law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.07 Conversion of Common Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
each Common Share issued and outstanding immediately prior to the Effective Time
(other than any Common Shares held by Parent, the Purchaser, any wholly owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly owned subsidiary of the Company, which Common Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto), shall be cancelled and retired and shall be converted into the
right to receive in cash the Offer Price (the "Merger Price"), payable to the
holder thereof, without interest thereon, upon surrender of the certificate
formerly representing such Common Share.
SECTION 2.08 Conversion of Purchaser Common Stock. The Purchaser has
100 shares of common shares, par value $.01 per share, outstanding all of which
are entitled to vote with respect to approval of this Agreement. At the
Effective Time, each share of common stock of the Purchaser issued and
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<PAGE> 9
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and non-assessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
SECTION 2.09. Options. Prior to the Effective Time, the Company Board
(or, if appropriate, any Committee thereof) shall adopt appropriate resolutions
and take all other actions necessary to provide for the cancellation, effective
at the Effective Time, of all the outstanding stock options, stock appreciation
rights, limited stock appreciation rights and performance units (the "Options")
heretofore granted under any stock option, performance unit or similar plan of
the Company (the "Stock Plans"). Immediately prior to the Effective Time, (i)
each Option, whether or not then vested or exercisable, shall no longer be
exercisable but shall entitle each holder thereof, in cancellation and
settlement therefor, to payments in cash (subject to any applicable withholding
taxes, the "Cash Payment"), at the Effective Time, equal to the product of (x)
the total number of Common Shares subject or related to such Option, whether or
not then vested or exercisable, and (y) the excess of the Merger Price over the
exercise price per Common Share subject or related to such Option, each such
Cash Payment to be paid to each holder of an outstanding Option at the Effective
Time; provided, however, that any Person subject to Section 16 of the Exchange
Act shall be provided with a cash compensation arrangement providing such
individual with the opportunity to receive a cash payment equal to the benefits
of which he or she would be deprived by reason of Section 16(b) of the Exchange
Act, and (ii) each Common Share previously issued in the form of grants of
restricted stock or grants of contingent shares shall fully vest. As provided
herein, the Stock Plans and any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
the Company or any subsidiary shall terminate as of the Effective Time. The
Company will take all reasonable steps to ensure that none of the Parent, the
Company or any of their respective subsidiaries is or will be bound by any
Options, other options, warrants, rights or agreements which would entitle any
Person, other than Parent or its affiliates, to own any capital stock of the
Surviving Corporation or any of its subsidiaries or to receive any payment in
respect thereof. The Company will use its reasonable best efforts to obtain all
necessary consents to ensure that after the Effective Time, the only rights of
the holders of Options to purchase Common Shares in respect of such Options will
be to receive the Cash Payment in cancellation and settlement thereof.
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<PAGE> 10
(b) All Stock Plans shall terminate as of the Effective Time
and the Company shall ensure that following the Effective Time no holder of an
Option or any participant in any Stock Plans shall have any right thereunder to
acquire any capital stock of the Company, Parent or the Surviving Corporation.
SECTION 2.10 Shareholders' Meeting.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through the Company Board, shall, in accordance
with applicable law and the Company's Articles of Incorporation and By-laws:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") as soon as
practicable following the acceptance for payment of and payment for
Common Shares by the Purchaser pursuant to the Amended Offer for the
purpose of considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to this Agreement, and use its reasonable best
efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy
statement and cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its shareholders and (y) subject to the
fiduciary duties of the Company Board under applicable law, to obtain
the necessary approvals of the Merger and this Agreement by its
shareholders; and
(iii) subject to the fiduciary obligations of the Company
Board under applicable law as provided in Section 1.02(a), include in
the Proxy Statement the recommendation of the Company Board that
shareholders of the Company vote in favor of the approval of this
Agreement.
(b) Parent agrees that it will vote, or cause to be voted, all
of the Common Shares then owned by it, the Purchaser or any of its other
subsidiaries in favor of the approval of this Agreement.
SECTION 2.11 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.10, in the event that Parent,
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<PAGE> 11
the Purchaser or any other subsidiary of Parent shall acquire at least 90% of
the outstanding shares of each outstandingclass of capital stock of the Company
pursuant to the Amended Offer, the parties hereto agree to take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Common Shares by
the Purchaser pursuant to the Amended Offer without a meeting of shareholders of
the Company, in accordance with Section 735 of the MBCA and Section 253 of the
GCL.
ARTICLE III
PAYMENT FOR SHARES
SECTION 3.01 Payment for Common Shares.
(a) From and after the Effective Time, Chemical Mellon
Shareholder Services, L.L.C. or such other bank or trust company as shall be
mutually acceptable to Parent and the Company shall act as paying agent (the
"Paying Agent") in effecting the payment of the Merger Price in respect of
certificates (the "Certificates") that, prior to the Effective Time, represented
Common Shares entitled to payment of the Merger Price pursuant to Section 2.07.
At the Effective Time, Parent or the Purchaser shall deposit, or cause to be
deposited, in trust with the Paying Agent the aggregate Merger Price to which
holders of Common Shares shall be entitled at the Effective Time pursuant to
Section 2.07.
(b) Promptly after the Effective Time, the Paying Agent shall
mail to each record holder of Certificates that immediately prior to the
Effective Time represented Common Shares (other than Certificates representing
Common Shares held by Parent or the Purchaser, any wholly owned subsidiary of
Parent or the Purchaser, in the treasury of the Company or by any wholly owned
subsidiary of the Company) 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 Paying Agent
and instructions for use in surrendering such Certificates and receiving the
Merger Price in respect thereof. Upon the surrender of each such Certificate,
the Paying Agent shall pay the holder of such Certificate the Merger Price
multiplied by the number of Common Shares formerly represented by such
Certificate, in consideration therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered, each such Certificate (other than Certificates
representing Common Shares held by Parent
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<PAGE> 12
or the Purchaser, any wholly owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing Common
Shares surrendered therefor is registered, it shall be a condition to such right
to receive such Merger Price that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person surrendering such Common Shares shall pay to the Paying Agent any
transfer or other taxes required by reason of the payment of the Merger Price to
a person other than the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Paying Agent that such tax has been
paid or is not applicable.
(c) Promptly following the date which is 120 days after the
Effective Time, the Paying Agent shall deliver to the Surviving Corporation all
cash, Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing a
Common Share may surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price relating thereto, without any
interest or dividends thereon.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Common Shares which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing Common Shares are presented
to the Surviving Corporation or the Paying Agent, they shall be surrendered and
cancelled in return for the payment of the aggregate Merger Price relating
thereto, as provided in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser
that except as set forth in the Company Disclosure Schedule (as hereinafter
defined):
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<PAGE> 13
SECTION 4.01 Organization and Qualification; Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company and each of its
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on the Company. The term "Material Adverse Effect on the
Company", as used in this Agreement, means any change in or effect on the
business, assets, financial condition or results of operation of the Company or
any of its subsidiaries that is materially adverse to the Company and its
subsidiaries taken as a whole.
SECTION 4.02 Charter; By-Laws and Rights Agreement. The
Company has heretofore made available to Parent and the Purchaser a complete and
correct copy of the articles of incorporation and the by-laws or comparable
organizational documents, each as amended to the date hereof, of the Company and
each of its subsidiaries and has made available a complete and correct copy of
the Rights Agreement as amended to the date hereof.
