<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the registrant (X)
Filed by a party other than the registrant ( )
Check the appropriate box:
(X) Preliminary proxy statement
( ) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Mark IV Industries, Inc.
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(Name of Registrant as Specified in Its Charter)
Mark IV Industries, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
( ) No fee required.
(X) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common stock, par value $0.01
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(2) Aggregate number of securities to which transaction applies:
54,559,563(/1/)
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11(1) (set forth the amount on which the filing
fee is calculated and state how it was determined):
$23.00
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(4) Proposed maximum aggregate value of transaction:
$1,254,869,949
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(5) Total fee paid:
$250,974
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(X) Fee paid previously with preliminary materials:
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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(1) Estimated for purposes of calculating the amount of the filing fee only.
The amount assumes the conversion of 54,559,563 shares of common stock,
par value $0.01 per share (the "Shares") of the Registrant, into the
merger consideration of $23.00 per Share in cash. As of June 16, 2000,
there were (i) 44,361,427 Shares issued and outstanding, (ii) 8,380,952
Shares reserved for issuance upon conversion of the Company's outstanding
4 3/4% Convertible Subordinated Notes, due 2004 and (iii) an aggregate of
2,445,634 Shares reserved for issuance upon exercise of outstanding
options pursuant to Incentive Stock Option Plans, totalling 55,188,013
Shares on a fully diluted basis. Certain stockholders of the Company,
owning an aggregate of 628,450 options, agreed, in lieu of receiving cash
based on the $23.00 per Share merger consideration, to exchange their
options for options to purchase shares of the parent of the surviving
corporation, resulting in 54,559,563 Shares to be converted into cash in
the merger. The amount of the filing fee calculated in accordance with
Rule 0-11 of the Securities Exchange Act of 1934, as amended, equals
1/50th of one percent of the value of the transaction.
<PAGE>
PRELIMINARY PROXY MATERIALS - SUBJECT TO COMPLETION
[LOGO]
, 2000
To Our Stockholders:
Our board of directors has called a special stockholders meeting to be held
on , 2000, at which you will be asked to consider and vote upon adoption
of a merger agreement between Mark IV Industries, Inc. and MIV Acquisition
Corporation, a newly-formed entity controlled by funds advised by BC Partners,
a leading European private equity firm, which provides for, among other
things, the merger of MIV Acquisition Corporation into Mark IV. In the merger,
our common stockholders will receive $23.00 in cash for each share of Mark IV
common stock, together with the associated preferred share purchase rights,
they own.
The board has carefully reviewed and considered the terms and conditions of
the proposed merger. Based on its review, our board of directors determined
that the merger is fair to and in the best interests of Mark IV and the
holders of our common stock.
THE BOARD HAS APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT YOU VOTE
"FOR" ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE MERGER, AT THE SPECIAL
MEETING.
Your vote is very important. For the merger agreement to be adopted and the
transactions contemplated by the merger agreement, including the merger, to be
approved, the holders of at least a majority of our outstanding shares of
common stock must vote in favor of the proposal. As a result, your failure to
vote will have the same effect as if you voted against the merger agreement.
We urge you to complete, sign and date the enclosed proxy card and promptly
return it in the enclosed return envelope, whether or not you plan to attend
the special meeting and regardless of the number of shares you own. If you do
attend the special meeting, you may withdraw your proxy and vote in person.
A formal notice of the special stockholders meeting, a proxy statement and a
form of proxy accompany this letter. The proxy statement provides you with
detailed information about the proposed merger. We encourage you to read the
entire proxy statement, including the appendices, completely and carefully.
We are mailing the proxy statement and form of proxy to our stockholders
beginning on , 2000.
Please do not send us any stock certificates at this time. You will receive
instructions as to how to surrender your stock certificate(s) and receive
payment for your common stock after the effective time of the merger.
Sincerely,
/s/ Sal H. Alfiero
Sal H. Alfiero
Chairman of the Board and
Chief Executive Officer
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD. A
FAILURE TO VOTE EITHER AT THE SPECIAL MEETING OR BY RETURNING THE ENCLOSED
PROXY CARD WILL COUNT AS A VOTE AGAINST THE MERGER.
<PAGE>
PRELIMINARY PROXY MATERIALS - SUBJECT TO COMPLETION
[LOGO]
501 John James Audubon Parkway
P. O. Box 810
Amherst, New York 14226-0810
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 2000
----------------
To The Stockholders Of
Mark IV Industries, Inc.:
NOTICE HEREBY IS GIVEN that a special meeting of stockholders of Mark IV
Industries, Inc. will be held at a.m., local time, on , 2000 at the
Buffalo Marriott Hotel, 1340 Millersport Highway, Amherst, New York for the
purpose of considering and voting upon:
1. A proposal to adopt the Agreement and Plan of Merger, dated as of May
26, 2000, between Mark IV and MIV Acquisition Corporation, referred to
as MIV, which provides for, among other things, the merger of MIV into
Mark IV, and approve of the transactions contemplated by the merger
agreement, including the merger. As a result of the merger, each share
of Mark IV common stock, together with the associated preferred stock
purchase rights, outstanding immediately prior to the merger, other
than common stock for which dissenter's rights are perfected in
accordance with Delaware law, will be converted into the right to
receive $23.00 in cash, as described in more detail in the accompanying
proxy statement.
2. A proposal to permit the proxies, in their discretion, to adjourn the
special meeting of stockholders for the sole purpose of soliciting more
votes or proxies in favor of adoption of the merger agreement in the
event that the number obtained is insufficient to assure adoption of
the merger agreement.
3. Transaction of such other business as properly may come before the
meeting or any adjournment of the meeting.
A copy of the merger agreement is attached as Appendix A to the proxy
statement which accompanies this notice. Please review the proxy statement for
more complete information regarding the merger proposal.
Adoption of the merger agreement and approval of the transactions
contemplated by the merger agreement, including the merger, requires the
affirmative vote of the holders of a majority of the issued and outstanding
shares of common stock. Approval of the proposal to permit the proxies, in
their sole discretion, to adjourn the special meeting for the sole purpose of
soliciting more votes or proxies in favor of the approval of the merger
agreement requires the affirmative vote of the holders of a majority of the
shares of common stock voting on the proposal at the meeting, assuming at
least a majority of the outstanding common shares are present in person or
represented by proxy at the meeting. Only stockholders of record at the close
of business on , 2000 are entitled to receive notice of and to vote at
the special meeting or any adjournment or postponement of the special meeting
and "FOR" the proposal to permit the proxies, in their discretion, to adjourn
the meeting for the sole purpose of soliciting more votes or proxies in favor
of adoption of the merger agreement.
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The proxy holders will vote common stock represented by properly executed
proxies as directed on the proxy card. If no directions are given, proxies
will be voted "FOR" adoption of the merger agreement and approval of the
transactions contemplated by the merger agreement, including the merger. To
grant a proxy to vote your common stock, please complete, date and sign the
enclosed proxy card and mail it promptly in the enclosed return envelope.
By Order of the Board of Directors,
/s/ Sal H. Alfiero
Sal H. Alfiero
Chairman of the Board and
Chief Executive Officer
Amherst, New York
, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. PLEASE DO
NOT SEND IN ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME. YOU MAY REVOKE YOUR
PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT ANY TIME
BEFORE THE PROXY HAS BEEN VOTED AT THE SPECIAL MEETING.
<PAGE>
PRELIMINARY PROXY MATERIALS--SUBJECT TO COMPLETION
MARK IV INDUSTRIES, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 2000
----------------
SUMMARY TERM SHEET
THIS SUMMARY TERM SHEET HIGHLIGHTS SELECTED INFORMATION CONTAINED IN THIS
PROXY STATEMENT AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT
TO YOU. WE URGE YOU TO READ THIS ENTIRE PROXY STATEMENT, INCLUDING THE
APPENDICES, CAREFULLY. IN THIS PROXY STATEMENT, THE TERMS "MARK IV," "WE,"
"US," "OUR" AND "OUR COMPANY" REFER TO MARK IV INDUSTRIES, INC.
. We are proposing to merge with MIV Acquisition Corporation, a newly-
formed entity controlled by funds advised by BC Partners, pursuant to
the merger agreement described in this proxy statement. (page 27)
. We are holding a special meeting of our stockholders at a.m. on
, 2000 at the Buffalo Marriott Hotel, 1340 Millersport Highway,
Amherst, New York to vote on adoption of the merger agreement and
approval of the transactions contemplated by the merger agreement, to
permit the proxies to adjourn the meeting for the sole purpose of
soliciting more votes or proxies in favor of adoption of the merger
agreement, and to act on any other matters that properly may come before
the meeting. (page 1)
. Our board of directors has determined that the merger agreement and the
transactions contemplated by the merger agreement, including the merger,
are advisable, fair to and in the best interests of Mark IV and our
stockholders. Our board recommends that you vote "FOR" adoption of the
merger agreement and approval of the transactions contemplated by the
merger agreement, including the merger. (page 8)
. Our board of directors received a written opinion dated May 26, 2000
from its financial advisor, Bear, Stearns & Co. Inc., to the effect
that, as of that date and based on and subject to the matters described
in the opinion, the cash consideration to be received in the merger by
our stockholders was fair, from a financial point of view to our
stockholders, other than certain executive officers of Mark IV. We have
included Bear Stearns' opinion as Appendix B to this Proxy Statement.
While the opinion of Bear Stearns is directed to the Mark IV board of
directors and does not constitute a recommendation to any stockholder as
to any matter relating to the proposed merger, we urge our stockholders
to read the opinion of Bear Stearns carefully in its entirety. (page 10
and Appendix B)
. Certain members of our senior management and directors, owning in the
aggregate approximately 16.2% of our outstanding common stock, have
agreed to, among other things, vote or cause to be voted their shares of
common stock in favor of the adoption of the merger agreement and
approval of the transactions contemplated thereby, including the merger,
at the special meeting (page 2).
The following are the material terms of the proposed merger:
. You will receive $23.00 in cash, without interest, for each share of
common stock, together with the associated preferred stock purchase
rights, you own. (page 27)
. The merger will be a taxable transaction to our stockholders for federal
tax purposes. (page 23-25)
. MIV will be merged with and into us, and we will be the surviving
corporation after the merger and will be a wholly-owned subsidiary of an
entity to be organized under the laws of Luxembourg. Private
<PAGE>
investment funds advised by BC Partners will own a direct or indirect
controlling interest in the common equity of the Luxembourg parent and
the other holders of common equity of the parent will include certain
members of our senior management. (page 27)
. After the merger, our stockholders will not have an equity interest in
Mark IV. (page 27)
. The merger will be completed only if a number of conditions are
satisfied. These include adoption of the merger agreement and approval
of the transactions contemplated by the merger agreement, including the
merger, by our stockholders and MIV obtaining the financing needed to
pay the merger consideration. (page 34-35)
. The merger agreement can be terminated by the mutual written consent of
Mark IV and MIV at any time or by either or both of us under specified
circumstances. (page 36) If the agreement is terminated, in some
circumstances we will be obligated to pay up to $6,000,000 in out-of-
pocket expenses to MIV and also, in some cases, a termination fee in the
amount of $30,000,000. (page 37)
. We expect to complete the merger promptly after the special stockholders
meeting, but not later than November 30, 2000. (pages 27 and 41).
The procedures relating to your vote at the meeting are as follows:
. If your shares are held directly in your name, you should mail your
signed proxy card to us in the enclosed self-addressed envelope so that
we receive your proxy prior to the , 2000 special meeting. (page 2)
. If your shares are held in "street name" by your broker, your broker
cannot vote your shares without instructions from you. You should follow
the directions for giving instructions provided by your broker. (page 1)
. Under Delaware law, you have the right to be paid the fair value of your
stock, as determined in the Court of Chancery of the State of Delaware,
if you do not vote for the merger, the merger is completed and you
properly follow the procedures for perfecting dissenter's rights under
Delaware law. (page 25)
. Adoption of the merger agreement and approval of the transactions
contemplated by the merger agreement, including the merger, requires the
affirmative vote of the holders of a majority of the issued and
outstanding common stock. If you fail to vote, it will have the same
effect as if you voted against adoption of the merger agreement.
(page 2)
. You may revoke your proxy and change your vote in any of the following
ways (page 3):
- Send us a written notice stating that you would like to revoke your
proxy.
- Complete and submit a new, later dated proxy card by mail, which will
supersede your prior vote.
- Attend the special stockholders meeting and vote in person.
- If you have instructed a broker to vote your shares, you must follow
directions from your broker to change or revoke your proxy.
. Please do not send us any of your stock certificates at this time. After
the merger is completed, we will send you instructions explaining how to
exchange your common stock certificates for cash. (page 28)
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN
CONNECTION WITH THIS SOLICITATION OF PROXIES AND, IF GIVEN OR MADE, THE
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY US OR ANY PERSON ACTING ON OUR BEHALF.
If you would like additional copies of this proxy statement or if you would
like to ask questions about the merger, you should contact Colleen Tibollo at
Mark IV Industries, Inc., 501 John James Audubon Parkway, P.O. Box 810,
Amherst, New York 14226-0810, or by telephone at (716) 689-4972.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary Term Sheet.........................................................
The Special Stockholders Meeting........................................... 1
General.................................................................. 1
Record Date and Vote Required............................................ 1
Proxies.................................................................. 2
Revocation of Proxies.................................................... 3
Other Matters............................................................ 3
Solicitation of Proxies.................................................. 3
Special Factors............................................................ 3
Background of the Merger................................................. 3
Reasons for the Merger; Recommendation of our Board of Directors......... 8
Opinion of our Financial Advisor......................................... 10
Certain Estimates of Future Operations and other Information............. 16
Stockholder Voting Agreement............................................... 17
Interests of Certain Persons; Conflicts of Interest........................ 18
Continuing Management Members; Retained Equity........................... 18
Restructured Employment Agreements and Other Benefit Arrangements........ 19
New Management Option Plan............................................... 21
Accounting Treatment....................................................... 22
Financing.................................................................. 22
Effect of the Merger on our Common Stock................................... 23
Regulatory Matters......................................................... 23
United States Federal Income Tax Consequences.............................. 23
Dissenter's Rights......................................................... 25
Litigation Challenging the Merger.......................................... 26
The Merger Agreement....................................................... 27
The Merger............................................................... 27
Consideration to be Received in the Merger............................... 27
Treatment of Stock Options............................................... 27
Exchange of our Common Stock............................................. 28
Representations and Warranties of Mark IV................................ 28
Representations and Warranties of MIV.................................... 29
Covenants of Mark IV..................................................... 30
Covenants of MIV......................................................... 33
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Additional Covenants of Mark IV and MIV................................ 34
Conditions to the Merger............................................... 34
Termination............................................................ 36
Termination Fees and Expenses.......................................... 37
Amendment and Waiver................................................... 37
Information about Us..................................................... 38
Information about MIV, Luxco, and Certain other Persons.................. 38
Ownership of our Common Stock............................................ 39
Directors and Executive Officers....................................... 39
Annual Meeting and Stockholder Proposals................................. 41
Where You Can Find More Information...................................... 42
APPENDIX A Agreement and Plan of Merger, dated as of May 26, 2000, by
and between MIV Acquisition Corporation and Mark IV
Industries, Inc............................................ A-1
APPENDIX B Opinion of Bear, Stearns & Co. Inc. ...................... B-1
APPENDIX C Section 262 of the Delaware General Corporation Law....... C-1
</TABLE>
ii
<PAGE>
THE SPECIAL STOCKHOLDERS MEETING
General
We are furnishing this proxy statement to the holders of our common stock in
connection with the solicitation of proxies by our board of directors for use
at a special meeting of stockholders to be held on , 2000 at a.m., local
time, at the Buffalo Marriott Hotel, 1340 Millersport Highway, Amherst, New
York.
The purpose of the special meeting is to consider and vote upon:
. a proposal to adopt the merger agreement and approve the transactions
contemplated by the merger agreement, including the merger, pursuant to
which, among other things, each share of our common stock, together with
the associated preferred share purchase rights, outstanding immediately
prior to the merger, other than common stock for which dissenter's
rights are perfected in accordance with Delaware law, will be converted
into the right to receive $23.00 in cash;
. a proposal to permit the proxies, in their discretion, to adjourn the
special stockholders meeting for the sole purpose of soliciting more
votes or proxies in favor of adoption of the merger agreement; and
. such other business as may properly come before the special meeting.
OUR BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE MERGER, ARE
ADVISABLE, FAIR TO AND IN THE BEST INTERESTS OF MARK IV AND THE HOLDERS OF OUR
COMMON STOCK AND HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE MERGER. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT AND
APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING
THE MERGER.
THE BOARD OF DIRECTORS ALSO RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO
PERMIT THE PROXIES, IN THEIR DISCRETION, TO ADJOURN THE SPECIAL STOCKHOLDERS
MEETING FOR THE SOLE PURPOSE OF SOLICITING MORE VOTES OR PROXIES IN FAVOR OF
ADOPTION OF THE MERGER AGREEMENT.
Record Date and Vote Required
You may cast one vote at the special stockholders meeting for each share of
common stock that you owned at the close of business on , 2000. On that
date, we had shares of common stock outstanding and entitled to vote.
The affirmative vote of the holders of a majority of the issued and
outstanding common stock is required to adopt the merger agreement and approve
the transactions contemplated by the merger agreement, including the merger.
The affirmative vote of the holders of a majority of the shares of common
stock voting on the proposal at the meeting is required to approve the
proposal to permit the proxies, in their discretion, to adjourn the special
stockholders meeting for the sole purpose of soliciting more votes or proxies
in favor of adoption of the merger agreement, assuming at least a majority of
the outstanding common shares are present in person or represented by proxy at
the meeting.
Under the rules of the New York Stock Exchange, brokers who hold shares in
street name for customers will not have authority to vote on adoption of the
merger agreement and approval of the transactions contemplated by the merger
agreement, including the merger, unless they receive special instructions from
the beneficial owners of those shares. Shares that are not voted because
brokers did not receive any instructions are referred to as "broker non-
votes."
1
<PAGE>
The presence, in person or represented by a proxy, of the holders of a
majority of the common stock entitled to vote at the special stockholders
meeting will constitute a quorum for the transaction of business. Abstentions
and broker non-votes will be counted as present for purposes of determining a
quorum.
Any failure to be present at the special stockholders meeting, in person or
by proxy, any abstention and any broker non-vote will have the same effect as
a vote against adoption of the merger agreement and approval of the
transactions contemplated by the merger agreement, including the merger. Any
failure to be present at the special stockholders meeting, in person or by
proxy, will have the effect of reducing the aggregate number of common stock
voting and, therefore, the number of votes required to approve the proposal to
permit the proxies, in their discretion, to adjourn the meeting to solicit
more votes or proxies in favor of adoption of the merger agreement, while any
abstention or broker non-vote will have the same effect as a vote against that
proposal.
The persons appointed to vote as proxies are authorized to vote upon any
adjournments, postponements, continuations or reschedulings of the special
stockholders meeting and upon any other matters that properly come before the
meeting. In the event that less than a majority of our issued and outstanding
shares of common stock entitled to vote are voted in favor of adoption of the
merger agreement and a majority of the shares of common stock present at the
meeting are voted in favor of the proposal to permit the holders of the
proxies, in their discretion, to adjourn the meeting for the sole purpose of
soliciting more votes or proxies in favor of adoption of the merger agreement,
the holders of the proxies will be authorized, in their discretion, to vote
the common stock for which they hold proxies to adjourn, postpone or continue
the meeting for the purpose of allowing them to have additional time to
solicit additional votes or proxies in favor of adoption of the merger
agreement. If less than a majority of the shares of common stock present at
the meeting are voted in favor of the proposal to permit the proxies to
adjourn the meeting to solicit more votes or proxies in favor of adoption of
the merger agreement, the proxies may not adjourn, postpone or continue the
meeting for that purpose alone.
As of June 16, 2000, our directors and executive officers owned beneficially
(exclusive of exercisable options) and had the right to vote an aggregate of
7,476,013 shares of common stock, or approximately 16.9% of the common stock
outstanding on that date. Our directors have indicated their intention to vote
their common stock in favor of adoption of the merger agreement and approval
of the transactions contemplated by the merger agreement, including the
merger, and approval of the proposal to permit the proxies, in their
discretion, to adjourn the meeting for the sole purpose of soliciting more
votes or proxies in favor of adoption of the merger agreement. In addition,
certain of our executive officers and directors have agreed, among other
things, to vote or cause to be voted the aggregate of approximately 16.2% of
our outstanding shares of common stock owned by them in favor of adoption of
the merger agreement and approval of the transactions contemplated by the
merger agreement, including the merger, at the special meeting and at any
adjournment of the special meeting pursuant to a Stockholder Voting Agreement,
dated as of May 26, 2000 which is described below under "Stockholder Voting
Agreement."
As of , 2000, our directors and executive officers owned no common stock
of MIV, and MIV owned none of our common stock. However, certain of our
executive officers (one of whom is also a director) have entered into
agreements described in this proxy statement to acquire indirect equity
interests in the surviving corporation. (See "Interests of Certain Persons;
Conflicts of Interest--Continuing Management Members; Retained Equity.)
Proxies
Each copy of this proxy statement sent to our common stockholders is
accompanied by a form of proxy for use at the special stockholders meeting.
Common stock represented by a proxy properly submitted as described below and
received at or prior to the special stockholders meeting, unless subsequently
revoked, will be voted in accordance with the instructions on the proxy.
TO SUBMIT A PROXY, HOLDERS OF COMMON STOCK SHOULD COMPLETE, SIGN, DATE AND
MAIL THE PROXY CARD PROVIDED WITH THIS PROXY STATEMENT IN ACCORDANCE WITH THE
INSTRUCTIONS SET FORTH ON THE PROXY CARD. If a proxy card is signed and
returned without indicating any voting instructions, the common stock
represented by the proxy will be voted "FOR"
2
<PAGE>
adoption of the merger agreement and approval of the transactions contemplated
thereby, including the merger and "FOR" permitting the proxies, in their
discretion, to adjourn the meeting for the sole purpose of soliciting more
votes or proxies in favor of adoption of the merger agreement.
Revocation of Proxies
Any stockholder who submits a proxy may revoke it at any time before it is
voted:
--by giving written notice of the revocation to us, addressed to: Mark IV
Industries, Inc., P. O. Box 810, Amherst, New York 14226, Attention:
Secretary;
--by submitting a later dated proxy by mail, if we receive the proxy prior
to the special stockholders meeting; or
--by VOTING in person at the special stockholders meeting. A proxy is not
revoked simply by ATTENDING the special stockholders meeting.
Stockholders who have instructed a broker to vote their stock must follow
directions received from their broker to change or revoke their proxy.
Other Matters
Our board of directors currently is not aware of any business to be acted
upon at the special stockholders meeting, other than as described above. If,
however, other matters properly are brought before the meeting, the persons
appointed as proxies will have discretion to vote or to act on these matters
according to their best judgment, unless otherwise indicated on any particular
proxy.
Solicitation of Proxies
In addition to solicitation by mail, our directors, officers and employees,
none of whom will be specifically compensated for those services, but may be
reimbursed for reasonable out-of-pocket expenses incurred in connection with
those services, may solicit proxies from our stockholders personally or by
telephone, facsimile or telegram or other form of communication. Brokerage
houses, nominees, fiduciaries and other custodians will be requested to
forward soliciting materials to beneficial owners and will be reimbursed for
their reasonable expenses incurred in sending the materials to beneficial
owners.
PLEASE DO NOT SEND YOUR COMMON STOCK CERTIFICATES TO US WITH YOUR PROXY
CARD. IF THE MERGER IS COMPLETED, WE WILL SEND YOU A TRANSMITTAL FORM WITH
INSTRUCTIONS ON HOW TO EXCHANGE YOUR STOCK CERTIFICATES FOR $23.00 PER SHARE
IN CASH.
SPECIAL FACTORS
Background of the Merger
Our management and our board of directors have, from time to time, discussed
strategies to maximize stockholder value as a regular part of our strategic
planning activities. Over the past several years, our management and our board
of directors have become concerned that Mark IV's strong operating performance
was not appropriately reflected in our stock price.
Beginning in October 1996, we implemented programs and took various actions
in an effort to increase our stockholder value. Throughout this process we
consulted with our long standing financial advisor, Bear, Stearns & Co. Inc.,
or Bear Stearns, about the various programs and steps that we were
implementing. In fiscal 1997, we initiated a restructuring of our business
that included upgrades to the manufacturing equipment in many of our
facilities and improvements to the efficiency of our manufacturing facilities.
In fiscal 1999, we worked to
3
<PAGE>
reduce our inventory levels and to better focus our business strategy on our
automotive aftermarket customer base. We completed strategic acquisitions of:
Imperial Eastman in March 1996, LPI Systemes Moteurs S.A. in October 1997 and
Lombardini FIM and Ruggerini S.p.A. in April and September 1999, respectively.
In addition, we sold our audio equipment group of companies, our Purolator
automotive and industrial filters businesses and certain other smaller units,
all of which we determined to be outside of our core business focus. Beginning
in March 1997, we implemented a stock repurchase program under which we
repurchased approximately 33% or $423 million of our outstanding common stock.
We also refinanced $388 million of our highest cost debt in order to reduce
our interest expense. Despite the programs and changes that we had implemented
and the related improvement in our earnings, our stock price as of January 18,
2000 had decreased by 18% since January 17, 1997.
On January 18, 2000, our board of directors met to discuss, among other
things, the performance of our stock and to consider other strategic
alternatives that might be available in order to maximize stockholder value,
including the possible sale or merger of Mark IV. At this board meeting as
well as each subsequent board meeting described under "Background of the
Merger" all of our directors were in attendance, either in person or by
conference telephone, with the exception of one director who was seriously ill
throughout this period. After discussion, the board of directors authorized
our senior management to retain Bear Stearns as financial advisor to evaluate
our strategic alternatives to maximize stockholder value, including the
possible sale or merger of Mark IV. On January 19, 2000, we publicly announced
the board of directors' decision to consider strategic alternatives and to
retain Bear Stearns for this purpose.
During the six week period following January 19, 2000, as part of our
efforts to explore our strategic alternatives, including the possible sale or
merger of Mark IV, Bear Stearns contacted and responded to inquiries from 85
potential bidders on our behalf. Forty-three strategic parties and financial
sponsors entered into confidentiality agreements with us and received non-
public descriptive materials about our business, products and the markets in
which we compete. Following January 19, 2000, our senior management had
discussions with Bear Stearns and concluded that the strategic alternative
most likely to maximize shareholder value was the sale of Mark IV in its
entirety and, therefore, the descriptive materials indicated that we were
soliciting indications of interest for the acquisition of 100% of the stock of
Mark IV. We set March 15, 2000 as the deadline for submissions of initial
indications of interest.
On January 25, 2000, at the request of the chief executive officer of
Interbanca S.p.A., an Italian merchant bank, referred to as Interbanca, three
of our senior executives, William Montague, our president and chief operating
officer and a director, Kurt Johansson, our senior vice president and
president of our automotive business segment, and Giuliano Zucco, our vice
president and executive vice president of our automotive business segment,
representatives of our financial advisor, representatives of Interbanca and
representatives of The Chase Manhattan Bank, referred to as Chase, who were
invited by Interbanca, met in Milan, Italy to discuss Interbanca's preliminary
interest in a transaction with us. Interbanca is a lender to our Italian
subsidiary and Chase is a lender under our senior credit facility.
Consequently, both banks were familiar with our business. Later in the day our
senior executives met with representatives of Mediobanca--Banco di Credito
Finanziario S.p.A., an Italian merchant bank, referred to as Mediobanca, who
had expressed an interest in participating as an equity participant or as a
lender in a potential transaction with us. Neither the Interbanca nor the
Mediobanca representatives made a proposal at the January 25 meetings.
On February 29, 2000, at a meeting of our board of directors, the process
undertaken with the assistance of Bear Stearns was discussed. Sal Alfiero, our
chairman and chief executive officer, discussed with our board of directors
the descriptive materials about Mark IV which had been prepared for, and
requested by and distributed to a number of potential strategic and financial
bidders. Mr. Alfiero also discussed with the board of directors that
management, along with Bear Stearns, had considered the sale of each of our
business units in separate transactions. Due, among other things, to the
uncertainties inherent in pursuing a program of selling our business units on
an individual basis, both as to the aggregate value that could be obtained and
the length of time involved, and in view of the diversion of management time
and attention and the potentially adverse tax costs of selling
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our business units separately, management had determined, after consulting
with and receiving the advice of Bear Stearns, that a sale of Mark IV as a
whole was the strategic alternative most likely to maximize shareholder value.
On March 8, 2000, we received a letter from a representative of Interbanca
informing us that Interbanca was working with BC Partners, a leading European
private equity firm which advises several large private investment funds, for
the joint submission of a preliminary indication of interest.
On March 15, 2000, we received three preliminary indications of interest in
acquiring Mark IV as a whole, including the joint submission of BC Partners
and Interbanca (the "Investor Group"). Although we had solicited indications
of interest for the acquisition of 100% of the stock of Mark IV, we also
received written and verbal indications of interest for the acquisition of
specific business segments or product lines, which we continued to believe,
after consulting with and receiving the advice of Bear Stearns, did not
reflect the alternative most likely to maximize stockholder value.
Accordingly, with the assistance of Bear Stearns, we began the process of
reviewing and evaluating the three preliminary indications of interest in
acquiring Mark IV as a whole that we had received.
