<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
AND
SCHEDULE 13D
(AMENDMENT NO. 1)
------------------------
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>
<CAPTION>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- ---------------------------------------------------------------------------------------------
<S> <C>
$117,424,450 $23,485
- ---------------------------------------------------------------------------------------------
</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 $11.00 cash per share, the number of shares of Common
Stock reported in the Quarterly Report on Form 10-Q of the subject company
for the quarter ended September 30, 1995 as outstanding as of November 1,
1995 (11,061,350) and the number of shares of Common Stock under option
reported in such Form 10-Q of the subject company (418,600).
** 1/50 of 1% of Transaction Valuation.
/ / 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>
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
CUSIP NO. 139168 10 8 14D-1
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Eaton Corporation
34-0196300
- ---------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) / /
(b) / /
- ---------------------------------------------------------------------------------------------
3. SEC Use Only
- ---------------------------------------------------------------------------------------------
4. Sources of Funds
OO
- ---------------------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or
2(f) / /
- ---------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Ohio
- ---------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
805,000
- ---------------------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares / /
- ---------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Approximately 7.3%
- ---------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
CUSIP NO. 139168 10 8 14D-1
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Eaton Acquisition Corporation
Pending
- ---------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(a) / /
(b) / /
- ---------------------------------------------------------------------------------------------
3. SEC Use Only
- ---------------------------------------------------------------------------------------------
4. Sources of Funds
AF
- ---------------------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or
2(f) / /
- ---------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- ---------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
805,000
- ---------------------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares / /
- ---------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Approximately 7.3%
- ---------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is CAPCO Automotive Products
Corporation, a Michigan corporation (the "Company"), and the address of its
principal executive offices is 300 S. St. Louis Boulevard, P.O. Box 208, South
Bend, Indiana 46624.
(b) The class of securities to which this statement relates is the Common
Stock, par value $0.01 per share (the "Common Stock"), of the Company, including
any 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 Common Stock and Rights are referred to collectively herein as
the "Shares"). The information set forth in the Introduction and Section 1 of
the Offer to Purchase (the "Offer to Purchase") filed herewith as Exhibit (a)(1)
is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) The information set forth in Section 9 of the Offer to
Purchase is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each director
and executive officer of Eaton Acquisition Corporation, a Delaware corporation
(the "Purchaser"), and Eaton Corporation, an Ohio corporation ("Parent"), and
the name, principal business and address of any corporation or other
organization in which such occupations, positions, offices and employments are
or were carried on are set forth in Schedule I of the Offer to Purchase and
incorporated herein by reference.
(e)-(f) During the last five years, none of the Purchaser or Parent or, to
the best of the Purchaser's and Parent's knowledge, any of the directors or
executive officers of the Purchaser or Parent has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person was or is subject to a
judgment, decree of final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such law.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction and Section 11 of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction and Sections 7 and 12
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in Section 11 and Schedule II of the
Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Section 11 of the Offer
to Purchase is incorporated herein by reference.
<PAGE> 5
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
(b)-(c) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(e) The information set forth under Section 15 of the Offer to Purchase is
incorporated herein by reference. See Exhibit (g).
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, filed herewith as Exhibit (a)(2), to the extent not otherwise
incorporated herein by reference, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated March 19, 1996.
(2) Letter of Transmittal with respect to the Shares and Rights.
(3) Notice of Guaranteed Delivery.
(4) Letter, dated March 19, 1996, to brokers, dealers, commercial banks,
trust companies and other nominees.
(5) Letter to be sent by brokers, dealers, commercial banks, trust
companies and other nominees to their clients.
(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(7) Eaton Corporation Press Release, dated March 13, 1996 (incorporated
by reference to Exhibit 2 to Form 13D filed by Eaton Corporation on March 18,
1996).
(8) Eaton Corporation Press Release dated March 14, 1996 (incorporated
by reference to Exhibit 4 to Form 13D filed by Eaton Corporation on March 18,
1996).
(9) Eaton Corporation Press Release dated March 18, 1996 (incorporated
by reference to Exhibit 5 to Form 13D filed by Eaton Corporation on March 18,
1996).
(10) Form of summary advertisement, dated March 19, 1996.
(b) None.
(c)(1) Manufacturing and Asset Purchase Agreement among Eaton Corporation,
Clark Automative Products Corporation and Equipamentos Clark Ltda., dated March
10, 1987 (incorporated by reference to Exhibit 10.2 of the Company's
Registration Statement on Form S-1, No. 33-75626).
(2) Extension and Amendment Agreement, among Eaton Corporation, Clark
Automotive Products Corporation and Equipamentos Clark Ltda., dated February 23,
1994 (incorporated by reference to Exhibit 10.3 of the Company's Registration
Statement on Form S-1, No. 33-75626).
<PAGE> 6
(3) Intellectual Property Acquisition Agreement, among Clark Equipment
Company, Equipamentos Clark Ltda. and Eaton Corporation, dated March 10, 1987,
including amendments thereto (incorporated by reference to Exhibit 10.1 of the
Company's Registration Statement on Form S-1, No. 33-75626).
(4) Transitional Services Agreement -- Brasil, between Eaton Corporation
do Brasil and Equipamentos Clark Ltda. dated March 10, 1987, including letter
amendment thereto (incorporated by reference to Exhibit 10.5 of the Company's
Registration Statement on Form S-1, No. 33-75626).
(d) None.
(e) Not applicable.
(f) None.
(g) Complaint in Eaton Corporation v. CAPCO Automotive Products
Corporation, Francisco Edmir Bertolaccini, Harold L. Bowman, David A. Brockway,
C.E. Cheesbrough, Thomas C. Clarke, William N. Harper and Jose Roberto Morato,
filed in the United States District Court for the Eastern District of Michigan,
Southern Division on March 13, 1996 (incorporated by reference to Exhibit 3 to
Schedule 13D filed by Eaton Corporation on March 18, 1996).
<PAGE> 7
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 19, 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> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
---------- -----------------------------------------------------------------------
<C> <C> <S> <C>
(a) (1) Offer to Purchase, dated March 19, 1996................................
(2) Letter of Transmittal with respect to the Shares and Rights............
(3) Notice of Guaranteed Delivery..........................................
(4) Letter, dated March 19, 1996, to brokers, dealers, commercial banks,
trust companies and other nominees...................................
(5) Letter to be sent by brokers, dealers, commercial banks, trust
companies and other nominees to their clients........................
(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9..................................................
(7) Eaton Corporation Press Release, dated March 13, 1996 (incorporated by
reference to Exhibit 2 to Schedule 13D filed by Eaton Corporation on
March 18, 1996)......................................................
(8) Eaton Corporation Press Release dated March 14, 1996 (incorporated by
reference to Exhibit 4 to Schedule 13D filed by Eaton Corporation on
March 18, 1996)......................................................
(9) Eaton Corporation Press Release dated March 18, 1996 (incorporated by
reference to Exhibit 5 to Schedule 13D filed by Eaton Corporation on
March 18, 1996)......................................................
(10) Form of summary advertisement, dated March 19, 1996....................
(b) None...................................................................
(c) (1) Manufacturing and Asset Purchase Agreement among Eaton Corporation,
Clark Automotive Products Corporation, and Equipamentos Clark Ltda.,
dated March 10, 1987 (incorporated by reference to Exhibit 10.2 of
the Company's Registration Statement on Form S-1, No. 33-75626)......
(2) Extension and Amendment Agreement, among Eaton Corporation, Clark
Automotive Products Corporation and Clark Equipment Company, dated
February 23, 1994 (incorporated by reference to Exhibit 10.3 of the
Company's Registration Statement on Form S-1, No. 33-75626)..........
(3) Intellectual Property Acquisition Agreement, among Clark Equipment
Company, Equipamentos Clark Ltda. and Eaton Corporation, dated March
10, 1987, including amendments thereto (incorporated by reference to
Exhibit 10.1 of the Company's Registration Statement on Form S-1, No.
33-75626)............................................................
(4) Transitional Services Agreement -- Brasil, between Eaton Corporation do
Brasil and Equipamentos Clark Ltda. dated March 10, 1987, including
letter amendment thereto (incorporated by reference to Exhibit 10.5
of the Company's Registration Statement on Form S-1, No. 33-75626)...
(d) None...................................................................
(e) Not applicable.........................................................
(f) None...................................................................
(g) Complaint in Eaton Corporation v. CAPCO Automotive Products
Corporation, Francisco Edmir Bertolaccini, Harold L. Bowman, David A.
Brockway, C.E. Cheesbrough, Thomas C. Clarke, William N. Harper and
Jose Roberto Morato, filed in the United States District Court for
the Eastern District of Michigan, Southern Division on March 13, 1996
(incorporated by reference to Exhibit 3 to Schedule 13D filed by
Eaton Corporation on March 18, 1996).................................
</TABLE>
<PAGE> 1
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
at
$11.00 NET PER SHARE IN CASH
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 OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER
THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES"),
OF CAPCO AUTOMOTIVE PRODUCTS CORPORATION (THE "COMPANY"), WHICH, TOGETHER WITH
THE SHARES OWNED BY EATON CORPORATION, CONSTITUTES A MAJORITY OF ALL OUTSTANDING
SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE, (2) THE RIGHTS (AS
DEFINED HEREIN) OF THE COMPANY HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF
THE COMPANY OR EATON ACQUISITION CORPORATION (THE "PURCHASER") BEING SATISFIED,
IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE MERGER (AS DEFINED HEREIN), (3) THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF CHAPTER 7A
("CHAPTER 7A") OF THE MICHIGAN BUSINESS CORPORATION ACT ("MBCA") ARE
INAPPLICABLE TO THE MERGER AND THE ACQUISITION OF SHARES PURSUANT TO THE OFFER,
OR THE MERGER HAVING BEEN APPROVED PURSUANT TO CHAPTER 7A AND (4) THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF CHAPTER 7B OF
THE MBCA ARE INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER.
THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION
AND SECTIONS 1, 14 AND 15.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (and the associated Rights) should either (1) complete and sign the
Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it (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 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.
Unless and until the Purchaser declares that the Rights Condition (as
defined herein) is satisfied, shareholders will be required to tender one Right
for each Share tendered in order to effect a valid tender of such Share. If the
Distribution Date (as defined herein) does not occur prior to the Expiration
Date (as defined herein), a tender of Shares will also constitute a tender of
Rights. If the Distribution Date occurs prior to the Expiration Date, the
procedures set forth in Section 2 with respect to the separate delivery of
certificates evidencing the Rights must be followed.
A Shareholder who desires to tender Shares and Rights and whose certificates
for such Shares (and Rights, if applicable) 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 Rights, if
applicable) by following the procedure for guaranteed delivery set forth in
Section 2.
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 Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal, 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.
------------------------
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
March 19, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Introduction.......................................................................... 1
The Tender Offer...................................................................... 4
1. Terms of the Offer............................................................ 4
2. Procedure for Tendering Shares and Rights..................................... 5
3. Withdrawal Rights............................................................. 9
4. Acceptance for Payment and Payment............................................ 10
5. Certain Federal Income Tax Consequences....................................... 11
6. Price Range of the Shares; Dividends on the Shares............................ 12
7. Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange
Act Registration; Margin Regulations........................................ 12
8. Certain Information Concerning the Company.................................... 13
9. Certain Information Concerning the Purchaser and Parent....................... 17
10. Source and Amount of Funds.................................................... 17
11. Contacts and Transactions with the Company; Background of the Offer........... 18
12. Purpose of the Offer; the Merger; Plans for the Company....................... 23
13. Dividends and Distributions................................................... 25
14. Certain Conditions of the Offer............................................... 26
15. Certain Legal Matters......................................................... 29
16. Fees and Expenses............................................................. 33
17. Miscellaneous................................................................. 33
Schedule I -- Directors and Executive Officers of Parent and the Purchaser............ I-1
Schedule II -- Parent Purchases of Shares............................................. II-1
</TABLE>
<PAGE> 3
To the Holders of Common Stock
(including the Associated Preferred
Stock Purchase Rights) of
CAPCO Automotive Products Corporation:
INTRODUCTION
Eaton Acquisition Corporation, a Delaware corporation (the "Purchaser") and
wholly owned subsidiary of Eaton Corporation, an Ohio corporation ("Parent"),
hereby offers 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 (unless and until the
Purchaser declares that the Rights Condition (as defined below) is satisfied)
any 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 $11.00 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 this Offer to Purchase and in
the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively 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.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. 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.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. The Purchaser currently intends, as soon as
practicable following consummation of the Offer, to seek to have the Company
consummate a merger or similar business combination (the "Merger") with the
Purchaser, pursuant to which each then outstanding Share (other than Shares
owned by Parent or any of its wholly owned subsidiaries and Shares held in the
treasury of the Company) would 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. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all of
the Shares.
On March 13, 1996, Parent delivered a notice to the Company nominating
seven individuals for election as directors at the Company's annual meeting of
shareholders scheduled for May 14, 1996, who if elected are intended by Parent
to constitute the entire board. On March 14, 1996, at the request of Parent,
Cede & Co. delivered a similar notice to the Company. Parent intends to solicit
proxies from shareholders for the purpose of electing such director candidates
nominated by Parent in order to insure that the new Board of Directors will take
all such actions necessary or appropriate (subject to such directors' fiduciary
duties) to approve and effectuate the consummation of the Offer and Merger,
including taking action to execute an agreement and plan of merger and to
satisfy the Rights Condition, the Business Combination Condition and the Control
Share Condition.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY
SPECIAL MEETING OF THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY
SUCH SOLICITATION WHICH PARENT OR THE PURCHASER MAY MAKE WILL BE MADE ONLY
PURSUANT TO SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION
14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "EXCHANGE ACT").
Upon consummation of the Offer, assuming the Minimum Tender Condition, the
Rights Condition, the Business Combination Condition and the Control Share
Condition are satisfied and the other conditions to the
1
<PAGE> 4
Offer set forth in Section 14 are satisfied or waived, the Purchaser and Parent
will own sufficient Shares ultimately to remove and/or replace the Company's
Board of Directors and to approve the Merger without the vote of any other
shareholder.
THE OFFER IS SUBJECT TO THE FULFILLMENT OF A NUMBER OF CONDITIONS
INCLUDING, WITHOUT LIMITATION, THE FOLLOWING:
MINIMUM TENDER CONDITION. THE OFFER IS CONDITIONED UPON THERE BEING
VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS
DEFINED IN SECTION 1) THAT NUMBER OF SHARES (THE "MINIMUM 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, WITHOUT
GIVING EFFECT TO ANY DILUTION THAT MIGHT ARISE FROM EXERCISE OF THE RIGHTS (THE
"MINIMUM TENDER CONDITION").
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995 (the "Company September 1995 10-Q"), as of November 1,
1995, there were 11,061,350 Shares issued and outstanding. According to the
Company September 1995 10-Q, as of August, 1995, there were 418,600 Shares
issuable upon exercise of outstanding stock options. Based on the foregoing and
assuming that no options were granted after August, 1995, there would be
11,479,950 Shares outstanding on a fully diluted basis and 5,739,976 Shares
would represent a majority of the Shares outstanding on a fully diluted basis.
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
the information provided in the Company September 1995 10-Q and thus, based on
the foregoing assumptions, 4,934,976 Shares would be the Minimum Number of
Shares. However, the actual Minimum Number of Shares will depend on the facts as
they exist on the date of purchase.
RIGHTS CONDITION. THE OFFER IS CONDITIONED UPON THE RIGHTS HAVING BEEN
REDEEMED BY THE BOARD OF DIRECTORS OF THE COMPANY OR THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE
OTHERWISE INAPPLICABLE TO THE OFFER AND THE MERGER (THE "RIGHTS CONDITION").
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (the "Company 1994 10-K"), in April, 1994, prior to the
consummation of the initial public offering of the Shares, the Company adopted
the Rights Agreement and declared a dividend of one Right for each outstanding
Share. The Company 1994 10-K states that each Right entitles the registered
holder thereof to purchase one five-hundredth of a share of Series A Junior
Participating Preferred Stock at a purchase price of $77.50, and that the Rights
will become operative in the event that certain change in control conditions
occur. A more detailed description of the Rights is contained in Section 8.