SECTION 4.03 Capitalization; Subsidiaries. The authorized
capital stock of the Company consists of 30,000,000 Common Shares and 10,000,000
shares of Series Preferred Stock, par value $.01 per share (the "Series
Preferred Stock") and 60,000 shares of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Junior Preferred Stock", and together with
the Series Preferred Stock, the "Preferred Stock"). As of the close of business
on March 15, 1996, 11,061,350 Common Shares were issued and outstanding, all of
which are entitled to vote on this Agreement, and no Common Shares were held in
treasury. As of the close of business on March 15, 1996 there were no shares of
Preferred Stock issued and outstanding. The Company has no shares reserved for
issuance, except that, as of March 15, 1996, there were 523,600 Common Shares
reserved for issuance pursuant to outstanding Options granted under the Stock
Plans and 60,000 shares of Series A Junior Participating Preferred Stock
reserved for issuance upon exercise of the Rights. As
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<PAGE> 14
of the date hereof, the Company has options to purchase 523,600 Common Shares
outstanding issued to persons listed (including exercise price and expiration
date) in Section 4.03 of the disclosure schedule delivered to Parent by the
Company on the date hereof (the "Company Disclosure Schedule"). Since March 15,
1996, the Company has not issued any shares of capital stock except pursuant to
the exercise of Options outstanding as of such date. All the outstanding Common
Shares are, and all Common Shares which may be issued pursuant to the exercise
of outstanding Options will be, when issued in accordance with the respective
terms thereof, duly authorized, validly issued, fully paid and nonassessable and
are not subject to, nor were they issued in violation of, any pre-emptive
rights. There are no bonds, debentures, notes or other indebtedness having
general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its subsidiaries issued and
outstanding. Except as set forth above or for the Rights and except for the
transactions contemplated by this Agreement, there are no existing options,
warrants, calls, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its subsidiaries, obligating the Company or any of its
subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its subsidiaries or securities convertible into or
exchangeable for such shares or equity interests and neither the Company nor any
of its subsidiaries is obligated to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment. Except as contemplated by this Agreement or the Rights Agreement and
except for the Company's obligations in respect of the Options under the Stock
Plans, there are no outstanding contractual obligations of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any Common Shares or
the capital stock of the Company or any of its subsidiaries. Each of the
outstanding shares of capital stock of each of the Company's subsidiaries is
duly authorized, validly issued, fully paid, and to the extent applicable,
nonassessable, and, except as set forth in Section 4.03 of the Company
Disclosure Schedule such shares of the Company's subsidiaries as are owned by
the Company or by a subsidiary of the Company are owned in each case free and
clear of any lien, claim, option, charge, security interest, limitation,
encumbrance and restriction of any kind (any of the foregoing being a "Lien").
Set forth in Section 4.03 of the Company Disclosure Schedule is a complete and
correct list of each subsidiary (direct or indirect) of the Company and any
joint ventures, partnerships or similar
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<PAGE> 15
arrangements in which the Company has an interest (and the amount and percentage
of any such interest). No entity in which the Company owns, directly or
indirectly, less than a 50% equity interest is, individually or when taken
together with all such other entities, material to the business of the Company
and its subsidiaries taken as a whole.
SECTION 4.04 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized and
approved by the Company Board and no other corporate proceedings on the part of
the Company are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval of this Agreement by the affirmative vote of the holders of
a majority of the then outstanding Common Shares entitled to vote thereon, to
the extent required by applicable law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
are made and the waiting periods thereunder have been terminated or have
expired, (ii) the requirements of the Exchange Act and any applicable state
securities, "blue sky" or takeover law are met, (iii) the filing of the
certificates of merger and other appropriate merger documents, if any, as
required by the MBCA and the GCL, is made and (iv) approval of this agreement by
a majority of the holders of Common Shares, if required by the MBCA, is
received, none of the execution and delivery of this Agreement by the Company,
the consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will (i) conflict
with or violate the Articles of Incorporation or By-Laws of the Company or the
comparable organizational documents of any of
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<PAGE> 16
its subsidiaries, (ii) conflict with or violate any statute, ordinance, rule,
regulation, order, judgment or decree applicable to the Company or any of its
subsidiaries, or by which any of them or any of their respective properties or
assets may be bound or affected, or (iii) result in a violation or breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in any loss of any
material benefit, or the creation of any Lien on any of the property or assets
of the Company or any of its subsidiaries (any of the foregoing referred to in
clause (ii) or this clause (iii) being a "Violation") pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties may be bound or affected, except in the case
of the foregoing clauses (ii) or (iii) for any such Violations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, or would not, individually or in the aggregate,
reasonably be expected to prevent or materially delay consummation of the
transactions contemplated by this Agreement.
(b) None of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any United States or Brazilian government or subdivision thereof, or
any United States or Brazilian administrative, governmental or regulatory
authority, agency, commission, tribunal or body (a "Governmental Entity"),
except for (i) compliance with any applicable requirements of the Exchange Act
and any state securities, "blue sky" or takeover law, (ii) the filing of
certificates of merger, pursuant to the MBCA and the GCL, (iii) compliance with
the HSR Act and any requirements of any foreign or supranational Antitrust Laws
(as hereinafter defined), (iv) such filings, authorizations, orders and
approvals, as set forth on the Company Disclosure Schedule, required under
foreign laws, and (v) Consents the failure of which to obtain or make would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or reasonably be expected to prevent or materially delay consummation of the
transactions contemplated by this Agreement.
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<PAGE> 17
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Company with the SEC since May 6, 1994 (as they have been
amended since the time of their filing, collectively, the "SEC Reports"). As of
their respective dates, the SEC Reports (including but not limited to any
financial statements or schedules included or incorporated by reference therein)
complied in all material respects with the requirements of the Exchange Act or
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations of the SEC promulgated thereunder applicable, as the case may be, to
such SEC Reports, and none of the SEC Reports contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Company has
heretofore furnished to Parent the latest available drafts of filings to be made
with the SEC pursuant to the Exchange Act and the rules and regulation
promulgated thereunder in each case which have not been filed with the SEC,
including without limitation drafts of the Company's annual report on Form 10-K
for fiscal year 1995 and the Company's Annual Report to Shareholders,
(collectively, the "Draft Filings"). Except to the extent revised or superseded
by a subsequent filing with the SEC made prior to the date hereof, none of the
SEC Reports filed by the Company since December 31, 1994 and prior to the date
hereof contain any untrue statement of a material fact required to be stated or
incorporated by reference therein, or necessary to make the statement made
therein, in light of the circumstances under which they were made, not
misleading. Each of the Draft Filings will comply when filed as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder, and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated or
incorporated by reference therein, or necessary to make the statement made
therein, in light of the circumstances under which they were made, not
misleading.
(b) The consolidated balance sheets as of December 31, 1995
and 1994 and the consolidated statements of income, common shareholders' equity
and cash flows for each of the three years in the period ended December 31, 1995
(including the related notes and schedules thereto) of the Company contained in
the draft Form 10-K for the year ended December 31, 1995 present fairly in all
material respects the
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<PAGE> 18
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated subsidiaries as of the dates or
for the periods presented therein and were prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved except as otherwise noted therein, including
the related notes.