The Investor Group's preliminary indication of interest reflected a
preliminary price range of $24 to $27 per share, payable in cash. The second
preliminary indication of interest was from an automotive parts manufacturer,
with annual revenues which were significantly less than ours, to acquire us
for a combination of cash and the buyer's common stock with a combined value
within a range lower than the preliminary range in the Investor Group's
submission. The third preliminary indication of interest was from a financial
sponsor to acquire us for cash within a range lower than the preliminary range
in the Investor Group's submission. After consultation with Bear Stearns, we
concluded that there were uncertainties regarding the likelihood of
consummation by the financial sponsor of a transaction of this magnitude.
During our review process and at our direction, Bear Stearns contacted the
Investor Group and other selected parties who had submitted indications of
interest to discuss in detail various aspects of their submissions, including
sources of financing. Based upon these discussions and after consulting with
and receiving the advice of Bear Stearns, we determined the Investor Group's
preliminary indication of interest to be superior to the other submissions we
had received. Therefore, we determined to pursue the preliminary indication of
interest from the Investor Group.
The Investor Group's preliminary indication of interest requested the grant
of an exclusivity agreement for a six week period to conduct legal and
business due diligence and negotiate a definitive acquisition agreement. On
March 31, 2000, after negotiating a modification by the Investor Group
increasing their preliminary price range for the acquisition of Mark IV to $25
to $28 per share, we granted the Investor Group, pursuant to a letter
agreement, a 42-day period of exclusivity, ending on May 16, 2000, for the
purposes of conducting business, financial and legal due diligence.
During the exclusivity period, the Investor Group and their financial,
accounting, legal and other advisors met on several occasions with our
management for the purpose of conducting financial, business and legal due
diligence.
On April 21, 2000, at a meeting of our board of directors, Mr. Alfiero
reported at length on the process undertaken with the assistance of Bear
Stearns. He advised the board of directors that Bear Stearns had completed the
solicitation of indications of interest on behalf of Mark IV and reviewed the
indications of interest that had been received with our board of directors.
Mr. Alfiero reported that Mark IV had granted the Investor Group a period of
exclusivity until May 16, 2000 for the purpose of completing their due
diligence review and finalizing financing commitments.
On May 2, 2000 our counsel submitted a draft merger agreement to the
Investor Group and its counsel.
On May 9, 2000, we were advised by BC Partners that they had been informed
that The Wall Street Journal was publishing an article in its European edition
regarding the acquisition of Mark IV by BC Partners. On May 10, 2000, articles
appeared in both the United States and European editions of The Wall Street
Journal stating that BC Partners was "close to acquiring Mark IV" for "as much
as $26 per share." We issued a press release
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the same day stating that, consistent with our January 19, 2000 announcement
of our intention to explore our strategic alternatives to maximize stockholder
value, we were engaged in discussions with BC Partners regarding a possible
business combination in which Mark IV would be acquired by a financial group
headed by BC Partners. We also stated that no definitive proposal had been
received and that there was no agreement as to the principal terms and
conditions of any transaction.
On May 11, 2000, at the request of the Investor Group, Messrs. Montague,
Johansson and Zucco and David Oliver, the president of our transportation
products group, referred to as the Continuing Management Members, met with
representatives of the Investor Group in Milan, Italy to discuss the Investor
Group's interest in retaining these four members of our senior management
after a potential acquisition of Mark IV. The Investor Group's preliminary
indication of interest had stated that the Investor Group expected a number of
our key executives to be retained going forward and to invest alongside the
Investor Group in order to provide management with appropriate incentives to
focus on growing the value of the surviving company. The Investor Group
indicated that they were interested in discussing these matters with our
management team at the appropriate time. At the May 11 meeting, the Investor
Group discussed, on a preliminary basis, the employment arrangements which
they were considering with respect to the retention of the Continuing
Management Members after completion of the transaction. The representatives
also advised the Continuing Management Members that the Investor Group
expected them to invest approximately $8 million, with individual amounts to
be agreed upon, in the ordinary shares of a Luxembourg holding company,
referred to as Luxco, which was to be formed as the parent of MIV. At the
request of our executives, the representatives of the Investor Group said they
would consider whether a portion of their investment in Luxco could be
effected through the exchange of the Continuing Management Members' existing
Mark IV stock options for options to acquire shares of Luxco.
On May 22, 2000, Messrs. Alfiero and Montague and representatives of the
Investor Group, Bear Stearns and SG Cowen Securities Corporation and SG
Hambros Corporate Finance Advisory, the financial advisors to the Investor
Group met in New York City. At the meeting, the Investor Group stated that it
was revising its preliminary indication of interest to reflect a price per
share of $22.00. The Investor Group said the reduction from the $25.00 to
$28.00 per share range contained in their revised preliminary indication of
interest was due to a variety of factors, including adjustments the Investor
Group considered necessary, based on their due diligence review, to our
management's pro forma financial performance forecast, increases in our
projected working capital requirements that would result in additional debt
and interest costs, adverse changes in foreign exchange rates and higher than
anticipated transaction costs resulting from additional employment related
expenses.
After discussions with our financial advisor, we informed the Investor Group
that a price of $22.00 per share was inadequate. During further discussions
between the parties and their financial advisors occurring later in the day on
May 22, the Investor Group indicated that they would be willing to increase
the price being proposed to $23.00 per share in cash, subject to reaching an
understanding with management on certain compensation and severance matters
and negotiating satisfactory definitive documentation.
Although our counsel had proposed a structure under which a cash tender
offer would be followed by a second step merger transaction in order to allow
our stockholders to receive the cash consideration for their shares at the
earliest possible date after the execution of a merger agreement, the Investor
Group could not commit to a tender offer because of the timing and
complications involved in financing such a tender offer. That evening, counsel
to the Investor Group delivered a revised merger agreement showing the changes
from the draft that had been prepared in early May by our counsel.
On May 23, 2000, at a special meeting of our board of directors, our
directors discussed the Investor Group's $23.00 per share cash proposal, the
proposed structure of the merger, and the other terms and conditions of the
draft merger agreement and the general terms of the financing being provided
to the Investor Group for purposes of funding the transaction. The board also
reviewed the terms of the two other preliminary indications of interest that
had been received in March with respect to the acquisition of Mark IV as a
whole and concluded that the Investor Group's revised proposal continued to be
superior. In response to the increase in the price being proposed by the
Investor Group from $22.00 to $23.00 per share and after discussions by our
senior management
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with our financial advisor, our board of directors authorized our senior
management and our legal counsel to continue negotiating the terms of the
draft merger agreement.
From May 23, 2000 until May 26, 2000, our senior management led by Messrs.
Alfiero and Montague and Gerald S. Lippes, our secretary and general counsel
and a director, and our legal counsel negotiated the terms of the merger
agreement with the Investor Group and its legal counsel. We also were provided
with and reviewed drafts of the debt financing commitments that had been
received by the Investor Group and draft commitment letters for the equity and
other contributions to be made by the Investor Group in connection with the
financing of a potential transaction.
From May 23, 2000 until May 26, 2000, the Investor Group commenced
definitive discussions with the Continuing Management Members which the
Investor Group had initiated at the May 11, 2000 meeting regarding the
Continuing Management Members' employment arrangements, option exchange and
equity participation in Luxco and their respective post-closing positions with
Mark IV. In addition, during this period at the request of the Investor Group,
the Continuing Management Members and certain of our other executive officers
and employees agreed to amend the terms and conditions of their existing
employment and severance arrangements with us to, among other things, modify
the existing change in control provisions. Each of these executive officers
signed a term sheet with us. A summary of the relevant modifications is more
fully described under "Interests of Certain Persons; Conflicts of Interest--
Restructured Employment Agreements and Other Benefit Arrangements".
At the Investor Group's request and as a condition to execution of the
merger agreement by MIV, the Investor Group negotiated the terms of a
stockholder voting agreement with Messrs. Alfiero, Montague, and Lippes and
Clement Arrison, who is also a director and a retired president of Mark IV,
pursuant to which these four stockholders have agreed, among other things, to
vote or cause to be voted the shares of common stock beneficially owned by
them in favor of adoption of the merger agreement and the transactions
contemplated by the merger agreement, including the merger. These four
stockholders beneficially own an aggregate of 7,173,863 shares of our common
stock, representing approximately 16.2% of our common stock outstanding. The
terms of the stockholder voting agreement are more fully described under
"Stockholder Voting Agreement."
On May 26, 2000, a special meeting of our board of directors took place in
New York City with all of our directors present in person, with the exception
of the director who was seriously ill. Representatives of our outside legal
counsel and financial advisor were also present. Current drafts of the merger
agreement, financing commitments and the stockholder voting agreement had been
provided to the directors prior to the meeting. Our legal counsel then
reported on the status of the negotiations, which were nearly complete. Our
legal counsel reviewed in detail the terms of the merger agreement, including
the conditions to the obligation of each party to consummate the merger,
provisions for the termination of the merger agreement and the termination fee
and expense payments payable by us in certain circumstances. Our legal counsel
discussed specific provisions in the merger agreement which would allow our
board to negotiate with third parties who might submit unsolicited written
acquisition proposals under certain circumstances and to terminate the merger
agreement in such circumstances. Our legal counsel reviewed with our directors
the terms and conditions set forth in the term sheets between Mark IV and
certain of our executive officers which would, among other things, modify the
change in control severance provisions contained in the existing employment
agreements with our executive officers. Our legal counsel also described the
employment, option exchange and equity participation arrangements between the
Continuing Management Members and the Investor Group. In addition, our legal
counsel reviewed the financing commitments that had been obtained by the
Investor Group and the terms of the stockholder voting agreement.
Bear Stearns, as our financial advisor, reviewed with our directors its
analysis of the $23.00 per share cash consideration provided for in the merger
agreement and rendered its oral opinion, which opinion was subsequently
confirmed by delivery of a written opinion dated May 26, 2000, to the effect
that, as of the date of the opinion and based on and subject to the matters
described in the opinion, the $23.00 per share cash consideration to be
received in the merger by our common stockholders was fair from a financial
point of view to those holders, other than the Continuing Management Members.
Based on various factors considered by our directors, as described below under
"Reasons for the Merger; Recommendation of Our Board of Directors," our
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board of directors determined that the merger agreement and the transactions
contemplated by the merger agreement, including the merger, are advisable,
fair to, and in the best interests, of our stockholders; approved the merger
agreement and the transactions contemplated by the merger agreement, including
the merger; and recommended that our stockholders approve the merger agreement
and the transactions contemplated by the merger agreement, including the
merger. The board of directors also approved execution by Mark IV of the
stockholder voting agreement and the term sheets with certain of our executive
officers.
On May 26, 2000 each of the Continuing Management Members entered into a
founding managers agreement with BC Partners on its behalf and on behalf of
Luxco, in connection with the execution of the merger agreement, by the
parties setting forth certain summary terms of their post-closing employment
arrangements with Mark IV and option exchange and equity participation in
Luxco which are more fully described under "Interests of Certain Persons,
Conflicts of Interests- Continuing Management Members; Retained Equity." In
addition, that same day Messrs. Alfiero, Lippes, Montague and Arrison entered
into a stockholder voting agreement with Mark IV and MIV which is more fully
described under "Stockholder Voting Agreement".
The merger agreement was executed by the parties late in the afternoon on
Friday, May 26, 2000 and on Monday, May 29, 2000, we issued a joint press
release with the Investor Group announcing the execution of the merger
agreement.
Reasons for the Merger; Recommendation of our Board of Directors
In reaching its decision to approve the merger agreement and the
transactions contemplated by the merger agreement, including the merger, and
to recommend that our stockholders vote "FOR" adoption of the merger agreement
and approval of the transactions contemplated by the merger agreement,
including the merger, our board of directors consulted our financial advisor,
Bear Stearns, our special legal counsel, Stroock & Stroock & Lavan LLP, and
our general counsel, Lippes, Silverstein, Mathias & Wexler LLP, and considered
a number of factors with respect to the merger. The following list of factors
considered by the board is not exhaustive, but includes all of the material
factors considered. The board of directors did not assign specific weights to
any of these factors, and individual directors may have given different
weights to different factors.
. MERGER CONSIDERATION. The board of directors considered that the $23.00
per share cash consideration to be paid in the merger represents a
premium of approximately 25% over the closing price of the common stock
on January 18, 2000, the day before we announced we had retained Bear
Stearns to review our strategic alternatives and approximately 9% over
the closing price of the common stock on May 9, 2000, the last trading
day prior to our issuance of a press release on May 10, 2000 confirming
discussions with BC Partners. The board also considered that our common
stock closed during the 52 weeks prior to May 10, 2000 at a range from a
low of $16.5625 to a high of $23.125.
. PROCESS. Our board of directors considered that our public announcement
on January 19, 2000 that we had decided to evaluate our strategic
alternatives to maximize stockholder value, including the possible sale
or merger of the company, and had retained Bear Stearns as financial
advisor for such purpose and the process conducted with the assistance
of Bear Stearns to solicit proposals from 85 potential strategic and
financial bidders were likely to have elicited proposals from
substantially all entities who could reasonably be expected to have an
interest in acquiring Mark IV and the ability to finance such a
transaction.
. TERMS OF THE MERGER. The board of directors considered the terms of the
merger agreement, which permit the board of directors to provide
confidential information to, and to engage in discussions or
negotiations with, a third party that makes an unsolicited bona fide
written acquisition proposal if necessary to prevent the board from
breaching its fiduciary duties and the board concludes in good faith
that the acquisition proposal would, if accepted, result in a superior
proposal and to terminate the merger agreement in order to accept a
superior proposal. The directors also considered our obligation under
the merger agreement to pay a termination fee and out-of-pocket expenses
to MIV if the merger
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agreement is terminated under some circumstances. After discussions with
our legal counsel and financial advisor, the board of directors believed
that the amount of the fee and expenses we may be obligated to pay, and
the circumstances under which they are payable, are typical for
transactions of this size and type. The board of directors believed that
the fees and expenses are not likely to discourage another party from
proposing an alternative transaction that might be more advantageous to
our stockholders. In considering the amount of the termination fee and
expenses that are payable and the circumstances under which they are
payable, the board of directors also considered that, with its guidance,
our legal counsel and financial advisor had negotiated, on our behalf, a
reduction in the amount of the termination fee initially proposed by the
Investor Group and narrowed the circumstances under which the
termination fee and expense payment would be payable. See "The Merger
Agreement--Termination Fees and Expenses."
. OPINION OF OUR FINANCIAL ADVISOR. The board of directors considered the
financial presentation made by Bear Stearns, our financial advisor, as
more fully described below under "Opinion of Our Financial Advisor,"
including its opinion as to the fairness from a financial point of view
to the holders of our common stock, other than the Continuing Management
Members, of the $23.00 per share cash consideration to be received in
the merger by those holders. The full text of the opinion is attached to
this proxy statement as Appendix B.
. FINANCING ARRANGEMENTS. The board of directors considered the terms of
the merger agreement providing that MIV's obligation to complete the
merger is conditioned upon financing. The board of directors also
considered the nature and terms and conditions of the commitment letter
obtained by MIV from The Chase Manhattan Bank, Interbanca S.p.A. and
Mediobanca-Banca di Credito Finanziario S.p.A. with respect to senior
bank financing for the merger, including that the obligations of the
lenders under the financing commitments obtained by MIV are subject to,
among other conditions, the absence at the time of funding of a material
adverse change in the financial markets or in our company. The board
also considered the terms of the commitment letters for the equity and
other financing to be obtained from certain investment funds advised by
BC Partners and from Interbanca S.p.A.
. STOCKHOLDER APPROVAL REQUIRED. The board of directors considered that
the affirmative vote of the holders of at least a majority of our
outstanding common stock is required to adopt the merger agreement and
approve the transactions contemplated by the merger agreement, including
the merger. The board also considered the stockholder voting agreement
which requires certain stockholders, who are also executive officers
and/or directors of Mark IV, to vote or cause to be voted their shares,
representing approximately 16.2% of the outstanding common stock in the
aggregate, in favor of the adoption of the merger agreement and the
approval of the transactions contemplated by the merger agreement,
including the merger.
. DISSENTER'S RIGHTS. The board of directors considered that dissenter's
rights are available to the stockholders under Delaware law.
. EMPLOYMENT AGREEMENTS AND STOCK OPTION ROLL-OVER AND EQUITY INVESTMENT
IN LUXCO. The board of directors considered that the Investor Group
required, as a condition to entering into the merger agreement, that the
Continuing Management Members agree to enter into employment agreements
and agree to roll-over their existing Mark IV stock options into options
to purchase ordinary shares of Luxco and have the opportunity to
purchase additional shares of Luxco, all to be effective upon completion
of the merger, which resulted in a potential conflict of interest.
However, the board also considered that these executive officers did not
reach any agreement or understanding with respect to the specific nature
or amount of their respective equity participations in Luxco or the
specific terms of their continued employment until after the principal
financial terms of the merger had been negotiated.
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Opinion of our Financial Advisor
Bear, Stearns & Co. Inc.
Bear Stearns has acted as exclusive financial advisor to our board of
directors in connection with our review of strategic alternatives and the
merger. Bear Stearns is an internationally recognized investment banking firm
that has substantial experience in transactions similar to the merger. Bear
Stearns, as part of its investment banking business, is continuously engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and other
purposes. We retained Bear Stearns based on its qualifications, expertise and
reputation in providing advice to companies with respect to transactions
similar to the merger and because it is familiar with our business.
In connection with Bear Stearns' engagement as financial advisor, our board
of directors requested that Bear Stearns evaluate the fairness, from a
financial point of view, to our stockholders, other than the Continuing
Management Members, of the $23.00 per share cash consideration to be received
by our stockholders in the merger. On May 26, 2000, Bear Stearns delivered its
oral opinion, subsequently confirmed in writing, to the effect that, as of
that date and based on and subject to the matters described in the opinion,
the $23.00 per share cash consideration to be received in the merger by our
stockholders, other than the Continuing Management Members, was fair, from a
financial point of view, to them.
The full text of Bear Stearns' opinion, which sets forth the procedures
followed, assumptions made, matters considered and limitations on the review
undertaken, is attached as Appendix B and is incorporated by reference into
this proxy statement. The summary of the opinion set forth in this proxy
statement is qualified in its entirety by reference to the full text of the
opinion. You are urged to read the opinion carefully in its entirety. The
opinion was directed to our board of directors for its information in
connection with its consideration of the merger and relates only to the
fairness, from a financial point of view, of the $23.00 per share cash
consideration to be received by the holders of our common stock, other than
the Continuing Management Members. The opinion does not address any other
aspect of the merger or any related transaction, does not address our
underlying business decision to effect the merger, does not constitute a
recommendation to our board of directors, and does not constitute a
recommendation to any stockholder as to any matter relating to the merger.
Although Bear Stearns evaluated the fairness, from a financial point of
view, of the $23.00 per share cash consideration to our stockholders, other
than the Continuing Management Members, the amount and form of the merger
consideration was determined by the parties to the merger agreement through
arm's-length negotiations. We did not provide specific instructions to, or
place any limitations on, Bear Stearns with respect to the procedures to be
followed or factors to be considered by Bear Stearns in performing its
analyses or rendering its opinion.
In arriving at its opinion, Bear Stearns:
. reviewed the merger agreement and related documents;
. reviewed our Annual Reports to Stockholders and Annual Reports on Form
10-K for the fiscal years ended February 28, 1997 through 1999, our
audited, consolidated financial statements and the notes to the
consolidated financial statements for the year ended February 29, 2000
provided to Bear Stearns by our senior management, our Quarterly Reports
on Form 10-Q for the periods ended November 30, 1999, August 31, 1999
and May 31, 1999 and our Reports on Form 8-K for the three years ended
May 26, 2000;
. reviewed operating and financial information, including projections for
the three years ending February 28, 2003, provided to Bear Stearns by
our management relating to our business and prospects;
. met with members of our senior management to discuss our business,
operations, historical and projected financial results and future
prospects;
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. reviewed the historical prices, trading multiples and trading volumes of
our common stock;
. reviewed publicly available financial data, stock market performance
data and trading multiples of companies which Bear Stearns deemed
generally comparable to us;
. reviewed the terms of recent mergers and acquisitions of companies which
Bear Stearns deemed generally comparable to us;
. performed sum-of-the-parts analysis based on the business segments and
tax basis information furnished to Bear Stearns by us;
. performed discounted cash flow analysis based on the projections for us
furnished to Bear Stearns; and
. conducted other studies, analyses, inquiries and investigations as Bear
Stearns deemed appropriate.
In the course of its review, Bear Stearns relied on and assumed, without
independent verification, the accuracy and completeness of the financial and
other information, including without limitation the projections, provided by
us to Bear Stearns. With respect to the projections provided by us to Bear
Stearns, Bear Stearns was advised that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments of our
management as to our expected future performance. Bear Stearns did not assume
any responsibility for the independent verification of any of the information
or of the projections provided to it, and Bear Stearns relied on the
assurances of our senior management that they were unaware of any facts that
would make the information or projections provided to Bear Stearns incomplete
or misleading. Bear Stearns assumed, with the consent of our board, that the
merger would be consummated in a timely manner and in accordance with the
terms of the merger agreement without any regulatory limitations,
restrictions, conditions, amendments or modifications that collectively would
have a material effect on the consummation of the merger.
In arriving at its opinion, Bear Stearns did not perform or obtain any
independent appraisal of our assets or liabilities, contingent or otherwise,
nor was Bear Stearns furnished with any appraisals. Bear Stearns did not
express any opinion as to the price or range of prices at which our common
stock may trade subsequent to the announcement of the merger. During the
course of its engagement, Bear Stearns was asked by the board of directors to
solicit indications of interest from various third parties regarding a
potential transaction with us, and Bear Stearns considered the results of
those solicitations in rendering its opinion. Bear Stearns was not asked to
consider, and Bear Stearns' opinion does not address, the relative merits of
the merger as compared to any alternative business strategies that might exist
for Mark IV or the effect of any other transaction in which we might engage.
Bear Stearns' opinion was necessarily based on information available to it,
and financial, economic, market and other conditions as they existed and could
be evaluated on the date of its opinion.
The following is a summary of the material analyses underlying Bear Stearns'
opinion dated May 26, 2000 delivered to the board of directors in connection
with the merger. The financial analyses summarized below include information
presented in tabular format. In order to fully understand Bear Stearns'
financial analyses, the tables must be read together with the text of each
summary. The tables alone do not constitute a complete description of the
financial analyses. Considering the data set forth in the tables below without
considering the full narrative description of the financial analyses,
including the methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of Bear Stearns' financial analyses.
As part of Bear Stearns' review of our historical financial results and
financial projections, we advised Bear Stearns that we have an overfunded
pension plan that recorded significant net non-cash pension income in the five
fiscal years ended February 29, 2000, and that we expect to do so throughout
the forecast period. Bear Stearns observed that, unlike us, the operating
earnings, such as earnings before interest, taxes, depreciation and
amortization, commonly referred to as EBITDA, and earnings before interest and
taxes, commonly referred to as EBIT, of the selected companies in the analyses
discussed below were generally not impacted by non-cash pension income. To
adjust for this difference between us and the selected companies, Bear
Stearns, in performing its analyses, excluded the net non-cash pension income
from our EBITDA and EBIT and included only the pension service cost to our
EBITDA and EBIT. Bear Stearns used these adjusted EBITDA and EBIT results to
calculate implied per share equity values for us in its analyses and to
calculate the hypothetical transaction multiples implied by the $23.00 per
share cash consideration.
11
<PAGE>
Further, to assign a value to the pension overfunding, Bear Stearns
estimated the after-tax amount of such overfunding based upon a hypothetical
termination of our pension plan and reversion of the balance sheet amount of
overfunding to us. Bear Stearns assumed the reversionary amount would be
subject to federal and state corporate tax, as well as an excise tax. The
estimated after-tax reversion value was treated as a cash equivalent for
purposes of the calculation of implied per share equity values for us in Bear
Stearns' analysis and its calculation of hypothetical transaction multiples.
Bear Stearns made such judgements, assumptions and adjustments with the
consent of our management and solely for the purposes of estimating a
theoretical value of the overfunding of the pension plan and the related non-
cash pension income for analytical purposes. To Bear Stearns' knowledge, no
such reversion of the overfunding of the pension plan is currently
contemplated by us.
Stock Trading History
Bear Stearns reviewed the historical market prices of our common stock
during the 12-month period prior to May 19, 2000. Bear Stearns observed that
the $23.00 per share cash consideration to be received by our common
stockholders represents a 24.7% premium to the stock price on January 18,
2000, the day prior to our announcement that we had retained Bear Stearns to
evaluate strategic alternatives.
Comparison to Selected Public Companies
Using publicly available information, Bear Stearns reviewed and compared our
financial and stock market performance data to corresponding data of the
following selected public companies in the automotive supplier and mid-
capitalization diversified industrial industries:
<TABLE>
<CAPTION>
Automotive Suppliers Mid-Cap Diversified Industrials
-------------------- -------------------------------
<S> <C>
Arvin Industries, Inc. AMETEK, Inc.
BorgWarner Inc. Cooper Industries, Inc.
Cooper Tire & Rubber Company ITT Industries, Inc.
Dana Corporation Parker-Hannifin Corporation
Meritor Automotive, Inc. Teleflex Incorporated
Tenneco Automotive Inc. United Dominion Industries Ltd.
</TABLE>
Bear Stearns chose the selected companies because they have general
business, operating and financial characteristics similar to ours. However,
Bear Stearns noted that none of the selected companies described above is
directly comparable to our company. Accordingly, Bear Stearns did not rely
solely on the mathematical results of the analysis but also made qualitative
judgments concerning differences in financial and operating characteristics of
our company and the selected companies that could affect the values of each.
For each of the selected companies, Bear Stearns reviewed certain publicly
available financial data, valuation statistics, financial ratios, research
reports, published earnings estimates for calendar year 2000 and stock market
information and calculated the ratios and multiples based on such information,
which data was adjusted, where applicable, for certain extraordinary and non-
recurring items. Bear Stearns compared enterprise values, calculated as equity
value plus debt, preferred stock and minority interests less cash and cash
equivalents, of the selected companies and us as multiples of their respective
latest 12 months revenue, EBIT and EBITDA, and estimated calendar year 2000
EBITDA. Bear Stearns also compared stock prices of the selected companies and
Mark IV as multiples of the latest 12 months and of estimated calendar year
2000 earnings per share, commonly referred to as the P/E ratio. In our case,
data for the fiscal year ending February 28, 2001 was used in place of
calendar year 2000.
12
<PAGE>
All multiples were based on closing stock prices on May 19, 2000, except in
our case where the multiples were based on the cash consideration. Estimated
financial data for the selected companies were based on publicly available
research analysts' estimates and, in our case, our estimated financial data.
This analysis indicated the following multiples for the selected companies
based on their latest 12 months revenue, EBIT and EBITDA, estimated calendar
year 2000 EBITDA, and latest 12 months and estimated calendar year 2000
earnings per share, as compared to our corresponding multiples implied by the
cash consideration of $23.00 per share:
<TABLE>
<CAPTION>
Enterprise Value/ Price/
------------------------------------------ ---------------------
Latest 12 months CY2000E Latest 12
-------------------------------- --------- months CY2000E
Earnings Earnings
Revenue EBIT EBITDA EBITDA Per Share Per Share
----------- ---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Range of Automotive
Suppliers.............. 0.36x-0.77x 4.4x-7.3x 3.2x-4.9x 3.3x-5.4x 3.2x-8.2x 3.9x-7.5x
Harmonic Mean of
Automotive Suppliers
(1).................... 0.52x 6.4x 4.3x 4.1x 5.2x 5.4x
Range of Mid-cap
Diversified
Industrials............ 0.64x-1.17x 7.1x-10.3x 5.5x-7.6x 4.9x-7.3x 7.4x-14.5x 7.1x-13.3x
Harmonic Mean of Mid-cap
Diversified Industrials
(1).................... 0.92x 8.4x 6.3x 5.8x 10.6x 9.9x
Weighted Mean (2)....... 0.69x 7.3x 5.2x 4.8x 7.5x 7.3x
Mark IV--At $23.00 per
Share.................. 0.91x 10.8x 7.0x 6.1x(/3/) 13.8x 12.1x(/3/)
</TABLE>
--------
(1) "Harmonic Mean" represents the reciprocal of the arithmetic mean of the
reciprocals of a set of data points.
(2) Weighted average of harmonic mean of automotive suppliers and mid-cap
diversified industrials based on our weighting of 57% automotive and 43%
industrial fiscal year 2000 EBITDA before corporate expenses.
(3) The EBITDA estimate was provided by our management and our earnings per
share estimates were based on First Call consensus estimates.
Selected Mergers and Acquisitions Analysis
Using publicly available information, Bear Stearns reviewed and analyzed the
purchase prices, and transaction multiples implied by the purchase prices,
proposed to be paid, at the time of announcement, in the following sixteen
selected merger and acquisition transactions:
<TABLE>
<CAPTION>
Acquiror Target
-------- ------
<S> <C>
Meritor Automotive, Inc. Arvin Industries, Inc.
Saw Mill Capital Fund II, Jason Incorporated
L.P.
Parker-Hannifin Commercial Intertech Corp.