The Rights Agreement provides that, until the close of business on the
Distribution Date (as defined in Section 8), the Rights will be evidenced by the
certificates for Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Shares will also constitute the surrender for transfer of the Rights associated
with the Shares represented by such certificates. The Rights Agreement further
provides that, as soon as practicable following the Distribution Date, separate
certificates representing the Rights are to be mailed by the Company or the
Rights Agent to holders of record of Shares as of the close of business on the
Distribution Date.
The Rights Agreement provides that, at any time prior to the close of
business on the earlier of (a) the date that an Acquiring Person (as defined in
Section 8) becomes such and (b) the Final Expiration Date (as defined in Section
8), the Board of Directors of the Company may redeem (except as provided in the
Rights Agreement) the Rights in whole, but not in part, at a price of $.01 per
Right.
Based on publicly available information, the Purchaser believes that, as of
the date hereof, the Rights are not exercisable, certificates for Rights have
not been issued and the Rights are evidenced by the certificates for Shares. The
Purchaser believes that, as a result of the Purchaser's commencement of the
Offer on the date hereof, the Distribution Date may occur as early as April 2,
1996, unless prior to such date the Company's Board of Directors defers the
Distribution Date, redeems the Rights or amends the Rights Agreement to make the
Rights inapplicable to the Offer and the Merger.
2
<PAGE> 5
Unless the Rights Condition is satisfied, shareholders will be required to
tender one Right for each Share tendered in order to effect a valid tender of
Shares in accordance with the procedures set forth in Section 2. Unless the
Distribution Date occurs prior to the Expiration Date, a tender of Shares will
also constitute a tender of the associated Rights.
The Purchaser and Parent believe that under the circumstances of the Offer,
and under applicable law, the Board of Directors of the Company has a fiduciary
obligation to redeem the Rights (or amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Merger), and the Purchaser has
requested that the Company's Board of Directors do so. However, there can be no
assurance that the Board of Directors of the Company will redeem the Rights (or
amend the Rights Agreement). Parent has commenced litigation against the Company
and its directors in the United States District Court for the Eastern District
of Michigan, Southern Division, seeking, among other things, an order requiring
the Board of Directors of the Company to redeem the Rights.
Redemption of the Rights (or an amendment of the Rights Agreement that the
Purchaser is satisfied, in its sole discretion, makes the Rights inapplicable to
the Offer and the Merger) would satisfy the Rights Condition.
BUSINESS COMBINATION CONDITION. THE OFFER IS CONDITIONED UPON THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF
CHAPTER 7A ARE INAPPLICABLE TO THE MERGER AND THE ACQUISITION OF SHARES PURSUANT
TO THE OFFER, OR THE MERGER HAVING BEEN APPROVED PURSUANT TO CHAPTER 7A (THE
"BUSINESS COMBINATION CONDITION"). THE PROVISIONS OF CHAPTER 7A ARE DESCRIBED
MORE FULLY IN SECTION 15.
Chapter 7A provides, in general, that any Business Combination (as defined
in Section 15) between a Michigan corporation and an Interested Shareholder (as
defined in Section 15) requires, in addition to any other vote required by law
or the corporation's articles of incorporation, (i) an advisory statement from
the board of directors and (ii) approval by at least 90% of the votes entitled
to be cast by each class of the corporation's stock and by at least two-thirds
of the votes entitled to be cast by each class of the corporation's stock,
excluding the shares beneficially owned by the Interested Shareholder. See
Section 15.
The Purchaser and Parent believe that Chapter 7A does not apply to the
Company because the Company had an Interested Shareholder on the effective date
of the chapter. The Company's prospectus dated May 6, 1994 for the initial
public offering of the Shares (the "IPO Prospectus") states that the Company has
not elected to be subject to Chapter 7A (or Chapter 7B, discussed below) and
indicates that the Company's Board of Directors may elect to be subject to such
Chapters at any time without further shareholder approval, although the Company
has no current intention to do so. Parent has commenced litigation against the
Company and its directors in the United States District Court for the Eastern
District of Michigan, Southern Division, seeking, among other things, an order
that any action by the Board of Directors of the Company to cause the Company to
become subject to Chapter 7A would constitute a breach of fiduciary duty to the
Company's shareholders and an injunction against enforcement by the defendants
of Chapter 7A.
CONTROL SHARE CONDITION. THE OFFER IS CONDITIONED UPON THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF CHAPTER 7B ARE
INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER (THE "CONTROL
SHARE CONDITION"). THE PROVISIONS OF CHAPTER 7B ARE DESCRIBED MORE FULLY IN
SECTION 15.
Chapter 7B provides, in general, that shares of an Issuing Public
Corporation (as defined in Section 15) acquired in a Control Share Acquisition
(as defined in Section 15) will not have voting rights unless voting rights for
such shares are authorized at an annual or special meeting of shareholders of
the Issuing Public Corporation by (i) a majority of the votes cast by holders of
shares entitled to vote thereon, and of any class or series entitled to a class
or series vote thereon, and (ii) a majority of the votes cast by holders of
shares entitled to vote thereon, and of any class or series entitled to a class
or series vote thereon, in each case excluding all Interested Shares (as defined
in Section 15). Chapter 7B allows a corporation's articles of incorporation or
by-laws to provide that Chapter 7B does not apply to prospective Control Share
Acquisitions of shares of the corporation. See Section 15.
The Purchaser and Parent believe that the Company is not an Issuing Public
Corporation due to the fact that neither the Company's principal place of
business nor its principal office is located in Michigan, nor based
3
<PAGE> 6
on the Company's publicly available information does the Company have
substantial assets within Michigan. In addition, the Company's IPO Prospectus
states that the Company has not elected to be subject to the provisions of
Chapter 7B (or Chapter 7A, discussed above) and indicates that the Company's
Board of Directors may elect to be subject to such Chapters at any time without
further shareholder approval, although the Company has no current intention to
do so. Parent has commenced litigation against the Company and its directors in
the United States District Court for the Eastern District of Michigan, Southern
Division, seeking, among other things, an order that Chapter 7B does not apply
to the Company or that its application to the Company would be unconstitutional,
and seeking an injunction against enforcement by the defendants of Chapter 7B.
Certain other conditions to the Offer are described in Section 14. The
Purchaser reserves the right (but shall not be obligated) to waive any or all
such conditions. See Sections 1, 8, 14 and 15.
In the event the Offer is not consummated, Parent and the Purchaser intends
to explore all options which may be available to them at such time, which may
include without limitation the acquisition of Shares through open market
purchases, privately negotiated transactions, another tender offer or exchange
offer or otherwise, upon such terms and at such prices as they shall determine,
which may be more or less than the price to be paid pursuant to the Offer.
Parent and the Purchaser also reserve the right to dispose of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date (as defined herein) and not withdrawn in
accordance with the procedures set forth in Section 3 on or prior to the
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.
Subject to the applicable rules and regulations of the Commission, the
Purchaser reserves the right, in its sole discretion, at any time and from time
to time, and regardless of whether or not any of the events or facts set forth
in Section 14 hereof shall have occurred, to (a) extend the period of time
during which the Offer is open, and thereby delay acceptance for payment of and
the payment for any Shares, by giving oral or written notice of such extension
to the Depositary and (b) amend the Offer in any other respect by giving oral or
written notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE
PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If by 12:00 Midnight, New York City time, on Monday, April 15, 1996 (or any
date or time then set as the Expiration Date), any or all of the conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), subject to the applicable rules and regulations of
the Securities and Exchange Commission ("Commission"), to (a) terminate the
Offer and not accept for payment or pay for any Shares and return all tendered
Shares to tendering shareholders, (b) waive all the unsatisfied conditions and
accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn, (c) extend the Offer and, subject
to the right of shareholders to withdraw Shares until the Expiration Date,
retain the Shares that have been tendered during the period or periods for which
the Offer is extended or (d) amend the Offer. The rights reserved by the
Purchaser in this paragraph are in addition to the Purchaser's rights pursuant
to Section 14.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by a public announcement. In the case
4
<PAGE> 7
of an extension, Rule 14e-1(d) under the Exchange Act requires that the
announcement be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act.
Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to shareholders in connection with the Offer be
promptly disseminated to shareholders in a manner reasonably designed to inform
shareholders of such change), and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service. As used in this Offer to Purchase, "business day" has the meaning set
forth in Rule 14d-1 under the Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance for
payment of Shares) for Shares or it is unable to pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser,
and such Shares may not be withdrawn except to the extent tendering shareholders
are entitled to withdrawal rights as described in Section 3. However, the
ability of the Purchaser to delay the payment for Shares that the Purchaser has
accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or
waives a material condition of the Offer, the Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of such offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the materiality of the changed terms or information. In the
Commission's view, an offer should generally remain open for a minimum of five
business days from the date a material change is first published, sent or given
to shareholders. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought, a minimum period
of 10 business days is generally required to allow for adequate dissemination to
shareholders. Accordingly, if prior to the Expiration Date, the Purchaser
decreases the number of Shares being sought, or increases or decreases the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
the date that notice of such increase or decrease is first published, sent or
given to holders of Shares, the Offer will be extended at least until the
expiration of such ten business day period.
Requests are being made to the Company pursuant to Rule 14d-5 of the
Exchange Act and Section 487 of the MBCA for the use of the Company's
shareholder lists and security position listings for the purpose of, among other
things, disseminating the Offer to holders of Shares and communicating with
shareholders regarding proxy solicitations in connection with the upcoming
annual meeting. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares, 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, by the Purchaser following receipt of such lists or listings from the
Company, or by the Company if it so elects.
2. PROCEDURE FOR TENDERING SHARES AND RIGHTS
Valid Tender. 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 (as
defined below), and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase 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
such Shares and Rights must be delivered pursuant to the procedures for
book-entry transfer set forth below (and a Book-Entry Confirmation
5
<PAGE> 8
(as defined below) received by the Depositary), in each case prior to the
Expiration Date, or (b) the tendering shareholder must comply with the
guaranteed delivery procedures set forth below.
Unless the Rights Condition is satisfied, shareholders will be required to
tender one Right for each Share tendered in order to effect a valid tender of
Shares. Accordingly, shareholders who sell their Rights separately from their
Shares and do not otherwise acquire Rights may not be able to satisfy the
requirements of the Offer for a valid tender of Shares. Unless the Distribution
Date occurs, a tender of Shares will also constitute a tender of the associated
Rights.
If the Distribution Date occurs and certificates representing Rights
("Rights Certificates") are distributed by the Company or the Rights Agent to
holders of Shares prior to the time a holder's Shares are tendered pursuant to
the Offer, 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 tendered must be delivered to the Depositary or, if available,
a Book-Entry Confirmation 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 pursuant to the Offer, Rights may be tendered
prior to a shareholder receiving Rights Certificates by use of the guaranteed
delivery procedure described below. In any case, a tender of Shares constitutes
an agreement by the tendering shareholder to deliver Rights 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.
The Depositary will make a request to establish accounts with respect to
the Shares at The Depository Trust Company, the Midwest Securities Trust Company
and the Philadelphia Depository Trust Company (the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
any of the Book-Entry Transfer Facilities' systems may make book-entry delivery
of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering shareholder must comply with the guaranteed delivery procedures
described below.
If the Distribution Date occurs, the Depositary will also make a request to
establish an account with respect to the Rights at each of the Book-Entry
Transfer Facilities, but no assurance can be given that book-entry delivery of
Rights will be available. If book-entry delivery of Rights is available, the
foregoing book-entry transfer procedures will also apply to Rights. If
book-entry delivery of Rights is not available and the Distribution Date occurs,
a tendering shareholder will be required to tender Rights by means of physical
delivery (including with respect to the guaranteed delivery procedures set forth
below) to the Depositary of certificates for Rights (in which event references
in this Offer to Purchase to Book-Entry Confirmations with respect to Rights
will be inapplicable).
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY. The confirmation of a book-entry transfer of Shares or Rights
into the Depositary's account at a Book-Entry Transfer Facility as described
above is referred to herein as a "Book-Entry Confirmation".
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.
6
<PAGE> 9
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.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the 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 therewith and such registered holder has not completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
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 the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for Shares or Rights are
registered in the name of a person other than the signer of the 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 holder 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 holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. 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 Rights Agent) or 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, such
shareholder's tender may be effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, on or prior to the Expiration Date;
and
(iii) 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 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 above) after the date certificates for Rights are
distributed to shareholders by the Rights Agent. A "trading day" is any day
on which the New York Stock Exchange (the "NYSE") 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 Exchange
Act, each in the form set forth in such Notice of Guaranteed Delivery.
7
<PAGE> 10
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares and, if the Distribution Date occurs,
Rights 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, 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.
If the Rights Condition is satisfied, the guaranteed delivery procedures
with respect to Rights Certificates and the requirement for the tender of Rights
will no longer apply.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering shareholder irrevocably appoints designees of the Purchaser and each
of them as such shareholder's attorneys-in-fact and proxies in the manner set
forth in the Letter of Transmittal, each with full power of substitution, to the
full extent of such shareholder's rights with respect to the Shares and Rights
tendered by such shareholder and 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. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares and Rights tendered by such shareholder as provided herein. Upon such
acceptance for payment, all prior powers of attorney, proxies and consents given
by such shareholder 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). The designees of the Purchaser will thereby 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 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 of such Shares and Rights, the Purchaser must be able to exercise full
voting, consent and other rights with respect to such Shares, Rights and other
securities or rights, including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares or Rights will be determined by the Purchaser in its sole discretion,
which determination will be final and binding on all parties. The Purchaser
reserves the absolute right to reject any or all tenders determined by it not to
be in proper form or the acceptance for payment of or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any condition of the Offer or any defect or
irregularity in the tender of any Shares or Rights of any particular shareholder
whether or not similar defects or irregularities are waived in the case of other
shareholders. No tender of Shares or Rights will be deemed to have been validly
made until all defects or irregularities relating thereto have been cured or
waived. None of the Purchaser, Parent, any of their affiliates or assigns, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding on all parties.
Backup Withholding and Substitute Form W-9. 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 a Substitute Form W-9 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
8
<PAGE> 11
(the "IRS") may impose a penalty on such shareholder and payment of cash to such
shareholder pursuant to the Offer may be subject to backup withholding of 31%.
All shareholders surrendering Shares pursuant to the Offer should complete and
sign the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal to provide the information and certification necessary to
avoid backup withholding (unless an applicable exemption exists and is proved in
a manner satisfactory to the Purchaser and the Depositary). 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 Instruction 9 to the
Letter of Transmittal.
Other Requirements. The Purchaser's acceptance for payment of Shares and,
if applicable, Rights tendered pursuant to any of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer, including
the tendering shareholder's representation and warranty that the shareholder is
the holder of the Shares (and, if applicable, the Rights) within the meaning of,
and that the tender of the Shares and Rights complies with, Rule 14e-4 under the
Exchange Act.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares and
Rights are irrevocable. Shares and Rights tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth below 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 this Section 3. 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 set forth on the back cover of this 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, the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution. If Shares or
Rights have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 2, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares or Rights, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method of delivery described in
the first sentence of this paragraph.
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. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
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 purposes of the Offer. However, withdrawn
9
<PAGE> 12
Shares and Rights may be retendered by again following one of the procedures
described in Section 2 at any time on or prior to the Expiration Date.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with Section 3 promptly after the Expiration Date. All questions
as to the satisfaction of such terms and conditions will be determined by the
Purchaser in its sole discretion, which determination will be final and binding.
See Sections 1 and 14. The Purchaser expressly reserves the right, in its sole
discretion, to delay acceptance for payment of or payment for Shares in order to
comply in whole or in part with any applicable law, including, without
limitation, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder (the "HSR Act"). Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
Parent is filing a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the fifteenth calendar
day after the date of such filing, unless early termination of the waiting
period is granted. However, the Antitrust Division of the Department of Justice
(the "Antitrust Division") or the Federal Trade Commission (the "FTC") may
extend the waiting period by requesting additional information or documentary
material from Parent. If such a request is made, such waiting period will expire
at 11:59 p.m., New York City time, on the 10th day after substantial compliance
by Parent with such request. Thereafter, the waiting period may only be extended
by court order or with the consent of Parent. See Section 15 hereof for
additional information concerning the HSR Act and the applicability of the
antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation with respect to) such Shares and, if the
Distribution Date occurs, Rights 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, an Agent's Message, and (c) any other documents required by the Letter
of Transmittal. The per Share consideration paid to any shareholder pursuant to
the Offer will be the highest per Share consideration paid to any other
shareholder pursuant to the Offer.