(c) Except as reflected, reserved against or otherwise
disclosed in the financial statements of the Company included in the SEC Reports
or as otherwise disclosed in the SEC Reports, in each case, filed prior to the
date of this Agreement, the Draft Filings or as set forth in Section 4.06(d) of
the Company Disclosure Schedule, as of the date hereof, neither the Company nor
any of its subsidiaries have any liabilities or obligations (absolute, accrued,
fixed, contingent or otherwise) which would be required to be reflected on a
balance sheet or the notes thereto prepared in accordance with GAAP, other than
liabilities incurred in the ordinary course of business consistent with past
practice since December 31, 1995 which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(d) The Company has heretofore furnished to Parent a complete
and correct copy of any amendments or modifications which have not yet been
filed with the SEC to agreements (including the Rights Agreement), documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act and the rules and regulations promulgated
thereunder or the Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 4.07 Environmental Laws and Regulations. Except as disclosed in
the SEC Reports, the Company and its subsidiaries are in compliance with all
applicable United States federal and state laws and regulations and Brazilian
laws and regulations, as in effect on the date hereof, relating to the
protection of the environment (collectively, "Environmental Laws"), except for
violations of Environmental Laws that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
SECTION 4.08 Compliance with Applicable Laws. Except with respect to
Environmental Laws which are covered in Section 4.07, the Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities, except for such permits, licenses,
variances, exemptions, orders and approvals the failure of which to hold would
not have a Material Adverse Effect
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<PAGE> 19
on the Company (the "Company Permits"). The Company and its subsidiaries are in
compliance with the terms of the Company Permits, except for such failures to
comply which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Except with respect to Environmental Laws which
are covered in Section 4.07, the business operations of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
SECTION 4.09 Change of Control. The transactions contemplated by this
Agreement will not constitute a "change of control" under, require the consent
from or the giving of notice to a third party pursuant to, or accelerate vesting
or repurchase rights under the terms, conditions or provisions of any
employment, compensation, termination or severance agreement, or other
instrument or obligation of the Company or any of its subsidiaries. The total
amounts payable to the executives identified in Section 4.09 of the Company
Disclosure Schedule, as a result of the transactions contemplated by this
Agreement and/or any subsequent employment termination (excluding any cash-out
or acceleration of options and restricted stock but including any "gross-up"
payments with respect thereto), based on compensation data applicable as of the
date hereof, calculated assuming effective tax rates of 39.6%, will not exceed
the amount set forth on such schedule.
SECTION 4.10 Litigation. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement, there is as of the date hereof no suit,
claim, action, proceeding or investigation pending or, to the knowledge of the
Company, threatened, against the Company or any of its subsidiaries before any
Governmental Entity which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company or would prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. Except as disclosed in the SEC Reports filed prior to the date of
this Agreement, neither the Company nor any of its subsidiaries is subject to
any outstanding order, writ, injunction or decree which, individually or in the
aggregate, would have a Material Adverse Effect on the Company or would prevent
or materially delay the consummation of the transactions contemplated hereby.
SECTION 4.11 Information. None of the information supplied by the
Company in writing specifically for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) the Proxy Statement or (iii) any other document to
be
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filed with the SEC or any other Governmental Entity in connection with the
transactions contemplated by this Agreement (the "Other Filings") will, at the
respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to shareholders, at the time of the Special Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by the Company
with respect to statements made therein based on information supplied by Parent
or the Purchaser in writing specifically for inclusion in the Proxy Statement.
SECTION 4.12 Certain Approvals. Section 780 of Chapter 7A and Chapter
7B of the MBCA are not applicable to the Company and the Company Board has not
taken any action which would subject the Company to the requirements of such
statutes.
SECTION 4.13 Employee Benefit Plans. The Company has delivered to
Parent true, complete and correct copies of each writing constituting a part of
the employee benefit plans of the Company and its subsidiaries, including
without limitation the Stock Plans, any employment agreements or any severance
agreements, arrangements or plans (such writings to include, as applicable, plan
documents, benefit descriptions, benefit schedules, trust agreements, and
insurance contracts and other funding vehicles) and, in the case of any
unwritten employee benefit plan, a written description thereof (collectively the
"Employee Plans"). All Employee Plans that are "employee benefit plans" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained or contributed to by the Company and its
subsidiaries are in compliance with the applicable provisions of ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"), except for instances of
non-compliance that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 4.14 Taxes.
(a) The Company and each of its subsidiaries has duly filed
all federal, state, local and foreign income
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Tax Returns (as hereinafter defined) required to be filed by it, and all other
material Tax Returns required to be filed by it except in the case of such other
Tax Returns where the failure to so file will not have a Material Adverse Effect
on the Company, and has duly paid or caused to be paid all Taxes (as hereinafter
defined) shown to be due on such Tax Returns in respect of the periods covered
by such returns and has made adequate provision in the Company's financial
statements for payment of all material Taxes anticipated to be payable in
respect of all taxable periods or portions thereof ending on or before the date
hereof. The Company Disclosure Schedule lists the periods through which the Tax
Returns required to be filed by the Company have been examined by the Internal
Revenue Service (the "IRS"), the Brazilian taxing authority ("Brazilian Taxing
Authority") or other appropriate taxing authority, or the period during which
any assessments may be made by the IRS, the Brazilian Taxing Authority or other
appropriate taxing authority has expired. All material deficiencies and
assessments asserted as a result of such examinations or other audits by
federal, state, local or foreign taxing authorities have been paid, fully
settled or adequately provided for in the Company's financial statements, and no
issue or claim has been asserted in writing for any material Taxes by any taxing
authority for any prior period, the adverse determination of which would result
in a deficiency which would have a Material Adverse Effect on the Company,
other than those heretofore paid or provided for in the Company's financial
statements. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return of the Company or
any of its subsidiaries. Except as set forth in the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party to any agreement,
contract or arrangement that could result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
280G of the Code. Neither the Company nor any of its subsidiaries (i) has been a
member of a group filing consolidated returns for federal income tax purposes,
or (ii) is a party to a tax sharing or tax indemnity agreement or any other
agreement of a similar nature that remains in effect.
(b) For purposes of this Agreement, the term "Taxes" means all
taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes of
this Agreement, the term "Tax Return" means any report, return or other
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information or document required to be supplied to a taxing authority in
connection with Taxes.
SECTION 4.15 Rights Agreement. The Company has taken all necessary
action pursuant to the Rights Agreement to provide that no "Triggering Event" or
"Distribution Date" (as such terms are defined in the Rights Agreement) will
occur, in each case as a result of the announcement, commencement or
consummation of the Amended Offer or Merger, the execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 4.16 Brokers. Except for the engagement of First Boston, none
of the Company, any of its subsidiaries, or any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement. The Company has previously
delivered to Parent a copy of the Company's engagement letter with First Boston
and the addendum thereto.
SECTION 4.17 Opinion of Financial Advisor. The Company has received the
written opinion of First Boston, its financial advisor, to the effect that, as
of March 27, 1996, the consideration to be received in the Amended Offer and the
Merger, taken as a whole, by the Company's shareholders is fair to the Company's
shareholders from a financial point of view. The Company has previously
delivered to Parent a copy of such opinion.
SECTION 4.18 Absence of Certain Changes. Except as previously disclosed
in the SEC Reports or the draft annual report to shareholders included in the
Draft Filings or as otherwise disclosed in Section 4.18 of the Company
Disclosure Schedule or as otherwise contemplated by this Agreement, since
December 31, 1995 (i) there has not been any Material Adverse Effect on the
Company (without regard, however, to changes in conditions generally applicable
to the industries in which the Company and its subsidiaries are involved or
general economic conditions); (ii) the businesses of the Company and each of its
subsidiaries have been conducted only in the ordinary course; (iii) neither the
Company nor any of its subsidiaries has incurred any material liabilities
(direct, contingent or otherwise) or engaged in any material transaction or
entered into any material agreement outside the ordinary course of business;
(iv) neither the Company nor any of its subsidiaries has taken any action
referred to in Section 6.01 hereof except as permitted thereby; (v) there has
not been any material revaluation by
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<PAGE> 23
the Company of any of its assets, including but not limited to materially
writing down the value of inventory or materially writing off notes or accounts
receivable other than in the ordinary course of business; (vi) there has not
been any declaration, setting aside or payment of any dividends or distributions
in respect of the Shares or any redemption, purchase or other acquisition of any
of its securities, except the regular quarterly dividend on the Shares at the
rate of $.04 per Share; (vii) there has not been any issuance of any shares of
capital stock of the Company of any of its subsidiaries (other than in
connection with the exercise of Options) or any grant or issuance of any
options, calls, warrants, or other rights, agreements, arrangements or
commitments of any kind or character relating to the issuance of capital stock
of the Company or any of its subsidiaries; (viii) there has not been any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan or agreement or arrangement, or any other increase in the
compensation payable or to become payable to any present or former directors,
officers or employees of the Company or any of its subsidiaries, except for
increases in base compensation in the ordinary course of business, or any
employment, consulting or severance agreement or arrangement entered into with
any such present or former directors, officers or employees; and (ix) there has
been no change by the Company in accounting principles, practices or methods.