Corporation
Vestar Capital Partners Gleason Corporation
IV, L.P./Management
Group
Citicorp Venture Capital U.S. Industries, Inc. (Diversified Business Unit)
Management Group Transportation Technologies
Cooper Tire & Rubber Siebe Automotive
Company
Kelso & Company Citation Corporation
Cooper Tire & Rubber The Standard Products Company
Company
TI Group plc Walbro Corp.
TRW Inc. LucasVarity plc
Eaton Corporation Aeroquip-Vickers, Inc.
Siebe plc BTR plc
Federal-Mogul Corporation Cooper Automotive
Federal-Mogul Corporation T&N plc
Granaria Industries B.V. Eagle-Picher Industries, Inc.
</TABLE>
13
<PAGE>
Bear Stearns compared enterprise values, calculated as the amount proposed
to be paid, at the time of announcement, in each transaction for the equity of
the target company, plus debt, preferred stock and minority interests, less
cash and cash equivalents, of the selected transactions and the merger as
multiples of latest 12 months revenue, EBIT and EBITDA, as well as equity
values, calculated as the amount proposed to be paid, at the time of
announcement, in each transaction for the equity of the target company, of the
selected transactions and the merger as multiples of latest 12 months net
income. All multiples for the selected merger and acquisition transactions
were based on financial information available at the time of the announcement
of the relevant transaction and data for the latest 12 months preceding the
date of announcement of the transaction. Adjustments were made, where
applicable, for certain extraordinary and non-recurring items. This analysis
indicated the following:
<TABLE>
<CAPTION>
Enterprise Value/
Latest 12 months Equity Value/
-------------------------------- Latest 12 months
Revenue EBIT EBITDA Net Income
Ratios ----------- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Range of Selected M&A Trans-
actions..................... 0.40x-1.01x 7.0x-12.8x 4.3x-7.4x 6.4x-31.5x
Harmonic Mean of Selected M&A
Transactions (1)............ 0.77x 9.7x 6.1x 14.8x
Mark IV--At $23.00 per Share
(2)......................... 0.91x 10.8x 7.0x 13.8x
</TABLE>
--------
(1) "Harmonic Mean" represents the reciprocal of the arithmetic mean of the
reciprocals of a set of data points.
(2) Implied transaction multiples for us based on latest 12 months ended
February 29, 2000.
Bear Stearns noted that no company or transaction used in the foregoing
analysis is directly comparable to our company or the proposed transaction.
Accordingly, Bear Stearns did not rely solely on the mathematical results of
the analysis, but also made qualitative judgements concerning the differences
in financial and operating characteristics of the companies and the selected
merger and acquisition transactions and other factors that could affect the
value of the companies or transactions to which we or the proposed transaction
are being compared.
Discounted Cash Flow Analysis
Bear Stearns performed a discounted cash flow analysis of us based on
financial projections for fiscal years ending the last day of February 2001
through 2003 provided by our management. Bear Stearns further extended
management's projections two additional years by increasing revenue at a rate
of 4% per year and keeping margins constant at forecasted fiscal 2003 levels
based on assumptions with which management agreed. Free cash flows for the
period beginning May 31, 2000 and ending on February 28, 2005 were discounted
to May 31, 2000. Bear Stearns calculated free cash flow for each year as tax-
affected earnings before interest and taxes, plus depreciation and
amortization, less capital expenditures, less the cost of cost reduction
actions and less incremental working capital requirements. Bear Stearns
calculated the terminal value by applying a range of assumed growth rates of
1.0% to 3.0% of projected fiscal year 2005 free cash flow into perpetuity.
Discount rates of 11.5% to 12.5% were chosen based on Bear Stearns' estimate
of our weighted average cost of capital. To calculate the aggregate net
present value of our equity, Bear Stearns subtracted our total debt minus cash
and cash equivalents (including the after-tax reversion value of pension
overfunding) as of February 29, 2000, from the sum of the present value of the
projected free cash flows and the present value of the terminal value.
Bear Stearns noted that the fiscal year 2001 through fiscal year 2003
forecast assumptions implied growth in revenue and EBITDA at levels
significantly above recent historical levels of revenue and EBITDA growth.
<TABLE>
<CAPTION>
FY1998- FY2000(1) FY2001- FY2003
----------------- --------------
<S> <C> <C>
Revenue CAGR............................ 4.0% 9.4%
EBITDA CAGR............................. 9.9% 17.3%
Average EBITDA Margin................... 12.2% 14.7%
</TABLE>
--------
(1) Based on management estimates of restated results to adjust for, among
other things, acquisitions and divestitures as if they occurred at the
beginning of the period.
14
<PAGE>
Accordingly, Bear Stearns performed a sensitivity case analysis based on a
percentage realized of our management's forecasted EBITDA. This analysis
indicated the following:
<TABLE>
<CAPTION>
Implied
Equity Value
Per Share:
-------------
<S> <C>
100% of Forecasted Management Case EBITDA................. $20.46-$30.88
95% of Forecasted Management Case EBITDA................. $18.02-$27.76
90% of Forecasted Management Case EBITDA................. $15.49-$24.65
85% of Forecasted Management Case EBITDA................. $12.91-$21.53
</TABLE>
Sum-of-the-Parts Analysis
Bear Stearns reviewed each of our three business units to derive enterprise
value, aggregate equity and per share equity reference ranges for us. This
analysis was based on estimated financial data of each business segment for
fiscal year 2000 provided to Bear Stearns by us. Bear Stearns derived these
approximate reference ranges based on the multiples implied by the purchase
prices proposed to be paid, at the time of announcement, in the selected
merger and acquisition transactions.
In addition, for purposes of this analysis, Bear Stearns assumed the sale of
the assets of Dayco Industrial and Transportation Products and a subsequent
sale of the stock of the remaining stub company, consisting of the automotive
business unit in order to maximize hypothetical after-tax proceeds.
Accordingly, only the Dayco Industrial and Transportation Products
transactions are assumed to be taxable to us and the assumed sale of the
automotive business unit is assumed to be tax-free to us. This analysis
indicated the following:
<TABLE>
<CAPTION>
Implied Reference Range
-----------------------
<S> <C>
Enterprise Value...................... $1,463.5 million-$1,681.1 million
Aggregate Equity...................... $674.4 million-$892.1 million
Implied Per Share Equity.............. $15.22-$19.99
</TABLE>
Other Analyses
Bear Stearns conducted other analyses as it deemed appropriate, including
reviewing our historical stock performance and our historical and estimated
financial and operating data.
In preparing its opinion to our board of directors, Bear Stearns performed a
variety of financial and comparative analyses, including those described
above. The summary of Bear Stearns' analyses is not a complete description of
the analyses underlying its opinion. The preparation of a fairness opinion is
a complex process and involves various judgments and determinations as to the
most appropriate and relevant assumptions and financial analyses and the
application of those methods to the particular circumstances involved. Bear
Stearns' opinion is therefore not necessarily susceptible to partial analysis
or summary description. In arriving at its opinion, Bear Stearns made
qualitative judgments as to the significance and relevance of each analysis
and factor considered by it and did not attribute particular weight to any one
analysis or factor. Bear Stearns did not form an opinion as to whether any
individual analysis or factor, positive or negative, considered in isolation,
supported or failed to support its opinion. Accordingly, Bear Stearns believes
that its analyses must be considered as a whole and that selecting portions of
its analyses and factors or of the summary described above or focusing on
information presented in tabular format, without considering all analyses and
factors or the narrative description of the analyses, could create a
misleading or incomplete view of the processes underlying its analyses and
opinion.
The analyses performed by Bear Stearns, particularly those based on
estimates, are not necessarily indicative of actual values or actual future
results, which may be significantly more or less favorable than those results
suggested by the analyses. In addition, analyses relating to the value of
businesses or securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold. Accordingly,
Bear Stearns' analyses are inherently subject to substantial uncertainty. The
analyses were prepared solely as part of Bear Stearns' analysis of the
fairness, from a financial point of view, of the $23.00 cash consideration to
be received in the merger by the holders of our common stock, other than the
Continuing Management Members.
15
<PAGE>
Bear Stearns' opinion and financial analyses were only one of many factors
considered by our board of directors in their evaluation of the merger, and
should not be viewed as determinative of the views of our board of directors
or our management with respect to the cash consideration or the merger.
In the ordinary course of business, Bear Stearns may actively trade debt and
equity securities of Mark IV and/or of Interbanca S.p.A. and its affiliates
for Bear Stearns' own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in those
securities. Bear Stearns has previously rendered investment banking and
financial advisory services unrelated to the merger to us for which Bear
Stearns received customary compensation.
Pursuant to a letter agreement dated January 18, 2000, entered into by us
and Bear Stearns, we have agreed to pay Bear Stearns (i) a fee of $500,000 on
execution of the engagement letter, (ii) an additional fee of $2,500,000 upon
the rendering of the opinion by Bear Stearns and (iii) a fee on consummation
of the merger equal to 0.5% of the total consideration paid in the merger,
less a credit for fees previously paid. We have agreed to reimburse Bear
Stearns for all out-of-pocket expenses incurred by Bear Stearns, including
fees and disbursements of counsel, and of other consultants and advisors
retained by Bear Stearns with our prior written consent, in connection with
our engagement. We have agreed to indemnify Bear Stearns and related persons
against liabilities in connection with the engagement of Bear Stearns,
including liabilities under the federal securities laws.
Certain Estimates of Future Operations and other Information
As a matter of policy, we do not make public forecasts or projections as to
our future performance or earnings. In connection with the Investor Group's
evaluation of the proposed merger, however, we provided the Investor Group and
the other parties who requested our descriptive materials, on a confidential
basis, with certain nonpublic estimates reflecting our management's view as to
our possible future financial performance for the four fiscal years ending
February 28, 2003. We also provided these estimates to Bear Stearns, our
financial advisor. Our management based these estimates on assumptions they
believed at the time were reasonable, in light of industry data they consulted
and our past financial performance. These estimates were prepared before we
had full results for our fiscal year ended February 29, 2000 so the amounts
for such fiscal year were estimated.
THESE ESTIMATES WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES ESTABLISHED BY THE SEC OR THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS. THESE
ESTIMATES ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE IN CONNECTION WITH
MANAGEMENT DECISIONS AND ARE SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE
TO VARIOUS INTERPRETATIONS. IN ADDITION, BECAUSE THESE ESTIMATES INHERENTLY
ARE SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND OTHER
CONTINGENCIES BEYOND OUR CONTROL, THERE CAN BE NO ASSURANCE THAT THESE
ESTIMATES WILL BE REALIZED; OUR ACTUAL RESULTS MAY BE HIGHER OR LOWER THAN
THOSE ESTIMATED. ACCORDINGLY, WE DO NOT ASSUME ANY RESPONSIBILITY FOR THE
ACCURACY OF THIS INFORMATION. GIVEN OUR HISTORICAL STRATEGY OF GROWTH THROUGH
ACQUISITIONS AND THE HISTORICAL CYCLICALITY OF OUR INDUSTRY, ANY YEAR TO YEAR
COMPARISON BEYOND FISCAL 2000 IS NOT LIKELY TO PROVIDE A MEANINGFUL VIEW OF
OUR OVERALL PERFORMANCE. WE DO NOT GENERALLY PUBLISH OUR BUSINESS PLANS AND
STRATEGIES OR MAKE EXTERNAL DISCLOSURES OF OUR ANTICIPATED FINANCIAL POSITION
OR RESULTS OF OPERATIONS.
ACCORDINGLY, WE DO NOT INTEND TO, AND SPECIFICALLY DO NOT ASSUME ANY
OBLIGATION TO, UPDATE OR OTHERWISE REVISE THESE ESTIMATES TO REFLECT
CIRCUMSTANCES EXISTING SINCE THEY WERE PREPARED OR TO REFLECT THE OCCURRENCE
OF UNANTICIPATED EVENTS, EVEN IF ANY OR ALL OF OUR UNDERLYING ASSUMPTIONS ARE
SHOWN TO BE IN ERROR. NEITHER OUR AUDITORS NOR ANY OTHER INDEPENDENT
ACCOUNTANTS HAVE COMPILED, EXAMINED OR PERFORMED ANY PROCEDURES WITH
16
<PAGE>
RESPECT TO THESE ESTIMATES, NOR HAVE THEY EXPRESSED ANY OPINION OR ANY OTHER
FORM OF ASSURANCE WITH RESPECT TO THIS INFORMATION OR ITS ACHIEVABILITY AND
THEY ASSUME NO RESPONSIBILITY FOR, AND DISCLAIM ANY ASSOCIATION WITH, THESE
ESTIMATES.
These estimates are summarized in the following table:
<TABLE>
<CAPTION>
Estimates for the Fiscal Year Ending
the
Last Day of February
---------------------------------------
2000(1)(2) 2001(2) 2002(2) 2003(2)
---------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Revenue........................... $2,030.6 $2,178.8 $2,376.0 $2,601.1
Consolidated EBITDA............... 266.5 300.3 356.9 412.2
Capital Expenditures.............. 85.0 81.1 83.1 85.1
Free Cash Flow(3)................. 181.5 219.2 273.8 327.1
</TABLE>
--------
(1)Based on nine months of actual and three months of forecasted results.
(2)Estimated.
(3)Represents Consolidated EBITDA net of Capital Expenditures.
The material assumptions underlying these estimates were the following:
. Revenues are estimated to increase at a compound annual growth rate of
8.6% between fiscal 2000 and fiscal 2003 as a result of, among other
things, the introduction of new products in our automotive and
industrial segments; anticipated growth in certain of the industries and
markets in which our products are sold, including the City Car/City Van
markets in Europe, construction equipment, and the worldwide
agricultural and petrochemical industries; anticipated growth in the
economies of the South American countries in which we operate; and
anticipated increases in our Transportation operations.
. Our margins are estimated to continue to increase during the forecast
period due to a continued shift in revenue mix in automotive operations
to higher margin engine-related technologies, continuous improvement in
manufacturing efficiencies in our operations generally and completion of
specific cost reduction actions currently being pursued in global
sourcing and distribution.
. Our annual capital expenditures are estimated to be reduced to a level
that is approximately 10% less than our annual rate of depreciation
expense during the forecast period due to the significant level of
capital spending we incurred over the last four fiscal years in order to
integrate a number of prior acquisitions and expand capacity, and to
facilitate the restructuring efforts we initiated in fiscal 1997. As a
result of these actions, we believe many of our facilities offer state-
of-the-art manufacturing and distribution capabilities and that we have
sufficient manufacturing capacity to accommodate the anticipated revenue
growth over the forecast period, thereby permitting a reduction in our
level of required capital expenditures.
STOCKHOLDER VOTING AGREEMENT
We entered into a stockholder voting agreement, dated as of May 26, 2000,
with MIV and the following stockholders, all four of whom are directors and
three of whom are executive officers of Mark IV: Sal H. Alfiero, William P.
Montague, Gerald S. Lippes and Clement R. Arrison. Messrs. Alfiero, Montague,
Lippes and Arrison own, in the aggregate, 7,173,863 shares of our common
stock, representing approximately 16.2% of our outstanding common shares.
Pursuant to the stockholder voting agreement, each of the stockholders agreed
to vote or cause to be voted all of his stock in favor of the merger and the
approval and adoption of the merger agreement and the other transactions
contemplated by the merger agreement. In addition, each stockholder agreed,
among other things, to vote against the approval of any merger,
reorganization, share exchange,
17
<PAGE>
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving, or any purchase or sale of, all
or any significant portion of our or our subsidiaries' assets or more than 15%
of our subsidiaries common stock, or any tender offer or exchange offer that
if completed would result in any person beneficially owning 15% or more of any
class of our or our subsidiaries' capital stock and against any other action
or agreement that could reasonably be expected to impede, delay or interfere
with the merger agreement or the merger.
The stockholder voting agreement includes a grant by each stockholder of an
irrevocable proxy coupled with an interest to and for the benefit of MIV with
respect to his common stock.
The stockholder voting agreement further provides that each stockholder will
not, directly or indirectly, solicit or respond to any inquiries or the making
of an acquisition proposal or any proposal with respect to us that constitutes
or could reasonably be expected to lead to an acquisition proposal. With the
exception of the provisions of the merger agreement, each stockholder agreed
not to sell, transfer, tender, pledge, encumber, assign, dispose or otherwise
arrange for the disposition of his shares. Each stockholder also agreed, with
the exception of the proxy granted to MIV in the stockholder voting agreement,
not to grant any proxy or enter into any voting agreement with respect to his
common stock and not to take any action that would prevent the stockholder
from performing his duties under the stockholder voting agreement. Each
stockholder entered into the stockholder voting agreement in his capacity as
stockholder and the stockholder voting agreement expressly excludes any
agreement or understanding in each person's capacity as a director or officer
of Mark IV.
INTERESTS OF CERTAIN PERSONS; CONFLICTS OF INTEREST
Certain of our directors and executive officers may have actual, potential,
or the appearance of potential conflicts of interest with respect to the
merger. Our directors were aware of the following matters and considered them
in making their determination. The following is a summary of the interests of
those persons in the merger that may be different from yours.
Continuing Management Members; Retained Equity
Messrs. Montague, Johannson, Zucco and Oliver entered into a Founding
Managers Agreement, dated as of May 26, 2000, setting forth certain summary
terms of their equity participation in Luxco and their continued employment
with Mark IV. Mr. Montague is the president and chief operating officer and a
director of Mark IV; Mr. Johansson is a senior vice president of Mark IV and
president of our automotive business segment; Mr. Zucco is a vice president of
Mark IV and executive vice president of our automotive business segment; and
Mr. Oliver is the president of our transportation products group. Pursuant to
the founding managers agreement, the Continuing Management Members agreed as
follows:
. Purchase of Equity. Each Continuing Management Member will be given the
opportunity to invest in shares of Luxco in agreed-upon amounts. The
purchase of additional equity by Messrs. Johannson, Zucco and Oliver may
be funded by electing to apply, in lieu of payment, to their equity
investment all or any portion of the 50% of their respective stay-
incentive payments otherwise due and payable on the first anniversary of
the closing of the merger as described below. Mr. Montague has the right
to purchase up to $500,000 of additional ordinary shares of Luxco after
the closing of the merger. It is anticipated that the cash investment by
the Continuing Management Members in the ordinary shares of Luxco will
aggregate approximately $4,393,000 which would result in a total
investment by them of approximately $8,000,000 when added to the net
value of their options, approximately $3,607,000, that are to be
exchanged for options to purchase Luxco common shares.
. Option Rollover. Each Continuing Management Member agreed to rollover
all of his options to purchase shares of our common stock into options
to purchase shares of Luxco. All rollover options will be fully vested
as of the effective time of the merger and will, assuming shares of
Luxco are purchased by the members of the Investor Group at a purchase
price of $1,000 per share, be immediately exercisable at an exercise
price of $250 per share.
18
<PAGE>
The number and weighted average exercise price of the options to
purchase shares of our common stock to be exchanged by the continuing
management members for fully-vested options to purchase Luxco common
shares is as follows:
<TABLE>
<CAPTION>
Number Weighted Average
Name of Options Exercise Price
---- ---------- ----------------
<S> <C> <C>
William P. Montague.......................... 252,833 $16.86
Kurt Johansson............................... 183,664 $17.47
Giuliano Zucco............................... 135,486 $17.89
David Oliver................................. 56,467 $16.86
</TABLE>
Based on the foregoing, the aggregate net value of the options held by
the Continuing Management Members (representing the number of options
multiplied by the difference between the $23.00 per share merger price
and the weighted average exercise price) to be exchanged for options to
purchase Luxco common shares is approximately $3,607,000.
. Salary, Bonus and Deferred Compensation. From and after the effective
time of the merger, Messrs. Montague, Johannson and Zucco will be
retained at a base salary of $800,000 per year, and Mr. Oliver will be
retained at a base salary of $400,000 per year. Prior to the effective
time of the merger, the salaries of the Continuing Management Members
will remain at present levels and bonus and deferred compensation will
be calculated on a pro rata basis through the effective time of the
merger. Bonus and deferred compensation arrangements will be eliminated
following the effective time of the merger for the Continuing Management
Members (notwithstanding any provision of the merger agreement to the
contrary). These salaries compare to the aggregate salaries, bonuses and
deferred compensation for our fiscal year ended February 29, 2000 of
$1,329,569 for Mr. Montague, $1,161,213 for Mr. Johansson, $1,161,213
for Mr. Zucco and $354,470 for Mr. Oliver.
. New Stock Option Plan. The Continuing Management Members will be
eligible to participate in a new stock option plan to be adopted by the
board of directors of Luxco upon the closing of the merger, and will
receive an initial grant of options at the closing of the merger. The
new stock option plan is discussed below under "New Management Option
Plan."
As a result of the exchange of their Mark IV options for Luxco options and
the purchase of additional equity in Luxco, it is anticipated that the
Continuing Management Members will beneficially own, in the aggregate,
approximately [3.5%] of the share capital of Luxco as of the effective time of
the merger on a fully-diluted basis.
In addition to the agreements with our Continuing Management Members, we
anticipate that certain of our other senior employees holding options to
purchase our common stock may, by agreement in writing between us and such
persons and with the consent of MIV, immediately prior to the effective time
of the merger, exchange such options for fully-vested options to purchase
Luxco ordinary shares. As of the date of this proxy statement, except as set
forth above with respect to the Continuing Management Members, no definitive
agreements, plans or arrangements have been entered into, formulated or
formalized with respect to any such potential exchange of options or any other
equity investment in Luxco by any of our executive officers.
None of our directors, other than Mr. Montague, will exchange any options to
purchase shares of our common stock for options to purchase Luxco ordinary
shares or otherwise have a continuing direct or indirect equity interest in
the surviving corporation following the effective time of the merger.
Restructured Employment Agreements and Other Benefit Arrangements
Restructured Employment Agreements
We have employment agreements (the "Employment Agreements") with 12 of our
executive officers, including Messrs. Alfiero, Montague, Lippes, Johansson,
Zucco and Richard Bing. The Employment Agreements generally provide, among
other things, that if the executive's employment is terminated under certain
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circumstances within three years of a "Change in Control" (as defined in the
Employment Agreements), the executive will be entitled to receive a lump sum
severance payment equal to three times the average of his or her total cash
compensation during the three year period immediately preceding the employment
termination, plus medical, disability and life insurance benefits for the rest
of the executive's life. The Employment Agreements define such total cash
compensation to include amounts deferred at the option of the executive. The
payments and benefits payable under the Employment Agreements in the event of
a Change in Control are not subject to any limitations that would prevent them
from being subject to excise tax payments or corporate deduction disallowance
under the Internal Revenue Code. The Employment Agreements provide that the
impact of any excise tax payment on the executive would be reimbursed to the
executive by us, including taxes the executive would incur on the
reimbursement itself.
The events that trigger a Change in Control under the Employment Agreements
include (i) certain consolidations or mergers, (ii) certain sales or transfers
of substantially all of our assets, (iii) the approval of our stockholders of
a plan of dissolution or liquidation, (iv) the acquisition of 20% or more of
our outstanding common stock by certain persons (other than our executive
officers and directors, whether individually or as a group), and (v) certain
changes in the membership of our board of directors. The merger will
constitute a Change in Control under the Employment Agreements.
In connection with the execution of the merger agreement, Mark IV and our
executive officers party to Employment Agreements agreed to restructure the
Employment Agreements and entered into term sheets for this purpose. As of the
date of this proxy statement, the restructured Employment Agreements have not
been finalized and are in various stages of completion. Based on the term
sheets, it is expected that the restructured Employment Agreements for Messrs.
Alfiero, Montague, Lippes, Johansson, Zucco and Bing will provide for, among
other things, the following changes to the requirements of and benefits
provided by their existing Employment Agreements:
. Each of Messrs. Alfiero, Montague, Lippes, Johansson, Zucco and Bing
will be subject to an expanded three-year non-compete/non-solicitation
agreement.
. The severance payments upon a Change in Control for Messrs. Montague and
Bing will be reduced to the extent of amounts allocated to stay-
incentive arrangements to facilitate the transition process following
the Change in Control.
. The severance payments upon a Change in Control and other reallocated
lump sum amounts for Messrs. Montague and Bing will be paid on the date
a Change in Control occurs without the need for termination of their
employment.
. The severance payments upon a Change in Control for Messrs. Johansson
and Zucco have been replaced by stay-incentive payments in the amount of
$5.0 million each. These amounts will be paid 50% on the date a Change
in Control occurs and the remaining 50% on the first anniversary of the
Change in Control, as long as the executive does not voluntarily
terminate his employment during that period.
. Mr. Bing's restructured Employment Agreement will also include an
incremental Change in Control severance payment of $200,000.
. The severance payments upon a Change of Control for Messrs. Alfiero and
Lippes will be reduced to the extent of amounts allocated to non-
competition/non-solicitation agreements, and in the case of Mr. Lippes,
a cooperation agreement with respect to future legal actions against
Mark IV following the merger.
In general, the restructured Employment Agreements of the executive officers
other than Messrs. Alfiero, Montague, Lippes, Johansson, Zucco and Bing will
contain modifications similar to those identified above for Mr. Montague.
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It is anticipated that the employment of Messrs. Alfiero and Lippes will
terminate upon the completion of the merger under circumstances which will
trigger the severance payments and other benefits payable under their
Employment Agreements, as so restructured.
The aggregate amount of the severance payments upon a Change in Control and
the other payments for each of Messrs. Alfiero, Montague, Lippes, Johannson,
Zucco and Bing are, respectively, approximately $4,425,000, $3,050,000,
$1,325,000, $5,000,000, $5,000,000 and $1,925,000.
Modifications to Other Benefit Plans
In addition to the restructured Employment Agreements, we made certain other
changes to executive employee benefit arrangements in connection with the
process we conducted with the assistance of Bear Stearns. The plans related to
our deferred compensation arrangements were amended at the end of fiscal year
2000 to eliminate the "rabbi-trust" funding requirements of the plans
following a Change in Control. The plans were further amended to allow the
direct payout of all account balances following the signing of a merger
agreement for the acquisition of Mark IV and prior to the completion of the
merger contemplated thereby, at the direction of our board of directors. In
addition, the existing requirements of our split-dollar life insurance program
for certain of our executives which provide for 100% lump sum funding of all
future premium payments in the event of a termination within two years
following a Change in Control will be eliminated through an amendment of the
existing agreements related to such benefits. As a result, we will continue to
fund the premium payments only as billed by the insurance companies following
a Change in Control.
New Management Option Plan
Immediately after the effective time of the merger, Luxco will adopt a stock
option plan providing for the grant of options to purchase common shares of
Luxco to management employees of the surviving corporation and its
subsidiaries, including the Continuing Management Members. The award of
options issued under the new stock option plan will be at the discretion of
the board of directors of Luxco. Options issued under the new stock option
plan, including those granted to the Continuing Management Members, will
periodically vest according to a formula to be determined by the board of
directors of Luxco at the time the new stock option plan is adopted, which
will generally be based on the performance of either the surviving corporation
on a consolidated basis or the relevant business division or segment. It is
expected that the new stock option plan will provide that options are subject
to forfeiture under certain circumstances in connection with the termination
of the holder's employment. Pursuant to the founding managers agreement, each
Continuing Management Member will receive, at the closing of the merger,
options to purchase common shares of Luxco representing 15% of the total
amount of options issuable under the new stock option plan. The total number
of options issuable under the new stock option will be limited to the number
of options which, assuming their exercise into common shares of Luxco, would
not exceed 10% of the fully-diluted share capital of Luxco at the effective
time of the merger, including shares acquired from the roll-over of Mark IV
options and shares purchased directly from Luxco.
Except as set forth above, there are currently no arrangements or
understandings with respect to the future grant of options under the new stock
option plan.
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ACCOUNTING TREATMENT
The merger will be accounted for in accordance with the purchase method of
accounting under U.S. generally accepted accounting principles.
FINANCING
MIV's obligation to complete the merger is contingent on, among other
things, obtaining the financing for the merger contemplated by commitment
letters obtained by it at the time the merger agreement was signed.
Consummation of the merger will require payment to:
--holders of our common stock who will receive a cash payment of the $23.00
per share merger consideration;
--holders of our options who will receive a cash payment equal to the net
value in their options, excluding those options held by the Continuing
Management Members or other employees which will be exchanged for options
to purchase ordinary shares of Luxco (see "Interests of Certain Persons;
Conflicts of Interest");
--holders of certain of our existing indebtedness which will be refinanced
or retired in connection with the merger;
--those who are owed fees and expenses relating to the merger and the
financing; and
--lump sum cash payments payable to our executive officers, described above
in "Interests of Certain Persons; Conflicts of Interest -- Employment
Agreements Amendments and Other Arrangements".
It is anticipated that the financing will be as follows:
CIE Management II Limited, on behalf of two funds managed by it, has agreed
to cause these funds to make an equity or other contribution of not less than
$650,000,000 in cash in the aggregate, contingent on, among other things (1)
full funding of the debt financings described below; (2) full funding by
Interbanca S.p.A. of the committed amounts described below; and (3)
satisfaction of all conditions to the obligation of MIV to complete the
merger.
In addition, Interbanca S.p.A. has agreed to make an equity or other
contribution of $180,000,000, contingent on, among other things (1) full
funding of the debt financings described below; (2) full funding by the two
funds managed by CIE Management II Limited of the committed amounts described
above; and (3) satisfaction of all conditions to the obligation of MIV to
complete the merger.