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
the Depositary of the Purchaser's acceptance for payment of such Shares pursuant
to the Offer. 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 EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act),
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares and the associated Rights will be
returned, without expense to the tendering shareholder (or, in the
10
<PAGE> 13
case of Shares or Rights delivered by book-entry transfer of such Shares or
Rights into the Depositary's account at a Book-Entry Transfer Facility pursuant
to the procedure set forth in Section 2, such Shares or Rights will be credited
to an account maintained at the appropriate Book-Entry Transfer Facility), as
promptly as practicable after the expiration, termination or withdrawal of the
Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
Federal income tax purposes, a tendering shareholder will recognize gain or loss
equal to the difference between the amount of cash received by the shareholder
pursuant to the Offer or the Merger and the aggregate tax basis in the Shares
(together with the Rights) tendered by the shareholder and purchased pursuant to
the Offer or converted in the Merger, as the case may be. Gain or loss will be
calculated separately for each block (i.e., Shares acquired at the same time in
a single transaction) of Shares and Rights tendered and purchased pursuant to
the Offer or converted in the Merger, as the case may be.
If Shares (and associated Rights) are held by a shareholder as capital
assets, gain or loss recognized by the shareholder will be capital gain or loss,
which will be long-term capital gain or loss if the shareholder's holding period
for the Shares (and associated Rights) exceeds one year. Under present law,
long-term capital gains recognized by an individual shareholder will generally
be taxed at a maximum Federal marginal tax rate of 28%, and long-term capital
gains recognized by a corporate shareholder will be taxed at a maximum Federal
marginal tax rate of 35%. There is currently pending legislation that if adopted
will reduce the maximum Federal marginal tax rate for long-term capital gains to
19.8% for individuals and 28% for corporations.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the shareholder
provides its TIN and certifies that such number is correct or properly certifies
that it is awaiting a TIN, or unless an exemption applies. A shareholder that
does not furnish its TIN may be subject to a penalty imposed by the IRS. See
Section 2 ("Procedure For Tendering Shares and Rights -- Backup Withholding and
Substitute Form W-9").
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional 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 appropriate income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES (AND
ASSOCIATED RIGHTS) RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS
OR OTHERWISE AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES (AND
ASSOCIATED RIGHTS) WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE, SUCH
AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND
FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF SHARES (AND ASSOCIATED
RIGHTS) IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM
(INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND
OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
11
<PAGE> 14
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are listed and traded on the NYSE under the symbol CAB. The
following table sets forth, for each of the periods indicated, the high and low
sales prices per Share on the NYSE as reported by the Dow Jones News Service and
the amount of cash dividends paid or declared per Share for each quarter based
on publicly available sources.
<TABLE>
<CAPTION>
MARKET PRICE
-----------------
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1994
Second Quarter................................................ $12.00 $10.25 --
Third Quarter................................................. 14.25 9.63 --
Fourth Quarter................................................ 14.13 11.25 --
FISCAL YEAR ENDED DECEMBER 31, 1995
First Quarter................................................. 11.75 6.88 .04
Second Quarter................................................ 9.38 7.25 .04
Third Quarter................................................. 10.13 7.25 .04
Fourth Quarter................................................ 9.25 6.13 .04
FISCAL YEAR ENDING DECEMBER 31, 1996
First Quarter (through March 18, 1996)........................ 12.50 6.50 .04
</TABLE>
On March 13, 1996, the trading day on which Parent announced after the
close of NYSE trading its proposal to acquire the Company for $11.00 per Share
in cash, the last reported sales price of the Shares on the NYSE was $7 3/4. On
March 18, 1996, the last full trading day before the Offer was commenced, the
last reported sales price of the Shares on the NYSE was $12.25 per Share.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
Upon the occurrence of the Distribution Date, the Rights are to detach, and
may trade separately, from the Shares. See Section 8. If the Distribution Date
occurs and the Rights begin to trade separately from the Shares, shareholders
should also obtain current market quotations for the Rights.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
MARKET FOR THE SHARES. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
STOCK EXCHANGE LISTING. According to the published guidelines of the NYSE,
the NYSE will consider delisting the Shares if, among other things, the number
of publicly held Shares (exclusive of holdings of officers, directors and their
families and other concentrated holdings of 10% or more ("NYSE Excluded
Holdings")) should fall below 600,000 or the aggregate market value of publicly
held Shares (exclusive of NYSE Excluded Holdings) should fall below $5,000,000.
If, as a result of the purchase of Shares pursuant to the Offer or otherwise,
the Shares no longer meet the requirements of the NYSE for continued listing and
the listing of the Shares is discontinued, the market and price for the Shares
could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange or
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. The extent of the public market therefor and
the availability of such quotations would depend, however, upon such factors as
the number of shareholders and/or the aggregate market value of such securities
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below, and other factors. The Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
12
<PAGE> 15
marketability of the Shares or whether it would cause future market prices to be
greater or less than the price per share to be paid pursuant to the Offer.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange or quoted on NASDAQ nor held by
300 or more holders of record. Termination of registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to its shareholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the Company,
such as the short-swing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with shareholders' meetings and
the related requirement of furnishing an annual report to shareholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to terminate the registration of the Shares under the
Exchange Act as soon after the completion of the Offer or the Merger as the
requirements for such termination are met.
Based on publicly available information, the Rights may be registered under
the Exchange Act. If the Distribution Date occurs and the Rights separate from
the Shares, the foregoing discussion with respect to the effect of the Offer on
any such Exchange Act registration would apply to the Rights in a similar
manner.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares and Rights under the Exchange Act will be terminated following the
consummation of the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers for the purpose of buying, carrying or trading in securities.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Michigan corporation with its principal United States
offices at 300 S. St. Louis Boulevard, P.O. Box 208, South Bend, Indiana 46624.
According to the Company 1994 10-K, the Company's principal line of business is
the design, development, manufacture and sale of on-highway manual transmissions
for passenger cars, small and light duty and medium duty trucks as well as
off-highway transmissions for agricultural tractors and powershift transmissions
for construction/industrial equipment.
13
<PAGE> 16
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted from the audited financial
information contained in the Company 1994 10-K and the IPO Prospectus and the
unaudited interim consolidated financial information contained in the Company
September 1995 10-Q. More comprehensive financial information is included in the
Company 1994 10-K, the Company September 1995 10-Q and other documents filed by
the Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports and such other documents and all the
financial information (including any related notes) contained therein. Such
reports and such other documents should be available for inspection and copies
thereof should be obtainable in the manner set forth below under "Available
Information".
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- ---------------------
1994 1993 1992 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Net sales......................... $189,111 $184,373 $145,483 $148,006 $138,055
Operating costs and expenses...... 171,336 167,085 134,350 144,601 126,159
Operating income.................. 17,775 17,288 11,133 3,405 11,896
Pre-tax income.................... 19,352 20,701 12,795 6,215 13,005
Net income........................ 12,564 12,450 8,207 4,164 8,278
Net income per Share.............. 1.17 1.22 0.81 0.38 0.78
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT
------------------------------------------- SEPTEMBER 30,
1994 1993 1992 1995
------------ ------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets..................... $118,413 $ 84,706 $ 95,254 $ 139,843
Long-term liabilities............ 422 -- -- --
Total shareholders' equity....... 92,714 60,752 72,164 95,785
</TABLE>
On February 15, 1996, the Company announced that it had net income of
$526,000 and sales of $176.2 million for the year ended December 31, 1995.
The Rights. Set forth below is a summary description of the publicly
available information concerning the Rights.
According to the IPO Prospectus, in April 1994, the Company adopted the
Rights Agreement and declared a dividend of one Right for each outstanding share
of Common Stock. Each Right entitles the registered holder to purchase from the
Company a unit consisting of one five-hundredth of a share (the "Unit") of
Series A Junior Participating Preferred Stock, $0.01 par value per share (the
"Preferred Stock"), at a purchase price of $77.50 per Unit, subject to
adjustment (the "Purchase Price"). On the effective date of the Rights
Agreement, the holder of each outstanding Share received one Right. As long as
the Rights are attached to the Shares, the Company will issue one Right for each
Share issued between the record date for the initial distribution of the Rights
(the "Record Date") and the Distribution Date so that all such Shares will have
attached Rights.
Initially, Rights are attached to all certificates representing Shares
("Share Certificates") outstanding and no separate Right Certificates are
distributed. The Rights will separate from the Shares and a "Distribution Date"
for the Rights will occur upon the earlier of (i) the 10th day after the public
announcement (the date of such public announcement being referred to as, the
"Stock Acquisition Date") that a person or group of affiliated or associated
persons (other than the Company, any subsidiary of the Company, any employee
benefit plan of the Company or any of its subsidiaries or any of the specified
exempt persons) has acquired beneficial ownership of 20% or more of the
outstanding Shares (an "Acquiring
14
<PAGE> 17
Person") and (ii) the 10th business day after (or such later date as may be
determined by the Company's Board) the commencement of a tender offer or
exchange offer that would result in a person beneficially owning 20% or more of
the outstanding Shares.
Until the Distribution Date, the Rights will be evidenced by Share
Certificates and will be transferred with and only with Share Certificates. New
Share Certificates issued upon transfer or new issuances of Shares after the
Record Date until the Distribution Date will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date, the surrender
for transfer of any Share Certificate will also constitute the transfer of the
Rights associated with the Shares represented by such Share Certificate.
The Rights are not exercisable until the Distribution Date and will expire
on the close of business on the tenth anniversary of the Rights Agreement,
unless earlier redeemed by the Company as described below. As soon as
practicable following the Distribution Date, separate Rights Certificates will
be mailed to holders of record of the Shares as of the close of business on the
Distribution Date. As of and after the Distribution Date, such separate Rights
Certificates alone will evidence the Rights. All Shares issued prior to the
Distribution Date will be issued with Rights.
In the event that a person becomes an Acquiring Person (the "Flip-In
Event"), each holder of a Right will thereafter have the right to purchase, upon
exercise thereof, Shares which have a market value of two times the Purchase
Price, or at the permission of the Company, to surrender such Rights in exchange
for Shares having a market value of half of the Purchase Price. However, the
Flip-In Event will not be triggered if the acquisition of Shares which would
cause an Acquiring Person to become such is pursuant to a tender or exchange
offer for all outstanding Shares at a price and on terms which, after receiving
advice from one or more investment banking firms, a majority of the non-officer
directors of the Company who are not affiliated with an Acquiring Person
determines to be fair to its shareholders and otherwise in the best interests of
the Company and its shareholders. Notwithstanding the foregoing, pursuant to the
Rights Agreement, following the occurrence of a Flip-In Event, all Rights that
are or were beneficially owned by or transferred to any Acquiring Person will be
null and void.
In the event that, at any time following the Stock Acquisition Date, the
Company is involved in a merger or other business combination transaction in
which it is not the continuing or surviving corporation, or if the Company is
the surviving entity and all or part of the Common Stock is exchanged for stock
or other securities of another entity or for cash, or 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights that previously have been voided as set forth above) will
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price, common stock of the acquiring company which has a value of two times the
Purchase Price (the "Flip-Over").
The Purchase Price payable and the number of Units, Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for Preferred Stock or convertible securities at less
than the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding dividends payable in Preferred Stock) or cash (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of issuance of the Rights.
At any time prior to the Stock Acquisition Date, the Company may redeem the
Rights in whole but not in part at a price (the "Redemption Price") of $0.01 per
Right, subject to adjustment. The concurrence of a majority of the Continuing
Directors (as defined below) is required to redeem the Rights if authorization
for such redemption occurs (i) on or after a time a person becomes an Acquiring
Person or (ii) on or after the date of a change (resulting from a proxy or
consent solicitation) in a majority of the directors in office at the
commencement of such solicitation if any person who is a participant in such
solicitation, or any of its affiliates
15
<PAGE> 18
or associates, is or might become an Acquiring Person or which would cause a
Flip-In Event or a Flip-Over unless, concurrent with such solicitation, such
person (or one or more of its affiliates or associates) is making a cash tender
offer for all Shares not beneficially owned by such person (or by its affiliates
and associates) (the "Cash Tender Offer Exception"). The term "Continuing
Director" means any member of the Company's Board of Directors who was a member
of the Board prior to the date of the Rights Agreement or has been subsequently
elected to the Board if such person was recommended or approved by a majority of
the Continuing Directors, but does not include an Acquiring Person, any
affiliate or associate thereof or any representative of any of the foregoing
persons. Because the Purchaser is making a cash tender offer for all outstanding
Shares, it believes that the Cash Tender Offer Exception applies to the Offer
and thus the redemption of the Rights following the election of its nominees to
the Board of Directors of the Company will not require the concurrence of a
majority of the Continuing Directors.
Immediately upon the action of the Board of Directors of the Company
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, it will not entitle the holder thereof to any
rights as a shareholder of the Company, including without limitation the right
to vote or to receive dividends.
Other than those provisions relating to the principal economic terms of the
Rights and other than amendments which would adversely affect certain Exempt
Persons (as defined in the Rights Agreement), any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company prior
to the Distribution Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board (in certain circumstances, with the
concurrence of the Continuing Directors) in order to cure any ambiguity, to make
changes that do not adversely affect the interests of holders of Rights (other
than an Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
The Purchaser believes that, as a result of the commencement of the Offer
on the date hereof, the Distribution Date may occur as early as April 2, 1996,
unless prior to such date the Company's Board of Directors defers the
Distribution Date, redeems the Rights or amends the Rights Agreement to make the
Rights inapplicable to the Offer and the Merger.
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement.
The Rights Agreement should be available for inspection and copies thereof
should be obtainable in the manner set forth below under "Available
Information".
PURSUANT TO THE RIGHTS CONDITION, THE OFFER IS CONDITIONED UPON THE RIGHTS
HAVING BEEN REDEEMED BY THE BOARD OF DIRECTORS OF THE COMPANY OR THE PURCHASER
BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED
OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE MERGER.
Unless the Rights Condition is satisfied, shareholders will be required to
tender one Right for each Share tendered in order to effect a valid tender of
Shares in accordance with the procedures set forth in Section 2. Unless the
Distribution Date occurs, a tender of Shares will also constitute a tender of
the associated Rights.
The Purchaser and Parent believe that under the circumstances of the Offer,
and under applicable law, the Board of Directors of the Company has a fiduciary
obligation to redeem the Rights (or amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Merger), and the Purchaser is hereby
requesting that the Company's Board of Directors do so. However, there can be no
assurance that the Board of Directors of the Company will redeem the Rights (or
amend the Rights Agreement). Parent has commenced litigation against the Company
and its directors in the United States District Court for the Eastern District
of Michigan, Southern Division, seeking, among other things, a declaration that
defendants have breached their fiduciary duties by rejecting Parent's
acquisition proposals and maintaining the Rights Agreement in place in response
to Parent's $11.00 merger proposal (see Section 11) and an order requiring the
Board of Directors of the Company to redeem the Rights.
16
<PAGE> 19
Redemption of the Rights (or an amendment of the Rights Agreement that
makes the Rights inapplicable to the Offer and the Merger) would satisfy the
Rights Condition.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
distributed to the Company's shareholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, DC 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago,
Illinois 60661. Copies of such information should be obtainable, by mail, upon
payment of the Commission's customary charges, by writing to the Commission's
principal office at 450 Fifth Street, N.W., Washington, DC 20549. Such material
should also be available for inspection at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
The information concerning the Company contained herein has been taken from
or based upon publicly available documents on file with the Commission and other
publicly available information. Although the Purchaser and Parent do not have
any knowledge that any such information is untrue, neither the Purchaser nor
Parent takes any responsibility for the accuracy or completeness of such
information or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Delaware corporation which is a wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal office of the Purchaser is
located at the principal office of Parent.
Parent is a global manufacturer of highly engineered products which serve
vehicle, industrial, construction, commercial and aerospace markets. Principal
products include truck transmissions and axles, engine components, hydraulic
products, electrical power distribution and control equipment, ion implanters
and a wide variety of controls. Parent is an Ohio corporation with its principal
office located at Eaton Center, 1111 Superior Avenue, Cleveland, Ohio 44114.