SECTION 4.19 Labor Matters. No work stoppage involving the Company or
any of its subsidiaries is pending or threatened which would reasonably be
expected to have a Material Adverse effect on the Company. Neither the Company
nor any of its subsidiaries is involved in, threatened with or affected by any
labor dispute, arbitration, lawsuit or administrative proceeding which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Except as set forth in the SEC Reports, employees
of the Company or of any of its subsidiaries are not represented by any labor
union or any collective bargaining organization and, to the best knowledge of
the Company or its subsidiaries, no labor union is attempting to organize
employees of the Company or any of its subsidiaries.
SECTION 4.20 Vote Required. The affirmative vote of the holders of a
majority of the outstanding Common Shares entitled to vote with respect to this
Agreement is the only vote of the holders of any class or series of the
Company's
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capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of Ohio and
each material subsidiary of Parent is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Parent and each of
its material subsidiaries (including the Purchaser) has the requisite corporate
power and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction in which the nature of
its business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
have such power or authority, or the failure to be so qualified, licensed or in
good standing, would not have a Material Adverse Effect on Parent. The term
"Material Adverse Effect on Parent", as used in this Agreement, means any change
in or effect on the business, assets, financial condition or results of
operation of Parent or any of its subsidiaries that would be materially adverse
to Parent and its subsidiaries taken as a whole.
SECTION 5.02 Authority Relative to this Agreement. Each of Parent and
the Purchaser has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent and the Purchaser and the
consummation by Parent and the Purchaser of the transactions contemplated hereby
have been duly and validly authorized and approved by the respective Boards of
Directors of Parent and the Purchaser and by Parent as sole stockholder of the
Purchaser and no other corporate proceedings on the part of Parent or the
Purchaser are necessary to authorize or approve this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been
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<PAGE> 25
duly executed and delivered by each of Parent and the Purchaser and, assuming
the due and valid authorization, execution and delivery by the Company,
constitutes a valid and binding obligation of each of Parent and the Purchaser
enforceable against each of them in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under the HSR Act are
made and the waiting periods thereunder have been terminated or have expired,
(ii) the requirements of the Exchange Act and any applicable state securities,
"blue sky" or takeover law are met and (iii) the filing of the certificates of
merger and other appropriate merger documents, if any, as required by the MBCA
and the GCL is made, none of the execution and delivery of this Agreement by
Parent or the Purchaser, the consummation by Parent or the Purchaser of the
transactions contemplated hereby or compliance by Parent or the Purchaser with
any of the provisions hereof will (i) conflict with or violate the
organizational documents of Parent or the Purchaser, (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to Parent or the Purchaser or any of their subsidiaries, or by which
any of them or any of their respective properties or assets may be bound or
affected, or (iii) result in a Violation pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or the Purchaser, or any of their
subsidiaries, is a party or by which any of their respective properties or
assets may be bound or affected, except in the case of the foregoing clauses
(ii) and (iii) for any such Violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent or
would not, individually or in the aggregate, reasonably be expected to prevent
or materially delay consummation of the transactions contemplated by this
Agreement.
(b) None of the execution and delivery of this Agreement by
Parent and the Purchaser, the consummation by Parent and the Purchaser of the
transactions contemplated hereby or compliance by Parent and the Purchaser with
any of the provisions hereof will require any Consent of any Governmental
Entity, except for (i) compliance with any applicable requirements of the
Exchange Act and any state securities
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<PAGE> 26
"blue sky" or takeover law, (ii) the filing of certificates of merger pursuant
to the MBCA and the GCL, (iii) compliance with the HSR Act and any requirements
of any foreign or supranational Antitrust Laws and (iv) Consents the failure of
which to obtain or make would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or materially adversely affect the ability of
Parent or reasonably be expected to prevent or materially delay consummation of
the transactions contemplated by this Agreement.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Schedule 14D-9, (ii) the Proxy Statement or (iii) the Other Filings
will, at the respective times filed with the SEC or such other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is
mailed to shareholders, at the time of the Special Meeting and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5.05 Financing. Parent has and will cause the Purchaser to have
available to it the funds necessary to consummate the Amended Offer and the
Merger and the transactions contemplated hereby.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as permitted,
required or specifically contemplated by, or otherwise described in, this
Agreement or otherwise with the prior written consent of Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and will use
its reasonable efforts, and will cause each of its subsidiaries to use its
reasonable efforts, to preserve intact the business organization of the Company
and each of its subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the good will of those
having business relationships with it, including, without limitation,
maintaining satisfactory relationships with
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<PAGE> 27
licensors, suppliers, distributors, customers and others having business
relationships with the Company. Without limiting the generality of the
foregoing, and except as otherwise expressly permitted, required or specifically
contemplated by, or otherwise described in, this Agreement, the Company will
not, and will not permit any of its subsidiaries to, prior to the Effective
Time, without the prior written consent of Parent:
(a) adopt any amendment to its Articles of Incorporation or
By-Laws or comparable organizational documents or the Rights Agreement;
(b) (i) issue, reissue, pledge or sell, or authorize the
issuance, reissuance, pledge or sale of (A) additional shares of capital stock
of any class, or securities convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible securities or capital
stock, other than the issuance of Common Shares (and the related Rights), in
accordance with the terms of the instruments governing such issuance on the date
hereof, pursuant to the exercise of Options outstanding on the date hereof, or
(B) any other securities in respect of, in lieu of, or in substitution for,
Shares outstanding on the date hereof or (ii) make any other changes in its
capital structure;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other than
between any of the Company and any of its wholly owned subsidiaries, except for
the regular quarterly dividend on the Common Shares not in excess of $0.04 per
Common Share with a record and payment date in accordance with recent practice;
provided that such dividend may not be declared if Common Shares are accepted
for payment in accordance with the Amended Offer and this Agreement prior to
June 1, 1996;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(e) except for (i) increases in salary, wages and benefits
granted to employees of the Company or its subsidiaries (who are not officers)
in conjunction with promotions or other changes in job status or normal
compensation reviews in the ordinary course of business consistent with
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<PAGE> 28
past practice, or (ii) increases in salary, wages and benefits to employees of
the Company pursuant to collective bargaining agreements entered into in the
ordinary course of business consistent with past practice: increase the
compensation or fringe benefits payable or to become payable to its directors,
officers or employees (whether from the Company or any of its subsidiaries), or
pay or award any benefit not required by any existing plan or arrangement to any
officer, director or employee (including, without limitation, the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units pursuant to the Stock Plans or otherwise), or grant any
severance or termination pay to any officer, director or other employee of the
Company or any of its subsidiaries (other than as required by existing
agreements or policies described in the Company Disclosure Schedule), or enter
into any employment or severance agreement with, any director, officer or other
employee of the Company or any of its subsidiaries or establish, adopt, enter
into, amend or waive any performance or vesting criteria under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, savings, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan, agreement,
trust, fund, policy or arrangement for the benefit or welfare of any current or
former directors, officers or current or former employees of the Company or its
subsidiaries (any of the foregoing being an "Employee Benefit Arrangement"),
except, in each case, to the extent required by applicable law or regulation;
(f) acquire, sell, lease or dispose of any material assets or
securities, or enter into any commitment to do any of the foregoing or enter
into any commitment or transaction outside the ordinary course of business other
than transactions between a wholly owned subsidiary of the Company and the
Company or another wholly owned subsidiary of the Company;
(g) (i) incur, assume or pre-pay any long-term debt or incur
or assume any short-term debt, except that the Company and its subsidiaries may
incur or pre-pay debt in the ordinary course of business in amounts and for
purposes consistent with past practice, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except in the ordinary course
of business consistent with past practice, or (iii) make any loans, advances or
capital contributions to, or investments in, any other person except in the
ordinary course of business consistent with past practice and except for loans,
advances,
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<PAGE> 29
capital contributions or investments between any wholly owned subsidiary of the
Company and the Company or another wholly owned subsidiary of the Company;
(h) other than in the ordinary course of business consistent
with past practice, (i) modify, amend or terminate any material contract, (ii)
except as required by law, waive, release, relinquish, settle, compromise or
assign any material contract (or any of the Company's rights thereunder), right
or claim, or (iii) cancel or forgive any indebtedness owed to the Company or any
of its subsidiaries except in ordinary course of business consistent with past
practice; provided, however, that the Company may not under any circumstance
waive or release any of its rights under any written confidentiality agreement
(except that provisions limiting control-related activities may be waived if the
Company's Board of Directors determines in good faith, upon the advice of its
outside counsel, that its fiduciary duties require it to do so) to which it is a
party;
(i) make any material tax election not required by law or,
except as required by law, settle or compromise any material tax liability;
(j) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof;
(k) enter into any contract or agreement other than in the
ordinary course of business that would be material to the Company and its
subsidiaries taken as a whole;
(l) except as may be required as a result of a change in law
or in generally accepted accounting principles, make any change in its methods
of accounting; or
(m) agree in writing or otherwise to take any of the foregoing
actions prohibited under this Section 6.01 or any action which would cause any
representation or warranty in this Agreement to be or become untrue or incorrect
in any material respect.