On May 26, 2000, MIV provided us with copies of commitment letters it
obtained with respect to the senior bank financing. The commitments are
subject to customary conditions, including, among others, negotiation and
execution of definitive documentation with respect to the financing and the
condition that there has been no event, development or circumstance that has
had a material adverse effect on the business, property operations, or
condition (financial or otherwise) of Mark IV and our subsidiaries taken as a
whole, or the validity or enforceability of any financing documentation with
respect to the senior bank debt or the rights and remedies of the
administrative agent and the lenders thereunder.
At the time of the merger, we expect to enter into new debt financing
arrangements aggregating $1,187,500,000, of which approximately $1,032,500,000
will be used to fund the merger and to pay related fees and expenses. The
primary borrowers will be one or more of our U.S. operating subsidiaries, one
of our Italian operating subsidiaries, and certain of our other European
operating subsidiaries. We will guarantee such loans.
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EFFECT OF THE MERGER ON OUR COMMON STOCK
Our common stock is currently listed on the New York Stock Exchange.
Following the merger, it is expected that our common stock no longer will be
traded on the New York Stock Exchange, price quotations no longer will be
available and the registration of our common stock under the Securities
Exchange Act of 1934 will be terminated.
REGULATORY MATTERS
Other than filings required by the federal securities laws, we do not
believe that any material U.S. federal or state regulatory approvals, filings
or notices are required by us in connection with the merger. Based on the
anticipated structure of the merger, the parties are not required to make any
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended. The parties are continuing to review whether any foreign approvals,
filings or notices are required in connection with the merger.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain material United States federal
income tax consequences of the merger to the holders of our common stock. It
is based upon the Internal Revenue Code of 1986, its legislative history,
existing and proposed treasury regulations, judicial authority and current
administrative rulings and pronouncements of the Internal Revenue Service, all
of which are subject to change, possibly with retroactive effect. Any such
change could materially affect the tax consequences described in the summary.
The summary does not consider or address any foreign, state or local tax
consequences or effects of the merger.
The summary applies to persons owning our common stock, but does not apply
to the holders of stock options or the Continuing Management Members. The
summary does not address all aspects of federal income taxation or all tax
consequences or effects of the merger that may affect or be relevant to owners
of common stock in light of their particular circumstances or to some types of
stockholders that may be subject to special treatment under United States
federal income tax law, including:
--persons who are entitled to relief as dissenting stockholders under
Delaware law,
--persons who acquired their common stock by exercising employee or
director stock options or otherwise as compensation,
--persons who receive our common stock or options to purchase our common
stock after the merger as consideration for services,
--tax-exempt entities,
--insurance companies,
--financial institutions or broker-dealers,
--dealers in securities or currencies,
--investors that hold our common stock as part of a straddle or a hedging
or conversion transaction,
--foreign persons, and
--investors whose functional currency is not the U.S. dollar.
The summary assumes that stockholders have held their common stock as
"capital assets" (generally, property held for investment) under the Internal
Revenue Code.
HOLDERS OF OUR COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE
TAX CONSEQUENCES, IN THEIR PARTICULAR CIRCUMSTANCES, UNDER THE INTERNAL
REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION, OF THE MERGER.
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The merger will be a taxable transaction to you for United States federal
income tax purposes. You will be treated for United States federal income tax
purposes as if you sold a portion of your common stock to Luxco for cash (a
sale transaction), and had a portion of your common stock redeemed by us for
cash (a redemption transaction).
The portion of your common stock that will be considered to be sold for cash
(the sale transaction) will be equal to the aggregate amount of cash
contributed to MIV and used to pay cash to common stockholders in the merger
divided by the aggregate amount of cash paid to all holders of our common
stock in the merger. Your remaining common stock will be treated as having
been redeemed by us for cash (the redemption transaction).
If you owned our common stock as a capital asset (generally, an asset held
for investment), you will recognize capital gain or loss on the deemed sale
and redemption at the effective time of the merger. You generally are required
to determine the amount of capital gain or loss separately with respect to
each block of stock that you own. The amount of capital gain or loss
recognized per share will equal the difference between: (i) $23.00, and (ii)
your adjusted tax basis in that share. Your gain or loss will be long-term
capital gain or loss if at the time of the sale you have held your common
stock for more than one year. If you are an individual, your net long-term
capital gains currently are subject to a maximum federal income tax rate of
20%. Your capital gain recognized in this transaction may be reduced by your
capital losses, if any.
The summary above does not apply to the portion of the transaction that
constitutes a redemption transaction if you own or are considered to
constructively own our stock after the merger. In general, you would
constructively own our stock in various circumstances, including the
following:
--your spouse, child, grandchild or parent owns our common stock after the
merger;
--you or your spouse, child, grandchild, or parent hold certain interests
in an entity that owns our common stock after the merger, such as any
interest in a partnership, estate, or trust, and 50% or more of the value
of the stock in a corporation; or
--you or your spouse, child, grandchild, parent or entity in which you have
an interest (such as any interest in a partnership, estate or trust or 50%
or more of the value of the stock in a corporation) hold an option or
conversion right to acquire our stock after the merger.
If you constructively own our common stock after the merger, then the amount
of cash you are deemed to receive in the redemption portion of the transaction
could be taxed as a dividend to the extent of our current or accumulated
earnings and profits, depending on your circumstances. If you are an
individual, your dividend income currently is subject to a maximum federal
income tax rate of 39.6%. If you are a corporation, you may be eligible for
the dividends-received deduction, subject to certain limitations. You can
waive application of these constructive ownership rules in accordance with
Section 302(c) of the Internal Revenue Code, provided that certain
requirements are satisfied. IF YOU THINK THAT YOU MIGHT CONSTRUCTIVELY OWN
SHARES OF OUR COMMON STOCK AFTER THE MERGER, YOU ARE STRONGLY ENCOURAGED TO
CONSULT WITH YOUR INDIVIDUAL TAX ADVISOR TO DETERMINE THE FEDERAL TAX
CONSEQUENCES OF THE MERGER.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments made on, and proceeds from the sale of, our common stock may be
subject to a backup withholding tax of 31% if you are not an exempt recipient
and:
--fail to provide your social security or taxpayer identification number to
us or your broker;
--provide us or your broker with an incorrect social security or tax
identification number;
--fail to provide us or your broker with a certified statement that your
social security or tax identification number is correct and that you are
not subject to backup withholding; or
--improperly report interest and dividends on your tax return.
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Any withheld amounts generally will be allowed as a credit or refund against
your federal income tax, provided the required information is timely filed
with the Internal Revenue Service.
DISSENTER'S RIGHTS
Delaware law allows holders of common stock to dissent from the merger and
have the fair cash value of their common stock appraised by the Court of
Chancery and paid to them in cash. If you dissent from the merger and follow
the required procedure, you will not receive the $23.00 per share price in the
merger. Instead, your only right will be to receive the fair cash value of
your common stock, paid in cash.
The applicable provisions of Delaware law related to dissenter's rights are
attached to this proxy statement as Appendix C. The following is a description
of the principal steps you must take to perfect your rights as a dissenting
stockholder under Delaware law. You must do each of the following. If your
shares of our common stock are held through a broker, bank or other nominee,
you must contact the person holding the shares of common stock and instruct it
to take the following steps:
1. YOU MUST NOT VOTE IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT. Only a
stockholder whose common stock is not voted in favor of adoption of the
merger agreement is entitled, if the merger is completed, to be paid the
fair cash value of the common stock which was registered in the
stockholder's name on , 2000. A vote for adoption of the merger
agreement waives dissenter's rights. Furthermore, neither a failure to vote
on the merger agreement and the merger, nor an abstention from voting on
the merger agreement and the merger, will be construed as a vote in favor
of the merger agreement and merger. However, if you return your signed
proxy left blank, your vote will be counted in favor of the merger
agreement and merger, and you will waive your dissenter's right.
2. YOU MUST GIVE US A SEPARATE WRITTEN DEMAND. If you wish to dissent,
you must give us a separate written demand for the fair cash value of the
dissenting stock prior to the stockholder vote adopting the merger
agreement. The written demand will be sufficient if it reasonably informs
us of your identity and that you intend to demand dissenter's rights. A
proxy or vote against approval of the merger agreement and the merger will
not satisfy the written demand requirement. In order to receive dissenter's
rights, you must be the record holder of your common stock on the date the
written demand is made and you must continue to hold your common stock
until the effective date of the merger. If the merger agreement and the
merger are approved by the stockholders, MIV will notify you, within ten
days of the time the merger becomes effective, that you are entitled to
dissenter's rights if you followed steps 1 and 2. Within 120 days after the
time the merger becomes effective MIV or any stockholder seeking
dissenter's rights may file a petition with the Court of Chancery seeking a
determination of the value of the stock. At any time within 60 days after
the effective date of the merger, you shall have the right to withdraw your
demand for dissenter's rights and to accept the terms offered pursuant to
the merger. During this 120 day period, if you have followed steps 1 and 2,
upon written request, you shall be entitled to receive from us a statement
setting forth the aggregate number of shares not voted in favor of approval
and adoption of the merger agreement and the merger and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares.
Upon petition made either by MIV or by a person who has filed a complaint
with the Court of Chancery, the court will hold a hearing to determine whether
you are entitled to be paid the fair cash value of your common stock. The
court then is required to make a finding as to the fair cash value of the
common stock for which dissenter's rights have been asserted and to render a
judgment against us for the payment of that value, with interest, if any.
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The fair value of the shares of common stock will be determined exclusive of
any element of value arising from the expectation or accomplishment of the
merger. The amount determined by the Court of Chancery may be more than, the
same as, or less than, the amount you would receive under the merger agreement
and merger. The costs of the proceedings are to be apportioned or assessed as
the court considers equitable. We are required to make payment, however, only
after you surrender to us the certificates representing the common stock for
which payment is being made.
If you dissent from the merger, your right to be paid the fair cash value of
your common stock will terminate:
--if you fail to give us a timely and appropriate written demand;
--if you vote your shares of common stock in favor of the merger agreement
and merger;
--if you do not file a petition with the Court of Chancery within 120 days
of the time the merger becomes effective;
--if you withdraw your demand for appraisal within 60 days of the time the
merger becomes effective, or, thereafter with the written approval of Mark
IV;
--if you otherwise fail to comply with the requirements of Section 262 of
the Delaware General Corporate Law.
If you fail to perfect your dissenter's rights as provided above, your
shares of common stock will be converted into the right to receive $23.00 per
share in accordance with the merger agreement.
If a proceeding is properly instituted before the Court of Chancery, it may
not be dismissed without the approval of the Court of Chancery.
After the date the merger becomes effective, you, as a dissenting
stockholder, will not be able to vote your stock or receive any dividends or
other distributions (except dividends or distributions payable prior to the
date the merger becomes effective).
FAILURE BY A STOCKHOLDER TO FOLLOW THE STEPS REQUIRED BY DELAWARE LAW FOR
PERFECTING RIGHTS OF APPRAISAL MAY RESULT IN THE LOSS OF THOSE RIGHTS. IN VIEW
OF THE COMPLEXITY OF THESE PROVISIONS, IF YOU ARE CONSIDERING DISSENTING FROM
THE APPROVAL OF THE MERGER AGREEMENT AND THE MERGER AND EXERCISING YOUR RIGHTS
UNDER SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW, YOU SHOULD CONSULT
YOUR LEGAL ADVISORS.
All written communication from stockholder with respect to the exercise of
appraisal rights should be mailed to Mark IV Industries, Inc., One Towne
Centre, 501 John James Audubon Parkway, P.O. Box 810, Amherst, New York 14226-
0810, Attention: Secretary.
LITIGATION CHALLENGING THE MERGER
On June 9, 2000, James Wernicke filed a complaint in the Delaware Chancery
Court, New Castle County against us and our directors, purporting to represent
a class of all current holders of our common stock, except for the defendants
and their affiliates. The complaint alleges that, in connection with the
contemplated merger with an affiliate of BC Partners, certain unidentified
members of our operating management agreed to roll-over stock options which
they hold, in lieu of receiving cash, and have been offered to purchase equity
in the surviving company. Based upon these allegations, the complaint alleges
that the defendants agreed to a merger which offers these persons disparate
consideration and opportunities that are not being offered to our
shareholders. The complaint also alleges that our shareholder rights plan,
which is alleged to require the approval of "Continuing Directors" to redeem
the rights once issued, and our staggered board prevent any opposing
stockholder initiative or hostile acquisition alternative to the proposed
merger. The complaint alleges that defendants undertook these acts in breach
of their fiduciary duties. The complaint seeks preliminary and permanent
injunctive relief against the consummation of the merger, an order directing
defendants "to exercise their fiduciary duties by giving due consideration to
any proposed business combination that would maximize Mark IV's shareholder
value," an award of damages if the merger is consummated, and an award of
attorneys' fees and litigation costs. We believe this lawsuit is without merit
and we intend to vigorously defend Mark IV and the other defendants.
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THE MERGER AGREEMENT
The following describes various aspects of the proposed merger, including
the material provisions of the merger agreement. Because this is a summary, it
does not contain all information you should consider. The merger agreement is
attached to this proxy statement as Appendix A and is incorporated in this
proxy statement by reference. You should read the merger agreement for
provisions that may be important to you. For purposes of this summary of the
merger agreement, "material adverse effect" or "material adverse change" means
with respect to Mark IV any change, circumstance, event or effect that,
individually or in the aggregate with all other changes, circumstances, events
and effects, that is materially adverse to (1) the business, operations,
liabilities, assets, results of operations or condition (financial or
otherwise) of Mark IV and our subsidiaries, taken as a whole, other than any
change or effect arising out of general economic conditions, or (2) the right
or ability of Mark IV or our subsidiaries to consummate any of the
transactions contemplated by the merger agreement.
The Merger
The merger agreement provides for the merger of MIV into us, so that
following the merger MIV no longer will exist and we will be the surviving
corporation. We will continue to be governed by the laws of Delaware after the
merger.
The merger will become effective when we file a certificate of merger with
the Delaware Secretary of State or at any later date that is specified in the
certificate of merger. The merger is expected to become effective on the same
day as the closing of the merger. This will take place on the next day after
the conditions described in the merger agreement have been satisfied or waived
or on another date agreed upon by MIV and us.
Consideration to be Received in the Merger
At the time the merger becomes effective:
--Each share of common stock, together with the associated preferred share
purchase rights, that is outstanding immediately prior to the merger will
be converted into the right to receive $23.00 in cash, without interest.
This does not include shares of common stock described in the following
sentence or shares of common stock owned by any stockholder who properly
exercises his or her dissenter's rights, as described above under
"Dissenter's Rights."
--All of our shares of common stock owned by us, by MIV, or by any of our
or MIV's subsidiaries automatically will be canceled without the payment
of any consideration.
--Each share of MIV's shares of common stock that is outstanding
immediately prior to the merger will be converted into the right to
receive one share of our common stock which will remain outstanding
immediately following the merger.
Treatment of Stock Options
Except as we otherwise agree with MIV, all of our stock option plans and any
other plan, program or arrangement with any current or former employee,
officer, director or consultant providing for the issuance or grant of any
other interest in respect of our capital stock will terminate at the time the
merger becomes effective.
Except as set forth below, each outstanding option granted under one of our
option plans will:
--(1) be canceled by us immediately before the merger becomes effective and
(2) at the effective time of the merger, the former holder of the option
will be entitled to receive from us, for each share previously subject to
the option, cash equal to the excess, if any, of $23.00 over the exercise
price per share contained in the option, subject to withholding or other
taxes required by law to be withheld.
The Continuing Management Members entered into a founding managers'
agreement with the Investor Group providing for an exchange of their Mark IV
common stock options into options to purchase ordinary shares of Luxco and
giving them the opportunity to invest in ordinary shares of Luxco for an
amount to be agreed upon. The terms and arrangements contained in the founding
managers' agreement are more fully described above under "Interests of Certain
Persons, Conflicts of Interests."
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Exchange of our Common Stock
MIV will select a commercial bank or trust as a paying agent, which must be
acceptable to us and have at least $50,000,000 in capital, surplus and
undivided profits, to facilitate the exchange of our common stock and the
payment of cash to our former stockholders. Immediately prior to the time the
merger is effective, the necessary funds will be deposited with the paying
agent to be distributed to our former stockholders in exchange for their
common stock certificates. After the merger is completed, the paying agent
will mail a letter of transmittal to you that will contain instructions for
returning your stock certificates. When the paying agent receives your
certificate, you will be entitled to receive the cash consideration payable in
the merger.
PLEASE DO NOT SEND STOCK CERTIFICATES TO US OR THE PAYING AGENT UNTIL YOU
HAVE RECEIVED A TRANSMITTAL FORM. DO NOT RETURN YOUR STOCK CERTIFICATE WITH
THE ENCLOSED PROXY CARD.
After the merger, each certificate formerly representing our common stock,
other than those owned by dissenting stockholders, will represent only the
right to receive the cash merger consideration. If you have not complied with
the exchange procedures within 180 days after the merger is completed, you may
look only to us for payment of the merger consideration due to you. At that
point, you will be a general unsecured creditor of us with respect to your
claim.
If your stock certificate representing our common or preferred stock has
been lost, stolen or destroyed, you will only be entitled to receive the
merger consideration by making an affidavit and, if required by us, posting a
bond in an amount sufficient to protect us against claims related to your
stock certificate.
Representations and Warranties of Mark IV
We made various representations and warranties to MIV in the merger
agreement, some of which we qualified by materiality or by our knowledge.
These representations cover, among other matters, the following:
--our corporate existence and power to own, lease and operate our
properties and carry on our business;
--our corporate power and authority to enter into and perform the merger
agreement;
--the enforceability of the merger agreement against us;
--consents and approvals needed from governmental entities in connection
with the merger;
--that the merger agreement and the merger will not violate our
organizational documents, result in a violation, breach or default under
our contracts or other instruments, or violate applicable laws, or create
any liens on our properties or assets;
--our capitalization;
--the absence of any stockholder voting agreement, voting trusts or the
like with respect to the voting of our equity securities;
--our ownership of our subsidiaries and their capital stock;
--the corporate existence, power and authority of our subsidiaries;
--our filings with the Securities and Exchange Commission;
--our financial statements;
--our undisclosed liabilities;
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--the accuracy of the information contained in this proxy statement and
other disclosure documents (excluding information supplied by MIV);
--the absence of changes or events that would be adverse to us;
--litigation;
--tax matters;
--the Employee Retirement Income Security Act of 1974 and employment
matters;
--the fairness opinions of our financial advisors and the fees payable to
them;
--our compliance with environmental laws and regulations;
--our intellectual property;
--our compliance with instruments and laws;
--our taking necessary action to render the rights issued pursuant to our
rights agreement inapplicable to the merger agreement and transactions
contemplated by the merger agreement;
--title to our assets;
--our significant contracts;
--our customers and suppliers;
--prohibited payments;
--the recommendation of our board of directors to you with respect to the
merger and the required vote of our stockholders to approve the merger;
and
--that the stockholder vote is the only vote of the holders of our
securities necessary to approve the merger agreement, merger or the other
transactions contemplated by the merger agreement and no vote of holders
of our securities is necessary to approve the stockholder voting
agreement.
Representations and Warranties of MIV
MIV also made representations and warranties to us in the merger agreement,
some of which are qualified by materiality or by MIV's knowledge. These
representations cover, among other matters, the following:
--its corporate existence and power;
--its corporate authority to enter into and perform the merger agreement;
--the enforceability of the merger agreement against MIV;
--consents and approvals needed from governmental entities in connection
with the merger;
--that the merger agreement and the merger will not violate MIV's
organizational documents, violate applicable laws, result in a violation,
breach or default under contracts or other instruments of MIV or create
any liens on MIV's properties or assets;
--the accuracy of the information submitted by MIV for use in this proxy
statement and other SEC documents;
--the financial advisors' fee; and
--the financing of the merger.
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Covenants of Mark IV
CONDUCT OF OUR BUSINESS PRIOR TO THE MERGER
We agreed that until the merger is effective, except as provided in the
merger agreement or in the disclosure schedule thereto, we will conduct our
business and our subsidiaries' businesses in the ordinary course, consistent
with past practice, unless we receive MIV's prior written consent to a
deviation from past practice. We also agreed to the following, unless we
receive MIV's prior consent to act otherwise:
-- we will use our reasonable best efforts to preserve our business and our
subsidiaries' business organizations and relationships with third
parties and to keep available the services of our and our subsidiaries'
officers and key employees;
-- we will not declare, set aside or pay any dividend or other distribution
with respect to any shares of our capital stock or redeem, purchase or
otherwise acquire our capital stock or of any of our subsidiaries (other
than regular quarterly dividends not in excess of $.0625 per share of
our common stock made in the ordinary course consistent with past
practice or dividends from any subsidiary to us or any other subsidiary
of Mark IV);
-- we will not, and will not permit any of our subsidiaries to, issue,
deliver, sell, pledge or otherwise encumber any capital stock, any
security convertible into or exchangeable for capital stock or any
option, warrant or other right to acquire capital stock (other than the
issuance of common stock pursuant to outstanding options and grants of
restricted stock outstanding on the date of the merger agreement);
-- neither we nor any of our subsidiaries will adopt or propose any change
in the certificate of incorporation or by-laws;
-- we will not, and will not permit any of our subsidiaries to, authorize,
propose or announce an intention to authorize or propose, or enter into
an agreement for any merger, consolidation or business combination
(other than the merger), or any acquisition or disposition of assets or
securities;
-- we will not, and will not permit any of our subsidiaries to, split,
combine, subdivide or reclassify any shares of its capital stock;
-- we will not, and will not permit any of our subsidiaries to, sell,
lease, license or otherwise dispose of any material assets or property,
except pursuant to existing contracts or commitments or in the ordinary
course of business consistent with past practice;
-- we will not, and will not permit any of our subsidiaries to, incur,
create, assume or otherwise become liable for borrowed money or assume,
guarantee, endorse or otherwise become responsible or liable for the
obligations of any other individual, corporation or other entity; or
make any loans or advances to any other person or entity, except for
borrowings under our existing credit facilities in the ordinary course
of business and, except for advances to employees consistent with past
practice which are not material;
-- we will not, and will not permit any of our subsidiaries to, create,
assume or incur any lien on any of our material assets or those of any
of our subsidiaries;
-- except as required by law, we will not, and will not permit any of our
subsidiaries to do any of the following:
. grant or make any change in control, severance or termination payments
to any officers or employees of Mark IV or any of our subsidiaries,
except pursuant to plans or agreements in existence on the date of the
merger agreement and set forth on the disclosure schedule to the
merger agreement or to be adopted after the date of the merger
agreement and described in the disclosure schedule,
. enter into any option, employment, deferred compensation or other
similar agreement or any change of control or severance agreement (or
enter into any amendment to any such existing agreement) with any
officer, director or employee of Mark IV or any of our subsidiaries,
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. accelerate, amend or change the period of exercisability of options or
restricted stock granted to any officer, director or employee of Mark
IV or any of our subsidiaries or, except as contemplated in the merger
agreement, authorize cash payments in exchange for any options granted
to any such persons,
. increase, accelerate the timing of, or otherwise amend the benefits
payable under any existing severance or termination pay policies or
agreements,
. enter into any collective bargaining agreement except in the ordinary
course of business,
. amend the terms of employee plans, benefit, arrangements, pension
plans, employee welfare plans, or other employment arrangements, or
adopt any new employee benefit plans other than plans to be adopted
after the date of the merger agreement described on the schedule to
the merger agreement, or
. pay, or provide for, any increase in compensation, bonus, or other
benefits payable to our employees or those of our subsidiaries, except
for (A) normal merit and cost of living increases not material in
amount, and (B) except as required by the terms of contracts or
agreements or collective bargaining obligations in effect on the date
of the merger agreement or as necessary to comply with any applicable
law;
-- we will not, and will not permit any of our subsidiaries to, take or
agree or commit to take any action that would make any representation
and warranty of Mark IV contained in the merger agreement inaccurate in
any respect at, or as of any time prior to, the effective time of the
merger;
-- we will not, and will not permit any of our subsidiaries to, make or
agree to make any material capital expenditure except in accordance with
our capital expenditure plan for the fiscal year 2000;
-- we will not, and will not permit any of our subsidiaries to, change any
accounting principles or practices except as required by any change in
applicable accounting standards;
-- except as required by law, we will not, and will not permit any of our
subsidiaries to, pay, discharge, settle or satisfy any claims,
liabilities or obligations material to Mark IV and our subsidiaries,
taken as a whole, other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in our financial statements (or the notes thereto) or incurred
thereafter in the ordinary course of business consistent with past
practice, or waive any material benefits of, or agree to modify in any
material respect, any confidentiality, standstill, non-solicitation or
similar agreement to which we or any subsidiary of ours is a party; and
-- we will not, and will not permit any of our subsidiaries to, authorize,
recommend, propose or announce an intention to do any of the foregoing
actions or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing actions.
ADDITIONAL EFFORTS
The merger agreement contains additional covenants relating to actions to be
taken by us prior to the merger including the following:
-- upon reasonable notice to us and subject to confidentiality, we will
provide MIV and its advisors and other authorized representatives and
the financial institutions providing or proposed to provide financing to
MIV access to our and our subsidiaries' offices, business information
and personnel;
-- with respect to taxes, without the prior consent of MIV, neither we nor
any of our subsidiaries shall make, revoke or change any election,
change an annual accounting period, adopt or change any accounting
method, file any amended return, enter into any closing agreement,
settle a tax claim or assessment relating to Mark IV or our
subsidiaries, surrender any right to claim a refund of taxes, consent to
any extension or waiver of the limitation period applicable to any tax
claim or assessment relating to the Mark IV or our subsidiaries, or take
any other action or omit to take any action, if any such election,
adoption, change, amendment, agreement, settlement, surrender, consent
or other action or omission could have the effect of materially
increasing the consolidated tax liability of Mark IV;
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-- we will keep MIV informed of tax notices, the commencement of tax
proceedings on other events which could have the effect of materially
increasing our tax liability;
-- except as disclosed in or contemplated by the merger agreement, without
the prior consent of MIV we will not adopt, amend (except as required by
law) or terminate any employee plans, benefit arrangements, pension
plans, employee welfare plans or other employment arrangements between
us or our subsidiaries and any current or former employee, director or
officer;
-- we will reasonably cooperate with MIV in connection with the arrangement
of financing needed by MIV to complete the merger;
-- we will, in conjunction with MIV obtaining financing for the merger and
at the request of MIV, call for prepayment or redemption, or prepay,
redeem, defease and/or renegotiate, as the case may be, any of our then
existing indebtedness; provided that any such prepayment or redemption
shall be conditioned upon and shall not actually be required to be made
until at or after the effective time of the merger;
-- we will, within 20 days of receiving a request from MIV (but in no event
earlier than 45 calendar days prior to the date fixed for the special
meeting), commence offers to purchase and consent solicitations with
respect to all of our 7 3/4% Senior Subordinated Notes due 2006 and 4
3/4% Convertible Notes due 2004 on customary terms and conditions
acceptable to MIV, and, to the extent we are required to commence the
debt tender offers, we will, subject to the terms and conditions of the
debt tender offers, accept for payment and pay for any tendered notes as
soon as reasonably practicable following the satisfaction or waiver of
the conditions to the debt offers and as permitted under applicable law;
-- we will promptly notify MIV if we receive notice from anyone alleging
that its consent is required in connection with the merger, or if we
receive any written notice or other written communication from a
governmental or regulatory agency in connection with the merger;
-- we will promptly notify MIV of any actions that are commenced or to our
knowledge threatened against us or our subsidiaries that relate to the
merger or that, if pending on the date the merger agreement was signed,
would have been required to be disclosed in the disclosure letter with
respect to the merger agreement;
-- we will provide MIV with interim financial statements within 30 days
after the end of each calendar month;
-- we will notify MIV of any change, circumstance, event or effect that
individually or in the aggregate with all other changes, circumstances,
events and effects, is materially adverse to (i) the business,
operations, liabilities, assets, results of operations or condition
(financial or otherwise) of Mark IV and our subsidiaries, taken as a
whole, other than any change or effect arising out of general economic
conditions, or (ii) the right or ability of Mark IV or our subsidiaries
to consummate any of the transactions contemplated by the merger
agreement;
-- we will promptly notify MIV of any breach by us of our representations
or warranties contained in the merger agreement (subject to materiality,
when applicable); and
-- at the closing of the merger, we will deliver to MIV resignations of all
of our directors.
ACQUISITION PROPOSALS
We agreed in the merger agreement that neither we nor any of our
subsidiaries will: (1) directly or indirectly, initiate, solicit, encourage or
knowingly facilitate any inquiries or the making of any proposal or offer
relating to certain acquisition transactions, (2) directly or indirectly,
endorse an acquisition proposal, grant any waiver or release under any
standstill, non-solicitation or similar agreement relating to our capital
stock or those of our subsidiaries or (3) have any discussion with or provide
any confidential information or data to any person relating to an acquisition
proposal, or engage in any negotiations concerning an acquisition proposal, or
knowingly facilitate any effort or attempt to make or implement an acquisition
proposal or accept an acquisition proposal. These are the acquisition
proposals covered by our agreement:
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-- any merger, reorganization, share exchange, consolidation, business
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving, or any purchase or sale of
all or any significant portion of the assets or more than 15% of the
common stock of Mark IV or our subsidiaries, except for the merger
described in the merger agreement; or
-- any tender offer or exchange offer that if completed would result in any
person or entity beneficially owning 15% or more of any class of our
capital stock or those of any of our subsidiaries.