AVAILABLE INFORMATION. Parent is subject to the informational requirements
of the Exchange Act and, in accordance therewith, files reports relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Parent's directors and officers, their remuneration, stock
options and other matters, the principal holders of Parent's securities and any
material interest of such persons in transactions with Parent is required to be
disclosed in proxy statements distributed to Parent's shareholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at the Commission and copies thereof should be
obtainable from the Commission in the same manner as is set forth with respect
to the Company in Section 8. Such material should also be available for
inspection at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required to purchase pursuant to the Offer 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 are estimated to be
approximately $115 million. The Purchaser plans to obtain all funds needed for
the Offer through a capital contribution, which will be made by Parent to the
Purchaser at the time Shares tendered pursuant to the Offer are accepted for
payment. Parent plans to use funds it has available in its cash accounts and
from the sale of commercial paper. The Purchaser has not conditioned the Offer
on obtaining financing.
17
<PAGE> 20
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND
OF THE OFFER
In 1987, Parent acquired certain United States based business and related
assets from the Company and entered into a long term manufacturing agreement
(the "Manufacturing Agreement") with the Company. Under the terms of the
Manufacturing Agreement the Company agreed to supply Parent with its worldwide
requirements for certain manual transmissions for medium duty trucks for a
minimum term of ten years. As part of this arrangement, (i) Clark Equipment
Company (which was then the Company's parent company) ("Clark") and the Company
sold to Parent all of the technical rights and tooling designs for the medium
duty truck transmissions then being produced by the Company including the
related service parts ("Manufactured Products"), (ii) the Company agreed to
supply Parent with Parent's worldwide requirements for the Manufactured
Products, (iii) Parent agreed to license to the Company the technical rights and
tooling designs for the Manufactured Products for the duration of the
Manufacturing Agreement, (iv) for the duration of the Manufacturing Agreement
(and for three years after the termination of the Manufacturing Agreement if
termination is the result of a breach by the Company), the Company agreed not to
design, manufacture or sell manual transmissions for medium duty trucks that
compete with the Manufactured Products, and (v) the Company agreed to assist
Parent with the marketing of the Manufactured Products in Brazil, in return for
which Parent agreed to pay the Company a commission of two percent of the net
sales price for the Manufactured Products sold in Brazil. That commission has
since been reduced to 1.5%.
The Manufacturing Agreement provides that it may be terminated by either
party upon three-years' prior written notice. In February 1994, the Company and
Parent executed an amendment to the Manufacturing Agreement which provides,
among other things, that the earliest possible notice date would be March 1997
and the earliest possible termination date would be March 2000. The
Manufacturing Agreement may also be terminated upon a default by any party or
upon the occurrence of certain bankruptcy, force majeure and government
expropriation events. The Company's right to use the technical rights and
tooling designs for the Manufactured Products will cease at the time the
Manufacturing Agreement is terminated. Upon termination of the Manufacturing
Agreement by Parent upon such three-years' notice or as a result of certain
events relating to Parent, the Company will have the right to cause Parent to
purchase the equipment owned and used by the Company solely to manufacture the
Manufactured Products. If the Company exercises this right, Parent will be
required to purchase such equipment at the lesser of the book value and the fair
market value of the equipment. Upon termination of the Manufacturing Agreement
by the Company upon such three years' notice or as a result of certain events
relating to the Company, Parent will have the right (but not the obligation) to
purchase such equipment at a purchase price equal to the book value of the
equipment.
As a result of the contractual arrangements between the Parent and the
Company described above, the Parent has made payments to the Company during the
past three years as follows: 1995 -- $77.6 million, 1994 -- $73.2 million and
1993 -- $58.1 million. The amount of the payments proposed to be made in 1996 by
Parent and its subsidiaries to the Company and its subsidiaries will depend upon
business conditions, will be made for products provided pursuant to the
Manufacturing Agreement and for assistance with marketing efforts in Brazil as
described above, and should be slightly less than in 1995. As a result of
purchases of products and services by Parent and its subsidiaries from the
Company and its subsidiaries in the ordinary course of business pursuant to the
arrangements described above, Parent and its subsidiaries have been indebted to
the Company and its subsidiaries in varying amounts. This indebtedness is
subject to usual trade terms, and, except for a small portion (estimated to be
about $400,000) of the Brazilian indebtedness which bears interest at the rate
of 1.5% per month, does not bear interest. The maximum amount of this
indebtedness at any time since the beginning of 1995 was approximately
$4,379,000 in Brazil and approximately $4,556,000 in the United States. The
amount of this indebtedness as of the most recent practical date was
approximately $2.3 million in Brazil and $3.74 million in the United States.
Prior to becoming a public company in 1994 pursuant to an initial public
offering, the Company was a wholly owned subsidiary of Clark. In 1993, Clark
approached Parent to determine its interest in acquiring the Company. At that
time, Parent had a right of first refusal to purchase the common equity of the
Company (as well as quotas of Equipamentos Clark Ltda., a Brazilian subsidiary
of Clark). At that time Parent decided it did not wish to pursue an acquisition
of the Company on the terms offered by Clark and so informed Clark.
18
<PAGE> 21
In November 1995, a senior executive of Parent contacted F. Edmir
Bertolaccini, Chairman and Chief Executive Officer of the Company, to schedule a
meeting for the purpose of discussing the possibility of Parent acquiring the
Company. The meeting was scheduled for early December. The Company's legal and
financial advisors then contacted Parent and requested that Parent and the
Company enter into a confidentiality and standstill agreement as a prerequisite
to the acquisition discussions. Parent and the Company were not able to reach an
agreement with respect to the standstill provisions, which would have restricted
Parent's ability to make an unsolicited offer for the Company for a period of
three years. Although Parent was willing to accept standstill provisions, the
Company refused to agree to Parent's request for 20 days' advance notice and
waiver of those provisions if the Company took certain actions indicating that
the Board of Directors of the Company was proceeding to sell the Company to a
purchaser other than Parent. As a result the confidentiality and standstill
agreement was not entered into and the scheduled meeting did not occur.
In early December 1995, two senior executives of Parent contacted Mr.
Bertolaccini. During the course of that conversation, the Parent executives and
Mr. Bertolaccini expressed disappointment that the scheduled meeting had not
occurred and agreed that representatives of Parent should visit the Company's
plant in Brazil and meet with the Company's operational management. In January
1996, representatives of Parent visited the Company's plant in Brazil and met
with members of the Company's management team and discussed various aspects of
the Company's business.
In late January 1996, a senior executive of Parent contacted Mr.
Bertolaccini to schedule a meeting in the United States for the purpose of
making an acquisition proposal to the Company. During the meeting, which took
place on February 3, 1996 in Orlando, Florida, Mr. Bertolaccini and the Parent
executive discussed various terms regarding the possible acquisition, including
the developments in the worldwide motor vehicle industry which made an
acquisition by Parent desirable and the importance of retaining the Company's
management following such an acquisition. The Parent executive indicated that
Parent was prepared to offer $10 per Share in cash for all Shares of the Company
and also indicated that Parent was prepared to consider improving the terms of
its proposal once negotiations were commenced. The Parent executive requested
that Mr. Bertolaccini present the proposal to the Company's Board of Directors.
Mr. Bertolaccini indicated that the Company's Board of Directors was unlikely to
accept an offer at that price, but that he would nevertheless present the
proposal to the Company's Board as requested.
On February 14, 1996, representatives of the Company's legal and financial
advisors telephoned the Parent executive who had met with Mr. Bertolaccini and
indicated that the Company's Board of Directors was disappointed with the
progress of the discussions and that the $10 per Share offer price was not a
basis for further discussions. Also on February 14, 1996, two senior executives
of Parent telephoned Mr. Bertolaccini to express disappointment with respect to
the telephone call one of them had received that day from representatives of the
Company's legal and financial advisors.
On February 28, 1996, two senior executives of Parent telephoned Mr.
Bertolaccini and again expressed Parent's interest in negotiating an acquisition
of the Company by Parent at $10 per Share, informed Mr. Bertolaccini that
Parent's board of directors had authorized such transaction at a meeting held
earlier that day and requested that Parent's proposal be presented to the
Company's Board. Mr. Bertolaccini indicated that he would present the proposal
to the Company's Board as requested.
On March 8, 1996, a representative of the Company's financial advisor
telephoned a representative of Parent's financial advisor and stated that the
Board of Directors of the Company had met and had determined to reject pursuing
an acquisition by Parent at $10 per Share, and had determined that the Company
was not for sale and that acquisition discussions should cease.
19
<PAGE> 22
On March 13, 1996, Parent sent the following letter (the "March 13 Letter")
to the Company and Parent also issued a press release publicly disclosing such
letter:
March 13, 1996
Mr. F. Edmir Bertolaccini
Chairman and Chief Executive Officer
CAPCO Automotive Products Corporation
Rua Clark, 2061
P.O. Box 304
13279-400 Valinhos
Sao Paulo, Brazil
Dear Mr. Bertolaccini:
As you are aware, we have expressed to you on a number of occasions
over the past several months Eaton Corporation's strong interest in
acquiring CAPCO Automotive Products Corporation. The logic of such a
business combination is compelling.
First, Eaton and CAPCO present an excellent business fit from the
standpoint of product lines, manufacturing capability, geographic coverage,
and developments in the worldwide motor vehicle industry. Vehicle
manufacturers are increasingly seeking Tier 1 suppliers capable of
partnering with the OEMs to provide products and services on a worldwide
basis. Even suppliers such as CAPCO, with your excellent regional
manufacturing base and talented management, will be at a serious and
increasing disadvantage as the trend to global consolidation continues.
Combined with Eaton, however, CAPCO would have access to the resources,
scale and global automotive presence necessary to succeed in an era of
increasingly pervasive global competition. Together, we could realize
significant opportunities for expansion within Brazil, in the rest of the
Mercosul trade area, and throughout the world.
Second, our companies have had a long history of working together
successfully. CAPCO's sales to Eaton as contract manufacturer of medium
duty mechanical transmissions under our sales and technology licensing
arrangements represent approximately 40% of CAPCO's revenues. CAPCO has
been an excellent supplier to Eaton and, we trust, it has been a successful
relationship for you as well. The relationship has been well-suited to
address the marketplace of the past ten years.
Moving forward, Eaton believes there are significant advantages to our
having control of all of the elements required for competitive success in
this important product line. We believe that the best approach to take full
advantage of the new opportunities for the business in the industrializing
world is to combine our technological and manufacturing capabilities and
focus our joint resources on the worldwide market potential.
Third, Eaton and CAPCO are an extraordinarily good fit from the
perspectives of management and business philosophy. We share a common
heritage of operating excellence. Your management has performed extremely
well in meeting the varied and difficult challenges facing your
business -- whether due to the cyclicality of the automotive business, the
special circumstances of operating in Brazil, or the loss of revenues
associated with cessation of Chevette production. You and your management
team have shown resourcefulness and creativity in meeting these and other
challenges, and have compiled a track record of performance of which you
can be justifiably proud. As we have tried to make clear, the quality of
CAPCO's management and employees is a major part of Eaton's interest in the
company.
Our sales in Brazil last year reached about $200 million. Brazil is a
market of strategic importance to Eaton, both as a production source to
satisfy worldwide demand and as a growing market for our products.
Together, sales of Eaton and CAPCO this year could reach well over $300
million. Combined, our businesses would provide an extraordinary foundation
for profitable growth in Brazil and Latin America.
20
<PAGE> 23
As you know, Eaton strongly desires to complete a negotiated merger
with CAPCO. Such a merger will provide great benefits for both of our
businesses, our employees, our customers and suppliers, and the communities
that we serve.
Therefore, I am making the following proposal which has been approved
by the Board of Directors of Eaton and is hereby submitted to the Board of
Directors of CAPCO.
1 - PRICE. We propose to acquire CAPCO in a transaction in which all
shareholders will receive $11 per share in cash. We believe that $11
per share is a compelling price, representing about a 55% premium
above the average closing price of the past 30 trading days. It
fairly reflects the benefits we envision from the combination of our
businesses, and will be financed from available internal cash
sources. The transaction we are proposing has no significant
contingencies and can be completed very quickly.
2 - CONTINUITY OF MANAGEMENT. We propose to offer all of CAPCO's
management the opportunity to continue in their current positions,
consistent with the discussions between our companies.
We strongly desire the support of CAPCO's management in this matter
and hope that our proposal will receive the prompt approval of CAPCO's
Board of Directors. Of course, we would expect CAPCO to remain exempt from
Michigan's anti-takeover statutes and to render its "Shareholder Rights
Plan" inapplicable to this transaction.
After several months of cordial discussions concerning a negotiated
acquisition, we are extremely disappointed by the recent refusal of your
Board to allow Eaton to continue these discussions with you. This is
particularly so in light of our repeatedly expressed willingness to
negotiate terms of a business combination which are mutually beneficial to
your shareholders and ours.
Thus, we have been left without any reasonable option other than to
proceed as we are now doing. Accordingly, we are today announcing our
proposal publicly so that all shareholders of CAPCO are made aware of it.
In addition, we will shortly be providing you notice nominating a full
slate for election as CAPCO directors at CAPCO's May 14, 1996 annual
meeting of shareholders. You should also know that Eaton now owns
approximately 7.3% of the outstanding common stock of CAPCO Automotive
Products Corporation. While we would very much prefer to negotiate a merger
supported by your Board, we reserve the right to go directly to your
shareholders with a cash offer for CAPCO.
Our objective is to work with you in a professional and constructive
manner to complete this transaction so that its full potential can be
realized and the best interests of all of our shareholders can be served. I
am available to discuss these important matters with you at any time.
Clearly, this situation has the highest priority for all of us at Eaton,
and we look forward to hearing from you soon.
Sincerely,
/s/ Stephen R. Hardis
Stephen R. Hardis
Chairman and Chief Executive Officer
xc: Board of Directors of CAPCO
Automotive Products Corporation
Also on March 13, 1996, a senior executive of Parent telephoned Mr.
Bertolaccini to inform him of Parent's proposal.
On March 13, 1996, Parent commenced litigation against the Company and its
directors in the federal district court in the Eastern District of Michigan in
connection with Parent's proposal set forth in the March 13 Letter. Parent's
litigation seeks both declaratory and injunctive relief. Parent's complaint
seeks to require the Company to redeem the Rights and to prevent the Company
from changing the May 14, 1996 date for its annual meeting of shareholders or
the March 20 record date for that meeting, and requests the court to
21
<PAGE> 24
declare that the Company is not subject to the provisions of certain Michigan
anti-takeover statutes. The Parent complaint also seeks to prevent the Company
from acting to become covered by these statutes. Copies of the Parent press
release issued on March 14, 1996 announcing the filing of the complaint and the
complaint filed by Parent and are attached as Exhibits (a)(8) and (g),
respectively, to the Schedule 14D-1 to which this Offer to Purchase is attached
as an exhibit and are incorporated herein by reference. The foregoing
description of the litigation and the press release is qualified in its entirety
by reference to Exhibits (a)(8) and (g) to the Schedule 14D-1 to which this
Offer to Purchase is attached as an exhibit.
On March 13, 1996, Parent delivered a notice to the Company nominating
seven individuals for election as directors at the Company's annual meeting of
shareholders scheduled for May 14, 1996. On March 14, 1996, Cede & Co., at the
request of Parent, delivered a similar notice to the Company (the Parent notice
and the Cede & Co. notice, collectively, the "Nomination Notices"). In the
Nomination Notices, Parent stated that all of its nominees were committed to
supporting the proposal made by Parent to acquire the Company in a transaction
pursuant to which the Company's shareholders will receive $11.00 per share in
cash. Following the filing of preliminary solicitation materials with the
Commission, Parent intends to solicit proxies from the Company's shareholders
for the purpose of electing to the Board of Directors of the Company the
director candidates nominated by Parent in order to insure that the Company's
Board of Directors will take all such actions necessary or appropriate (subject
to such directors' fiduciary duties) to approve and effectuate the consummation
of a business combination between Parent and the Company, including, among other
things, taking action to execute an agreement and plan of merger.
On March 14, 1996, Parent's Chairman and Chief Executive Officer telephoned
Mr. Bertolaccini, and during the course of such call he referred to the proposal
set forth in the March 13 Letter and expressed Parent's preference for a
friendly negotiated acquisition of the Company. Mr. Bertolaccini expressed the
belief that the present was not the best time to sell the Company in light of
his view of the Company's future prospects.