SECTION 6.02 Access to Information; Confidentiality. (a) From the date
of this Agreement until the Effective Time, the Company will, and will cause its
subsidiaries, and each of their respective officers, directors, employees,
counsel, advisors and representatives (collectively, the "Company
Representatives") to, give Parent and the Purchaser and their respective
officers, employees, counsel, advisors
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<PAGE> 30
and representatives (collectively, the "Parent Representatives") reasonable
access (subject, however, to existing confidentiality and similar non-disclosure
obligations and the preservation of attorney client and work product
privileges), during normal business hours, to the offices and other facilities
and to the books and records of the Company and its subsidiaries and will cause
the Company Representatives and the Company's subsidiaries to furnish Parent,
the Purchaser and the Parent Representatives to the extent available with such
financial and operating data and such other information with respect to the
business and operations of the Company and its subsidiaries as Parent and the
Purchaser may from time to time reasonably request. The Company shall furnish
promptly to Parent and the Purchaser a copy of each report, schedule,
registration statement and other document filed by it or its subsidiaries during
such period pursuant to the requirements of federal or state securities laws.
(b) Prior to the Effective Time, Parent and the Purchaser shall not
disclose (other than to their respective officers, directors, employees,
counsel, advisors and representatives who have been advised of the
confidentiality obligations hereunder and who need to have access to the non-
public information mentioned below), and shall not permit their respective
officers, directors, employees, counsel, advisors and representatives to so
disclose, any non-public information obtained from the Company in connection
with this Agreement and the transactions contemplated hereby until such time as
such information is otherwise publicly available (other than due to disclosure
by Parent or the Purchaser in breach of any obligation of confidentiality to the
Company or its subsidiaries) or except as otherwise required by applicable law
or judicial process. In the event this Agreement is terminated pursuant to
Section 8.01 hereof, Parent and the Purchaser shall, if requested by the
Company, return such information to the Company if it is in its original form
and destroy all other such information.
SECTION 6.03 Reasonable Best Efforts.
(a) Subject to the terms and conditions provided herein, each of the
Company, Parent and the Purchaser shall, and the Company shall cause each of its
subsidiaries to, cooperate and use their respective reasonable best efforts to
take, or cause to be made, all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including but not limited to
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Proxy Statement, any required filings under the
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<PAGE> 31
HSR Act, or other foreign filings and any amendments to any thereof.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries should be discovered by the Company or Parent, as
the case may be, which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments,the proper
officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such necessary action.
(b) Each of the parties will use its reasonable best efforts to obtain
as promptly as practicable all Consents of any Governmental Entity or any other
person required in connection with, and waivers of any Violations that may be
caused by, the consummation of the transactions contemplated by the Amended
Offer and this Agreement.
SECTION 6.04 Public Announcements. The Company, on the one hand, and
Parent and the Purchaser, on the other hand, agree to consult promptly with each
other prior to issuing any press release or otherwise making any public
statement with respect to the Offer, the Amended Offer, the Merger and the other
transactions contemplated hereby, agree to provide to the other party for review
a copy of any such press release or statement, and shall not issue any such
press release or make any such public statement prior to such consultation and
review, unless required by applicable law or any listing agreement with a
securities exchange.
SECTION 6.05 Employee Benefit Arrangements. Parent agrees that the
Company will honor and, from and after the Effective Time, Parent will cause the
Surviving Corporation to honor, all obligations under Employee Benefit
Arrangements to which the Company and/or any of its subsidiaries is presently a
party which are listed in Section 6.05 of the Company Disclosure Schedule.
Notwithstanding the foregoing, from and after the Effective Time, subject to the
remaining provisions of this Section 6.05, the Surviving Corporation shall have
the right to amend, modify, alter or terminate any Employee Benefit
Arrangements, provided that any such action shall not adversely affect the
rights or benefits of any employees or other beneficiaries which shall have
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<PAGE> 32
arisen thereunder prior to such amendment, modification, alteration or
termination, and shall not affect any rights or benefits for which the agreement
of the other party or a beneficiary is required as a condition to any such
amendment, modification, alteration or termination; and provided, further, that
neither Parent nor any subsidiary of Parent (including without limitation the
Surviving Corporation) shall at any time take any action to amend, modify, alter
or terminate the CAPCO Automotive Products Corporation Directors Unfunded
Deferred Fee Plan, as in effect on the date hereof, with respect to any
individual who is a participant therein as of the date hereof, without that
individual's written consent. Notwithstanding the foregoing, for a period of one
year following the Effective Time, Parent shall cause the Surviving Corporation
to continue to provide to individuals who are employees of the Company and/or
its subsidiaries immediately prior to the Effective Time (each, a "Company
Employee" and collectively, the "Company Employees") Fringe Benefits (as
hereinafter defined) which are in the aggregate no less favorable than those
provided to such employees as of the date hereof; provided that nothing in this
sentence shall be deemed to limit or otherwise affect the right of the Surviving
Corporation to terminate the employment or change the place of work,
responsibilities, status or designation of any Company Employee or group of
Company Employees as the Surviving Corporation may determine in the exercise of
its business judgment and in compliance with the terms of any applicable
employment or retainer agreement to which the Company and/or any of its
subsidiaries is presently a party and which is listed in Section 6.05 of the
Company Disclosure Schedule, and all applicable laws. For purposes of all
Employee Benefit Arrangements (including without limitation plans or programs of
Parent, the Surviving Corporation and other affiliates of Parent after the
Effective Time), all service with the Company or any of its subsidiaries prior
to the Effective Time shall be treated as service with Parent, the Surviving
Corporation and other affiliates of Parent for purposes of eligibility and
vesting thereunder, and Parent, the Surviving Corporation and the other
affiliates of Parent shall cause all such Employee Benefit Arrangements
(including without limitation plans or programs of Parent, the Surviving
Corporation and the other affiliates of Parent after the Effective Time) in
which Company Employees participate for the first time after the Effective Time
(x) to waive any pre-existing condition limitations otherwise applicable after
the Effective Time to any Company Employee, and (y) to provide that any expenses
incurred by Company Employees (and their dependents) during the calendar year of
the Effective Time shall be taken into account for purposes of satisfying
applicable deductible, coinsurance and maximum out-of-pocket
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provisions (and like adjustments or limitations on coverage) under such Employee
Benefit Arrangements. "Fringe Benefits" means only the following benefits: the
CAPCO Automotive Products Corporation Incentive Compensation Plan for Management
and any health, dental, pension, vacation, sick pay, prescription drug,
professional membership dues, life insurance, disability, severance, retirement
or savings plan, policy, program or arrangement.