However, if we receive an unsolicited bona fide written acquisition proposal
described above and (1) our board of directors determines in good faith after
consultation with our outside legal counsel that the actions described below
are required to prevent the board from breaching its fiduciary duties to our
stockholders and (2) the board determines in good faith after consultation
with its legal and financial advisers that the acquisition proposal, if
accepted, would result in a transaction that is more favorable to our
stockholders, from a financial point of view, than the merger described in the
merger agreement and is reasonably likely to be completed taking into account
all legal, regulatory and other aspects of the proposal, then we can take the
following actions with the person or group making the proposal:
-- recommend the acquisition proposal to our stockholders or withdraw or
modify our recommendation of the merger described in the merger
agreement;
-- engage in discussions or negotiations; and
-- furnish information about Mark IV and our businesses, properties or
assets pursuant to an appropriate confidentiality letter not less
favorable to us than the one with MIV.
In order to take any of the above actions we must first give 24 hours written
notice to MIV of our intention to do so and of the terms and conditions of the
proposal and the identity of the person making it.
If the board of directors approves any of the acquisition proposals referred
to above as being covered by the merger agreement (except that each reference
to "15%" shall be deemed to be a reference to "50%" for these purposes)
meeting the requirements specified in clauses (1) and (2) of the preceding
paragraph (referred to in the merger agreement and in this proxy statement as
a "superior proposal"), we will have the right to terminate the merger
agreement upon the prior payment of the termination fee and the expiration of
the three day good faith negotiation period that we are required to afford
MIV, as described under "The Merger Agreement-- Termination."
In addition, in all cases, we and our subsidiaries must promptly notify MIV
of the terms of any written proposal which we may receive in respect of any
acquisition proposal. The notice must state the identity of the prospective
purchaser or soliciting party. We must provide MIV with a copy of any written
acquisition proposal. We must keep MIV reasonably informed of the status of
any acquisition proposal.
The merger agreement does not prohibit us from taking or disclosing to our
stockholders a position contemplated by the SEC's tender offer rules.
Covenants of MIV
The merger agreement contains agreements by MIV relating to actions to be
taken after the merger by the surviving corporation, including the following:
DIRECTOR AND OFFICER LIABILITY
MIV has agreed that, for a period of six years, all rights to
indemnification and permitted limitations of liability for monetary damages
existing in favor of our present or former directors and officers of Mark IV
or those of our subsidiaries as provided in our certificate of incorporation
or by-laws or pursuant to any agreements previously disclosed by us to MIV in
writing, or the certificate of incorporation, by-laws or similar constitutive
documents of any subsidiary of ours with respect to matters occurring before
the merger (including without limitation the transactions contemplated by the
merger agreement) shall continue in full force and effect.
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In addition, for not less than six years after the effective time of the
merger, the surviving corporation shall indemnify, defend and hold harmless
present and former directors and officers of Mark IV and our subsidiaries
against all losses, claims, damages or liabilities arising out of actions or
omissions occurring at or prior to the effective time of the merger (including
without limitation the transactions contemplated by the merger agreement) to
the full extent provided by our certificate of incorporation or by-laws as in
effect on the date hereof. In the event any claim or claims are asserted or
made within the six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until final disposition of any and all
such claim or claims.
For six years, MIV will cause to be maintained our current officers' and
directors' liability insurance in respect of acts or omissions occurring
before the merger covering any person currently covered by our officers' and
directors' liability insurance policy. If such coverage is not obtainable at
its current cost, MIV will purchase such coverage (on terms that are at least
as favorable as the insurance policy in effect today) as may be obtained
having a cost per annum not to exceed 200% of its current annual premium for
such policy.
BENEFIT ARRANGEMENTS
MIV has agreed that for a period of two years after the merger, it will
maintain employee benefit plans that are no less favorable in the aggregate
than the benefit arrangements, pension plans, employee welfare plan or other
employment arrangements in effect on the date that the merger agreement was
signed, other than stock option, restricted stock, stock purchase or other
equity based programs, plans and arrangements and change of control and
severance plans.
FINANCING
MIV shall keep us reasonably informed of the ongoing status of the
negotiations for the financing needed by it for the merger. MIV has also
agreed to conduct any negotiations in good faith and use its commercially
reasonable efforts to effect the closing of the financing on the terms set
forth in the commitment letter received by MIV as soon as reasonably
practicable and in any event on or before the expiration of the effective time
of the merger. MIV shall not (1) voluntarily terminate the commitment letter
or the commitments for equity and other financings by BC Partners and
Interbanca without our prior written consent or (2) enter into any material
amendment of the commitments that would be adverse to Mark IV's interest.
Additional Covenants of Mark IV and MIV
The merger agreement contains additional agreements relating to actions to
be taken by us and MIV prior to the merger, including the following:
-- each of us will use our respective reasonable best efforts to take
whatever action is required to expeditiously complete the merger;
-- each of us promptly will make our respective filings under the Hart-
Scott-Rodino Antitrust Improvements Act and other applicable antitrust
laws; and
-- each of us will consult with the other before issuing any press release
or making any public statement with respect to the merger agreement and
the transactions contemplated and, except as may be required by
applicable law or any listing agreement with any national securities
exchange or any organization providing stock quotations, neither of us
will issue any such press release or make any such public statement
prior to such consultation.
Conditions to the Merger
CONDITIONS TO THE OBLIGATIONS OF MARK IV AND MIV
Our and MIV's respective obligations to effect the merger are subject to the
satisfaction of the following conditions at or before the closing date of the
merger:
--adoption of the merger agreement by our common stockholders in accordance
with Delaware law;
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--the absence of any applicable laws or any judgment or injunction of any
court of competent jurisdiction that prohibits or restrains the merger
from occurring or that makes the merger illegal; provided, however, that
the party invoking this condition shall have used reasonable best efforts
to lift or remove the applicable order, injunction, restraint or
prohibition;
--the expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act or similar antitrust laws;
and
--the obtaining of all consents, approvals and licenses of any governmental
or regulatory body required in connection with the execution, delivery,
and performance of the merger agreement and for us to conduct our business
after the merger in substantially the same manner as we now conduct it,
unless the failure to obtain any consents, approval or license would not
have a material adverse effect on Mark IV, after giving effect to the
transactions contemplated by the merger agreement, including the financing
being obtained by MIV.
ADDITIONAL CONDITIONS TO MARK IV'S OBLIGATIONS
Our obligations also are subject to the satisfaction or waiver by us of the
following conditions at or before the closing:
--all of the representations and warranties of MIV in the merger agreement
shall be true and correct on the closing date, as if they were made on
such date, (except for representations and warranties made as of a
specific date, in which case those representations and warranties shall be
true and correct, as of the specific date) subject, in all cases, to
materiality qualifications;
--MIV shall have performed in all material respects all obligations arising
under the agreements and covenants required to be performed by it prior to
or on the closing date; and
--we shall have received certificates signed by the president or a vice
president of MIV that the two conditions above have been satisfied.
ADDITIONAL CONDITIONS TO MIV'S OBLIGATIONS
MIV's obligations also are subject to the satisfaction or waiver by MIV of
the following conditions at or before the closing:
--no governmental or regulatory authority shall have instituted any claim,
action, suit, investigation or proceeding to enjoin or prevent the merger
or related transactions, or which could reasonably be expected to result
in a material adverse effect;
--all of our representations and warranties in the merger agreement shall
be true and correct on and as of the effective time of the merger and at
all times prior to the effective time of the merger (except for
representations and warranties made as of a specific date, in which case
those representations and warranties shall be true and correct, as of the
specific date)(subject, in all cases, to materiality qualifications), and
MIV shall have received a certificate signed by our president or a vice
president confirming this condition;
--we shall have performed in all material respects all obligations arising
under the agreements and covenants required hereby to be performed by us
prior to or on the closing, and MIV shall have received a certificate
signed by our president or a vice president confirming this condition;
--since February 29, 2000, there shall not have been any material adverse
change; and
--the funding contemplated by the financing commitment letters provided to
us shall have been obtained.
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Termination
We and MIV may terminate the merger agreement by mutual written consent and
abandon the merger at any time before it occurs. This is the case even if our
stockholders already have approved the merger. The merger agreement also may
be terminated, whether before or after our stockholders approve the merger, as
follows:
--by us or MIV, if the closing has not occurred on or before November 30,
2000;
--by us or MIV, if any law or regulation makes the completion of the merger
illegal or otherwise prohibited or if any final, non-appealable judgment,
injunction, order or decree enjoining us or MIV from completing the merger
is entered;
--by us or MIV, if, at our stockholders meeting on or at any
adjournment of the stockholders meeting at which the merger agreement and
the merger is voted upon, the requisite stockholder adoption and approval
shall not have been obtained;
--by us, if prior to the effective time of the merger:
--(1) the representations and warranties of MIV in the merger agreement
shall not be true, at any time after the date the merger agreement was
signed (except for representations and warranties made as of a
particular date or only with respect to a specific time period which
need only be true and accurate as of the specific date or time period),
or (2) MIV shall have breached or failed to perform or comply with any
required obligation, agreement or covenant under the merger agreement
and for any breach or failure to perform that is reasonably capable of
being remedied, the breach or failure to perform is not remedied within
15 days after we have furnished MIV with written notice of the breach or
failure to perform (subject, in all cases, to materiality
qualifications); or
--our board of directors approves a superior proposal; provided, however,
that (1) we have complied with our acquisition proposal covenant in the
merger agreement, and (2) prior to any such termination, we have and
have caused our financial and legal advisors to, negotiate in good faith
for a period of at least three (3) days with MIV to make any adjustments
in the terms and conditions to the merger agreement that would allow MIV
to proceed with the transactions contemplated by the merger agreement;
provided, however, that we cannot terminate until we have paid the
termination fee to MIV required by the merger agreement described below.
--by MIV:
--if we shall have materially breached any of our obligations under the
acquisition proposal section of the merger agreement;
--if our board of directors shall have (1) withdrawn or modified or
amended, in a manner adverse to MIV, its approval or recommendation of
the merger agreement and the merger or our recommendation that our
stockholders adopt and approve the merger agreement and the merger, (2)
approved, recommended or endorsed an acquisition proposal (including a
tender or exchange offer for our common stock); or (3) resolved to do
any of the foregoing; or
--if, prior to the effective time of the merger, (1) our representations
and warranties in the merger agreement shall not be true, at any time
after the merger agreement was signed (except for representations and
warranties made as of a particular date or only with respect to a
specific time period which need only be true and accurate as of the date
or period made), or we shall have breached or failed to perform or
comply with any required obligation, agreement or covenant under the
merger agreement, and, with respect to any such breach or failure to
perform that is reasonably capable of being remedied, the breach or
failure to perform is not remedied within 15 days after MIV furnished us
with written notice of such breach or failure to perform (subject, in
all cases, to materiality qualifications).
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Termination Fees and Expenses
Except as described below, we and MIV have agreed to pay our own costs and
expenses in connection with the merger agreement.
TERMINATION FEE
We have agreed to pay MIV a termination fee of $30,000,000 if any of the
following occur:
--we terminate the merger agreement in connection with our approval of a
superior proposal;
--MIV terminates the merger agreement because our board of directors has
withdrawn or amended or modified its recommendation of the merger
agreement and the merger in a manner that is adverse to MIV, or because
our board has approved, recommended or endorsed an acquisition proposal;
--MIV terminates the merger agreement because we have materially breached
our acquisition proposal covenant in the merger agreement;
--MIV terminates the merger agreement in connection with our uncured breach
of our other covenants in the merger agreement, but only if our breach
arises out of our bad faith or willful misconduct; or
--after an acquisition proposal has been made by a third party and has been
publicly disclosed, we or MIV terminate the merger agreement because (1)
the merger agreement was not adopted by our stockholders in accordance
with Delaware law or (2) the closing did not occur on or before November
30, 2000 and, within one year after such termination, we enter into a
definitive agreement with respect to, or consummate:
. a merger, consolidation or other business combination with the third
party acquirer (or a new third party acquirer who makes an acquisition
proposal at a time when we are in discussions with the first third
party acquirer);
. the sale or transfer to the third party acquirer or any new third
party acquirer of, or the acquisition of beneficial ownership by the
third party acquirer or any new third party acquirer of, 50% or more
of our voting securities; or
. the sale or transfer of 50% or more, in market value, of the
consolidated assets of Mark IV and our subsidiaries to the third party
acquirer or any new third party acquirer.
PAYMENT OF MIV'S EXPENSES
We also have agreed to reimburse MIV and its affiliates for its documented
out-of-pocket fees and expenses actually incurred by any of them or on their
behalf in connection with the merger agreement, the transactions described in
the merger agreement and the arrangement of the financing required to complete
the merger, (1) if the merger agreement is terminated for any of the reasons
described above for which the termination fee is payable, except that we have
agreed to pay expenses if the merger agreement is terminated by reason of
breaches of our representations and warranties or uncured breaches of our
covenants (without regard to whether our breaches of covenants arise out of
our bad faith or willful misconduct) or (2) if the merger agreement is
terminated by us or MIV, if the required vote for adoption of the merger
agreement and the merger is not obtained by our stockholders at a duly held
stockholders' meeting or any adjournment of the meeting.
The aggregate amount of any expense payments which we must make under this
provision will not exceed $6,000,000.
Amendment and Waiver
We and MIV may amend the merger agreement at any time by a writing signed by
each of us. After our stockholders have approved the merger agreement and the
merger described in the merger agreement, no amendment may be made which by
law requires further stockholder approval without obtaining that approval.
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INFORMATION ABOUT US
We are Mark IV Industries, Inc., a Delaware Corporation originally
incorporated in 1970. We are a diversified manufacturer of a broad range of
proprietary and other power and fluid transfer products and systems which
serve primarily industrial and automotive markets. Many of our product groups
have a significant, and in certain instances the leading share of their
respective markets. We operate 65 manufacturing facilities and 51 distribution
and sales locations and employ approximately 15,600 people in 14 countries.
We classify our operations into the following business segments:
--MARK IV AUTOMOTIVE, which includes the design, manufacture and
distribution of power transmission, fuel and fluid handling systems and
components, as well as air-intake systems, diesel and gas engines and CVT
applications for the global automotive aftermarket and OEM (original
equipment manufacturers) market; and
--MARK IV INDUSTRIAL, which includes the design, manufacture and
distribution of power transmission and fluid management systems and
components for industrial OEM and distribution markets worldwide, and
transportation and other products and systems.
As part of our business strategy, we are focused on building our worldwide
Automotive and Industrial business segments through internal growth and
selective strategic acquisitions, and the continuation of cost control and
quality improvement programs. Our principal executive offices are located at
501 John James Audubon Parkway, P.O. Box 810, Amherst, New York 14226-0810,
and our telephone number at that address is (716) 689-4972.
INFORMATION ABOUT MIV, LUXCO AND CERTAIN OTHER PERSONS
MIV Acquisition Corporation recently was incorporated under the laws of
Delaware for the purpose of entering into the merger agreement and
consummating the transactions contemplated by the merger agreement, including
the merger. MIV has not conducted any business or activities other than those
incident to its formation and entering into the merger agreement, the
stockholder voting agreement and certain other agreements contemplated by the
merger agreement. It is not anticipated that MIV will have any assets or
liabilties other than those arising under the merger agreement or in
connection with the merger, nor will it engage in any activities other than
those incident to its formation and capitalization and the merger. The
principle business office of MIV is located at Park Avenue Tower, 65 East 55th
Street, Suite 2300, New York, New York 10022, and its telephone number at that
address is (212) 891-2884.
The executive officers of MIV are Francesco Loredan, President; Michel
Guillet, Vice President and Secretary; and Kevin O'Donohue, Vice President and
Treasurer. Each of Messrs. Loredan (age 42), Guillet (age 55) and O'Donohue
(age 39) are also directors of MIV. The principal occupation of each of
Messrs. Loredan, Guillet and O'Donohue is to act as managing partners of BC
Partners at its Milan, Italy; Paris, France; and New York, New York offices,
respectively. Each has served as managing partner or has been employed in
various other capacities with BC Partners for the past five years. MIV has
informed us that it expects that Messrs. Loredan, Guillet and O'Donohue will
become the directors of the surviving corporation at the effective time of the
merger in accordance with the terms of the merger agreement.
As of the date of this proxy statement, all of the issued and outstanding
shares of capital stock of MIV Acquisition Corporation are owned by CIE
Management II, Limited, a limited corporation organized under the laws of
Guernsey, Channel Islands, as trustee for Luxco, which has yet to be formed.
It is currently contemplated that Luxco will be organized under the laws of
Luxembourg and that all issued and outstanding shares of MIV Acquisition
Corporation will be transferred to Luxco upon its formation. As a result, at
the effective time of the merger, MIV will be a wholly-owned subsidiary of
Luxco. As of the date of this proxy statement, no
38
<PAGE>
determination has been made with respect to the identity of the directors and
executive officers of Luxco, except that it is anticipated that each of
Messrs. Loredan and Guillet will be directors of Luxco upon its formation.
CIE Management II, Limited acts as manager of various investment funds
advised by BC Partners, including funds which will ultimately control Luxco
and, through Luxco, MIV. The directors of CIE Management are Otto van der
Wyck, Mike Twinning, John Burgess, Iain Stokes, David Dorey, Lawrence McNarm
and John Marren. CIE Management has no executive officers, except that
Guernsey International Fund Managers Limited ("GIFM") acts as the Secretary of
CIE Management. The principal occupation of each of Messrs. Stokes, Dorey,
McNarm and Marren is to act as officers of GIFM, which is in the business of
administering companies, limited partnerships and other entities. The present
principal occupation of each of Messrs. van der Wyck and Burgess is to act as
managing partners, and of Mr. Twinning is to act as the finance manager, of BC
Partners at its London, England office. The principal business office of each
of CIE Management and GIFM is located at P.O. Box 255, Barfield House, St.
Julian's Avenue, St. Peter Port, Guernsey GY1 3QL, Channel Islands, and the
telephone number at that address is +44-1481-710651.
BC Partners is a European private equity firm principally engaged in the
business of advising investment funds, including those managed by CIE
Management II Limited, with respect to investments, acquisitions and other
transactions. The managing directors of BC Partners are Messrs. Loredan,
Guillet, O'Donohue, van der Wyck and Burgess. The principal business office of
BC Partners in the U.S. is located at Park Avenue Tower, 65 East 55th Street,
Suite 2300, New York, New York 10022, and in Europe is located at Via Brera,
3, 20121 Milano, Italy. The telephone number for BC Partners at its New York
address is (212) 891-2884, and at its Milan, Italy address is +39-02-7200-
3101.
OWNERSHIP OF OUR COMMON STOCK
Directors and Executive Officers
The following table sets forth information as of June 16, 2000 (except as
otherwise noted) with respect to all stockholders known by Mark IV to be the
beneficial owners of more than 5% of our outstanding common stock, each
director, each of our five most highly compensated executive officers, and all
executive officers and directors as a group.
<TABLE>
<CAPTION>
Number of Percent
Name and Positions Stock(1)(2) of Class
------------------ ----------- --------
<S> <C> <C>
Sal H. Alfiero, Chairman of the Board and Chief Ex-
ecutive Officer.................................... 4,475,893(3) 10.0%
William P. Montague, President and Chief Operating
Officer and Director............................... 841,964(4) 1.9%
Gerald S. Lippes, Secretary and Director............ 1,648,590(5) 3.7%
Clement R. Arrison, Director........................ 756,360(6) 1.7%
Joseph G. Donohoo, Director......................... 12,158(7) *
Herbert Roth, Jr., Director......................... 25,103(8) *
Kurt J. Johansson, Senior Vice President............ 128,865(9) *
Giuliano Zucco, Vice President...................... 73,986(10) *
Richard F. Bing, Vice President..................... 66,810(11) *
All Executive Officers and Directors as a Group (15
persons)........................................... 8,506,299(12) 18.7%
Gabelli Related Persons............................. 8,978,667(13) 20.0%
</TABLE>
--------
*Less than 1%
(1) Except as otherwise indicated below, each person listed in the table has
both sole voting and sole investment power with respect to the number of
shares of common stock set forth opposite his name. Messrs. Alfiero,
Montague and Lippes, each of whom is an executive officer of Mark IV,
have the right to direct the trustee of Mark IV's master defined benefit
pension plan (the "Plan") with respect to the investment by the trustee
in shares of Mark IV's common stock and voting of the shares of Mark
IV's common stock owned by such Plan. The Plan owns a total of 1,018,222
shares of Mark IV's common stock (2.3% of the total number of shares of
common stock outstanding). Such executive officers are not
39
<PAGE>
participants in the Plan and disclaim any beneficial ownership in the
common stock, and the shares of common stock have not been included in the
amounts listed in this table.
(2) Concurrent with the signing of a merger agreement between Mark IV and
MIV on May 26, 2000, Messrs. Alfiero, Montague, Lippes and Arrison
executed a stockholder voting agreement in which each executive agreed
to vote their shares of common stock owned of record and/or beneficially
in favor of the merger transaction provided for in the merger agreement.
(3) Includes 242,777 shares of common stock issuable under currently
exercisable options granted under Mark IV's incentive stock option
plans. Also includes 16,460 shares of common stock allocated to Mr.
Alfiero's self-directed accounts in Mark IV's retirement and 401(k)
savings plan and 7,603 shares of common stock owned by Mr. Alfiero's
wife. Does not include 77,764 shares of common stock owned by the
Alfiero Family Charitable Foundation, of which Mr. Alfiero is one of
four directors and for which he disclaims beneficial ownership. Also
does not include 412,872 derivative shares of Mark IV's common stock,
which represent the $9,496,059 value of Mr. Alfiero's phantom-stock-
based account balance in Mark IV's deferred compensation arrangements as
of May 31, 2000, valued at the $23.00 share price provided for in the
merger agreement.
(4) Includes 157,520 shares of common stock issuable under currently
exercisable options granted pursuant to Mark IV's option plans. Also
includes 6,890 shares of common stock allocated to Mr. Montague's self-
directed accounts in Mark IV's retirement and 401(k) savings plan. Does
not include 21,876 shares of common stock owned by the Montague Family
Charitable Foundation, of which Mr. Montague is one of four directors
and for which he disclaims beneficial ownership. Also does not include
215,744 derivative shares of Mark IV's common stock, which represent the
$4,962,121 value of Mr. Montague's phantom-stock-based account balance
in Mark IV's deferred compensation arrangements as of May 31, 2000,
valued at the $23.00 share price provided for in the merger agreement.
(5) Includes 117,694 shares of common stock issuable under currently
exercisable options granted pursuant to Mark IV's option plans. Does not
include 68,917 shares of common stock owned by the Lippes Family
Charitable Foundation, of which Mr. Lippes is one of four directors and
for which he disclaims beneficial ownership. Also does not include
140,906 derivative shares of Mark IV's common stock, which represent the
$3,240,848 value of Mr. Lippe's phantom-stock-based account balance in
Mark IV's deferred compensation arrangements as of May 31, 2000, valued
at the $23.00 share price provided for in the merger agreement.
(6) Does not include 137,107 shares of common stock owned by the Arrison
Family Charitable Foundation, of which Mr. Arrison is one of four
directors and for which he disclaims beneficial ownership. Also does not
include 1,968 derivative shares of Mark IV's common stock, which
represent the $45,271 value of Mr. Arrison's phantom-stock-based account
balance in Mark IV's deferred compensation arrangements as of May 31,
2000, valued at the $23.00 share price provided for in the merger
agreement.
(7) Includes 1,658 shares of common stock held by The Gibson Group, Inc.
Pension Fund, of which Mr. Donohoo is a trustee and has voting power.
Does not include 8,107 derivative shares of Mark IV's common stock,
which represent the $186,470 value of Mr. Donohoo's phantom-stock-based
account balance in Mark IV's deferred compensation arrangements as of
May 31, 2000, valued at the $23.00 share price provided for in the
merger agreement.
(8) Does not include 14,269 derivative shares of Mark IV's common stock,
which represent the $328,180 value of Mr. Roth's phantom-stock-based
account balance in Mark IV's deferred compensation arrangements as of
May 31, 2000, valued at the $23.00 share price provided for in the
merger agreement.
(9) Includes 126,181 shares of common stock issuable under currently
exercisable options granted pursuant to the option plans. Does not
include 52,484 derivative shares of Mark IV's common stock, which
represent the $1,207,143 value of Mr. Johansson's phantom-stock-based
account balance in Mark IV's deferred compensation arrangements as of
May 31, 2000, valued at the $23.00 share price provided for in the
merger agreement.
(10) Includes 73,986 shares of common stock issuable under currently
exercisable options granted to Mr. Zucco pursuant to the option plans.
Does not include 47,431 derivative shares of Mark IV's common stock,
which represent the $1,090,909 value of Mr. Zucco's phantom-stock-based
account balance in Mark IV's deferred
40
<PAGE>
compensation arrangements as of May 31, 2000, valued at the $23.00 share
price provided for in the merger agreement.
(11) Includes 58,066 shares of common stock issuable under currently
exercisable options granted pursuant to the option plans. Also includes
2,515 shares of common stock allocated to Mr. Bing's self-directed
accounts in Mark IV's retirement and 401(k) savings plan. Does not
include 35,380 derivative shares of Mark IV's common stock, which
represent the $813,746 value of Mr. Bing's phantom-stock-based account
balance in Mark IV's deferred compensation arrangements as of May 31,
2000, valued at the $23.00 share price provided for in the merger
agreement.
(12) Includes 1,030,286 shares of common stock issuable under currently
exercisable options granted pursuant to the option plans. Also includes
38,566 shares of common stock allocated to the officers' self directed
accounts in Mark IV's retirement and 401(k) savings plan. Does not
include 1,343,282 derivative shares of Mark IV's common stock, which
represents the $30,895,521 value of the group's phantom-stock-based
account balances in Mark IV's deferred compensation arrangements as of
May 31, 2000, valued at the $23.00 share price provided for in the
merger agreement.
(13) Based on information set forth in Amendment No. 11 to Schedule 13-D
filed with the SEC on May 18, 2000 by Gabelli Funds, LLC, GAMCO
Investors, Inc., Gabelli Performance Partnership L.P., Gabelli
International Limited, Gabelli Securities, Inc., Gabelli Group Capital
Partners, Inc., Gabelli Asset Management Inc., Marc J. Gabelli, and
Mario J. Gabelli (collectively, the "Gabelli Related Persons"), the
Gabelli Related Persons held shared voting and/or dispositive power for
8,978,667 shares of Mark IV's common stock. Such amount includes 495,842
shares which the Gabelli Related Persons have the right to acquire
through the conversion into common stock of Mark IV's 4 3/4% Convertible
Subordinated Notes. The stated business address of the Gabelli Related
Persons is One Corporate Center, Rye, New York 10580-1435.
ANNUAL MEETING AND STOCKHOLDER PROPOSALS
We intend to postpone our 2000 annual meeting of stockholders, which was
scheduled for August, 2000. If the merger agreement is adopted by the
stockholders at the special meeting and the merger is completed prior to
November 30, 2000, we do not intend to hold the 2000 annual meeting prior to
completion of the merger. If the merger agreement is not adopted by the
stockholders at the special meeting or if the merger agreement is adopted by
the stockholders, but the merger is not completed prior to November 30, 2000,
we intend to reschedule the 2000 annual meeting of stockholders. If we
reschedule the 2000 annual meeting of stockholders, we will, in a timely
manner, inform our stockholders of the new date on which the 2000 annual
meeting of stockholders will be held by including a notice in the earliest
possible Quarterly Report on Form 10-Q we file with the SEC or, if
impracticable, by another means reasonably calculated to inform our
stockholders. At that time, we also will inform you of the following:
--the date by which stockholder proposals must be received for inclusion in
our proxy statement and form of proxy for the rescheduled annual meeting
of stockholders; and
--the date after which a notice from a stockholder as to a proposal the
stockholder intends to propose at the 2000 annual meeting of stockholders
will be considered untimely and, as a result, with respect to which the
proxies for the meeting will have discretionary authority to vote on the
proposal without discussion of the proposal in the proxy statement for the
meeting.
41
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statement and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http.//www.sec.gov. You also may read and
copy any documents we file at the SEC's public reference rooms in Washington,
D.C., New York, and Chicago, as well as at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York. 10005, where our common stock
is listed under the symbol "IV." You can call the SEC at 1-800-732-0330 for
further information about the public reference rooms.
You should rely only on the information provided (and not later changed) in
this proxy statement. We have not authorized anyone else to provide you with
additional or different information.
You should not assume that the information in this proxy statement is
accurate as of any date other than the date on the front of this document.
By Order of the Board of Directors,
/s/ Sal H. Alfiero
-------------------
Sal H. Alfiero, Chairman
of the Board of Directors
42
<PAGE>
APPENDIX A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and between
MIV ACQUISITION CORPORATION
and
MARK IV INDUSTRIES, INC.