On March 14, 1996, the Company issued a press release, the text of which is
as follows:
South Bend, IN. - March 14, 1996 - CAPCO Automotive Products
Corporation (CAB) announced today that its Board of Directors will meet
late next week to consider the proposal to acquire the company made by
Eaton Corporation in the March 13th letter from Eaton's Chairman to Mr.
Bertolaccini. CS First Boston has been retained by CAPCO to review the
proposal. Harold Bowman, a member of the Board and Chairman of CAPCO's
Governance Committee (a committee of independent directors) stated, "We
understand why the proposal is attractive to Eaton. It appears Eaton is
acting opportunistically to acquire CAPCO while the Brazilian market is in
a temporary downturn and the Company is in a period of transition."
On March 18, 1996, Parent announced that it would be commencing the Offer.
In addition, Parent also said that it intends to acquire in the Merger any
Shares not purchased in the Offer. A copy of the press release issued by Parent
is attached as Exhibit (a)(9) to the Schedule 14D-1 to which this Offer to
Purchase is attached as an exhibit and is incorporated herein by reference. Also
on March 18, 1996, concurrently with the issuance of Parent's announcement, a
senior executive of Parent contacted Mr. Bertolaccini to apprise him of the
announcement.
On March 19, 1996, the Purchaser commenced the Offer. Also on that date
Parent sent a letter to the Company requesting that the Board make the Rights
inapplicable to the Offer and sent separate letters requesting the Company's
shareholder list and security position listings and other information pursuant
to the federal securities laws and Michigan law.
Parent currently beneficially owns an aggregate of 805,000 Shares,
representing approximately 7.3% of the 11,061,350 Shares reported by the Company
as outstanding at November 1, 1995. Such Shares were acquired by Parent in the
transactions described in Schedule II.
Except as described in this Offer to Purchase (including Schedules I and II
hereto), none of the Purchaser, Parent or, to the best knowledge of the
Purchaser and Parent, any of the persons listed in Schedule I hereto, or any
associate or majority owned subsidiary of the Purchaser, Parent or any of the
persons so listed,
22
<PAGE> 25
beneficially owns any equity security of the Company, and none of the Purchaser,
Parent or, to the best knowledge of the Purchaser and Parent, any of the other
persons referred to above, or any of the respective directors, executive
officers or subsidiaries of any of the foregoing, has effected any transaction
in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, as of the date hereof (a)
there have not been any contacts, transactions or negotiations between the
Purchaser or Parent, any of their respective subsidiaries or, to the best
knowledge of the Purchaser and Parent, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or any of its directors, officers or
affiliates, on the other hand, that are required to be disclosed pursuant to the
rules and regulations of the Commission and (b) none of the Purchaser, Parent
or, to the best knowledge of the Purchaser and Parent, any of the persons listed
in Schedule I hereto has any contract, arrangement, understanding or
relationship, with any person with respect to any securities of the Company.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Merger is to enable Parent to
acquire control of, and the entire equity interest in, the Company. If the Offer
is consummated, then, as soon as practicable thereafter, Parent will seek to
consummate the Merger.
Merger. The MBCA requires that unless otherwise provided by the Company's
articles of incorporation, the plan of Merger for the Merger must be approved by
the affirmative vote of the holders of at least a majority of the outstanding
Shares. The Minimum Tender Condition requires that there shall have been validly
tendered and not properly withdrawn prior to the Expiration Date 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,
without giving effect to any dilution that might arise from exercise of the
Rights. Upon consummation of the Offer, assuming the Minimum Tender Condition,
the Rights Condition, the Business Combination Condition and the Control Share
Condition are satisfied and the other conditions to the Offer set forth in
Section 14 are satisfied or waived, the Purchaser and Parent will own sufficient
Shares to approve the Merger without the vote of any other shareholder.
Board Approval. Except in the case of a short form merger in accordance
with the MBCA described below, the MBCA requires that the plan of merger for the
Merger be adopted by the Company's Board of Directors. As described above,
Parent has previously requested and continues to request that the Company's
Board of Directors approve the Merger and believes that the Company's Board of
Directors is obligated by its fiduciary responsibilities to do so. On March 13
and 14, 1996, notice was delivered to the Company nominating seven individuals
for election as Company directors at the Company's annual meeting of
shareholders scheduled for May 14, 1996. Parent intends to solicit proxies from
shareholders for the purpose of electing the seven director candidates nominated
by Parent, in order that the new Board of Directors would take all such actions
necessary or appropriate (subject to such directors' fiduciary duties) to
approve and effectuate the consummation of the Offer and the Merger, including
taking action to execute an agreement and plan of merger and to satisfy the
Rights Condition. If the seven director candidates nominated by Parent are not
elected at the annual meeting and the conditions to the Offer are not otherwise
satisfied, Parent will explore the other options available to it, including
soliciting shareholder demands to call a special meeting of the Company's
shareholders for the purpose of electing candidates nominated by Parent as
directors of the Company, removing current directors, adopting resolutions of
shareholders instructing the Board of Directors of the Company to approve the
Offer and the Merger or taking other actions to enhance the likelihood that the
Offer and the Merger will be consummated. Under the MBCA, upon application by
holders of at least 10% of the Shares, for good cause shown, a Michigan circuit
court may order a special meeting of the shareholders to be held.
If all the conditions to the Offer are satisfied even though the Company's
Board of Directors does not take the actions requested by the Purchaser to
approve the Offer and the Merger, and if Parent is unsuccessful in seeking
election of the seven director candidates nominated by Parent to the Company's
Board of Directors at the upcoming annual meeting, then Parent and the Purchaser
presently intend to request as soon as practicable following consummation of the
Offer that some or all of the then-current members of the Board of
23
<PAGE> 26
Directors resign and to cause nominees of Parent or the Purchaser to be elected
to fill the resulting vacancies. Should such request be refused, Parent and the
Purchaser intend to take such action as may be necessary and lawful to secure
control of the Board of Directors of the Company. In the event the Purchaser
obtains control of the Company's Board of Directors, the Purchaser would expect
to seek approval of the Merger as soon as practicable thereafter, consistent
with the fiduciary obligations of the Board.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY
SPECIAL MEETING OF THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY
SUCH SOLICITATION WHICH PARENT OR THE PURCHASER MAY MAKE WILL BE MADE ONLY
PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF
SECTION 14(A) OF THE EXCHANGE ACT.
Shareholder Approval. The MBCA requires that except with respect to a
short form merger in accordance with the MBCA as described below, the Merger be
approved by the affirmative vote of the holders of at least a majority of the
outstanding Shares. The Minimum Tender Condition requires that there shall have
been validly tendered and not properly withdrawn on or prior to the Expiration
Date a number of Shares which, together with the Shares owned by Parent,
constitutes at least a majority of the voting power (determined on a fully
diluted basis) on the date of purchase of all securities entitled to vote
generally in the election of directors or in a merger. Upon consummation of the
Offer and assuming the Minimum Tender Condition is satisfied, the Purchaser will
own sufficient Shares to enable it to obtain shareholder approval of the Merger
without the vote of any other shareholder.
Short Form Merger. Under the MBCA and subject to Chapters 7A and 7B of the
MBCA, a parent corporation owning at least 90% of the outstanding shares of each
class of a subsidiary corporation may merge the subsidiary corporation into
itself without the approval of the shareholders of parent corporation or of the
board of directors or shareholders of the subsidiary corporation. In the event
that the Purchaser owns more than 90% of the Shares following the consummation
of the Offer and assuming that Chapters 7A and 7B of the MBCA are inapplicable,
the Purchaser may elect to consummate a short form merger in accordance with the
MBCA. If the Purchaser does not own 90% or more of the Shares following
consummation of the Offer, it may seek to purchase additional Shares in the open
market or otherwise in order to reach 90% ownership of the Shares.
Plans for the Company. Parent does not have any current plans to dispose
of any businesses or other assets of the Company or to effect any changes in its
operations, except that it will consider combining the Company's U.S.
headquarters operations with the headquarters of Parent's Truck Components
Operations. Parent plans to offer all of the Company's management the
opportunity to continue in their current positions. If Parent acquires control
of the Company, it intends to conduct a further review of the Company and its
subsidiaries and their respective assets, businesses, corporate structure,
capitalization, operations, properties, policies, management and personnel.
Except as described in this Offer to Purchase, none of the Purchaser,
Parent nor, to the best knowledge of the Purchaser and Parent, any of the
persons listed on Schedule I, have any present plans or proposals that would
relate to or result in an extraordinary corporate transaction such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries
or a sale or other transfer of a material amount of assets of the Company or any
of its subsidiaries, any material change in the capitalization or dividend
policy of the Company or any other material change in the Company's corporate
structure or business or the composition of its Board of Directors or
management.
Dissenters' Rights. Parent and the Purchaser have been advised that,
pursuant to Section 450.1762 of the MBCA, holders of Shares do not have
dissenters' rights as a result of the Merger because such Shares would be
converted into the right to receive in cash the price per Share paid by the
Purchaser pursuant to the Offer.
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act, which is applicable to certain "going private" transactions
and which may under certain circumstances be applicable to the Merger. However,
Rule 13e-3 would not be applicable to the Merger if (a) the Shares are
deregistered under the Exchange Act prior to the Merger or (b) the Merger is
consummated within one year after the
24
<PAGE> 27
purchase of the Shares pursuant to the Offer and the Merger provided for
shareholders to receive cash for their Shares in an amount at least equal to the
amount paid per Share in the Offer. However, in the event that the Purchaser is
deemed to have acquired control of the Company pursuant to the Offer and if the
Merger is consummated more than one year after completion of the Offer or an
alternative acquisition transaction is effected whereby shareholders of the
Company receive consideration less than that paid pursuant to the Offer, in
either case at a time when the Shares are still registered under the Exchange
Act, the Purchaser may be required to comply with Rule 13e-3 under the Exchange
Act. If applicable, Rule 13e-3 requires, among other things, that certain
financial information concerning the fairness of the proposed transaction and
the consideration offered to minority shareholders in such transaction be filed
with the Commission and disclosed to shareholders prior to the consummation of
the transaction. The purchase of a substantial number of Shares pursuant to the
Offer may result in the Company being able to terminate its Exchange Act
registration. See Section 7.
Other. The timing and details of the Merger will depend on a variety of
factors and legal requirements, the action of the Company's Board of Directors
and the number of Shares acquired by the Purchaser pursuant to the Offer and
whether the Minimum Tender Condition, the Rights Condition, the Business
Combination Condition and the Control Share Condition are satisfied or waived.
Although the Purchaser has proposed the Merger to the Company and seeks to have
the Company consummate the Merger as soon as practicable after consummation of
the Offer, the Purchaser can give no assurance that the Merger will be
consummated or as to the timing of the Merger if it is consummated. Although the
Purchaser has proposed the Merger on the terms described above, it is possible
that as a result of substantial delays in the Purchaser's ability to effect the
Merger, information hereafter obtained by the Purchaser, changes in general
economic or market conditions or in the business, operations or financial
condition or prospects of the Company, any of the Minimum Tender Condition, the
Rights Condition, the Business Combination Condition and/or the Control Share
Condition not being satisfied or any factors which the Purchaser does not
currently foresee, the Merger may not be so proposed, may be delayed or
abandoned or may be proposed on different terms. Although it has no current
intention to do so, the Purchaser expressly reserves the right to propose a
merger on terms other than those described above and the right to withdraw any
merger proposal.
The Purchaser reserves the right to purchase, following consummation or
termination of the Offer, additional Shares or Rights in the open market, in
privately negotiated transactions, in another tender offer or exchange offer or
otherwise. In addition, in the event that the Purchaser decides not to propose
the Merger, to propose a merger on terms other than those described above or to
withdraw any merger previously proposed, the Purchaser will evaluate its other
alternatives. Such alternatives could include purchasing additional Shares or
Rights in the open market, in privately negotiated transactions, in another
tender offer or exchange offer or otherwise, or taking no further action to
acquire additional Shares or Rights. Any additional purchases of Shares or
Rights could be at a price greater or less than the price to be paid for Shares
and Rights in the Offer and could be for cash or other consideration.
Alternatively, the Purchaser and Parent may sell or otherwise dispose of any or
all Shares or Rights acquired pursuant to the Offer or otherwise. Such
transactions may be effected on terms and at prices then determined by the
Purchaser and Parent, which may vary from the price paid for Shares and Rights
in the Offer.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after March 18, 1996, the Company should (a) split, combine or
otherwise change the Shares or its capitalization, (b) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or (c)
issue or sell additional Shares (other than the issuance of Shares under options
outstanding prior to March 15, 1996, in accordance with the terms of such
options as publicly disclosed prior to March 18, 1996), shares of any other
class of capital stock, other voting securities or any securities convertible
into or exchangeable for, or rights, warrants or options, conditional or
otherwise, to acquire, any of the foregoing, then, subject to the provisions of
Section 14, the Purchaser, in its sole discretion, may make such adjustments as
it deems appropriate in the purchase price and other terms of the Offer,
including, without limitation, the number or type of securities offered to be
purchased, to reflect such action.