SECTION 6.06 Indemnification.
(a) Parent agrees that all rights to indemnification now
existing in favor of any director or officer of the Company and its subsidiaries
(the "Indemnified Parties") as provided in their respective charters or by-laws
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time. After the Effective
Time, Parent agrees to cause the Surviving Corporation to honor all rights to
indemnification referred to in the preceding sentence.
(b) Parent agrees that the Company, and from and after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
for not less than four years (except as provided in the last sentence of this
Section 6.06(b)) from the Effective Time the current policies of the directors'
and officers' liability insurance maintained by the Company; provided that the
Surviving Corporation may substitute therefor other policies not less
advantageous (other than to a de minimis extent) to the beneficiaries of the
current policies and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess of 100% of the last annual
premium paid by the Company prior to the date hereof (which the Company
represents to be $720,000 for the 12-month period ending May 9, 1996) and if the
Surviving Corporation is unable to obtain the insurance required by this Section
6.06(b) it shall obtain the greatest comparable insurance coverage as possible
for an annual premium equal to such maximum amount. Notwithstanding the
foregoing, at any time on or after the second anniversary of the Effective Time,
Parent may, at its election, undertake to provide funds to the Surviving
Corporation to the extent necessary so that the Surviving Corporation may
self-insure with respect to the level of insurance coverage required under this
Section 6.06(b) in lieu of causing to remain in effect any directors' and
officers' liability insurance policy.
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(c) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Parent or the Surviving
Corporation shall have the right, from and after the purchase of Shares pursuant
to the Amended Offer, to assume the defense thereof and Parent shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) Parent shall not be liable for any
settlement effected without its prior written consent; and provided further that
Parent shall not have any obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
SECTION 6.07 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time or (ii)
to cause any material covenant, condition or agreement under this Agreement not
to be complied with or satisfied in all material respects and (b) any failure of
the Company or Parent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect; provided, however, that no such notification
shall affect the representations or warranties of any party or the conditions to
the obligations of any party hereunder. Each of the Company, Parent and the
Purchaser shall give prompt notice to the other parties hereof 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 6.08 Rights Agreement. The Company covenants and agrees that it
will not (i) redeem the Rights, (ii) amend the Rights Agreement in any material
respect or (iii) take any action which would allow any Person (as defined in the
Rights Agreement) other than Parent or the Purchaser to acquire beneficial
ownership of 20% or more of the Common Shares without causing a Distribution
Date or a
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<PAGE> 35
Triggering Event (as each term is defined in the Rights Agreement) to
occur.
SECTION 6.09 State Takeover Laws. The Company shall, upon the request
of the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement, including the Amended Offer and the Merger, of any state
takeover law.
SECTION 6.10 Disposition of Litigation.
(a) The parties hereto shall immediately dismiss, without
prejudice, with each party bearing its own costs and litigation expenses, all
proceedings pending between them and their affiliates (including their
respective directors), (collectively, the "Litigation") and each shall
thereafter sign and deliver such further papers as may be necessary to effect
such dismissals. The Company agrees that it will not settle any litigation
currently pending, or commenced after the date hereof, against the Company or
any of its directors by any shareholder of the Company relating to the Amended
Offer, the Merger or this Agreement, without the prior written consent of
Parent.
(b) The Company will not voluntarily cooperate with any third
party which has sought or may hereafter seek to restrain or prohibit or
otherwise oppose the Amended Offer or the Merger and will cooperate with Parent
and the Purchaser to resist any such effort to restrain or prohibit or otherwise
oppose the Amended Offer or the Merger.
SECTION 6.11 Proxy Contests. Parent hereby agrees to withdraw and
rescind and shall promptly cause to be withdrawn and rescinded (i) the notice by
Parent, dated March 13, 1996, pursuant to Section 3.5 of the Company's By-Laws,
(ii) the notice by Cede & Co., dated March 14, 1996, pursuant to Section 3.5 of
the Company's By-Laws, and (iii) the Schedule 14A filed with the SEC, in each
case, relating to the nomination of the persons named in such notices for
election to the Company Board at the Annual Meeting of the Company's
Shareholders. The Company shall as soon as possible indefinitely postpone its
annual meeting of shareholders currently scheduled for May 14, 1996, and shall
take no action unless compelled by legal process to reschedule such annual
meeting or to call a special meeting of shareholders of the Company except in
accordance with this Agreement, unless and until this Agreement has been
terminated in accordance with its terms.
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<PAGE> 36
SECTION 6.12 No Solicitation.
(a) 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 acquisition or exchange of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries or any business combination with the Company or any of its
subsidiaries. The Company agrees that, prior to the Effective Time, it shall
not, and shall not authorize or permit any of its subsidiaries or any of its or
its subsidiaries' directors, officers, employees, agents or representatives,
directly or indirectly, to solicit, initiate, knowingly encourage or actively
facilitate, or furnish or disclose non-public information in furtherance of, any
inquiries or the making of any proposal with respect to any merger, liquidation,
recapitalization, consolidation or other business combination involving the
Company or its subsidiaries or acquisition of any capital stock or any material
portion of the assets (except for acquisition of assets in the ordinary course
of business consistent with past practice) of the Company or its subsidiaries,
or any combination of the foregoing (an "Acquisition Transaction"), or
negotiate, explore or otherwise engage in substantive discussions with any
person (other than Purchaser, Parent or their respective directors, officers,
employees, agents and representatives) with respect to any Acquisition
Transaction or enter into any agreement, arrangement or understanding requiring
it to abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement; provided that the Company may
furnish information to, and negotiate or otherwise engage in substantive
discussions with, any party who delivers a written proposal for an Acquisition
Transaction if the Company Board determines in good faith by a majority vote,
based upon advice from its outside legal counsel, that failing to take such
action would constitute a breach of the fiduciary duties of the Company Board,
and such a proposal is more favorable to the Company's shareholders from a
financial point of view than the transactions contemplated by this Agreement.
(b) From and after the execution of this Agreement, the
Company shall promptly advise the Purchaser in reasonable detail of the receipt,
directly or indirectly, of any inquiries, discussions, negotiations or proposals
relating to an Acquisition Transaction, including without limitation identifying
the offeror and the terms of any proposal relating to an Acquisition
Transaction. The Company shall promptly advise Parent of any material
development
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<PAGE> 37
relating to such proposal, including the results of any discussions or
negotiations with respect thereto.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Shareholder Approval. The shareholders of the Company
shall have duly approved the transactions contemplated by this Agreement, if
required by applicable law.
(b) Purchase of Common Shares. The Purchaser shall have
accepted for payment and paid for Common Shares pursuant to the Amended Offer in
accordance with the terms hereof; provided that this condition shall be deemed
to have been satisfied with respect to Parent and the Purchaser if the Purchaser
fails to accept for payment or pay for Common Shares pursuant to the Amended
Offer in violation of the terms of the Amended Offer.
(c) Injunctions; Illegality. The consummation of the Merger
shall not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity which
prevents the consummation of the Merger or has the effect of making the purchase
of Common Shares illegal.