Dated as of May 26, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
The Merger
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 1.1 The Merger.................................................. A-1
1.2 Conversion or Cancellation of Shares........................ A-2
1.3 Surrender and Payment....................................... A-2
1.4 Dissenting Shares........................................... A-3
1.5 Stock Options............................................... A-4
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation................................ A-4
2.2 By-laws..................................................... A-4
2.3 Directors and Officers...................................... A-5
ARTICLE III
Representations and Warranties of The Company
Section 3.1 Corporate Existence and Power............................... A-5
3.2 Corporate Authorization..................................... A-5
3.3 Governmental Authorization.................................. A-5
3.4 Non-Contravention........................................... A-6
3.5 Capital Stock............................................... A-6
3.6 Subsidiaries................................................ A-7
3.7 SEC Filings................................................. A-7
3.8 Financial Statements........................................ A-8
3.9 Undisclosed Liabilities..................................... A-8
3.10 Information in Disclosure Documents......................... A-8
3.11 Absence of Certain Changes.................................. A-8
3.12 Litigation.................................................. A-9
3.13 Taxes....................................................... A-9
3.14 ERISA and Employment Matters................................ A-10
3.15 Financial Advisers, Fees.................................... A-12
3.16 Environmental Laws and Regulations.......................... A-12
3.17 Intellectual Property....................................... A-12
3.18 Compliance with Instruments and Laws........................ A-13
3.19 Rights Agreement............................................ A-13
3.20 Title to Assets............................................. A-13
3.21 Contracts................................................... A-13
3.22 Customers and Suppliers..................................... A-14
3.23 Prohibited Payments......................................... A-14
3.24 Opinion of Financial Advisor................................ A-14
3.25 Board Recommendation........................................ A-14
3.26 Required Company Vote....................................... A-14
</TABLE>
A-i
<PAGE>
ARTICLE IV
Representations and Warranties of Merger Sub
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 4.1 Corporate Existence and Power............................... A-15
4.2 Corporate Authorization..................................... A-15
4.3 Governmental Authorization.................................. A-15
4.4 Non-Contravention........................................... A-15
4.5 Information in Disclosure Documents......................... A-15
4.6 Financial Advisers, Fees.................................... A-16
4.7 Financing................................................... A-16
ARTICLE V
Covenants of The Company
Section 5.1 Conduct of Business......................................... A-16
5.2 Stockholder Meeting; Proxy Material......................... A-18
5.3 Schedule 13E-3.............................................. A-18
5.4 Acquisition Proposals....................................... A-18
5.5 Access to Information....................................... A-19
5.6 Tax Elections............................................... A-20
5.7 Benefit Plans............................................... A-20
5.8 Company Cooperation......................................... A-20
5.9 Notice of Certain Events.................................... A-20
5.10 Resignation of Directors.................................... A-21
5.11 Financial Statements, Etc................................... A-21
5.12 Debt Offers................................................. A-21
ARTICLE VI
Covenants of Merger Sub
Section 6.1 Indemnification............................................. A-22
6.2 Employee Benefits........................................... A-22
6.3 Matters Relating to the Bank Commitment Letter.............. A-23
ARTICLE VII
Covenants of Merger Sub and The Company
Section 7.1 Reasonable Best Efforts..................................... A-23
7.2 Certain Filings............................................. A-23
7.3 Public Announcements........................................ A-23
7.4 Further Assurances.......................................... A-23
ARTICLE VIII
conditions to The Merger
Section 8.1 Conditions to the Obligations of Each Party................. A-24
8.2 Conditions to the Obligations of Merger Sub................. A-24
8.3 Condition to the Obligations of the Company................. A-25
</TABLE>
A-ii
<PAGE>
ARTICLE IX
Termination
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 9.1 Termination............................................... A-25
9.2 Effect of Termination..................................... A-26
9.3 Fees, Expenses and Other Payments......................... A-26
ARTICLE X
Miscellaneous
Section 10.1 Notices................................................... A-27
10.2 Non-Survival of Representations and Warranties............ A-28
10.3 Amendments; No Waivers.................................... A-28
10.4 Successors and Assigns.................................... A-28
10.5 Entire Agreement; Governing Law; No Third Party
Beneficiaries............................................ A-28
10.6 Counterparts; Effectiveness............................... A-29
10.7 Invalidity................................................ A-29
10.8 Titles.................................................... A-29
10.9 Enforcement of the Agreement.............................. A-29
10.10 Knowledge................................................. A-29
</TABLE>
A-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 26, 2000 (this "Agreement"),
by and between MIV Acquisition Corporation, a Delaware corporation ("Merger
Sub"), and MARK IV INDUSTRIES, INC., a Delaware corporation (the "Company").
A. This Agreement provides for the merger (the "Merger") of Merger Sub with
and into the Company, with the Company as the surviving corporation in such
merger, all in accordance with the provisions of this Agreement.
B. The respective Boards of Directors of Merger Sub and the Company have
approved this Agreement, and deemed it advisable and fair to and in the best
interests of their respective companies and stockholders to consummate the
Merger. The Company intends promptly to submit to its stockholders this
Agreement for their consideration of, and vote on, the approval and adoption
of this Agreement and the approval of the Merger upon the terms and conditions
set forth in this Agreement.
C. As a condition to Merger Sub entering into this Agreement,
contemporaneously with the execution and delivery of this Agreement certain
beneficial and record stockholders of the Company have entered into an
agreement (the "Stockholder Voting Agreement") providing for certain actions
relating to the shares of common stock, par value $0.01 per share, of the
Company (the "Company Common Stock"), together with the rights (the "Rights")
attached thereto pursuant to the Rights Agreement, dated as of May 17, 1995,
between the Company and American Stock Transfer & Trust Company (the "Rights
Agent") and the First Amendment to the Rights Agreement, dated as of May 19,
1999 (the "Rights Agreement") (each issued and outstanding share of Company
Common Stock and the Rights attached thereto are referred to herein as a
"Share" and collectively as the "Shares") owned by such stockholders.
D. The parties desire to make certain representations, warranties, covenants
and agreements in connection with the Merger and also to prescribe various
conditions to the Merger.
AGREEMENT
Now, Therefore, in consideration of the mutual covenants and agreements
contained herein and intending to be legally bound, the parties agree as
follows:
ARTICLE I
The Merger
Section 1.1 The Merger.
(a) Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined below), Merger Sub shall be merged upon the terms and subject
to the conditions hereof with and into the Company in accordance with the
General Corporation Law of the State of Delaware, as amended (the "DGCL"),
whereupon the separate existence of Merger Sub shall cease, and the Company
shall be the surviving corporation. The corporation surviving the Merger is
sometimes hereinafter referred to as the "Surviving Corporation".
(b) On the Closing Date, each of the Company and Merger Sub will cause a
certificate of merger (the "Certificate of Merger") to be executed and filed
with the Secretary of State of the State Delaware as provided in Section 251
or Section 253 of the DGCL and will make all other filings or recordings
required by the DGCL in connection with the Merger. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware or at such later time as is agreed
upon by the parties hereto and specified in the Certificate of Merger (the
"Effective Time").
(c) From and after the Effective Time, the Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights,
A-1
<PAGE>
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
(d) The closing of the Merger (the "Closing") shall take place (i) at the
offices of Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York,
10022, at 10:00 A.M., local time, on the first business day on which the last
of the conditions set forth in Article VIII hereof shall be satisfied or
waived in accordance with this Agreement, or (ii) at such other place, time
and date as Merger Sub and the Company shall agree. The date on which the
Closing occurs is herein referred to as the "Closing Date".
Section 1.2 Conversion or Cancellation of Shares.
At the Effective Time, by virtue of the Merger and without any action of the
part of Merger Sub or the Company or the holder of any shares of Company
Common Stock or any shares of common stock of Merger Sub:
(a) each Share outstanding immediately prior to the Effective Time shall
(except as otherwise provided in paragraph (b) of this Section 1.2 or as
provided in Section 1.4 hereof with respect to Shares as to which dissenters'
rights have been exercised) be converted into the right to receive from the
Surviving Corporation $23.00 per Share, in cash, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing the
Share as provided in Section 1.3;
(b) each Share owned by Merger Sub or the Company or any other direct or
indirect Subsidiary of Merger Sub or the Company immediately prior to the
Effective Time shall be canceled, and no payment shall be made with respect
thereto; and
(c) each share of common stock of Merger Sub outstanding immediately prior
to the Effective Time shall be converted into and become one share of common
stock of the Surviving Corporation (the "Surviving Corporation Common Stock")
with the same rights, powers and privileges as the shares so converted.
Section 1.3 Surrender and Payment.
(a) Prior to the Effective Time, Merger Sub shall appoint as agent (the
"Exchange Agent") a commercial bank or trust company, reasonably acceptable to
the Company and having at least $50,000,000 in capital, surplus and undivided
profits, for the purpose of exchanging certificates representing Shares for
the Merger Consideration which holders of such certificates are entitled to
receive pursuant to this Article I. Immediately prior to the Effective Time,
Merger Sub shall deposit in trust with the Exchange Agent cash in an aggregate
amount equal to the product of (i) the number of Shares outstanding
immediately prior to the Effective Time (other than the Shares owned by Merger
Sub or the Company and any direct or indirect subsidiary of Merger Sub or the
Company, and Shares as to which dissenters' rights have been exercised as of
the Effective Time) and (ii) the Merger Consideration (such amount being
hereinafter referred to as the "Payment Fund"). The Payment Fund shall be
invested by the Exchange Agent as directed by Merger Sub (so long as such
directions do not impair the rights of the holders of Shares) in direct
obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, and any net earnings with respect thereto
shall be paid to Merger Sub as and when requested by Merger Sub. The Exchange
Agent shall, pursuant to irrevocable instructions, make the payments referred
to in Section 1.3(b) out of the Payment Fund. The Payment Fund shall not be
used for any other purpose except as provided herein. Promptly after the
Effective Time, Merger Sub will send, or will cause the Exchange Agent to
send, to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding Shares, other
than holders of certificates which represent Shares canceled and retired
pursuant to Section 1.2(b) hereof, (i) a letter of transmittal for use in such
exchange (which shall specify that the delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery of the certificates
representing Shares to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of certificates for payment therefor (the "Exchange
Instructions").
A-2
<PAGE>
(b) Each holder of certificates representing Shares that have been converted
into a right to receive the Merger Consideration which holders of such
certificates are entitled to receive pursuant to this Article I, upon
surrender to the Exchange Agent of a certificate or certificates representing
such Shares, together with a properly completed and executed letter of
transmittal covering such Shares and any other documents reasonably required
by the Exchange Instructions, will promptly receive the Merger Consideration
payable in respect of such Shares as provided in this Article I, without any
interest thereon, less any required withholding of taxes, and the certificates
so surrendered shall forthwith be canceled. Until so surrendered, each such
certificate shall, and after the Effective Time, represent for all purposes
only the right to receive such Merger Consideration except as otherwise
provided herein or by applicable law.
(c) If any certificate has been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such certificate to be
lost, stolen or destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed certificate the Merger
Consideration.
(d) If any portion of the Merger Consideration is to be paid to a Person
other than the registered holder of the Shares represented by the certificate
or certificates surrendered in exchange therefor, it shall be a condition to
such payment that the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment shall pay to the Exchange Agent any transfer or
other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. The Exchange
Agent may make any tax withholdings required by law if not provided with the
appropriate documents. For purposes of this Agreement, "Person" means an
individual, a corporation, a partnership, a limited liability company, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof.
(e) After the Effective Time the stock transfer books of the Company shall
be closed and, thereafter, there shall be no further registration of transfers
of Shares. If, after the Effective Time, certificates representing Shares are
presented to the Surviving Corporation, they shall be canceled and exchanged
for the consideration provided for, and in accordance with the procedures set
forth, in this Article I.
(f) Any portion of the Payment Fund that remains unclaimed by the holders of
Shares 180 days after the Effective Time (including, without limitation, all
interest and other income received by the Exchange Agent in respect of all
funds made available to it) shall be returned to the Surviving Corporation,
upon demand, and any such holder of Shares who has not exchanged his or her
Shares for the Merger Consideration in accordance with this Section 1.3 prior
to that time shall thereafter look only to the Surviving Corporation for
payment of the Merger Consideration in respect of Shares (subject to abandoned
property, escheat and other similar laws) as general creditors thereof.
Notwithstanding the foregoing, the Surviving Corporation shall not be liable
to any holder of Shares for an amount paid to a public official pursuant to
applicable abandoned property, escheat or other similar laws.
(g) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 1.3(a) to pay for Shares, for which dissenters'
rights have been perfected shall be returned to Merger Sub, upon demand.
(h) All cash paid upon the surrender for exchange of certificates formerly
representing Shares in accordance with the terms of this Article I shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
Shares exchanged for cash theretofore represented by such certificates.
Section 1.4 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger and who has
delivered a written demand for appraisal of such Shares in accordance with
Section 262 of
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the DGCL (the "Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration as provided in Section 1.2 hereof, unless and
until such holder fails to perfect or effectively withdraws or otherwise loses
such holder's right to appraisal and payment under the DGCL. Such holder shall
be entitled to receive payment of the appraised value of such Shares in
accordance with the provisions of the DGCL, provided that such holder complies
with the provisions of Section 262 of the DGCL. If, after the Effective Time,
any such holder fails to perfect or effectively withdraws or otherwise loses
such holder's right to appraisal, such Dissenting Shares shall thereupon be
treated as if they had been converted as of the Effective Time into the right
to receive the Merger Consideration, without interest thereon. The Company
shall give Merger Sub prompt notice of any demands received by the Company for
appraisal of Shares, and, prior to the Effective Time, Merger Sub shall have
the right to participate in all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, the Company shall not, except with
the prior written consent of Merger Sub, make any payment with respect to, or
settle or offer to settle, any such demands.
Section 1.5 Stock Options.
(a) Except as otherwise agreed to in writing between the Company and the
holder of any outstanding options to purchase Company Common Stock
("Options"), and as consented to by Merger Sub, immediately prior to the
Effective Time, each outstanding Option granted under the Company's Incentive
Stock Option Plans whether or not then exercisable, shall be canceled by the
Company, and at the Effective Time, the former holder thereof shall receive
from the Company in consideration for such cancellation an amount in cash
equal to the product of (i) the number of Shares previously subject to such
Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share, if any, previously subject to such Option, reduced
by the amount of withholding or other taxes required by law to be withheld
(the "Net Value"); provided, however, that with respect to the individuals
listed on Schedule 1.5 (as such schedule may be amended by Merger Sub, with
the consent of any affected individual, from time to time prior to the
Effective Time), Options held by each such individual representing an
aggregate Net Value of not less than the amount set forth opposite such
person's name on Schedule 1.5 shall be retained and shall not be cancelled.
(b) Except as provided herein or as otherwise agreed by the parties, the
Company's Incentive Stock Option Plans and any provision under all other
plans, programs or arrangements providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any
Subsidiary shall terminate as of the Effective Time, and the Company shall
ensure that following the Effective Time, no current or former employee or
director shall have any Option to purchase Shares or any other equity interest
in the Company under any of the Company's Incentive Stock Option Plans.
(c) Prior to the Effective Time, the board of directors of the Company (the
"Board of Directors") (or, if appropriate, any committee administering the
Company's Incentive Stock Option Plans) shall adopt such resolutions or take
such actions as are necessary to carry out the terms of this Section 1.5.
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation. At the Effective Time, and without
any further action on the part of the Company or Merger Sub, the certificate
of incorporation of Merger Sub in effect immediately prior to the Effective
Time shall become the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law, except that the
name of the Surviving Corporation shall remain "Mark IV Industries, Inc."
Section 2.2 By-laws. At the Effective Time, and without any further action
on the part of the Company or Merger Sub, the by-laws of Merger Sub in effect
immediately prior to the Effective Time shall become the by-laws of the
Surviving Corporation until amended in accordance with applicable law.
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Section 2.3 Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified in accordance with
applicable law or their earlier death, resignation or removal, (a) the
directors of Merger Sub at the Effective Time shall become the directors of
the Surviving Corporation and (b) the officers of the Company at the Effective
Time shall become the officers of the Surviving Corporation.
ARTICLE III
Representations and Warranties of the Company
The Company hereby represents and warrants to Merger Sub that, except as set
forth in the disclosure schedule delivered to Merger Sub concurrently with
this Agreement, which shall make reference to the particular Section of this
Agreement to which such disclosure relates (the "Company Disclosure
Schedule"):
Section 3.1 Corporate Existence and Power.
(a) The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated,
and is duly qualified to do business and in good standing in each jurisdiction
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect (as defined below). The Company has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. The Company is not in default under or in
violation of any provision of its certificate of incorporation or by-laws. For
purposes of this Agreement, "Material Adverse Effect" or "Material Adverse
Change" means with respect to the Company any change, circumstance, event or
effect that, individually or in the aggregate with all other changes,
circumstances, events and effects, is materially adverse to (i) the business,
operations, liabilities, assets, results of operations or condition (financial
or otherwise) of the Company and its Subsidiaries (as defined herein), taken
as a whole, other than any change or effect arising out of general economic
conditions, or (ii) the right or ability of the Company or its Subsidiaries to
consummate any of the transactions contemplated by this Agreement.
(b) The Company has previously made available to Merger Sub true and
complete copies of the certificate of incorporation and by-laws of the
Company, as currently in effect.
Section 3.2 Corporate Authorization. The Company has all necessary corporate
power and authority to execute and deliver this Agreement and all agreements
and documents contemplated hereby. Subject only to the approval of this
Agreement and the transactions contemplated hereby by the majority of all the
votes entitled to be cast on the Merger by the holders of the Shares, the
consummation by the Company of the transactions contemplated hereby has been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly and validly executed and delivered by the Company
and constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting generally the
enforcement of creditors' rights and by the availability of equitable
remedies.
Section 3.3 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions (including the Merger) contemplated hereby require
no consent, waiver, agreement, approval, permit or authorization of, or
declaration, filing, notice or registration to or with, any governmental body,
agency, official or authority other than (a) the filing of the Certificate of
Merger in accordance with the DGCL; (b) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); (c) compliance with any applicable requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations promulgated thereunder; (d) state securities or "blue
sky" laws; (e) such filings, consents, approvals, orders, registrations and
declarations as may be required under the laws of any foreign country in which
the Company or any of its Subsidiaries conducts any business or owns any
assets; and (f) such other
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actions, filings, approvals and consents, the failure to make or obtain which
would not, either individually or in the aggregate, have a Material Adverse
Effect.
Section 3.4 Non-Contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not, assuming compliance with
the matters referred to in Section 3.3 hereof and subject to Section 7.2
hereof, (a) conflict with or violate any provision of the certificate of
incorporation or by-laws of the Company or any of its Material Subsidiaries,
(b) contravene or conflict with or constitute a violation of any provision of
any law, statute, rule, regulation, ordinance, code, judgment, injunction,
order or decree binding upon or applicable to the Company or any Subsidiary,
(c) result in a violation or breach of, or constitute (with or without notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or any loss of material benefits to the Company
or any Subsidiary) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of the Subsidiaries is a
party or any of their respective properties or assets may be bound or under
any permit relating to the operation of the business of the Company or any of
the Subsidiaries, or (d) result in the creation or imposition of any Lien (as
defined below) on any asset of the Company or any of the Subsidiaries, with
such exceptions with respect to the matters referred to in clauses (b) through
(d) as would not, either individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, "Lien" means, with respect to
any asset, any mortgage, lien, pledge, claim, security interest or encumbrance
of any kind in respect of such asset. For purposes of this Agreement, the term
"Material Subsidiary" means any Subsidiary of the Company that constitutes a
"significant subsidiary" (as such term is defined in Section 1.02(v) of
Regulation S-X of the SEC) of the Company; provided, however that for purposes
of this definition, all references in Section 1.02(v) to 10% shall be deemed
to be 2%.
Section 3.5 Capital Stock.
(a) The authorized capital stock of the Company consists of 10,000,000
shares of preferred stock, par value $.01 per share (none of which are issued
or outstanding), and 200,000,000 shares of Company Common Stock. As of May 26,
2000, there were (i) 44,361,427 shares of Company Common Stock outstanding,
(ii) an aggregate of 8,380,952 shares of Company Common Stock reserved for
issuance upon conversion of the Company's outstanding 4 3/4 % Convertible
Notes, due 2004 (the "4 3/4% Notes"), and (iii) an aggregate of 2,445,634
shares of Company Common Stock reserved for issuance upon exercise of
outstanding Options pursuant to the Incentive Stock Option Plans. The Company
Disclosure Schedule sets forth a list of the holders and the exercise prices
for all outstanding Options. Other than the 4 3/4 % Notes, the Company has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on
any matter.
(b) All outstanding Shares have been duly authorized and validly issued and
are fully paid, non-assessable and free of preemptive rights. Except as set
forth in paragraph (a) of this Section 3.5 and the Rights, no Stock Rights (as
defined below) are authorized, issued or outstanding with respect to the
capital stock of the Company. Except as set forth in paragraph (a) of this
Section 3.5 and except for changes since May 26, 2000 resulting from the
exercise of Stock Options outstanding on such date, there are (x) no shares of
capital stock or other voting securities of the Company, (y) no securities of
the Company or any Subsidiary of the Company convertible into or exchangeable
for shares of capital stock or voting securities of the Company, and (z) no
options or other rights to acquire from the Company or any Subsidiary of the
Company, and no obligation of the Company or any Subsidiary of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities (or cash or other property
in lieu of such stock or securities) of the Company (the items in clauses (x),
(y) and (z) being referred to collectively as the "Company Securities"). There
are no outstanding obligations of the Company or any Subsidiary of the Company
to repurchase, redeem or otherwise acquire any Company Securities. As of the
Effective Time, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of capital stock or other securities of the
Company or the Surviving Corporation except for any such obligations entered
into or approved by Merger Sub. Schedule 3.5(b) sets forth the total amount of
indebtedness for borrowed money and the total amount of cash on
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hand of the Company and its Subsidiaries on a consolidated basis as of April
30, 2000. For purposes of this Agreement, "Stock Rights" mean (i)
subscriptions, calls, warrants, options, rights and other arrangements or
commitments of any kind which obligate an entity to issue or dispose of any of
its capital stock or other equity securities, (ii) securities convertible into
or exercisable or exchangeable for shares of capital stock or other equity
securities, and (iii) stock appreciation rights, performance units and other
similar stock based rights whether they obligate the issuer thereof to issue
stock or other securities or to pay cash.
(c) Other than the Stockholder Voting Agreement, the Company is not a party
to any stockholder agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the purchase, sale or voting of
the capital stock of the Company, and to the knowledge of the Company, there
are no such agreements, trusts, proxies, other agreements or understandings
with respect to which the Company is not a party.
Sections 3.6 Subsidiaries.
(a) Schedule 3.6 lists each subsidiary of the Company and its jurisdiction
of organization (collectively, the "Subsidiaries"). Except as set forth on
Schedule 3.6, the Company owns, directly or indirectly, all of the outstanding
capital stock (or other ownership interests) of each of the Subsidiaries.
Except as shown on Schedule 3.6, the Company is the beneficial owner of all of
the outstanding shares of capital stock of each Subsidiary, free and clear of
any and all Liens. Except as shown on Schedule 3.6, the Company and its
Subsidiaries have no investments (whether through acquisition of an equity
interest or otherwise) in any other person, joint venture, business,
corporation, partnership, trust or other entity with a fair market value in
excess of $25.0 million. All of the shares of capital stock of each Material
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable, were issued and sold in accordance with federal and applicable
state securities laws and were not issued in violation of any preemptive or
other similar rights. Except as set forth on Schedule 3.6, there are no (i)
Stock Rights of any of the Subsidiaries or (ii) commitments or obligations of
any kind or character for (A) the issuance of capital stock or Stock Rights of
any of the Subsidiaries or (B) the repurchase, redemption or other acquisition
of any capital stock or Stock Rights of any of the Subsidiaries. There are no
stockholder agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the purchase, sale or voting of
the capital stock or Stock Rights of any of the Subsidiaries.
(b) Each of the Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction in which it
is incorporated, and is duly qualified to do business and in good standing in
each jurisdiction where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would either individually or in the aggregate, have a Material
Adverse Effect. Each of the Subsidiaries has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. The Company has made available to Merger Sub
true, correct and complete copies of each of its Material Subsidiaries'
certificate of incorporation and by-laws (in each case, as amended to date).
None of the Subsidiaries is in default under or in violation of any provision
of its certificate of incorporation or by-laws.
Sections 3.7 SEC Filings.
(a) Since March 1, 1997, the Company has timely filed all forms, reports,
statements, schedules and other documents (the "Company Filings") with the
Securities and Exchange Commission (the "SEC") required to be filed by the
Company pursuant to the federal securities laws. As of their respective dates,
the Company Filings (i) complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act, as applicable, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not false or misleading.
(b) The Company has previously delivered or made available to Merger Sub (i)
its annual report on Form 10-K for the fiscal year ended February 29, 2000,
(ii) its proxy statement relating to the meeting of the stockholders of the
Company held on July 14, 1999 and (iii) all of its other forms, reports,
statements, schedules
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and other documents filed with the SEC under the Exchange Act since March 1,
2000 (the items described in clauses (i), (ii) and (iii) are collectively
referred to as the "Recent Filings").
Section 3.8 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Recent Filings (the "Financial Statements") or
incorporated by reference, (i) comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto; (ii) have been prepared in accordance with
United States generally accepted accounting principles, consistently applied
throughout the periods covered thereby, and sound bookkeeping practices and
(iii) fairly present, in all material respects, in conformity with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved, the consolidated financial position of the
Company and its Subsidiaries as of the dates thereof, and their consolidated
results of operations, stockholders' equity and cash flows for the periods
then ended (except (x) in the case of unaudited interim statements, normal
year-end adjustments and the absence of notes and (y) as otherwise indicated
in such financial statements and the notes thereto).
Section 3.9 Undisclosed Liabilities. Except as set forth in the Financial
Statements, neither the Company nor any of its Subsidiaries has any liability
or obligation of any nature (whether accrued, contingent or otherwise) which
would be required to be reflected on a balance sheet or in the notes thereto,
prepared in accordance with United States generally accepted accounting
principles, except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since February 29, 2000 which
would not, individually or in the aggregate, have a Material Adverse Effect.
Section 3.10 Information in Disclosure Documents. The proxy statement (the
"Proxy Statement") to be mailed to the stockholders of the Company in
connection with the special meeting of the stockholders of the Company (the
"Special Meeting") in connection with the Merger and the transactions
contemplated hereby and the Schedule 13E-3, if filed, and any amendment
thereof or supplement thereto (excluding any information supplied in writing
by Merger Sub specifically for inclusion therein), when, in the case of the
Proxy Statement, mailed and at the time of the Special Meeting, and in the
case of the Schedule 13E-3, when and if filed, shall not contain any untrue
statement of a material fact, or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not false or misleading, and shall
comply, in all material respects as to form, with all requirements of the
Securities Act and the Exchange Act, as applicable.
Section 3.11 Absence of Certain Changes. Except as disclosed in the Recent
Filings, as contemplated by this Agreement or as set forth in Section 3.11 to
the Company Disclosure Schedule, since February 29, 2000, the Company and its
Subsidiaries have conducted their business in the ordinary course in
accordance with their customary practices, and there has not been:
(a) any event or occurrence which has had, individually or in the aggregate,
a Material Adverse Effect;
(b) except for quarterly dividends, any declaration, setting aside or
payment of any dividend or other distribution with respect to any shares of
capital stock of the Company, or any repurchase, redemption or other
acquisition by the Company or any of the Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests
in, the Company;
(c) any revaluation by the Company or any of its Subsidiaries of any of
their respective material assets, including, without limitation, write-downs
of inventory or write-offs of accounts receivable other than in the ordinary
course of business in accordance with their customary practices that have not
had a Material Adverse Effect;
(d) any incurrence, assumption or guarantee by the Company or any of the
Subsidiaries of any outstanding amount of indebtedness for borrowed money,
other than in the ordinary course of business in accordance with
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their customary practices, or any loan or advance by the Company or any of the
Subsidiaries to any other person, other than advances consistent with their
customary practices that are not material;
(e) any transaction or commitment made, or any contract or agreement entered
into, by the Company or any of the Material Subsidiaries relating to their
respective material assets or businesses (including the acquisition or
disposition of any assets) or any relinquishment by the Company or any of the
Material Subsidiaries of any material contract or other material right, other
than transactions and commitments in the ordinary course of business in
accordance with their customary practices;
(f) any damage, destruction or other casualty loss (whether or not covered
by insurance) that has resulted in a Material Adverse Effect;
(g) except as required by generally accepted accounting principles or
applicable law in any relevant jurisdiction applicable to the Company or its
Subsidiaries, any change in any method of accounting or accounting practice or
policy or application thereof by the Company or any of the Subsidiaries;
(h) any increase in (or commitment, oral or written, to increase) the rate
or terms (including, without limitation, any acceleration of the right to
receive payment) of compensation payable or to become payable by the Company
or any of its Subsidiaries to their directors, officers, employees or
consultants, except increases occurring in the ordinary course of business in
accordance with their customary practices which are not material;
(i) any increase in (or commitment, oral or written, to increase) the rate
or terms (including, without limitation, any acceleration of the right to
receive payment) any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with any director, officer, employee or
consultant of the Company or any of its Subsidiaries, except increases
occurring in the ordinary course of business in accordance with their
customary practices which are not material;
(j) any entry by the Company or any of its Material Subsidiaries into any
collective bargaining agreement, or any labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
Material Subsidiaries, or any lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to such employees; or
(k) any waiver of any material benefits of, or agreement to modify in any
material respect, any confidentiality, standstill, non-solicitation or similar
agreement to which the Company or any Material Subsidiary is a party.