25
<PAGE> 28
If, on or after March 18, 1996, the Company should declare or pay any cash
dividend on the Shares (other than regular quarterly cash dividends, not in
excess of $0.04 per Share, having a customary and usual record and payment
dates) or other distribution on the Shares, or issue with respect to the Shares
any additional Shares, shares of any other class of capital stock, other voting
securities or any securities convertible into, or rights, warrants or options,
conditional or otherwise, to acquire, any of the foregoing, payable or
distributable to shareholders of record on a date prior to the transfer of the
Shares purchased pursuant to the Offer to the Purchaser or its nominee or
transferee on the Company's stock transfer records, then, subject to the
provisions of Section 14, (a) the purchase price pursuant to the Offer may, in
the sole discretion of the Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering shareholders will (i)
be received and held by the tendering shareholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering shareholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire purchase price
pursuant to the Offer or deduct from the purchase price pursuant to the Offer
the amount or value thereof, as determined by the Purchaser, in its sole
discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer, the Purchaser
will not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-1(c) under the Exchange
Act (relating to the Purchaser's obligation to pay for or return Shares promptly
after the termination or withdrawal of the Offer), to pay for any Shares or
Rights not theretofore accepted for payment or paid for (and the Purchaser may
postpone the acceptance for payment or, subject to the restriction set forth
above, payment for any tendered Shares or Rights pursuant to the Offer, and may
amend or terminate the Offer (whether or not any Shares or Rights have
theretofore been accepted for payment or paid for)) (i) unless, in the sole
judgment of the Purchaser, (a) the Minimum Tender Condition shall have been
satisfied, (b) the Rights Condition shall have been satisfied, (c) the Business
Combination Condition shall have been satisfied, (d) the Control Share Condition
shall have been satisfied and (e) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated; or (ii) if, at any time on or after March 18, 1996, and before
the acceptance of such Shares or Rights for payment or the payment therefor, any
of the following events or facts shall have occurred (or if such events or facts
shall have occurred prior to March 18, 1996 but shall not have been publicly
disclosed until after such date):
(a) there shall be threatened, instituted or pending any action,
proceeding, claim, application or counterclaim by any government or
governmental, regulatory or administrative authority or agency, domestic,
foreign or supranational (each, a "Governmental Entity"), or by any other
person, domestic or foreign, before any court or Governmental Entity,
(i)(A) challenging or seeking to make illegal, delay or otherwise directly
or indirectly restrain or prohibit, or seeking to impose, in the sole
judgment of the Purchaser, voting, procedural, price or other requirements,
in addition to those required by Federal securities laws and the MBCA (each
as in effect on the date of this Offer to Purchase) or making the
acquisition of Shares pursuant to the Offer or to the Merger subject to
Chapter 7A or Chapter 7B, in connection with the making of the Offer, the
acceptance for payment of, or payment for, some of or all the Shares by the
Purchaser, Parent or any other affiliate of Parent or the consummation by
the Purchaser, Parent or any other affiliate of Parent of a merger or other
similar business combination with the Company, (B) seeking to obtain
material damages as a result thereof or (C) otherwise directly or
indirectly relating to the transactions contemplated by the Offer or the
Merger or any such other business combination, (ii) seeking to restrain,
prohibit or limit the ownership or operation by the Purchaser, Parent or
any other affiliate of Parent of all or any portion of the business or
assets of the Company and its subsidiaries or of the Purchaser, Parent or
any other affiliate of Parent or to compel the Purchaser, Parent or any
other affiliate of Parent to dispose of or hold separate all or any portion
of the business or assets of the Company or any of its subsidiaries or of
the Purchaser, Parent or any other affiliate of Parent or
26
<PAGE> 29
seeking to impose any limitation on the ability of the Purchaser, Parent or
any other affiliate of Parent to conduct such business or own such assets,
(iii) seeking to impose or confirm limitations on the ability of the
Purchaser, Parent or any other affiliate of Parent effectively to acquire
or hold or exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by the
Purchaser, Parent or any other affiliate of Parent on all matters properly
presented to the Company's shareholders, or the right to vote any shares of
capital stock of any subsidiary directly or indirectly owned by the
Company, (iv) seeking to require divestiture by the Purchaser, Parent or
any other affiliate of Parent of any Shares, (v) seeking, in the sole
judgment of the Purchaser, any diminution in the benefits expected to be
derived by the Purchaser, Parent or any other affiliate of Parent as a
result of the transactions contemplated by the Offer or the Merger or other
similar business combination with the Company, (vi) otherwise directly or
indirectly relating to the Offer or which otherwise, in the sole judgment
of the Purchaser, might adversely affect the Company or any of its
subsidiaries or the Purchaser, Parent or any other affiliate of Parent or
the value of the Shares or (vii) in the sole judgment of the Purchaser,
adversely affecting the business, properties, assets, liabilities,
capitalization, shareholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
the Purchaser, Parent or any other affiliate of Parent or the Company or
any of its subsidiaries or (ii) the Offer, the Merger or other similar
business combination by the Purchaser, Parent or any other affiliate of
Parent with the Company, by any government, legislative body or court,
domestic, foreign or supranational, or Governmental Entity, other than the
routine application of the waiting period provisions of the HSR Act to the
Offer, that, in the sole judgment of the Purchaser, might, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (vii) of paragraph (a) above;
(c) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been threatened
involving a prospective change) in the business, properties, assets,
liabilities, capitalization, shareholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company or any of its subsidiaries or affiliates or in the
general economic or financial market conditions in the United States,
Brazil or elsewhere that, in the sole judgment of the Purchaser, is or may
be materially adverse to the Company or any of its subsidiaries, or the
Purchaser shall have become aware of any facts that, in the sole judgment
of the Purchaser, have or may have material adverse significance with
respect to either the value of the Company or any of its subsidiaries or
the value of the Shares to the Purchaser, Parent or any other affiliate of
Parent;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in the
financial markets or major stock exchange indices in the United States,
Brazil or elsewhere, including without limitation a decline of at least 15%
in either the Dow Jones Average of Industrial Stocks or the Standard and
Poor's 500 Index from that existing at the close of business on March 18,
1996, (iii) any change in the general political, market, economic or
financial conditions in the United States, Brazil, or elsewhere that could,
in the sole judgment of the Purchaser, have a material adverse effect upon
the business, properties, assets, liabilities, capitalization,
shareholders' equity, condition (financial or otherwise), operations,
licenses or franchises, results of operations or prospects of the Company
or any of its subsidiaries or the trading in, or value of, the Shares, (iv)
any material change in United States or Brazilian currency exchange rates
or any other currency exchange rates or a suspension of, or limitation on,
the markets therefor, (v) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or Brazil,
(vi) a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or Brazil or (vii) in the case of any of the foregoing situations described
in clauses (i) through (vi) of this paragraph (d) existing at the time of
the commencement of the Offer, a material acceleration or worsening
thereof;
27
<PAGE> 30
(e) the Company or any of its subsidiaries shall have, directly or
indirectly, (i) split, combined or otherwise changed, or authorized or
proposed a split, combination or other change of, the Shares or its
capitalization, (ii) acquired or otherwise caused a reduction in the number
of, or authorized or proposed the acquisition or other reduction in the
number of, outstanding Shares or other securities, other than a redemption
of the Rights in accordance with the terms of the Rights Agreement as
publicly disclosed to be in effect on March 15, 1996, (iii) issued,
distributed or sold, or authorized, proposed or announced the issuance,
distribution or sale of, additional Shares (other than the issuance of
Shares under options outstanding prior to March 15, 1996, in accordance
with the terms of such options as publicly disclosed prior to March 18,
1996), shares of any other class of capital stock, other voting securities
or any securities convertible into or exchangeable for, or rights, warrants
or options to acquire, any of the foregoing, (iv) declared or paid, or
proposed to declare or pay, any dividend or other distribution, whether
payable in cash, securities or other property, on or with respect to any
shares of capital stock of the Company (other than a distribution of the
Rights Certificates or a redemption of the Rights in accordance with the
Rights Agreement as publicly disclosed to be in effect on March 15, 1996 or
regular quarterly cash dividends in the Shares of not more than $.04 per
Share, having customary and usual record and payment dates), (v) altered or
proposed to alter any material term of any outstanding security (including
the Rights) other than to amend the Rights Agreement to make the Rights
inapplicable to the Offer and the Merger, (vi) issued, distributed or sold,
or authorized or proposed the issuance, distribution or sale of any debt
securities or any securities convertible into or exchangeable for debt
securities or any rights, warrants or options entitling the holder thereof
to purchase or otherwise acquire any debt securities or incurred, or
authorized or propsed the incurrence of, any debt other than in the
ordinary course of business or any debt containing burdensome covenants,
(vii) authorized, recommended, proposed, entered into or announced its
intention to enter into an agreement with respect to, or to cause, any
merger (other than the Merger), consolidation, liquidation, dissolution,
business combination, acquisition of assets or securities, disposition of
assets, release or relinquishment of any material contractual or other
right of the Company or any of its subsidiaries or any comparable event not
in the ordinary course of business, (viii) authorized, recommended,
proposed or entered into, or announced its intention to authorize,
recommend, propose or enter into, any agreement or arrangement with any
person or group that in the sole judgment of the Purchaser could adversely
affect either the value of the Company or any of its subsidiaries or the
value of the Shares to the Purchaser, Parent or any other affiliate of
Parent, (ix) amended or proposed, adopted or authorized any amendment to
the Articles of Incorporation or By-laws of the Company or any of its
subsidiaries or the Rights Agreement (other than any amendment which
provides that the Rights are inapplicable to the Offer and the Merger), (x)
entered into any employment, severance or similar agreement, arrangement or
plan with or for the benefit of any of its employees or entered into or
amended any agreements, arrangements or plans so as to provide for
increased or accelerated benefits to the employees as a result of or in
connection with the transactions contemplated by the Offer, the Merger or
any other business combination or (xi) except as may be required by law,
taken any action to terminate or amend any employee benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended) of the Company or any of its subsidiaries;
(f) the Purchaser shall become aware (i) that any material contractual
right of the Company or any of its subsidiaries shall be impaired or
otherwise adversely affected or that any material amount of indebtedness of
the Company or any of its subsidiaries shall become accelerated or
otherwise become due or become subject to acceleration prior to its stated
due date, in any case with or without notice or the lapse of time or both,
as a result of or in connection with the Offer or the consummation by the
Purchaser, Parent or any other affiliate of Parent of the Merger or any
other business combination involving the Company, (ii) of any covenant,
term or condition in any of the instruments or agreements of the Company or
any of its subsidiaries that, in the sole judgment of the Purchaser, is or
may be (whether considered alone or in the aggregate with other such
covenants, terms or conditions) materially adverse to either the value of
the Company or any of its subsidiaries (including without limitation any
event of default that may occur as a result of or in connection with the
Offer, the consummation by the Purchaser or any of its affiliates of the
Merger or any other business combination involving the Company)
28
<PAGE> 31
or the value of the Shares to the Purchaser, Parent or any other affiliate
of Parent or the consummation by the Purchaser, Parent or any other
affiliate of Parent of the Merger or any other business combination
involving the Company, or (iii) that any report, document, instrument,
financial statement or schedule of the Company filed with the Commission
contained, when filed, an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under
which they were made, not misleading; or
(g) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or
any of its subsidiaries or affiliates), or it shall have been publicly
disclosed or the Purchaser shall have otherwise learned that (i) any
person, entity (including the Company or any of its subsidiaries) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares) or any of its subsidiaries, through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted any right,
option or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 5% of any class or series of capital stock of the
Company (including the Shares) or any of its subsidiaries, other than
acquisitions of shares for bona fide arbitrage purposes only and other than
as disclosed in a Schedule 13D or 13G on file with the Commission prior to
March 18, 1996, (ii) any such person, entity or group which, prior to March
18, 1996, had filed such a Schedule with the Commission, shall have
acquired or proposed to acquire (other than acquisitions of Shares for bona
fide arbitrage purposes only), through the acquisition of stock, the
formation of a group or otherwise, beneficial ownership of additional
shares of any class or series of capital stock of the Company (including
the Shares) or any of its subsidiaries constituting 2% or more of any such
class or series, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of shares of any
class or series of capital stock of the Company (including the Shares) or
any of its subsidiaries constituting 2% or more of any such class or
series, (iii) any person or group shall have entered into a definitive
agreement or an agreement in principle or made a proposal with respect to a
tender offer or exchange offer or a merger, consolidation or other business
combination with or involving the Company or any of its subsidiaries or
(iv) any person shall have filed a Notification and Report Form under the
HSR Act (or amended a prior filing to increase the applicable filing
threshold set forth therein) or made a public announcement reflecting an
intent to acquire the Company or any assets or subsidiaries of the Company;
or
(h) any approval, permit, authorization, favorable review or consent
of any Governmental Entity (including those described or referred to in
Section 15) shall not have been obtained on terms satisfactory to Purchaser
in its sole discretion;
which, in the sole judgment of the Purchaser in any such case, and regardless of
the circumstances (including any action or inaction by the Purchaser, Parent or
any other affiliate of Parent) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by the Purchaser in whole or
in part at any time and from time to time in its sole discretion. The failure by
the Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver with respect to
any other facts and circumstances and each such right will be deemed an ongoing
right that may be asserted at any time and from time to time. Any determination
by the Purchaser concerning the events described in this Section 14 will be
final and binding upon all parties including tendering shareholders.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, neither the Purchaser nor Parent
is aware of any license or regulatory permit that appears to be material to the
business of
29
<PAGE> 32
the Company and its subsidiaries, taken as a whole, that might be adversely
affected by the Purchaser's acquisition of Shares (and the indirect acquisition
of the stock of the Company's subsidiaries) as contemplated herein or of any
approval or other action by any Governmental Entity that would be required or
desirable for the acquisition or ownership of Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required or
desirable, the Purchaser and Parent currently contemplate that such approval or
other action will be sought. While, except as otherwise expressly described in
this Section 15, the Purchaser does not presently intend to delay the acceptance
for payment of or payment for Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business or
that certain parts of the Company's business might not have to be disposed of if
such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, the Purchaser
could decline to accept for payment or pay for any Shares tendered. See Section
14 for certain conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain conditions.
The Purchaser has not attempted to comply with any state takeover statutes
in connection with the Offer. The Purchaser reserves the right to challenge the
validity or applicability of any state law allegedly applicable to the Offer or
the Merger and nothing in this Offer to Purchase nor any action taken in
connection herewith is intended as a waiver of that right. In the event that any
state takeover statute is found applicable to the Offer or the Merger, the
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer. In
such case, the Purchaser may not be obligated to accept for payment or pay for
any Shares tendered. See Section 14.
CHAPTER 7A OF THE MBCA. Chapter 7A, in general, provides that in order for
a Michigan corporation to enter into a "Business Combination" (defined as a
variety of transactions, including mergers) with an "Interested Shareholder"
(defined, in general, as a person that is the beneficial owner of 10% or more of
a corporation's outstanding voting power) there must be an advisory statement
from the board of directors and the Business Combination must be approved by a
vote of (i) at least 90% of the votes of each class of stock entitled to be cast
and (ii) at least two-thirds of the votes to be cast by each class of stock
entitled to vote (other than the voting shares beneficially owned by the
Interested Shareholder) (the "Chapter 7A Voting Requirements"). The Chapter 7A
Voting Requirements will not apply to a Business Combination if, among other
things, prior to the date any person becomes an Interested Shareholder, the
board of directors of the corporation approves the Business Combination (either
specifically, generally, or by type).
The Chapter 7A Voting Requirements do not apply to any Business Combination
of a corporation, such as the Company, which had an Interested Shareholder on
the effective date of the chapter, whether or not such Business Combination is
with such Interested Shareholder. The board of directors of any such corporation
may, however, elect, in whole or in part, to subject a Business Combination to
the Chapter 7A Voting Requirements. Any such election can be altered or repealed
only by an amendment to the corporation's articles of incorporation adopted by
the shareholders in accordance with the Chapter 7A Voting Requirements.
30
<PAGE> 33
In addition, the Chapter 7A Voting Requirements will not apply to a
Business Combination if five years have passed from the date the Interested
Shareholder became such, and if, among other things, certain fair price tests
are satisfied and the consideration received by the shareholders in connection
with such Business Combination is either cash or in the form paid by the
Interested Shareholder for shares of the same class or series of stock.
The foregoing summary of Chapter 7A does not purport to be complete and is
qualified in its entirety by reference to the provisions of Chapter 7A.
PURSUANT TO THE BUSINESS COMBINATION CONDITION, THE OFFER IS CONDITIONED
UPON THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS
OF CHAPTER 7A ARE INAPPLICABLE TO THE MERGER AND THE ACQUISITION OF SHARES
PURSUANT TO THE OFFER, OR THE MERGER HAVING BEEN APPROVED PURSUANT TO CHAPTER
7A.
Parent has commenced litigation against the Company and its directors in
the United States District Court for the Eastern District of Michigan, Southern
Division, seeking, among other things, an order that any action by the Board of
Directors of the Company to cause the Company to become subject to Chapter 7A
would constitute a breach of fiduciary duty to the Company's shareholders and an
injunction against enforcing Chapter 7A.
CHAPTER 7B OF THE MBCA. Chapter 7B of the MBCA provides, in general, that
shares of an Issuing Public Corporation (which is defined as any corporation
organized under the laws of Michigan which has (a) at least 100 shareholders of
record; (b) its principal place of business, principal office or substantial
assets in Michigan; and (c) at least one of the following: (1) more than 10% of
its shareholders resident in Michigan, (2) more than 10% of its shares owned of
record by Michigan residents, or (3) at least 10,000 shareholders resident in
Michigan) acquired in a Control Share Acquisition will have only such voting
rights as are conferred by resolution approved by both (x) a majority of the
votes cast by holders of shares entitled to vote and a majority of the votes
cast by holders of shares of each class or series entitled to vote, and (y) a
majority of the votes cast by holders of shares entitled to vote and a majority
of the votes cast by the holders of shares of each class or series entitled to
vote, excluding the "Interested Shares." Further, a corporation's articles of
incorporation or by-laws may authorize, under certain circumstances, redemption
at fair value of the Control Shares acquired in a Control Share Acquisition if
no Acquiring Person Statement is filed with the corporation. The corporation
may, before any such control share acquisition, elect not to be governed by this
chapter by adopting an amendment to the corporation's articles of incorporation
or by-laws.
"Control Share Acquisition" means, in general, the acquisition (other than
pursuant to a merger or share exchange agreement to which the Issuing Public
Corporation is a party), directly or indirectly, by any person of ownership of
or the power to direct the voting with respect to, issued and outstanding
"Control Shares" of an Issuing Public Corporation, and all acquisitions of
shares or the power to direct the voting of shares within a 90-day period are
considered to be the same acquisition. "Control Shares" are shares which (but
for the provisions of the statute) would have voting rights and which, when
added to all other shares of such Issuing Public Corporation owned by such
person or in respect of which that person may direct the voting, would entitle
such person, upon acquisition of such shares, to vote or direct the voting of
shares of such Issuing Public Corporation having voting power in the election of
directors within any of the following ranges of such voting power: (i) one-fifth
or more but less than one-third of all voting power; (ii) one-third or more but
less than a majority of all voting power; or (iii) a majority or more of all
voting power.