(d) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or terminated.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the shareholders of the Company (with
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<PAGE> 38
any termination by Parent also being an effective termination by the Purchaser):
(a) by the mutual written consent of Parent and the Company,
by action of their respective Boards of Directors;
(b) by the Company if (i) the Purchaser fails to commence the
Amended Offer as provided in Section 1.01 hereof, (ii) the Purchaser shall not
have accepted for payment and paid for Common Shares pursuant to the Amended
Offer in accordance with the terms thereof on or before June 30, 1996 (provided
that if any Governmental Entity has made a request for additional information
under the HSR Act, such date shall be extended to a date which is 30 days after
substantial compliance with such request, but in no event later than July 31,
1996) (the latest such date being referred to as the "Outside Date") or (iii)
the Purchaser fails to purchase validly tendered Common Shares in violation of
the terms of the Amended Offer or this Agreement;
(c) by Parent or the Company if the Amended Offer is
terminated or withdrawn pursuant to its terms without any Common Shares being
purchased thereunder; provided, however, that neither Parent nor the Company may
terminate this Agreement pursuant to this Section 8.01(c) if such party shall
have materially breached this Agreement or, in the case of Parent, if it or
the Purchaser is in material violation of the terms of the Amended Offer;
(d) by Parent or the Company if any court or other
Governmental Entity 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, Common Shares pursuant to the Amended
Offer or the Merger and such order, decree or ruling or other action shall have
become final and nonappealable, provided, that Parent shall, if necessary to
prevent the taking of such action, or the enforcement, promulgation, amendment,
issuance or application of any statute, rule, regulation, legislation, order or
injunction, offer to accept an order to divest such of the Company's or its
subsidiaries', as applicable, or Parent's assets and businesses as may be
necessary to forestall such injunction or order and to hold separate such assets
and business pending such divestiture, but only if the amount of such assets and
businesses is not material in relation to the assets or profitability of the
Company and its subsidiaries taken as a whole;
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<PAGE> 39
(e) by the Company if, prior to the purchase of Common Shares
pursuant to the Amended Offer in accordance with the terms of this Agreement,
the Company Board approves an agreement to effect a proposal made by a third
party to acquire all the outstanding Common Shares pursuant to a tender offer or
a merger, or purchase all or substantially all of the assets of the Company, on
terms which a majority of the members of the Company Board have determined in
good faith (i) based upon the advice of a nationally recognized investment
banker, to be more favorable to the Company and its shareholders than the
transactions contemplated by this Agreement and (ii) based upon the advice from
its outside counsel, that failure to approve such proposal and terminate this
Agreement would constitute a breach of fiduciary duties of the Company Board
under applicable law; provided that the termination described in this Section
8.01(e) shall not be effective unless and until the Company shall have paid to
Parent all of the fees and expenses described in Section 8.03(b);
(f) by Parent if the Company breaches its covenant in Section
6.08;
(g) by the Company prior to the consummation of the Amended
Offer, if (i) any of the representations and warranties of Parent or the
Purchaser contained in this Agreement were untrue or incorrect in any material
respect when made or have since become, and at the time of termination remain,
incorrect in any material respect which breach would adversely affect the
ability of Parent or the Purchaser to consummate the Amended Offer and the
Merger, or (ii) Parent or the Purchaser shall have breached or failed to comply
in any material respect with any of their respective obligations under this
Agreement, which breach shall not have been cured prior to the earlier of (A) 10
days following notice of such breach and (B) two business days prior to the date
on which the Amended Offer expires;
(h) by Parent prior to the purchase of Common Shares pursuant
to the Amended Offer, if (i) there shall have been a breach of any
representation or warranty on the part of the Company contained in this
Agreement which would reasonably be expected to have Material Adverse Effect on
the Company or which would reasonably be expected to prevent (or materially
delay) the consummation of the Amended Offer, (ii) there shall have been a
breach of any covenant or agreement on the part of the Company contained in this
Agreement which would reasonably be expected to have a Material Adverse Effect
on the Company or which would reasonably be expected to prevent (or materially
delay) the consummation of the Amended
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<PAGE> 40
Offer, which shall not have been cured prior the earlier of (A) 10 days
following notice of such breach and (B) two business days prior to the date on
which the Amended Offer expires, or (iii) the Company Board shall have withdrawn
or modified (including by amendment of the Schedule 14D-9) in a manner adverse
to the Purchaser its approval or recommendation of the Amended Offer, this
Agreement or the Merger and shall not have reinstated such approval or
recommendation within three business days thereof, shall have approved or
recommended another offer or transaction, or shall have resolved to effect any
of the foregoing;
(i) by Parent prior to the purchase of Common Shares pursuant
to the Amended Offer if the Minimum Condition (as defined in Annex I) shall not
have been satisfied by the expiration date of the Amended Offer and on or prior
to such date any of the following shall have occurred: (A) the acquisition of
the Company by merger, tender offer or otherwise by any person other than
Parent, the Purchaser or any affiliate thereof (a "Third Party"); (B) the
acquisition by a Third Party of 20.0% or more of the assets of the Company and
its subsidiaries, taken as a whole; (C) the acquisition by a Third Party of
beneficial ownership of more than 20.0% of the outstanding Common Shares; (D)
the adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; or (E) the repurchase by the Company or
any of its subsidiaries of 20.0% or more of the outstanding Common Shares at a
price in excess of $12.50 per Share; or
(j) by Parent prior to the purchase of Shares pursuant to the
Amended Offer, if the Minimum Condition shall not have been satisfied by the
expiration date of the Amended Offer and on or prior to such date any person
(other than Parent or the Purchaser) shall have made a proposal or public
announcement or communication to the Company with respect to an Acquisition
Transaction.
SECTION 8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or shareholders, other than the provisions of Section
6.02(b), Section 8.02 and Section 8.03, which shall survive any such
termination. Nothing contained in this Section 8.02 shall relieve any party from
liability for any breach of this Agreement.
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<PAGE> 41
SECTION 8.03 Fees and Expenses.
(a) Whether or not the Merger is consummated, except as
otherwise specifically provided herein, all costs and expenses incurred in
connection with the Amended Offer, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
(b) In the event that this Agreement is terminated pursuant to
Section 8.01(e), (f), (h)(iii) or (i), then the Company shall promptly (and in
any event within one business day after such termination) reimburse Parent for
the expenses of Parent and the Purchaser (including printing fees, filing fees
and fees and expenses of its legal and financial advisors) related to the
Initial Offer, this Agreement, the transactions contemplated hereby and any
related financing (collectively, "Expenses") up to a maximum of $500,000, and
pay Parent a termination fee of $5,000,000 (the "Termination Fee").
(c) In the event that this Agreement is terminated pursuant to
Section 8.01(j) and within 12 months of the date of termination of this
Agreement a transaction constituting an Acquisition Transaction is consummated
or the Company or any of its subsidiaries enters into an agreement with respect
to, approves or recommends or takes any action to facilitate such a transaction,
the Company shall promptly (and in any event within one business day thereafter)
reimburse Parent for its Expenses up to a maximum of $500,000 and pay Parent the
Termination Fee.
(d) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement may
be amended by the Company, Parent and the Purchaser at any time before or after
any approval of this Agreement by the shareholders of the Company but, after any
such approval, no amendment shall be made which decreases the Merger Price or
which adversely affects the rights of the Company's shareholders hereunder
without the approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of
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<PAGE> 42
any of the obligations or other acts of any other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any other
party or in any document, certificate or writing delivered pursuant hereto by
any other party or (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 3.01, the last sentence of the second paragraph of Section 6.03(a),
Section 6.06 and Section 6.07 shall survive the Effective Time indefinitely
(except to the extent a shorter period of time is explicitly specified therein).
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the
instruments referred to herein) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party (except that Parent may assign its rights and Purchaser may assign its
rights, interest and obligations to any affiliate or direct or indirect
subsidiary of Parent without the consent of the Company provided that no such
assignment shall relieve Parent of any liability for any breach by such
assignee. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of
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<PAGE> 43
this Agreement, each of which shall remain in full force and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
Eaton Corporation
Eaton Center
1111 Superior Avenue, N.E.
Cleveland, Ohio 44114
Attention: Gerald L. Gherlein, Esq.
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Daniel A. Neff, Esq.