Section 3.12 Litigation. Except as disclosed in the Recent Filings, there is
no claim, action, suit, investigation or proceeding pending or, to the
Company's knowledge, threatened against or relating to, the Company or any of
its Subsidiaries or any of their respective properties or assets before (or
which could properly be brought before) any court or arbitrator or any
governmental or regulatory body, agency or official which (i) could reasonably
be expected to, individually or in the aggregate, have a Material Adverse
Effect or (ii) in any manner challenges or seeks to prevent, enjoin, alter or
delay the Merger or any of the other transactions contemplated hereby. Neither
the Company nor any of its Subsidiaries is subject to any outstanding order,
writ, injunction, settlement agreement or decree which could (i) reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect
or (ii) prevent or delay the Merger or any of the other transactions
contemplated hereby.
Section 3.13 Taxes.
(a) (i) All Tax returns and reports (including information returns and
reports) and amended or substituted returns and reports required to be filed
with any Taxing Authority prior to the Effective Time by or on behalf of the
Company or any Material Subsidiary (collectively, the "Returns"), have been or
will be filed when due in accordance with all applicable laws (including any
extensions of such due date); (ii) as of the time of filing, the Returns
correctly reflected (and, as to any Returns not filed as of the date hereof,
will correctly reflect) the income
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(or other measure of Tax) and any other information required to be shown
therein; (iii) the Company and its Subsidiaries have timely paid, withheld or
made provision for all Taxes shown as due and payable on the Returns that have
been filed; (iv) the Company and its Subsidiaries have made or will have made
all required estimated Tax payments due on or before the Effective Time; (v)
the charges, accruals and reserves for deferred and contingent Taxes reflected
on the books of the Company and its Subsidiaries are adequate to cover such
Taxes; (vi) neither the Company nor any of its Subsidiaries is delinquent in
the payment of any Tax or has requested any extension of time within which to
file or send any Return, which Return has not since been filed or sent; (vii)
neither the Company nor any of its Subsidiaries has granted any extension or
waiver of the limitation period applicable to any Returns; (viii) to the
Company's knowledge, there are no pending or threatened claims against or with
respect to the Company or any of its Subsidiaries in respect of any Tax or
assessment; and (ix) there are no Liens for Taxes upon the assets of the
Company or any of its Subsidiaries, except Liens for current Taxes not yet
due, except in the cases of clauses (ii) through (ix) of this Section 3.13(a),
for such items as would not, individually or in the aggregate, have a Material
Adverse Effect. Capitalized terms used in this Section 3.13(a) and not defined
in this Section 3.13(a) or elsewhere in this Agreement have the meanings
assigned to them in Section 3.13(b) hereof.
(b) For the purposes of this Agreement, "Tax" (and, with correlative
meaning, "Taxes" and "Taxable") means (i) any net income, alternative or add-
on minimum tax, gross income, gross receipts, sales, use, ad valorem,
franchise, profits, license, withholding on amounts paid to or by the Company
or any of its Subsidiaries, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit tax, custom,
duty or other tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any governmental authority (a "Taxing Authority")
responsible for the imposition of any such tax (domestic or foreign), (ii)
liability of the Company or any of its Subsidiaries for the payment of any
amounts of the type described in clause (i) of this paragraph (b) as a result
of being a member of an affiliated, consolidated, combined or unitary group
for any Taxable period and (iii) liability of the Company or any of its
Subsidiaries for the payment of any amounts of the type described in clause
(i) or (ii) of this paragraph (b) as a result of any express or implied
obligation to indemnify any other Person.
Section 3.14 ERISA and Employment Matters.
(a) The Company Disclosure Schedule sets forth a list of all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and which are subject to
ERISA) (each, a "Pension Plan"), all material "employee welfare benefit plans"
(as defined in Section 3(1) of ERISA and which are subject to ERISA) (each, a
"Welfare Plan"), all material bonus, deferred compensation, incentive
compensation, excess benefit, stock, stock option, severance, termination pay,
change in control compensation, death benefit and fringe benefit plans, and
all material employment agreements maintained, sponsored, administered or
contributed to by the Company or any of its Material Subsidiaries or with
respect to which the Company or any of its Material Subsidiaries has any
material liability for the benefit of any current or former employee or other
beneficiary, except in each case for any plan or agreement providing for
benefits which are required pursuant to any federal, state, local or foreign
law or regulation, (collectively, the "Plans"). Except as set forth on the
Company Disclosure Schedule, no Plan is or at any time within the six calendar
years preceding the date of this Agreement has been a "multiemployer plan"
within the meaning of Section 3(37) of ERISA which is subject to Title IV of
ERISA. Within 10 business days following the date hereof, the Company
Disclosure Schedule shall set forth all material collective bargaining
agreements covering employees of the Company or any Material Subsidiary within
North America.
(b) With respect to each Plan (to the extent applicable), the Company has
provided or made available, or will provide or make available prior to the
consummation of the Offer, to Merger Sub, true and complete copies of (i) the
current Plan documents, including all amendments, (ii) each trust agreement
relating to such Plan, (iii) the most recent annual report (Form 5500 Series)
required to be filed with the IRS, (iv) the most recent summary plan
description, (v) the most recent actuarial report or valuation and (vi) the
most recent determination letter issued by the IRS.
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(c) All Plans have been administered in all material respects in compliance
with their terms and with the requirements of any applicable law, including,
but not limited to ERISA and the Code.
(d) No Pension Plan subject to Title IV of ERISA for which the Company or a
Material Subsidiary of the Company was the contributing sponsor was terminated
within six years prior to the date hereof, or was terminated more than six
years prior to the date hereof unless the Company has no material contingent
or actual liability with respect to such plan as of the date hereof (other
than in a standard termination pursuant to Section 4041 of ERISA). Neither the
Company nor any of its Material Subsidiaries has engaged in a transaction that
may give rise to liability under Sections 4064 or 4069 of ERISA. Neither the
Company nor any Material Subsidiary is subject to any lien imposed under
Section 412(n) of the Code or Section 302(f) of ERISA, whichever may apply,
with respect to any Pension Plan. Neither the Company nor any Material
Subsidiary has any material liability for unpaid contributions with respect to
any Pension Plan. Neither the Company nor any Material Subsidiary is required
to provide security to a Pension Plan which covers or has covered employees or
former employees of the Company under Section 401(a)(29) of the Code. Each
Pension Plan and each related trust agreement, annuity contract or other
funding instrument which covers or has covered employees or former employees
of the Company and intended to be qualified and tax-exempt under the
provisions of Code Sections 401(a) and 501(a) has received a determination
letter that it is so qualified and the Company has no knowledge of any facts
which would adversely affect its qualified status. The Company has paid all
premiums (and interest charges and penalties for late payment, if applicable)
due the PBGC with respect to each Pension Plan for each plan year thereof for
which such premiums are required. There has been no "reportable event" (as
defined in Section 4043(b) of ERISA and the PBGC regulations under such
Section) with respect to any Pension Plan as to which the reporting
requirement has not been waived. No filing has been made by the Company or any
Material Subsidiary with the PBGC, and no proceeding has been commenced by the
PBGC, to terminate any Pension Plan, except for any Plan terminated under the
standard termination provisions of Section 4041 of ERISA. No condition exists
and no event has occurred that could constitute grounds for the termination of
any Pension Plan by the PBGC. With respect to any "multiemployer plan" (as
defined in Section 3(37) or 4001(a)(1) of ERISA) to which the Company or any
Material Subsidiary contributes or with respect thereto has any liability and
which is subject to Title IV of ERISA, no event has occurred in connection
with which the Company or any Material Subsidiary could have any liability
that would have a Material Adverse Effect.
(e) Neither the Company nor any of its Material Subsidiaries, nor, to the
knowledge of the Company, any trustee or administrator of any Plan, has
engaged in a "prohibited transaction," as defined in Section 4975 of the Code,
or a transaction prohibited by Section 406 of ERISA that could give rise to
any material tax or penalty under Section 4975.
(f) At the end of its most recent plan year, each Plan to which Section 412
of the Code or Section 302 of ERISA is applicable satisfied the minimum
funding standards provided for in such Section and all required installments
(within the meaning of Section 412(m) of the Code or Section 302(e) of ERISA),
the due date for which is after the end of the most recent plan year but prior
to the date hereof, have been made.
(g) Each Welfare Plan which covers or has covered employees or former
employees of the Company and which is a "group health plan," as defined in
Section 607(1) of ERISA, has been operated in compliance in all material
respects with provisions of Part 6 of Title I, Subtitle B of ERISA and
Sections 162(k) and 4980B of the Code at all times.
(h) With respect to any plan covering employees or former employees of any
Subsidiary organized under the laws of or doing business in any country other
than the United States which if maintained or administered in or otherwise
subject to the laws of the United States would be an "employee pension benefit
plan" as defined in Section 3(2) of ERISA (except for any such plan providing
for benefits which are required pursuant to any foreign law or regulation), to
the knowledge of the Company, each such plan has been maintained in all
material respects in compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations
(including without limitation any special provisions relating to the tax
status of
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contributions to, earnings of or distributions from such plans where each such
plan was intended to have such tax status) and has been maintained in good
standing with applicable regulatory authorities.
(j) The representations and warranties set forth in Sections 4.12(d) and (f)
are also true with respect to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) maintained, sponsored, administered or contributed to
by any entity which is in the same "controlled group" (as defined in Section
4001(a)(14) of ERISA or Section 414(b), (c), (m) or (o) of the Code) as the
Company or any Material Subsidiary of the Company.
Section 3.15 Financial Advisers' Fees. Except for Bear, Stearns & Co. Inc.
(the "Financial Advisor"), whose fees will be paid by the Company, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission from the Company,
any Subsidiary of the Company, Merger Sub or any of their affiliates as a
result of consummation of the transactions contemplated by this Agreement. A
true and correct copy of the engagement letter between the Company and the
Financial Advisor has been provided to Merger Sub.
Section 3.16 Environmental Laws and Regulations.
(a) Except as disclosed in the Recent Filings, (i) the Company and each of
its Subsidiaries is in compliance with all applicable, federal, state and
local laws and regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) (collectively, "Environmental
Laws"), except for non-compliance that individually or in the aggregate would
not have a Material Adverse Effect, which compliance includes, but is not
limited to, the possession by the Company and its Subsidiaries of all material
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; and
(ii) neither the Company nor any of its Subsidiaries has received written
notice of, or, to the knowledge of the Company, is the subject of, any action,
cause of action, claim, investigation, demand or notice by any person or
entity alleging liability under or noncompliance with any Environmental Law
(an "Environmental Claim"); and (iii) to the knowledge of the Company, there
have been no releases of hazardous substances at any facility owned or
operated at any time by the Company or its current or former subsidiaries, the
response costs for which, individually or in the aggregate, would have a
Material Adverse Effect.
(b) Except as disclosed in the Recent Filings, there are no Environmental
Claims which individually or in the aggregate would have a Material Adverse
Effect that are pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or, to the knowledge of the
Company, against any person or entity whose liability for any Environmental
Claim the Company or any of its Subsidiaries has or may have retained or
assumed either contractually or by operation of law. To the knowledge of the
Company, no facts exists which reasonably would form the basis for any such
Environmental Claim.
(c) To the Company's knowledge, there are no currently effective consent
decrees, consent orders, judgements, judicial or administrative orders or
agreements (other than permits) with or Liens by, any governmental authority
relating to any Environmental Law which regulate, obligate or bind the Company
or its Subsidiaries.
Section 3.17 Intellectual Property.
(a) The Company or one of its Subsidiaries is the owner of or has sufficient
rights to use all items of intangible property, including, without limitation,
trademarks and service marks (whether or not registered or applied for
registration), trade names, brand names, patents, patent applications,
inventions (whether or not patented), trade secrets, know- how, domain names,
copyrights (whether or not registered or applied for registration), and all
other items of intangible property (collectively, "Intellectual Property"),
which individually or in the aggregate are material to the business of the
Company and its Subsidiaries as currently conducted, taken as a whole, free
and clear of any liens or encumbrances. The Company or one of its Subsidiaries
is the owner of,
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has sufficient rights to use, or is a licensee under a valid license for, all
Intellectual Property which is used in the business of the Company or its
Subsidiaries as currently conducted, except where the failure to own or have
sufficient rights to use or have a valid license to such Intellectual Property
would not have a Material Adverse Effect. Except as set forth on Schedule
3.17(a), there are no claims pending or, to the Company's knowledge,
threatened, that the Company or any of its Subsidiaries is infringing or in
violation of any Intellectual Property of any third party which is reasonably
likely to have a Material Adverse Effect. To the Company's knowledge, no third
party has interfered with, infringed upon, misappropriated, or violated in any
material respect any Intellectual Property rights of the Company which could
be expected to have a Material Adverse Effect. The Company has taken
reasonable security measures to protect the secrecy, confidentiality and value
of the Intellectual Property. All payments, including maintenance fees, and
all filings and registrations have been made with respect to the Intellectual
Property so as to maintain the Intellectual Property in full force and effect.
(b) Without limiting the generality of the foregoing, Mark IV Industries
Limited/Industries Mark IV Limitee, one of the Company's Subsidiaries, is the
licensee under that certain Patent License and Technology Transfer Agreement,
dated September 2, 1987, with EID Electronic Identification Systems, Ltd., as
licensor (the "IVHS License"), and has valid and exclusive rights to the
technology and intellectual property licensed to it thereunder. The Company
has delivered to Merger Sub a true, correct and complete copy of the IVHS
License, together with all amendments, modifications or supplements thereto to
date. All royalty and other payments due under the IVHS License have been
timely paid in accordance with the terms thereof. There are no claims pending
or, to the Company's knowledge, threatened involving the Company or any of its
Material Subsidiaries relating to the IVHS License or the technology and
intellectual property licensed thereunder. To the Company's knowledge, no
party to the IVHS License is in breach thereof.
Section 3.18 Compliance with Instruments and Laws. Neither the Company nor
any of its Subsidiaries is, or has received any written notice to the effect
that it is (or that the manner in which any of them conducts its business is),
in breach or violation of, or in default under, any term or provision of (i)
its certificate of incorporation and by-laws, (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which it is a party or by which it is or may be bound or to
which any of its properties or assets is or may be subject, the effect of
which breach or default, either individually or in the aggregate, would have a
Material Adverse Effect, or (iii) except as disclosed pursuant to any other
Section of this Article III, any law, statute, rule, regulation, ordinance,
code, judgment, injunction, order or decree binding upon or applicable to the
Company or any of its Subsidiaries or of any arbitrator, court, regulatory
body, administrative agency or any other governmental agency or body, domestic
or foreign, having jurisdiction over the Company or any of its Subsidiaries or
any of their respective properties or assets and the effect of which breach,
violation or default, either individually or in the aggregate, would have a
Material Adverse Effect.
Section 3.19 Rights Agreement. The Company has taken all actions necessary
to render the Rights issued pursuant to the terms of the Rights Agreement
inapplicable to the Merger, this Agreement and the other transactions
contemplated hereby.
Section 3.20 Title to Assets. The Company and its Subsidiaries own, or have
valid leasehold or license interests in, all assets used in the conduct of
their business except where the absence of such ownership, leasehold or
license interests would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 3.21 Contracts.
(a) The Company Disclosure Schedule sets forth a list of all contracts of
the Company and its Subsidiaries (i) that are material to the business,
operation, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, (ii) required to be disclosed
pursuant to Item 601 of Regulation S-K of the SEC, or (iii) that are non-
competition or similar contracts that restrict the geographic or operational
scope of the Company's or its Material Subsidiaries' business or the ability
of the Company or its Material Subsidiaries' to enter into new lines of
business (other than (A) exclusive distribution agreements providing for the
right of a person to sell the products of the Company and its Subsidiaries on
an exclusive basis within a
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defined territory, (B) sales agreements for private label products which
restrict the Company and its Subsidiaries from selling such products to other
persons and (C) other similar sales or distribution contracts entered into in
the ordinary course of business) (together, the "Significant Contracts").
Prior to the date hereof, the Company has made available to Merger Sub true
copies of each Significant Contract.
(b) Except as set forth in the Company Disclosure Schedule, with respect to
each Significant Contract, (i) there is no default by the Company or its
Subsidiaries or, to the knowledge of the Company, any other party to any
Significant Contract which, individually or in the aggregate, would constitute
a Material Adverse Effect, and (ii) such Significant Contract is a legal,
valid and binding obligation of the Company or its Subsidiaries party thereto,
is in full force and effect and is enforceable against the Company or its
Subsidiaries and, to the knowledge of the Company, against each other party
thereto in accordance with its terms, except as the enforceability thereof may
be limited by (A) applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or similar laws in effect which affect
the enforcement of creditors' rights generally or (B) general principles of
equity, whether considered in a proceeding at law or in equity.
Section 3.22 Customers and Suppliers. The Company Disclosure Schedule sets
forth a true and correct list of (a) the 10 largest customers of the Company
and its Subsidiaries, on a consolidated basis, in terms of sales during the
twelve months ended February 29, 2000, and (b) the 10 largest suppliers of the
Company and its Subsidiaries, on a consolidated basis, in terms of purchases
in the twelve months ended February 29, 2000.
Section 3.23 Prohibited Payments. To the knowledge of the Company, the
Company and its Subsidiaries have not, directly or indirectly, (a) made or
agreed to make any contribution, payment or gift to any government official,
employee or agent where either the contribution, payment or gift or the
purpose thereof was illegal under the laws of any federal, state, local or
foreign jurisdiction, (b) established or maintained any unrecorded fund or
asset for any purpose or made any false entries on the books and records of
the Company and its Subsidiaries for any reason, (c) made or agreed to make
any contribution, or reimbursed any political gift or contribution made by any
other person, to any candidate for federal, state, local or foreign public
office or (d) paid or delivered any fee, commission or any other sum of money
or item of property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country, which in
any manner relates to the assets, business or operations of the Company or its
Subsidiaries, which the Company or its Subsidiaries knows or has reason to
believe to have been illegal under any federal, state or local laws (or any
rules or regulations thereunder) of the United States or any other country
having jurisdiction.
Section 3.24 Opinion of Financial Advisor. The Company has received the
opinion of the Financial Advisor on the date of this Agreement, to the effect
that, as of such date, the consideration to be received in the Merger by the
Company's stockholders (other than the individuals listed on Schedule 1.5) is
fair to such holders from a financial point of view and a signed copy of which
opinion shall be delivered to Merger Sub upon receipt by the Company.
Section 3.25 Board Recommendation. The Board of Directors of the Company, at
a meeting duly called and held, has by unanimous vote of the directors present
at the meeting (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, taken together are fair to and in
the best interests of the stockholders of the Company and has taken all
actions necessary on the part of the Company to render the restrictions on
business combinations contained in Section 203 of the DGCL inapplicable to
this Agreement, the Merger and the Stockholder Voting Agreement and (ii)
resolved to recommend that the holders of the Shares approve this Agreement
and the transactions contemplated herein, including the Merger.
Section 3.26 Required Company Vote. The affirmative vote of a majority of
the outstanding Shares is the only vote of the holders of any class or series
of the Company's securities necessary to approve this Agreement, the Merger
and the other transactions contemplated hereby. There is no vote of the
holders of any class or series of the Company's securities necessary to
approve the Stockholder Voting Agreement.
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ARTICLE IV
Representations and Warranties of Merger Sub
Merger Sub hereby represents and warrants to the Company that, except as set
forth in the disclosure schedule delivered to the Company concurrently with
this Agreement, which shall state with particularity the representation and
warranty herein, including section reference, to which such disclosure relates
(the "Merger Sub Disclosure Schedule"):
Section 4.1 Corporate Existence and Power. Merger Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business and in good standing in
each jurisdiction where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would not, either individually or in the aggregate, have a material
adverse effect on Merger Sub. Merger Sub has all necessary corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. Since the date of its incorporation, Merger
Sub has not engaged in any activities other than in connection with or as
contemplated by this Agreement or in connection with arranging any financing
required to consummate the transactions contemplated hereby.
Section 4.2 Corporate Authorization. Merger Sub has all necessary corporate
power and authority to execute and deliver this Agreement and all agreements
and documents contemplated hereby. The consummation by Merger Sub of the
transactions contemplated hereby has been duly authorized by all requisite
corporate action on the part of Merger Sub. This Agreement has been duly and
validly executed and delivered by Merger Sub and constitutes a valid and
binding agreement of each of Merger Sub, enforceable against Merger Sub in
accordance with its terms, except to the extent such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting generally the enforcement of creditors' rights
and by the availability of equitable remedies.
Section 4.3 Governmental Authorization. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby require no consent, waiver, agreement,
approval, permit or authorization of, or declaration, filing, notice or
registration to or with, any federal, state, local or foreign governmental or
regulatory body, agency, official or authority other than (a) the filing of
the Certificate of Merger in accordance with the DGCL, (b) compliance with any
applicable requirements of the HSR Act, (c) compliance with any applicable
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, (d) state securities or "blue sky" laws, (e) such filings,
registrations and declarations as may be required under the laws of any
foreign country in which the Company or any of its Subsidiaries conducts any
business or owns any assets, and (f) such other actions, filings, approvals
and consents, the failure to make or obtain which would not reasonably be
expected to prevent the consummation of the transactions contemplated hereby,
including the Merger.
Section 4.4 Non-Contravention. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not (a) conflict with or
violate any provision of the charter or by-laws of Merger Sub, (b) contravene
or conflict with any provision of law, statute, rule, regulation, ordinance,
code, judgment, injunction, order or decree binding upon or applicable to
Merger Sub, or (c) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation or acceleration or any loss of material benefits
to Merger Sub) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Merger Sub is a party or by which any of its
properties or assets may be bound, with such exceptions with respect to the
matters refer to in clause (c) as would not reasonably be expected to prevent
the consummation of the transactions contemplated hereby, including the
Merger.
Section 4.5 Information in Disclosure Documents. The information supplied by
Merger Sub for inclusion in the Proxy Statement and the Schedule 13E-3, if
filed, and any amendment thereof or supplement
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thereto, when, in the case of the Proxy Statement, mailed and at the time of
the Special Meeting, and in the case of the Schedule 13E-3, when and if filed,
shall not contain any untrue statement of a material fact, or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not false or misleading. Notwithstanding the foregoing, Merger Sub makes no
representation or warranty with respect to any information supplied by the
Company or any of its representatives which is contained in or incorporated by
reference in any of the foregoing documents.
Section 4.6 Financial Advisers' Fees. Unless the Merger is consummated, the
Company will not be responsible for the payment of any fees or commissions of
any investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act an behalf of Merger Sub who might be
entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement.
Section 4.7 Financing. Merger Sub is a newly formed corporation which has
conducted no business other than in connection with the transactions
contemplated by this Agreement. Merger Sub has executed a bank commitment
letter (the "Commitment Letter") and letters with respect to equity and other
financing (the "Equity Letters," and together with the Commitment Letter, the
"Financing Letters"). Assuming full funding under the Commitment Letter and
the Equity Letters, Merger Sub would have sufficient funds to consummate the
transactions contemplated hereby, including without limitation, the payment of
the Merger Consideration and the obligations of the debt offerings described
in Section 5.12 of this Agreement, to the extent consummated, and the payment
of the related fees and expenses (the "Financing"). Merger Sub has delivered
true, correct and complete copies of the Commitment Letter and the Equity
Letters to the Company. Each of the Commitment Letter and the Equity Letters
is in full force and effect as of the date hereof. Merger Sub is not, as of
the date hereof, aware of any fact, occurrence or condition that would cause
the Commitment Letter or the Equity Letters to be terminated or ineffective or
any of the conditions contained therein not to be met.
ARTICLE V
Covenants of The Company
Section 5.1 Conduct of Business. From the date hereof until the Closing,
except as contemplated by this Agreement, as disclosed in Section 5.1 to the
Disclosure Schedule, or except as consented to in writing by Merger Sub, the
Company and the Subsidiaries shall conduct their business in the ordinary
course consistent with past practice and shall use their reasonable best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
key employees. Without limiting the generality of the foregoing, from the date
hereof until the Closing:
(a) the Company will not declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
with respect to any shares of capital stock of the Company or redeem, purchase
or otherwise acquire any shares of capital stock of the Company or any
Subsidiary of the Company, (other than regular quarterly dividends not in
excess of $.0625 per share of Company Common Stock made in the ordinary course
consistent with past practice or dividends from any Subsidiary of the Company
to the Company or any other Subsidiary of the Company);
(b) the Company will not, and will not permit any of its Subsidiaries to,
issue, deliver, sell, pledge or otherwise encumber any shares of capital
stock, any security convertible into or exchangeable for capital stock or any
option, warrant or other right to acquire capital stock (other than the
issuance of Shares pursuant to outstanding Options and grants of restricted
stock outstanding on the date hereof);
(c) neither the Company nor any of its Subsidiaries will adopt or propose
any change in its certificate of incorporation or by-laws;
(d) the Company will not, and will not permit any of its Subsidiaries to,
authorize, propose or announce an intention to authorize or propose, or enter
into an agreement with respect to, any merger, consolidation or business
combination (other than the Merger), or any acquisition or disposition of
assets or securities;
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(e) the Company will not, and will not permit any of its Subsidiaries to,
split, combine, subdivide or reclassify any shares of its capital stock;
(f) the Company will not, and will not permit any of its Subsidiaries to,
sell, lease, license or otherwise dispose of any material assets or property,
except pursuant to existing contracts or commitments or in the ordinary course
business consistent with past practice;
(g) the Company will not, and will not permit any of its Subsidiaries to,
(i) incur, create, assume or otherwise become liable for borrowed money or
assume, guarantee, endorse or otherwise become responsible or liable for the
obligations of any other individual, corporation or other entity or (ii) make
any loans or advances to any other person or entity, except in the case of
clause (i) for borrowings under existing credit facilities in the ordinary
course of business and, except in the case of clause (ii) for advances to
employees consistent with past practice which are not material;
(h) the Company will not, and will not permit any of its Subsidiaries to,
create, assume or incur any Lien on any material asset of the Company or any
Subsidiary of the Company;
(i) except as required by law, the Company will not, and will not permit any
of its Subsidiaries to (i) grant or make any change in control, severance or
termination payments to any officer or employee of the Company or any of its
Subsidiaries, except pursuant to plans or agreements in existence on the date
hereof and set forth on Schedule 5.1(i) or to be adopted after the date hereof
and described with reasonable particularity on Schedule 5.1(i), (ii) enter
into any option, employment, deferred compensation or other similar agreement
or any change of control or severance agreement (or enter into any amendment
to any such existing agreement) with any officer, director or employee of the
Company or any of its Subsidiaries, (iii) accelerate, amend or change the
period of exercisability of options or restricted stock granted to any
officer, director or employee of the Company or any of its Subsidiaries or,
except as contemplated by Section 1.5, authorize cash payments in exchange for
any options granted to any such persons, (iv) increase, accelerate the timing
of, or otherwise amend the benefits payable under any existing severance or
termination pay policies or agreements, (v) enter into any collective
bargaining agreement except in the ordinary course of business, (vi) amend the
terms of the Plans or adopt any new employee benefit plans other than plans to
be adopted after the date hereof described with reasonable particularity on
Schedule 5.1(i), or (vii) pay, or provide for, any increase in compensation,
bonus, or other benefits payable to employees of the Company or any of its
Subsidiaries, except for (A) normal merit and cost of living increases not
material in amount, and (B) except as required by the terms of contracts or
agreements or collective bargaining obligations in effect on the date hereof
or as necessary to comply with any applicable law;
(j) the Company will not, and will not permit any of its Subsidiaries to,
take or agree or commit to take any action that would make any representation
and warranty of the Company contained herein inaccurate in any respect at, or
as of any time prior to, the Effective Time;
(k) the Company will not, and will not permit any of its Subsidiaries to,
make or agree to make any material capital expenditure except in accordance
with the Company's capital expenditure plan for the fiscal year 2000, a true,
correct and complete copy of which has been delivered to Merger Sub;
(l) the Company will not, and will not permit any of its Subsidiaries to,
change any accounting principles or practices except as required by any change
in applicable accounting standards;
(m) except as required by law, the Company will not, and will not permit any
of its Subsidiaries to, pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), material to the Company and its Subsidiaries, taken
as a whole, other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in the Financial
Statements (or the notes thereto) or incurred thereafter in the ordinary
course of business consistent with past practice, or waive any material
benefits of, or agree to modify in any material respect, any confidentiality,
standstill, non-solicitation or similar agreement to which the Company or any
Subsidiary is a party; and
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(n) the Company will not, and will not permit any of its Subsidiaries to,
authorize, recommend, propose or announce an intention to do any of the
foregoing actions proscribed by this Section 6.1, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing actions.
Section 5.2 Stockholder Meeting; Proxy Material.
(a) The Company shall cause the Special Meeting of its stockholders to be
duly called and held as soon as reasonably practicable for the purpose of
voting on the approval and adoption of this Agreement and the Merger. The
directors of the Company shall recommend approval and adoption of this
Agreement and the Merger by the Company's stockholders, shall not withdraw or
modify such recommendation and shall take all lawful action to solicit such
approval; provided that the Board of Directors of the Company may fail to make
or may withdraw or modify such recommendation, but only to the extent that the
Board of Directors of the Company shall have concluded in good faith after
consultation with outside counsel that such action is required to prevent the
Board of Directors of the Company from breaching its fiduciary duties to the
stockholders of the Company under applicable law. In connection with any
Company Stockholder Meeting, the Company will (a) as soon as practicable
prepare and file with the SEC, use its reasonable best efforts to have cleared
by the SEC and thereafter mail to its stockholders as promptly as practicable
the Proxy Statement and all other proxy materials for such meeting, (b) use
its reasonable best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated hereby, and
(c) otherwise comply in all material respects with the requirements of the
Exchange Act and the Securities Act, as applicable, and the rules and
regulations of the SEC thereunder applicable to the Proxy Statement and the
solicitation of proxies for the Special Meeting (including any requirement to
amend or supplement the Proxy Statement). The Proxy Statement shall include
the recommendation of the Company's Board of Directors in favor of the Merger,
unless otherwise required by the fiduciary duties of the directors under
applicable law as contemplated hereby.