"Interested Shares" means shares of an Issuing Public Corporation that are
entitled to vote upon the grant of voting rights to Control Shares and the
voting power of which are held by any acquiring person or member of a group with
respect to ownership of shares in a Control Share Acquisition, any officer of
the Issuing Public Corporation or any employee of the Issuing Public Corporation
who is also a director of such corporation.
Any person who proposes to make or has made a Control Share Acquisition may
at the person's election deliver a statement (an "Acquiring Person Statement")
to the Issuing Public Corporation setting forth specified information. If the
Acquiring Person Statement is delivered prior to or after the Control Share
Acquisition, such statement is to include, among other information, the identity
of the acquiring person and
31
<PAGE> 34
each other member of the group of which the person is a part, the number of
shares of the Issuing Public Corporation owned, directly or indirectly and the
number of shares not owned by such person, but with respect to which such person
has the power, directly or indirectly, to direct the exercise of voting power
and the range of voting power under which the Control Share Acquisition falls
or, if consummated, would fall. If the Acquiring Person Statement is delivered
prior to the Control Share Acquisition it is also to include, among other
information, a description of the terms of the proposed Control Share
Acquisition together with a statement that the proposed Control Share
Acquisition, if consummated, will not be contrary to law and a statement as to
the financial capacity to consummate the proposed Control Share Acquisition.
If the acquiring person requests at the time of delivery of an Acquiring
Person Statement and agrees to pay the corporation's expenses of a special
meeting, within 10 days thereafter, the board of directors of the Issuing Public
Corporation is to call a special meeting of shareholders of the Issuing Public
Corporation for the purpose of considering the voting rights to be accorded to
shares acquired or to be acquired in the Control Share Acquisition. Such special
meeting must be held within 50 days after (unless the acquiring person agrees to
another date), but not sooner than 30 days after (unless the acquiring person
requests otherwise), the request has been received. If no request is made, the
voting rights to be accorded the shares acquired in the Control Share
Acquisition shall be presented to the next special or annual meeting of the
shareholders.
The foregoing summary of Chapter 7B does not purport to be complete and is
qualified in its entirety by reference to the provisions of Chapter 7B.
The Purchaser and Parent do not believe that the Company is an Issuing
Public Corporation since neither its principal place of business or its
principal office nor, based on the Company's publicly available information, are
substantial assets located in Michigan. Further, the Company may not satisfy the
eligibility requirements of Chapter 7B relating to share ownership by Michigan
residents; the Purchaser does not as of the date hereof have information
sufficient to determine whether such eligibility requirements would be
satisfied.
PURSUANT TO THE CONTROL SHARE CONDITION, THE OFFER IS CONDITIONED UPON THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PROVISIONS OF
CHAPTER 7B ARE INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER.
Parent has commenced litigation against the Company and its directors in
the United States District Court for the Eastern District of Michigan, Southern
Division seeking, among other things, an order that Chapter 7B does not apply to
the Company or that its application to the Company would be unconstitutional,
and seeking an injunction against enforcing Chapter 7B.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from Parent
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. In practice, complying with a request for
additional information or material can take a significant amount of time.
BRAZILIAN REGULATIONS. The Company 1994 10-K indicates that the Company
and its subsidiaries conduct business in Brazil where regulatory filings or
approvals may be required or desirable in connection with the consummation of
the Offer. Certain of such filings or approvals, if required or desirable, may
not be made or obtained prior to the expiration of the Offer. After commencement
of the Offer, the Purchaser will seek further information regarding the
applicability of any such laws and currently intends to take such action as may
be requir ed or desirable. If any government or governmental authority or agency
takes any action prior
32
<PAGE> 35
to the completion of the Offer that, in the sole judgment of the Purchaser,
might have certain adverse effects, the Purchaser will not be obligated to
accept for payment or pay for any Shares tendered. See Section 14.
16. FEES AND EXPENSES
Smith Barney is acting as dealer manager in connection with the Offer and
as Parent's financial advisor in connection with the proposed acquisition of the
Company. Parent has agreed to pay Smith Barney a retainer fee of $150,000 (the
"Retainer Fee"), and an additional fee (the "Transaction Fee") payable upon
consummation of an acquisition transaction between the Company and Parent,
including without limitation consummation of the Offer. The Retainer Fee will be
credited against the Transaction Fee. The terms of Smith Barney's engagement
provide for certain expense reimbursement and the indemnification of Smith
Barney and certain related persons and entities against certain liabilities in
connection with its engagement, including certain liabilities under the federal
securities laws. Smith Barney may from time to time render various financial
advisory and investment banking services to Parent and its affiliates for which
it would be paid customary fees.
In the ordinary course of business, Smith Barney and its affiliates may
actively trade the securities of Parent and the Company for their own account
and for the account of customers and accordingly may, at any time, hold long or
short positions in such securities.
The Purchaser and Parent have retained Georgeson & Company Inc. to act as
the Information Agent and Chemical Mellon Shareholder Services, L.L.C. to serve
as the Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the Federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by the Purchaser upon request for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is being made solely by this Offer to Purchase and related Letter
of Transmittal and is being made to all holders of Shares. The Offer is not
being made to (nor will tenders be accepted from or on behalf of) holders of
Shares 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. Neither
the Purchaser nor Parent is aware of any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser or Parent becomes aware of any state
law that would limit the class of offerees in the Offer, the Purchaser will make
a good faith effort to comply with any such state statute. If after such good
faith effort, the Purchaser cannot comply with such state statute, the Offer
will not be made to nor will tenders be accepted from or on behalf of the
holders of Shares in such state. In any jurisdiction the securities, blue sky or
other laws of which require the Offer to be made by a licensed broker or dealer,
the Offer is being made on behalf of the Purchaser by the Dealer Manager or one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
33
<PAGE> 36
The Purchaser and Parent have filed with the Commission the Tender Offer
Statement on Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act,
together with exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments thereto. Such Schedule 14D-1 and any
amendments thereto, including exhibits, should be available for inspection and
copies should be obtainable in the manner set forth in Section 8 from the
offices of the Commission (except that such material will not be available at
the regional offices of the Commission).
EATON ACQUISITION CORPORATION
March 19, 1996
34
<PAGE> 37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
Parent are set forth below. Unless otherwise indicated, the business address of
each such director and each such executive officer is Eaton Center, 1111
Superior Avenue, Cleveland, Ohio 44114. Unless otherwise indicated below, each
occupation set forth opposite an individual's name refers to employment with
Parent. Unless otherwise indicated below, all directors and executive officers
listed below are citizens of the United States.
DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH PARENT; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
--------------------------------------------------------
<S> <C>
NEIL A. ARMSTRONG DIRECTOR SINCE 1981. Former Chairman of Computing
Technologies for Aviation, Inc., a computer systems
company, a position he held from 1982 until 1992. He is
a director of Cincinnati Milacron, Inc., Cinergy Corp.,
RMI Titanium Co., Thiokol Corporation and USX
Corporation.
ERNIE GREEN DIRECTOR SINCE 1995. Founder, President and Chief
Executive Officer of EGI, Inc., a manufacturer of
automotive components. The business address of EGI, Inc.
is 1785 Big Hill Road, Dayton, Ohio 45439. He is also
President of Florida Production Engineering, Inc., a
subsidiary of EGI. He is a director of Acordia, Inc.,
Bank One, Dayton, N.A., DP&L Inc. and Duriron Company,
Inc.
A. WILLIAM REYNOLDS DIRECTOR SINCE 1987. Chief Executive Officer of Old Mill
Group, a private investment firm. The business address
of Old Mill Group is 1696 Georgetown Road, Unit E,
Hudson, Ohio 44236. Former Chairman of GenCorp Inc., a
technology-based company with positions in aerospace,
automotive and polymer products. Mr. Reynolds'
association with GenCorp began in September, 1984, as
President and Chief Operating Officer. He was Chief
Executive Officer from August, 1985 to July, 1994 and
served as Chairman from January, 1987 through March,
1995. Mr. Reynolds is a director of Boise Cascade
Corporation, Boise Cascade Office Products Corp. and
Stant Corp. and Chairman of the Federal Reserve Bank of
Cleveland.
CHARLES E. HUGEL DIRECTOR SINCE 1978. Former Chairman and Chief Executive
Officer of Combustion Engineering, Inc., a provider of
products and services for the power, process,
automation, environmental control and other markets. Mr.
Hugel became President and Chief Executive Officer of
Combustion Engineering, Inc., in April, 1984 and
Chairman and Chief Executive Officer in July, 1988. He
was Chairman of Asea Brown Boveri Inc. from January,
1990 to February, 1991 and, until his retirement in
December, 1991, was advisor to the Chief Executive
Officer. Mr. Hugel is a director of Pitney Bowes Inc.
JOHN R. MILLER DIRECTOR SINCE 1985. President and Chief Executive
Officer of TBN Holdings Inc., an environmental company
engaged primarily in the resource recovery and recycling
business. The business address of TBN Holdings Inc. is
Lander Center, Suite 110, 3550 Lander Road, Pepper Pike,
Ohio 44124. He was President, Chief Operating Officer
and a director of The Standard Oil Company from August,
1980 through March, 1986. Mr. Miller formerly served as
Chairman of the Federal Reserve Bank of Cleveland and is
a director of American Waste Services, Inc.
</TABLE>
I-1
<PAGE> 38
<TABLE>
<CAPTION>
POSITION WITH PARENT; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
--------------------------------------------------------
<S> <C>
FURMAN C. MOSELEY DIRECTOR SINCE 1975. Chairman of Sasquatch Publishing
Company. The business address of Sasquatch Publishing
Company is c/o Simpson Investment Company, 1201 Third
Avenue, Suite 4900, Seattle, Washington 98101. Former
president of Simpson Investment Company, holding company
for Simpson Paper Company and Simpson Timber Company. He
was Chairman of Simpson Paper from 1969 to January, 1995
and retired as President of Simpson Investment Company
in July, 1995. Mr. Moseley is a director of
Owens-Corning Fiberglas Corporation.
VICTOR A. PELSON DIRECTOR SINCE 1994. Executive Vice President of AT&T
and Chairman of AT&T's Global Operations Team. The
business address of AT&T is 295 North Maple Avenue,
Basking Ridge, New Jersey 07920. Mr. Pelson began his
career with AT&T in 1959 and has served in many
executive positions, most recently as Group Executive
and President responsible for AT&T's Communications
Services Group. He is a director of AT&T, as well as a
member of its Management Executive Committee, and a
director of United Parcel Service. Mr. Pelson will
retire from AT&T at the end of March, 1996.
ALEXANDER M. CUTLER DIRECTOR SINCE 1993. President and Chief Operating
Officer of Parent. Mr. Cutler joined Cutler-Hammer, Inc.
in 1975, which was subsequently acquired by Parent, and
became President of Parent's Industrial Group in 1986.
Mr. Cutler was named President of the Controls Group in
1989, Executive Vice President -- Operations in 1991,
and was elected Executive Vice President and Chief
Operating Officer -- Controls in September, 1993 and
assumed his current position in September, 1995.
PHYLLIS B. DAVIS DIRECTOR SINCE 1991. Former Senior Vice President,
Corporate Affairs of Avon Products, Inc., a manufacturer
and marketer of cosmetics, toiletries and jewelry. Mrs.
Davis joined Avon in 1968, advanced to Group Vice
President (U.S.) in 1977 and was head of its sales and
distribution from 1985 to 1988. She became Corporate
Senior Vice President of Business Development in 1989
and served as Senior Vice President, Corporate Affairs
from 1990 until her retirement in September, 1991. Mrs.
Davis is a director of BellSouth Corporation and The TJX
Companies, Inc., and a trustee of various open-end
mutual funds in the Fidelity Group.
STEPHEN R. HARDIS DIRECTOR SINCE 1983. Chairman and Chief Executive
Officer of Parent. Mr. Hardis served as Executive Vice
President -- Finance and Administration prior to April,
1986, was elected Vice Chairman in 1986 and designated
Chief Financial and Administrative Officer, and became
Chief Executive Officer in September, 1995 and Chairman
in January, 1996. He joined Parent in 1979. Mr. Hardis
is a director of First Union Real Estate Investments
Trust, KeyCorp, Nordson Corporation and Progressive
Corporation.
GARY L. TOOKER DIRECTOR SINCE 1992. Vice Chairman and Chief Executive
Officer of Motorola, Inc., a manufacturer of electronics
equipment. The business address of Motorola, Inc. is
1303 East Algonquin Road, Schaumburg, Illinois 60196.
Mr. Tooker joined Motorola in 1962 and advanced to the
position of Senior Executive Vice President and Chief
Corporate Staff Officer in 1986. He became Chief
Operating Officer in 1988, President in 1990 and Vice
Chairman and Chief Executive Officer in December, 1993.
</TABLE>
I-2
<PAGE> 39
<TABLE>
<S> <C>
EXECUTIVE OFFICERS
Stephen R. Hardis Chairman (January 1, 1996) and Chief Executive Officer
(September 1, 1995); Director.
Alexander M. Cutler President and Chief Operating Officer (September 1,
1995); Director.
Gerald L. Gherlein Executive Vice President and General Counsel (September
4, 1991).
Brian R. Bachman Senior Vice President -- Semiconductor and Specialty
Systems (January 1, 1996).
Joseph L. Becherer Senior Vice President -- Cutler-Hammer (September 1,
1995). The business address of Mr. Becherer is Five
Parkway Center, 875 Greentree Road, Pittsburgh, PA
15220.
Robert J. McCloskey Senior Vice President -- Controls and Hydraulics
(September 1, 1995).
Thomas W. O'Boyle Senior Vice President -- Truck Components (September 1,
1995).
Larry M. Oman Senior Vice President -- Automotive Components
(September 1, 1995). The business address of Mr. Oman is
26101 Northwestern Highway, Southfield, Michigan 48076.
John M. Carmont Vice President and Treasurer (December 1, 1981).
(Citizen of the United Kingdom.)
Susan J. Cook Vice President -- Human Resources (January 16, 1995).
Adrian T. Dillon Vice President -- Chief Financial and Planning Officer
(September 1, 1995).
Patrick X. Donovan Vice President -- International (April 27, 1988).
Earl R. Franklin Secretary and Associate General Counsel (September 1,
1991).
John W. Hushen Vice President -- Corporate Affairs (August 1, 1991).
Stanley V. Jaskolski Vice President -- Technical Management (October 1,
1990).
Ronald L. Leach Vice President -- Accounting (December 1, 1981).
William T. Muir Vice President -- Manufacturing Technologies (April 1,
1989).
Derek R. Mumford Vice President -- Information Technologies (April 1,
1992). (Citizen of the United Kingdom.)
Billie K. Rawot Vice President and Controller (March 1, 1991).
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
the Purchaser are set forth below. Unless otherwise indicated, the business
address of each such director and each such executive officer is Eaton Center,
1111 Superior Avenue, Cleveland, Ohio 44114. Unless otherwise indicated below,
each occupation set forth opposite an individual's name refers to employment
with the Purchaser. Unless otherwise indicated, all directors and executive
officers listed below are citizens of the United States.
DIRECTOR
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
--------------------------------------------------------
<S> <C>
EARL R. FRANKLIN DIRECTOR SINCE 1996. Vice President and Secretary since
March 14, 1996. He is also Secretary and Associate
General Counsel of Parent (since September 1, 1991).
</TABLE>
I-3
<PAGE> 40
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITION WITH THE PURCHASER; BUSINESS ADDRESS;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
5-YEAR EMPLOYMENT HISTORY
--------------------------------------------------------
<S> <C>
Thomas W. O'Boyle President and Assistant Secretary (March 14, 1996). He
is also Senior Vice President -- Truck Components of
Parent (since September 1, 1995). Mr. O'Boyle served as
Vice President -- Truck Components, North America of
Parent from January, 1991 to September, 1991 and Vice
President -- Truck Components Operations/Worldwide of
Parent from September, 1991 to September 1, 1995.
John M. Carmont Vice President -- Finance, Assistant Secretary and
Treasurer (March 14, 1996). He is also Vice President
and Treasurer of Parent (since December 1, 1981).
(Citizen of the United Kingdom.)
Earl R. Franklin Vice President and Secretary (March 14, 1996). He is
also Secretary and Associate General Counsel of Parent
(since September 1, 1991). Director.