If to the Company:
CAPCO Automotive Products Corporation
300 S. St. Louis Blvd.
Suite 202
South Bend, Indiana 46617
Attention: C. E. Cheesbrough
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
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<PAGE> 44
SECTION 9.06 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.08 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, except with respect
to Sections 1.03(c), 2.09 and 6.06, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 9.09 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or under
common control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b) the term "Person" or "person" shall include individuals,
corporations, partnerships, trusts, other entities and groups (which term shall
include a "group" as such term is defined in Section 13(d)(3) of the Exchange
Act); and
(c) the term "Subsidiary" or "subsidiaries" means, with
respect to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the Company or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
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<PAGE> 45
SECTION 9.10 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity, provided that this
Section 9.10 shall have no force and effect from and after the termination of
this Agreement in accordance with Section 8.01 and the payment by the Company of
any Expenses and the Termination Fee in accordance with Section 8.03.
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<PAGE> 46
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
EATON CORPORATION
By: /s/ Stephen R. Hardis
-------------------------------
Name: Stephen R. Hardis
Title: Chairman and Chief
Executive Officer
By: /s/ Gerald L. Gherlein
-------------------------------
Name: Gerald L. Gherlein
Title: Executive Vice President
and General Counsel
EATON ACQUISITION CORPORATION
By: /s/ Earl R. Franklin
-------------------------------
Name: Earl R. Franklin
Title: Vice President and
Secretary
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
By: /s/ F. Edmir Bertolaccini
-------------------------------
Name: F. Edmir Bertolaccini
Title: Chairman, CEO & President
- # -
<PAGE> 47
Annex I
Conditions to the Amended Offer. Notwithstanding any other provisions
of the Amended Offer, the Purchaser shall not be required to accept for payment
or pay for any tendered Common Shares, unless (i) there are validly tendered and
not properly withdrawn prior to the expiration date for the Amended Offer (the
"Expiration Date") that number of Common Shares which, when aggregated with the
805,000 Common Shares currently beneficially owned by Parent, represent at least
a majority of the total number of outstanding Common Shares on a fully diluted
basis on the date of purchase (not taking into account the Rights) (the "Minimum
Condition") and (ii) any applicable waiting period under the HSR Act or under
any applicable foreign statutes or regulations shall have expired or been
terminated. Furthermore, notwithstanding any other provisions of the Amended
Offer, the Purchaser may, subject to the terms of the Merger Agreement, amend or
terminate the Amended Offer or postpone the acceptance for payment of or payment
for tendered Common Shares if at any time on or after March 27, 1996 (unless
otherwise indicated below) and before the time of payment for any Common Shares,
any of the following events (each, an "Event") shall occur:
(a) there shall be any action taken, or any statute,
rule, regulation, legislation, interpretation, judgment, order or
injunction enacted, enforced, promulgated, amended, issued or deemed
applicable to the Amended Offer, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency, domestic or Brazilian, other than the routine application of
the waiting period provisions of the HSR Act to the Amended Offer or to
the Merger, that would reasonably be expected to: (i) make illegal or
otherwise prohibit or materially delay consummation of the Amended
Offer or the Merger or seek to obtain material damages or make
materially more costly the making of the Offer, (ii) prohibit or
materially limit the ownership or operation by Parent or the Purchaser
of all or any material portion of the business or assets of the Company
or any of its subsidiaries taken as a whole or compel Parent or the
Purchaser to dispose of or hold separately all or any material portion
of the business or assets of Parent or the Purchaser or the Company or
any of its subsidiaries taken as a whole, or seek to impose any
material limitation on the ability of Parent or the Purchaser to
conduct its business or own such assets, (iii) impose material
limitations on the ability of Parent or the Purchaser effectively to
acquire, hold or exercise full rights of ownership of the shares of
Common Shares, including, without limitation, the right
<PAGE> 48
to vote any Common Shares acquired or owned by the Purchaser or Parent
on all matters properly presented to the Company's shareholders, or
(iv) require divestiture by Parent or the Purchaser of any Common
Shares; provided, that Parent shall, if necessary to prevent the taking
of such action, or the enforcement, promulgation, amendment, issuance
or application of any statute, rule, regulation, legislation, order or
injunction, offer to accept an order to divest such of the Company's or
its subsidiaries', as applicable, or Parent's assets and businesses as
may be necessary to forestall such injunction or order and to hold
separate such assets and business pending such divestiture, but only if
the amount of such assets and businesses is not material in relation to
the assets or profitability of the Company and its subsidiaries taken
as a whole;
(b) there shall have occurred any development that
has, or would reasonably be expected to have, a material adverse effect
on the business, assets, financial condition or results of operations
of the Company and its subsidiaries taken as a whole; or
(c) (i) it shall have been publicly disclosed or
Purchaser shall have otherwise learned that beneficial ownership
(determined for the purposes of this paragraph as set forth in Rule
13d-3 promulgated under the Exchange Act) of more than 20.0% of the
outstanding Common Shares has been acquired by any person (including
the Company or any of its subsidiaries or affiliates) or group (as
defined in Section 13(d)(3) under the Exchange Act), (ii) the Company
Board or any committee thereof shall have withdrawn, or shall have
modified or amended in a manner adverse to Parent or the Purchaser, the
approval, adoption or recommendation, as the case may be, of the
Amended Offer, or the Merger Agreement, or approved or recommended any
other takeover proposal or other acquisition of Common Shares other
than the Amended Offer and the Merger, (iii) any corporation,
partnership, person or other entity or group shall have entered into a
definitive agreement or an agreement in principle with the Company with
respect to a tender offer or exchange offer for any Common Shares or a
merger, consolidation or other business combination with or involving
the Company or any of its subsidiaries, or (iv) the Company Board or
any committee thereof shall have resolved to do any of the foregoing;
or
(d) the Company and the Purchaser and Parent shall
have reached an agreement that the Amended Offer
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<PAGE> 49
or the Merger Agreement be terminated, or the Merger Agreement shall
have been terminated in accordance with its terms; or
(e) any of the representations and warranties of the
Company set forth in the Merger Agreement that are qualified as to
materiality shall not be true and correct, or any such representations
and warranties that are not so qualified shall not be true and correct
in any respect which would reasonably be expected to have a material
adverse effect on the business, assets, financial condition or results
of operations of the Company and its subsidiaries taken as a whole, in
each case as if such representations and warranties were made at the
time of such determination except as to any such representation or
warranty which speaks as of a specific date, which must be untrue or
incorrect in the foregoing respects as of such specific date; or
(f) the Company shall have failed to perform in any
material respect or to comply in any material respect with any of its
obligations, covenants or agreements under the Merger Agreement; or
(g) there shall have occurred, and continued to exist,
(i) any general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange, (ii) any decline of at least
25% in either the Dow Jones Average of Industrial Stocks or the
Standard & Poor's 500 Index from the close of business on the last
trading day immediately preceding the date of the Merger Agreement,
(iii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or Brazil and, in the
case of Brazil, would reasonably be expected to have a material adverse
effect on the business, assets, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, (iv) a
commencement of a war, armed hostilities or other national or
international crisis directly or indirectly involving the United States
or Brazil and, in the case of Brazil, would reasonably be expected to
have a material adverse effect on the business, assets, financial
condition or results of operations of the Company and its subsidiaries
taken as a whole, or (v) in the case of any of the foregoing clauses
(i) through (iv) existing at the time of the commencement of the
Amended Offer, a material acceleration or worsening thereof.
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<PAGE> 50
The foregoing conditions (including those set forth in clauses
(i) and (ii) of the initial paragraph) are for the benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived by Parent or
the Purchaser in whole or in part at any time and from time to time in their
reasonable discretion, in each case, subject to the terms of the Merger
Agreement. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time. Any determination by the Purchaser concerning the events
described in this Annex I will be final and binding on all parties.
The Amended Offer may be terminated by Purchaser if the Merger
Agreement is terminated pursuant to its terms.
The capitalized terms used in this Annex I shall have the
meanings set forth in the Agreement to which it is annexed, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
I is appended.
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