</TABLE>
I-4
<PAGE> 41
SCHEDULE II
PARENT PURCHASES OF SHARES
(ALL PURCHASES WERE MADE FOR CASH ON THE OPEN MARKET
ON THE NEW YORK STOCK EXCHANGE)
<TABLE>
<CAPTION>
NUMBER OF PRICE PER
DATE SHARES SHARE
- ----------------- ---------- ----------
<S> <C> <C>
February 5, 1996 200,000 $7.25
March 5, 1996 20,000 $7.25
March 6, 1996 100 $7.25
March 6, 1996 49,900 $7.375
March 7, 1996 31,400 $7.375
March 7, 1996 18,600 $7.25
March 7, 1996 95,500 $7.125
March 7, 1996 34,500 $7.00
March 8, 1996 37,800 $6.875
March 8, 1996 16,000 $7.00
March 8, 1996 10,000 $7.125
March 8, 1996 165,900 $7.25
March 8, 1996 100 $7.25
March 11, 1996 50,000 $7.125
March 12, 1996 53,200 $7.25
March 12, 1996 2,500 $7.125
March 12, 1996 11,500 $7.375
March 13, 1996 8,000 $7.50
----------
TOTAL 805,000
===========
</TABLE>
II-1
<PAGE> 42
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, 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
</TABLE>
Facsimile Transmission:
(201) 296-4293
(For Eligible Institutions Only)
Confirmation of Facsimile Transmission:
(201) 296-4209
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, 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)
<PAGE> 1
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
at
$11.00 NET PER SHARE
Pursuant to the Offer to Purchase dated March 19, 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 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.
Unless and until the Purchaser declares that the Rights Condition (as
defined in the Offer to Purchase) is satisfied, holders of Shares will be
required to tender one associated Right for each Share tendered in order to
effect a valid tender of such Share. If the Distribution Date (as defined in the
Offer to Purchase) 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. If the Distribution Date occurs and certificates representing
Rights are distributed to holders of Shares, such holders of Shares will be
required to tender certificates for Rights equal to the number of Shares being
tendered in order to effect a valid tender of such Shares. 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 (unless and
until the Purchaser declares that the Right Condition (as defined in the Offer
to Purchase) is satisfied) 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 and this Letter of
Transmittal (which, together with any amendments or supplements thereto or
hereto, collectively 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.
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
Purchaser declares that the Rights Condition is satisfied, the Purchaser will
not require delivery of Rights.
The undersigned understands that, unless and until the Purchaser declares
that the Rights Condition is satisfied, holders of Shares will be required to
tender one associated Right for each Share tendered in order to effect a valid
tender of such Share in accordance with the procedures set forth in Section 2 of
the Offer to Purchase. 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 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
<PAGE> 6
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. 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 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, 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.
UNLESS AND UNTIL THE PURCHASER DECLARES THAT THE RIGHTS CONDITION IS
SATISFIED, HOLDERS OF SHARES WILL BE REQUIRED TO TENDER ONE ASSOCIATED RIGHT FOR
EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. 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. The Rights are
currently represented by the certificates for the Shares with respect to which
the Rights were issued. The Rights Agreement provides that until the close of
business on the Distribution Date, the Rights will be evidenced by the
certificates for the Shares and may be transferred with and only with the
Shares. The Rights Agreement further provides that, as soon as practicable
following the Distribution Date, separate Rights Certificates are to be mailed
by the Company or the Rights Agent to holders of record of Shares as of the
close of business on the Distribution Date. If the Distribution Date occurs and
separate Rights Certificates are distributed 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 separate Rights
Certificates are not distributed prior to the time Shares are tendered herewith,
Rights may be tendered prior to a shareholder receiving separate Rights
Certificates by use of the guaranteed delivery procedures described below. In
any case, a tender of Shares constitutes an agreement by the tendering
shareholder to deliver Rights 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.
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 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 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 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 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 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"), and in the related Letter 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.
<TABLE>
<S> <C>
Number of Shares Name(s) of Record Holder(s)
-------------------------------
------------------------------------------------
Number of Rights
------------------------------- ------------------------------------------------
Certificate Nos. (if available): Please Print
- ------------------------------------------------ Address(es):
------------------------------------
- ------------------------------------------------ ------------------------------------------------
(Check one box if Shares or Zip Code
Rights will be tendered by Area Code and
book-entry transfer) Tel. No.:
/ / The Depository Trust Company ---------------------------------------
/ / Midwest Securities Trust Company Signature(s):
/ / Philadelphia Depository Trust Company -----------------------------------
Account Number ------------------------------------------------
---------------------------------
Dated: , 1996
------------------------------------
</TABLE>
<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
Depositary 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 certificates for Rights 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.
<TABLE>
<S> <C>
Name of Firm:
---------------------------------- AUTHORIZED SIGNATURE
------------------------------------------------
- -----------------------------------------------
Address:
---------------------------------------
PLEASE PRINT
- ----------------------------------------------- Name:
-------------------------------------------
Title:
-------------------------------------------
- -----------------------------------------------
Zip Code
Area Code and
Tel No.: Dated: , 1996
-------------------------------------- -------------------------------------------
</TABLE>
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)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
at
$11.00 NET PER SHARE IN CASH
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.
March 19, 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, at a price of $11.00 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") and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") enclosed herewith. 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.
Unless and until the Purchaser declares that the Rights Condition (as
defined in the Offer to Purchase) is satisfied, holders of Shares will be
required to tender one associated Right for each Share tendered in order to
effect a valid tender of such Share in accordance with the procedures set forth
in Section 2 of the Offer to Purchase. If the Distribution Date (as defined in
the Offer to Purchase) 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.
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. Offer to Purchase, dated March 19, 1996.
2. 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. Facsimile copies of the Letter of
Transmittal may be used to tender Shares (and associated Rights).
<PAGE> 2
3. 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, (1) 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, without
giving effect to any dilution that might arise from exercise of the Rights; (2)
the Rights having been redeemed by the Board of Directors of the Company or the
Purchaser being satisfied, in its sole discretion, that the Rights have been
invalidated or are otherwise inapplicable to the Offer and the Merger; (3) the
Purchaser being satisfied, in its sole discretion, that the provisions of
Chapter 7A of the Michigan Business Corporation Act ("Chapter 7A") are
inapplicable to the Merger and the acquisition of Shares pursuant to the Offer,
or the Merger having been approved pursuant to Chapter 7A; and (4) the Purchaser
being satisfied, in its sole discretion, that the provisions of Chapter 7B of
the Michigan Business Corporation Act are inapplicable to the acquisition of
Shares pursuant to the Offer. The Offer is also subject to other terms and
conditions contained in the Offer to Purchase. See the Introduction and Sections
1, 14 and 15 of the Offer to Purchase.
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 Offer to Purchase 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
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
at
$11.00 NET PER SHARE IN CASH
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.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated March 19,
1996 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively 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, at a price of $11.00 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 and in the related Letter of
Transmittal enclosed herewith.
Unless and until the Purchaser declares that the Rights Condition (as
defined in the Offer to Purchase) is satisfied, holders of Shares will be
required to tender one associated Right for each Share tendered in order to
effect a valid tender of such Share in accordance with the procedures set forth
in Section 2 of the Offer to Purchase. If the Distribution Date (as defined in
the Offer to Purchase) 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 $11.00 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.
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.
<PAGE> 2
4. The Offer is conditioned upon, among other things, (1) 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, without giving
effect to any dilution that might arise from exercise of the Rights; (2)
the Rights having been redeemed by the Board of Directors of the Company or
the Purchaser being satisfied, in its sole discretion, that the Rights have
been invalidated or are otherwise inapplicable to the Offer and the Merger;
(3) the Purchaser being satisfied, in its sole discretion, that the
provisions of Chapter 7A of the Michigan Business Corporation Act ("Chapter
7A") are inapplicable to the Merger and the acquisition of Shares pursuant
to the Offer, or the Merger having been approved pursuant to Chapter 7A;
and (4) the Purchaser being satisfied, in its sole discretion, that the
provisions of Chapter 7B of the Michigan Business Corporation Act are
inapplicable to the acquisition of Shares pursuant to the Offer. The Offer
is also subject to other terms and conditions contained in the Offer to
Purchase. See the Introduction and Sections 1, 14 and 15 of the Offer to
Purchase.
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.
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 Offer
to Purchase dated March 19, 1996 (the "Offer to Purchase") and the related
Letter of Transmittal 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 and in the related Letter of
Transmittal.
<TABLE>
<S> <C>
SIGN HERE
Number of Shares to be Tendered:(1)
---------------------------------------------
Shares
- ---------------------------------------------- ---------------------------------------------
Signature(s)
Number of Rights to be Tendered:(1) ---------------------------------------------
Rights
- ---------------------------------------------- ---------------------------------------------
(Please Print Name(s))
---------------------------------------------
Account Number:
------------------------------ ---------------------------------------------
---------------------------------------------
(Please type or print address(es) here)
Dated: , 1996
---------------------------------------- ---------------------------------------------
Area Code and Telephone Number
---------------------------------------------
Tax Identification or Social Security Number(s)
</TABLE>
- ---------------
(1) Unless and until the Purchaser declares that the Rights Condition (as
defined in the Offer to Purchase) is satisfied, holders of Shares will be
required to tender one assciated Right for each Share tendered to effect a
valid tender such of Share. If the Distribution Date (as defined in the
Offer to Purchase) 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. Unless otherwise indicated, it will be assumed
that all of your Shares and Rights held by us for your account are to be
tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security number have nine digits separated by two hyphens;
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen; i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------
FOR THIS TYPE OF GIVE THE TAXPAYER
ACCOUNT: IDENTIFICATION
NUMBER OF--
- --------------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the minor
account) is the only contributor,
the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid
trust under State
law
8. Sole proprietorship The owner(4)
account
9. A valid trust, estate, The legal entity (Do not
or pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ------------------------------------------------------------
- ------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or
you don't know your number, obtain Form SS-5,
Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number,
at the local office of the Social Security
Administration or the Internal Revenue Service and
apply for a number.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on
ALL payments include the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a),
or an individual retirement plan.
- - The United States or any agency or instrumentality
thereof.
- - A State, the District of Columbia, a possession of
the United States, or any subdivision or
instrumentality thereof.
- - A foreign government, a political subdivision of a
foreign government, or any agency or instrumentality
thereof.
- - An international organization or any agency, or
instrumentality thereof.
- - A registered dealer in securities or commodities
registered in the U.S. or a possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section
584(a).
- - An exempt charitable remainder trust, or a nonexempt
trust described in section 4947(a)(1).
- - An entity registered at all times under the
Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not
generally subject to backup withholding include the
following:
- - Payments to nonresident aliens subject to withholding
under section 1441.
- - Payments to partnerships not engaged in a trade or
business in the U.S. and which have at least one
nonresident partner.
- - Payments of patronage dividends where the amount
received is not paid in money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest generally subject to backup
withholding include the following:
- - Payments of interest on obligations issued by
individuals. Note: You may be subject to backup
withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business
and you have not provided your correct taxpayer
identification number to the payer.
- - Payments of tax-exempt interest (including
exempt-interest dividends under section 852).
- - Payments described in section 6049(b)(5) to
nonresident aliens.
- - Payments on tax-free covenant bonds under section
1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF
THE FORM, AND RETURN IT TO THE PAYER; IF THE PAYMENTS
ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends,
and patronage dividends, that are not subject to
information reporting are also not subject to backup
withholding. For details, see the regulations under
sections 6041, 6041(a), 6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most
recipients of dividend, interest, or other payments
to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the
numbers for identification purposes. Payers must be
given the numbers whether or not recipients are
required to file a tax return. Beginning January 1,
1984, payers must generally withhold 20% of taxable
interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification
number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER
IDENTIFICATION NUMBER. -- If you fail to furnish your
taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure
unless your failure is due to reasonable cause and not
to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST
PAYMENTS. -- If you fail to include any portion of an
includible payment for interest, dividends, or
patronage dividends in gross income, such failure will
be treated as being due to negligence and will be
subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there
is clear and convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO
WITHHOLDING. -- If you make a false statement with no
reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of
$500.
(4) CRIMINAL PENALTY FOR FALSIFYING
INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<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 and the related Letter 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.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
CAPCO AUTOMOTIVE PRODUCTS CORPORATION
AT
$11.00 NET PER SHARE
BY
EATON ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
EATON CORPORATION
Eaton Acquisition Corporation, a Delaware corporation (the
"Purchaser"), which is a wholly owned subsidiary of Eaton Corporation, an Ohio
corporation ("Eaton"), is 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 between the Company and Harris Trust and Savings Bank, as
Rights Agent (the "Rights Agreement"), at a price of $11.00 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") and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively 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
<PAGE> 2
may inure to holders of the Rights pursuant to the Rights Agreement.
The purpose of the Offer is to enable Eaton to acquire control of, and
the entire equity interest in, the Company. The Purchaser currently intends,
as soon as practicable following consummation of the Offer, to seek to have the
Company consummate a merger or similar business combination with the Purchaser
(the "Merger") pursuant to which each then outstanding Share (other than Shares
owned by Eaton or any of its wholly owned subsidiaries and Shares held in the
treasury of the Company) would be converted into the right to receive cash in
the same amount as received per Share in the Offer, and the Company would
become a wholly owned subsidiary of Eaton. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all
the Shares.
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, (1) there being
validly tendered and not properly withdrawn prior to the Expiration Date (as
defined below) 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, without giving effect to any dilution that might
arise from exercise of the Rights; (2) the Rights having been redeemed by the
Board of Directors of the Company or the Purchaser being satisfied, in its sole
discretion, that the Rights have been invalidated or are otherwise inapplicable
to the Offer and the Merger (the "Rights Condition"); (3) the Purchaser being
satisfied, in its sole discretion, that the provisions of Chapter 7A of the
Michigan Business Corporation Act ("Chapter 7A") are inapplicable to the
Merger, the acquisition of Shares pursuant to the Offer, or the Merger having
been approved pursuant to Chapter 7A; and (4) the Purchaser being satisfied, in
its sole discretion, that the provisions of Chapter 7B of the Michigan Business
Corporation Act are inapplicable to the acquisition of Shares pursuant to the
Offer. The Offer is also subject to other terms and conditions contained in
the Offer to Purchase. See the Introduction and Sections 1, 14 and 15 of the
Offer to Purchase.
If the Distribution Date (as defined in the Offer to Purchase) does
not occur prior to the Expiration Date, a tender of Shares will also constitute
a tender of the associated Rights. If the Purchaser declares that the Rights
Condition is satisfied, the Purchaser will not require delivery of Rights.
Unless and until the Purchaser declares that the Rights Condition is satisfied,
holders of Shares will be required to tender one associated Right for each
Share tendered in order to effect a valid tender of such Share. If the
Distribution Date occurs and
<PAGE> 3
certificates representing Rights ("Rights Certificates") are distributed by the
Company or the Rights Agent to holders of Shares prior to the time a holder's
Shares are tendered pursuant to the Offer, 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 tendered must be delivered to
Chemical Mellon Shareholder Services, L.L.C. (the "Depositary") or, if
available, a Book-Entry Confirmation (as defined below) 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 pursuant
to the Offer, 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 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.
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 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 extension of the Offer or 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) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a
(CONTINUED ON NEXT PAGE)
<PAGE> 4
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase),
and (iii) any other documents required by the Letter of Transmittal. The
Purchaser expressly reserves the right, in its sole discretion, 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 14 of the Offer to Purchase, 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
<PAGE> 5
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 (the "Exchange Act"), is contained in the Offer to
Purchase and is incorporated herein by reference.
Requests pursuant to Rule 14d-5 under the Exchange Act and Michigan
law are being made to the Company for the use of the Company's shareholder
lists and security position listings for the purpose of, among other things,
disseminating the Offer to holders of Shares. Upon compliance by the Company
with such request, the Offer to Purchase, the related 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,
and will be furnished to brokers, dealers, 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 AND THE LETTER 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 Letter of Transmittal and other tender offer documents may be
directed to the Information Agent or the
(CONTINUED ON NEXT PAGE)
<PAGE> 6
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.
<PAGE> 7
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
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.
388 Greenwich Street
New York, New York 10013
(212) 816-8530 (Call Collect)
March 19, 1996