(b) The Proxy Statement shall not be filed and no amendment or supplement to
the Proxy Statement shall be made by the Company without reasonable advance
consultation with Merger Sub and its counsel. The Company shall advise Merger
Sub of any request by the SEC for amendment of the Proxy Statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
Section 5.3 Schedule 13E-3. If, in the opinion of the Company's counsel
after consultation with counsel to Merger Sub, the filing with the SEC of a
Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") in connection
with the Merger is required by Rule 13e-3 under the Exchange Act, the Company
shall file the Schedule 13E-3 with the SEC at the time of filing of the Proxy
Statement. If the Schedule 13E-3 is filed, at the time of any amendment to the
Proxy Statement, the parties shall cause to be filed with the SEC an
appropriate amendment to the Schedule 13E-3.
Section 5.4 Acquisition Proposals.
(a) The Company agrees that neither it nor any of its Subsidiaries nor any
of the officers and directors of it or its Subsidiaries shall, and that it
shall direct and use its best efforts to cause its and its Subsidiaries'
employees, agents and representatives (including any investment banker,
attorney or accountant retained by it or any of its Subsidiaries) not to,
directly or indirectly, initiate, solicit, encourage or knowingly facilitate
(including by way of furnishing information) any inquiries or the making of
any proposal or offer with respect to (i) a merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving, or any purchase or sale of all
or any significant portion of the assets or more than 15% of the common stock
of, it or any of its Subsidiaries, or (ii) any tender offer (including a self
tender offer) or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of capital stock of it or any of
its Subsidiaries (any such proposal or offer (other than a proposal or offer
made by Merger Sub or an affiliate thereof) being hereinafter referred to as
an "Acquisition Proposal"). The Company further agrees that neither it nor any
of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, endorse an Acquisition Proposal,
grant any waiver or release under
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any standstill or similar agreement with respect to any capital stock of the
Company or any of its Subsidiaries, have any discussion with or provide any
confidential information or data to any Person relating to an Acquisition
Proposal, or engage in any negotiations concerning an Acquisition Proposal, or
knowingly facilitate any effort or attempt to make or implement an Acquisition
Proposal or accept an Acquisition Proposal. Notwithstanding the foregoing, the
Company or its Board of Directors shall be permitted to (A) to the extent
applicable, comply with Rule l4d-9 and Rule 14e-2(a) promulgated under the
Exchange Act with regard to an Acquisition Proposal, (B) in response to an
unsolicited bona fide written Acquisition Proposal by any Person, recommend
approval of such an unsolicited bona fide written Acquisition Proposal to the
stockholders of the Company or withdraw or modify in any adverse manner its
recommendation referred to in Section 3.26 hereof or (C) engage in any
discussions or negotiations with, or provide (subject to an appropriate
confidentiality agreement which shall not be less favorable to the Company in
any material respect than the Confidentiality Agreement (as defined herein)
and a copy of which shall be provided to Merger Sub) any information to, any
Person in response to an unsolicited bona fide written Acquisition Proposal by
any such Person, if and only to the extent that, in any such case as is
referred to in clause (B) or (C), (x) the Board of Directors of the Company
shall have concluded in good faith after consultation with outside counsel
that such action is required to prevent the Board of Directors of the Company
from breaching its fiduciary duties to the stockholders of the Company under
applicable law and (y) the Board of Directors of the Company shall have
concluded in good faith after consultation with its legal and financial
advisors that such Acquisition Proposal (1) would, if accepted, result in a
transaction that is more favorable to the Company's stockholders (in their
capacities as stockholders), from a financial point of view, than the
transactions contemplated by this Agreement and (2) is reasonably likely to be
completed, taking into account all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal (an Acquisition
Proposal meeting the requirements of clauses (1) and (2) being referred to
herein as a "Superior Proposal," provided that for purposes of this definition
the term Acquisition Proposal shall have the meaning assigned to such term in
Section 5.4 except that the reference to "15%" in the definition of
"Acquisition Proposal" shall each be deemed to be a reference to "50%");
provided, however, that the Board of Directors shall not take any of the
foregoing actions referred to in clauses (A) through (C) until after giving 24
hours written notice to Merger Sub with respect to its intent to take any such
action and informing Merger Sub of the terms and conditions of such proposal
and the person making it. The Company agrees that it will immediately cease
and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. The Company agrees that it will take the necessary steps
to promptly inform the individuals or entities referred to in the first
sentence of this Section 5.4 of the obligations undertaken in this Section
5.4.
(b) The Company and its Subsidiaries shall (i) promptly notify Merger Sub of
the terms of any written proposal which it may receive in respect of any such
Acquisition Proposal, including, without limitation, the identity of the
prospective purchaser or soliciting party and (ii) provide Merger Sub with a
copy of any such Acquisition Proposal, if written. The Company shall keep
Merger Sub reasonably informed of the status of any such Acquisition Proposal.
Section 5.5 Access to Information. From the date hereof until the Effective
Time, upon reasonable notice the Company will (and will cause each of its
Subsidiaries to) give Merger Sub, its counsel, financial advisors, auditors
and other authorized representatives and the financial institutions (and their
counsel and representatives) providing or proposed to provide financing in
connection with this Agreement and the transactions contemplated hereby full
access during normal business hours to its offices, properties, books and
records, will allow them to inspect and make copies of contracts, books and
records and all other documents and information that they may reasonably
request related to the operations and business of the Company and its
Subsidiaries, will (and will cause each of its Subsidiaries to) furnish to
them such financial and operating data and other information as they may
reasonably request, will allow them to meet with designated personnel of the
Company or its Subsidiaries and/or their representatives, and will instruct
its employees, counsel, financial advisors and accountants to cooperate with
them in their investigation of the business of the Company and its
Subsidiaries; provided, however, that no investigation pursuant to this
Section 5.5 shall affect or be deemed to modify any representation or warranty
given by the Company to Merger Sub hereunder. Unless otherwise
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required by law, Merger Sub and its counsel, financial advisors, auditors and
other authorized representatives and the financial institutions (and their
counsel and representatives) shall hold any such information which is
nonpublic in confidence in accordance with the provisions of the
Confidentiality Agreement. The Company shall promptly deliver to Merger Sub
correct and complete copies of any report, statement or schedule filed with
the SEC subsequent to the date of this Agreement.
Section 5.6 Tax Elections. With respect to Taxes, without the prior consent
of Merger Sub (which consent shall not be unreasonably withheld or delayed),
neither the Company nor any of its Subsidiaries shall make, revoke or change
any election, change an annual accounting period, adopt or change any
accounting method, file any amended Return, enter into any closing agreement,
settle a Tax claim or assessment relating to the Company or its Subsidiaries,
surrender any right to claim a refund of Taxes, consent to any extension or
waiver of the limitation period applicable to any Tax claim or assessment
relating to the Company or its Subsidiaries, or take any other action or omit
to take any action, if any such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action or omission could
have the effect of materially increasing the consolidated Tax liability of the
Company. Upon the commencement or scheduling of any Tax audit, the assessment
of any Tax, the issuance of any notice of Tax due or any bill for collection
of any Tax or the commencement or scheduling of any other administrative or
judicial proceeding with respect to the determination of any Tax, to the
extent such matter could have the effect of materially increasing the Tax
liability of the Company, the Company shall provide prompt notice to Merger
Sub of such matter setting forth information (to the extent known) describing
any asserted Tax liability in reasonable detail and including copies of any
notice or other documentation received from the applicable Tax authority with
respect to such matter.
Section 5.7 Benefit Plans. Except as disclosed in Section 5.7 to the
Disclosure Schedule or as otherwise contemplated by this Agreement, during the
period from the date of this Agreement and continuing until the Effective
Time, the Company agrees as to itself and its Subsidiaries that it will not,
without the prior written consent of Merger Sub enter into, adopt, amend
(except as may be required by law) or terminate any of the Plans or any other
employee benefit plan or any agreement, arrangement, plan or policy between
the Company or any of its Subsidiaries and one or more of their respective
current or former employees, directors or officers.
Section 5.8 Company Cooperation. The Company agrees to provide, and will
cause its Subsidiaries and its and their respective officers, employees and
advisors to provide, all cooperation reasonably necessary in connection with
the arrangement of any financing to be consummated contemporaneous with the
Closing in respect of the transactions contemplated by this Agreement,
including, without limitation, (i) participation in meetings, due diligence
sessions and road shows and (ii) reasonable assistance in connection with
Merger Sub's or its banks', underwriters', placement agents' or other
representatives' preparation of offering memoranda, private placement
memoranda, prospectuses and similar documents. In addition, in conjunction
with the obtaining of any such financing, the Company agrees, at the request
of Merger Sub, to call for prepayment or redemption, or to prepay, redeem,
defease and/or renegotiate, as the case may be, any then existing indebtedness
of the Company; provided that any such prepayment or redemption shall be
conditioned upon and shall not actually be required to be made until at or
after the Effective Time.
Section 5.9 Notice of Certain Events. The Company shall promptly notify
Merger Sub of:
(a) any written notice or other written communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;
(b) any written notice or other written communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(c) any claim, action, suit, investigation or proceeding commenced or, to
its knowledge threatened against, relating to or involving or otherwise
affecting the Company or any Subsidiary which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Section
3.12 or which relate to the consummation of the transactions contemplated by
this Agreement;
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(d) any Material Adverse Change; and
(e) the breach by the Company of any representation or warranty contained
herein that is qualified as to materiality, or a material breach of any
representation or warranty contained herein that is not so qualified.
Section 5.10 Resignation of Directors. At the Closing, the Company shall
deliver to Merger Sub evidence satisfactory to Merger Sub of the resignation
of all directors of the Company, effective at the Effective Time.
Section 5.11 Financial Statements, Etc. Within 30 days after the end of each
calendar month, the Company and its Subsidiaries shall provide Merger Sub with
the interim consolidated financial statements relating to such calendar month.
Such interim financial statements shall (a) be in accordance with the books
and records of the Company and its Subsidiaries, (b) be prepared in accordance
with United States generally accepted accounting principles consistently
applied throughout the periods covered thereby (except for the absence of
footnotes) and present fairly and accurately in accordance with United States
generally accepted accounting principles the assets, liabilities (including,
without limitation, all reserves) and financial condition of the Company and
its Subsidiaries as of the respective dates thereof and the results of
operations, stockholders' equity and cash flows for the periods covered
thereby.
Section 5.12 Debt Offers.
(a) The Company shall, within 20 days of receiving any request by Merger Sub
to do so (but in no event earlier than 45 calendar days prior to the date
fixed by the Company for the holding of the Special Meeting of its
stockholders contemplated by Section 5.2 hereof), commence offers to purchase,
accompanied by related solicitations of consent regarding covenant amendments,
all of the Company's outstanding 4 3/4% Notes and the Company's outstanding 7
3/4% Senior Subordinated Notes, due 2006 (the "7 3/4% Notes" and collectively
with the 4 3/4% Notes, the "Notes") on such customary terms and conditions as
are acceptable to Merger Sub, in the exercise of its judgment in making debt
tender offers on commercially reasonable terms to the holders of the Notes
(the "Debt Offers"). The Company shall waive any of the conditions to the Debt
Offers and make any other changes in the terms and conditions of the Debt
Offers as may be requested by Merger Sub, and the Company shall not, without
Merger Sub's prior consent, waive any material condition to the Debt Offers or
make any other material changes in the terms and conditions of the Debt
Offers. Notwithstanding the immediately preceding sentence, Merger Sub shall
not request that the Company make any change to the terms and conditions of
the Debt Offers that (i) decreases the price per Senior Note payable in the
Debt Offers or imposes conditions to the Debt Offers or (ii) eliminates,
changes, or waives the condition to the Debt Offers that the Closing shall
have occurred. The Company covenants and agrees that, subject to the terms and
conditions in the Debt Offers, it will accept for payment and pay for the
Notes as soon as reasonably practicable after such conditions to the Debt
Offers are satisfied and it is permitted to do so under applicable law,
provided that the Company shall use reasonable best efforts to coordinate the
timing of any such purchases with Merger Sub in order to obtain the greatest
participation in the Debt Offers.
(b) Promptly following the date of this Agreement, the Company shall
prepare, subject to advice and comments of Merger Sub, an offer to purchase
for each of the issues of Notes and forms of the related letters of
transmittal and summary advertisement, as well as all other information and
exhibits (collectively, the "Offer Documents"). All mailings to the holders of
Notes in connection with the Debt Offers shall be subject to the prior review,
comment and approval of Merger Sub. The Company will use its commercially
reasonable efforts to cause the Offer Documents to be mailed to the holders of
the Notes as promptly as practicable following receipt of the request from
Merger Sub under paragraph (a) above to do so. The Company agrees promptly to
correct any information in the Offer Documents that shall be or have become
false or misleading in any material respect.
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ARTICLE VI
Covenants of Merger Sub
Section 6.1 Indemnification.
(a) All rights to indemnification and permitted limitations of liability for
monetary damages existing in favor of the present or former directors and
officers of the Company or any of its Subsidiaries as provided in the
Company's certificate of incorporation or by-laws or pursuant to any
agreements previously disclosed by the Company to Merger Sub in writing, or
the certificate of incorporation, by-laws or similar constitutive documents of
any Subsidiary of the Company as in effect as of the date hereof, with respect
to matters occurring prior to the Effective Time (including without limitation
the transactions contemplated by this Agreement) shall survive the Merger and
shall continue in full force and effect (to the extent consistent with
applicable law) for a period of not less than six years after the Effective
Time. For not less than six years after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the present and former
directors and officers of the Company and its Subsidiaries against all losses,
claims, damages or liabilities arising out of actions or omissions occurring
at or prior to the Effective Time (including without limitation the
transactions contemplated by this Agreement) to the full extent provided by
the Company's certificate of incorporation or by-laws as in effect on the date
hereof. In the event any claim or claims (a "Claim or Claims") are asserted or
made pursuant to the preceding sentence within such six-year period, all
rights to indemnification in respect of any such Claim or Claims shall
continue until final disposition of any and all such Claim or Claims. Without
limiting the foregoing, the Surviving Corporation, to the extent permitted by
applicable law, will periodically advance reasonable expenses as incurred with
respect to the foregoing to the fullest extent permitted under applicable law;
provided, however, that the person to whom the expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification.
(b) Merger Sub shall cause to be maintained in effect for not less than six
years from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by the Company, or to the extent such
coverage is not obtainable at the per annum cost presently in effect, Merger
Sub shall purchase such coverage (on terms with respect to coverage and amount
no less favorable to such officers and directors than those of such policies
in effect on the date hereof) as may be obtained having a cost per annum not
to exceed 200% of the current annual premium paid by the Company with respect
to such current policies (and provided, further, that Merger Sub may
substitute therefor policies of at least the same coverage containing terms
and conditions which are no less advantageous to such officers and directors
so long as no lapse in coverage occurs as a result of such substitution) with
respect to all matters, including the transactions contemplated hereby,
occurring prior to, and including, the Effective Time; provided, however,
that, if any Claim or Claims are asserted or made within such six year period,
such insurance shall be continued in respect of such Claim or Claims until
final disposition of such Claim or Claims.
(c) In the event that the Surviving Corporation or its successors or assigns
(i) consolidates with or merges into another person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties or assets to any
person, then in each such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation shall assume the
obligations set forth in this Section 6.1.
(d) This Section 6.1 is intended to be for the benefit of, and shall be
enforceable, by the indemnified parties, their heirs and personal
representatives, and shall be binding on the Surviving Corporation and its
successors and assigns.
Section 6.2 Employee Benefits. For a period of two years following the
Effective Time, Merger Sub shall cause the Surviving Corporation to maintain
employee benefit plans (except stock option, restricted stock, stock purchase
or other equity based programs, plans and arrangements and change in control
and severance plans) that are no less favorable in the aggregate than the
Plans (except stock option, restricted stock, stock
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purchase or other equity based programs, plans and arrangements and change in
control and severance plans) in effect on the date of this Agreement.
Section 6.3 Matters Relating to the Bank Commitment Letter. In connection
with the negotiation of the definitive financing agreements contemplated by
the Commitment Letter regarding the Financing (the "Definitive Financing
Agreements") (i) Merger Sub shall keep the Company reasonably informed of the
ongoing status of any such negotiations, and (ii) Merger Sub shall conduct any
such negotiations in good faith. Merger Sub shall use its commercially
reasonable efforts to effect the closing of the Financing on the terms set
forth in the Commitment Letter as soon as reasonably practicable and in any
event on or before the expiration of the Effective Date. Merger Sub shall not
materially amend in a manner adverse to the Company or voluntarily terminate
the Commitment Letter or the Equity Letters without the Company's prior
written consent.
ARTICLE VII
Covenants of Merger Sub and The Company
Section 7.1 Reasonable Best Efforts. Subject to terms and conditions of this
Agreement, each party will use reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary proper
or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement.
Section 7.2 Certain Filings.
(a) Subject to the terms and conditions of this Agreement (including but not
limited to Section 7.2(b) below), the Company and Merger Sub shall consult and
cooperate with one another (i) in connection with the preparation of the Proxy
Statement and, if applicable, the Schedule 13E-3, (ii) in determining whether
any action by or in respect of, or filing with, any governmental body, agency
or official, or authority is required or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (iii) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Proxy Statement and, if applicable, the
Schedule 13E-3 and seeking timely to obtain any such actions, consents,
approvals or waivers.
(b) Each of the Company and Merger Sub will make as promptly as practicable
all filings necessary under the HSR Act and other applicable federal, state,
local and foreign antitrust, competition and other similar laws (collectively,
the "Antitrust Laws") in order to obtain any required regulatory approvals,
clearance or expirations of waiting periods in connection with the
transactions contemplated by this Agreement. Subject to the limitations
contained in the last sentence of this Section 7.2(b), each of the Company and
Merger Sub shall use its reasonable best efforts to resolve such objections,
if any, as any governmental or regulatory authorities with jurisdiction over
the enforcement of any Antitrust Laws may assert with respect to the Merger
under any such Antitrust Laws. The parties shall consult with each other when
dealing with such authorities and before submitting any application or other
written communication to any such authority.
Section 7.3 Public Announcements. Merger Sub and the Company will consult
with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with any national securities exchange or any organization providing
stock quotations, will not issue any such press release or make any such
public statement prior to such consultation. The initial press release
announcing the execution of this Agreement shall be made jointly by Merger Sub
and the Company promptly after the execution hereof.
Section 7.4 Further Assurances. Each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or contemplated hereby,
including, without limitation, the Merger. At and after the Effective Time,
the officers and directors of
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the Surviving Corporation will be authorized to execute and deliver, in the
name and on behalf of the Company or Merger Sub, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of the
Company or Merger Sub, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
the Company and Merger Sub acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
ARTICLE VIII
Conditions To The Merger
Section 8.1 Conditions to the Obligations of Each Party. The obligations of
the Company and Merger Sub to consummate the Merger are subject to the
satisfaction of the following conditions on or prior to the Closing Date:
(a) this Agreement shall have been adopted by the stockholders of the
Company in accordance with applicable law;
(b) all necessary waiting periods applicable to the Merger under the HSR Act
and similar antitrust laws shall have expired or been earlier terminated;
(c) no court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and
prohibits, restrains or makes illegal consummation of the transactions
contemplated by this Agreement; provided, however, that prior to invoking this
condition, the party so invoking this condition shall have used reasonable
best efforts to lift or remove such order, injunction, restraint or
prohibition; and
(d) all consents, approvals and licenses of any state, federal or foreign
governmental or other regulatory body required in connection with the
execution, delivery, and performance of this Agreement and for the Surviving
Corporation to conduct the business of the Company in substantially the manner
now conducted, shall have been obtained, unless the failure to obtain such
consents, authorizations, orders or approvals would not have a Material
Adverse Effect after giving effect to the transactions contemplated by this
Agreement (including the Financing);
Section 8.2 Conditions to the Obligations of Merger Sub. The obligations of
Merger Sub to consummate the Merger are subject to the satisfaction of the
following conditions on or prior to the Closing Date:
(a) no governmental or regulatory authority shall have instituted any claim,
action, suit, investigation or proceeding for the purpose of enjoining or
preventing the transactions contemplated hereby, or which could reasonably be
expected to result in a Material Adverse Effect.
(b) all of the representations and warranties of the Company set forth
herein that are qualified as to materiality shall be true and correct, and all
of the representations and warranties that are not so qualified shall be true
and correct in all material respects, in each case on and as of the Effective
Time and at all times prior to the Effective Time (except to the extent such
representations and warranties are made as of a specific date, in which case
such representations and warranties shall be true and correct, or true and
correct in all material respects, as the case may be, as of such date), and
Merger Sub shall have received a certificate to such effect signed by the
President or a Vice President of the Company;
(c) the Company shall have performed in all material respects all
obligations arising under the agreements and covenants required hereby to be
performed by it prior to or on the Closing Date, and Merger Sub shall have
received a certificate to such effect signed by the President or a Vice
President of the Company;
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(d) since February 29, 2000, there shall not have been any Material Adverse
Change; and
(e) the funding contemplated by the Financing Letters shall have been
obtained.
Section 8.3 Condition to the Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the satisfaction of the
condition on or prior to the Closing Date that (i) all of the representations
and warranties of Merger Sub set forth herein that are qualified as to
materiality shall be true and correct, and all of the representations and
warranties that are not so qualified shall be true and correct in all material
respects, in each case on and as of the Effective Time and at all times prior
to the Effective Time (except to the extent such representations and
warranties are made as of a specific date, in which case such representations
and warranties shall be true and correct, or true and correct in all material
respects, as the case may be, as of such date), (ii) Merger Sub shall have
performed in all material respects all obligations arising under the
agreements and covenants required to be performed by it prior to or on the
Closing Date and (iii) the Company shall have received certificates to such
effect signed by the President or a Vice President of Merger Sub.
ARTICLE IX
Termination
Section 9.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Merger Sub at any time;
(b) by either the Company or Merger Sub:
(i) if the Closing shall not have occurred on or before November 30,
2000; or
(ii) if there shall be any law or regulation that makes consummation of
the Merger illegal or otherwise prohibited or if any judgment, injunction,
order or decree enjoining Merger Sub or the Company from consummating the
Merger is entered and such judgment, injunction, order or decree shall
become final and non-appealable; or
(iii) if, at a duly held stockholders meeting of the Company or any
adjournment thereof at which this Agreement and the Merger is voted upon,
the requisite stockholder adoption and approval shall not have been
obtained;
(c) by the Company:
(i) if, prior to the Effective Time, the representations and warranties
of Merger Sub set forth in this Agreement which are not qualified by
"materiality" or "material adverse effect" shall not be true in any
material respect, and the representations and warranties that are qualified
by "materiality" or "material adverse effect" shall not be true in any
respect, at any time after the date hereof (except for those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time which need only be
true and accurate as of such date or with respect to such period), or
Merger Sub shall have breached or failed to perform or comply in any
material respect with any obligation, agreement or covenant required by
this Agreement to be performed or complied with by it, and, with respect to
any such breach or failure to perform that is reasonably capable of being
remedied, the breach or failure to perform is not remedied within 15 days
after the Company has furnished Merger Sub with written notice of such
breach or failure to perform; or
(ii) if, prior to the Effective Time, the Board of Directors of the
Company shall approve a Superior Proposal; provided, however, that (x) the
Company shall have complied with Section 5.4, and (y) prior to any such
termination, the Company shall, and shall cause its financial and legal
advisors to, negotiate in
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good faith for a period of at least three (3) days with Merger Sub to make
such adjustments in the terms and conditions of this Agreement as would
enable Merger Sub to proceed with the transactions contemplated hereby;
provided, however, that it shall be a condition to termination by the
Company pursuant to this Section 9.1(c)(ii) that the Company shall have
made the payment of the Termination Fee to Merger Sub required by Section
9.3.
(d) by Merger Sub:
(i) if the Company shall have materially breached any of its obligations
under Section 5.4 hereof;
(ii) if the Board of Directors of the Company shall have (A) withdrawn or
modified or amended, in a manner adverse to Merger Sub, its approval or
recommendation of this Agreement and the Merger or its recommendation that
stockholders of the Company adopt and approve this Agreement and the
Merger, (B) approved, recommended or endorsed an Acquisition Proposal
(including a tender or exchange offer for Company Common Stock); or (C)
resolved to do any of the foregoing; or
(iii) if, prior to the Effective Time, the representations and warranties
of the Company set forth in this Agreement which are not qualified by
"materiality" or "Material Adverse Effect" shall not be true in any
material respect, and the representations and warranties that are qualified
by "materiality" or "Material Adverse Effect" shall not be true in any
respect, at any time after the date hereof (except for those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time which need only be
true and accurate as of such date or with respect to such period), or the
Company shall have breached or failed to perform or comply in any material
respect with any obligation, agreement or covenant required by this
Agreement to be performed or complied with by it, and, with respect to any
such breach or failure to perform that is reasonably capable of being
remedied, the breach or failure to perform is not remedied within 15 days
after Merger Sub has furnished the Company with written notice of such
breach or failure to perform.
Section 9.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 9.1, this Agreement shall become void and of no effect with no
liability on the part of any party hereto (unless such termination is the
result of deliberate breach of this Agreement by such party); provided,
however, that this Section 9.2, Section 9.3 and Article X of this Agreement
shall survive the termination hereof.
Section 9.3 Fees, Expenses and Other Payments.
(a) In the event that this Agreement is terminated by the Company pursuant
to Section 9.1(c)(ii) hereof or by Merger Sub pursuant to Section 9.1(d)(i) or
Section 9.1(d)(ii) hereof, or by Merger Sub pursuant to Section 9.1(d)(iii)
hereof solely on the basis of the Company's breach of any obligation,
agreement or covenant required by this Agreement to be performed by the
Company but only if such breach arises out of the bad faith or willful
misconduct of the Company, the Company shall pay to Merger Sub by certified
check or wire transfer to an account designated by Merger Sub, immediately
following receipt of a request therefor, an amount equal to $30,000,000 (the
"Termination Fee"). In addition, the Company shall pay in cash to Merger Sub
the Termination Fee if this Agreement is terminated (A) by the Company or
Merger Sub pursuant to Section 9.1(b)(i) or Section 9.1(b)(iii) at any time
after an Acquisition Proposal has been made by a third party (such third
party, together with its affiliates and other Persons acting in concert with
such third party are hereafter referred to as a "Third Party Acquirer"), which
Acquisition Proposal has been publicly disclosed prior to the termination of
this Agreement and, within one year after such a termination, the Company
enters into a definitive agreement with respect to, or consummates (i) a
merger, consolidation or other business combination with any such Third Party
Acquirer (or another party who makes an Acquisition Proposal at a time when
the Company is in discussions with any such Third Party Acquirer (such other
party, together with its affiliates and other Persons acting in concert with
such other party are hereafter referred to as the "New Third Party
Acquirer")), (ii) the sale or transfer to such Third Party Acquirer (or any
New Third Party Acquirer) of, or the acquisition of beneficial ownership by
such Third Party Acquirer (or any New Third Party Acquirer) of, 50% or more of
the Company Voting Securities (as defined herein) or (iii) the sale or
transfer of 50% or more (in market value) of the assets of the Company and its
Subsidiaries, on a consolidated basis, to any such Third Party Acquirer (or
any New Third
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Party Acquirer), upon which event the Termination Fee and Expenses shall
become immediately payable in cash. For purposes of this Agreement, "Company
Voting Securities" shall mean Company Common Stock or securities of similar
interests, warrants, options or other rights to acquire Company Common Stock
or securities convertible or exchangeable into shares of capital stock of the
Company which entitles the holder to vote generally in the election of
directors.
(b) Upon termination of this Agreement by the Company pursuant to Section
9.1(b)(iii) hereof or Section 9.1(c)(ii) hereof or by Merger Sub pursuant to
Section 9.1(b)(iii), Section 9.1(d)(i), Section 9.1(d)(ii) or Section
9.1(d)(iii), the Company shall pay to Merger Sub, promptly upon receipt, but
in no event later than two business days following receipt, of reasonable
supporting documentation, all actual and reasonably documented out-of-pocket
expenses incurred by or on behalf of Merger Sub in connection with or in
anticipation of the Merger, this Agreement and the consummation of the
transactions contemplated hereby (including, without limitation, the
reasonable fees and expenses of their counsel and accountants and investment
banking fees) and the arrangement of, obtaining the commitment to provide, or
obtaining, the financing for the transactions contemplated by this Agreement
(including any fees payable to the entities providing such financing and their
respective counsel) in an amount not to exceed $6,000,000 (the "Expenses").
(c) The Company acknowledges that the agreements contained in this Section
9.3 are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Merger Sub would not enter into this
Agreement; accordingly, if the Company fails to promptly pay any amount due
pursuant to this Section 9.3, and, in order to obtain such payment, the Merger
Sub commences a suit which results in a judgment against the Company for the
fee or fees and expenses set forth in this Section 9.3, the Company shall also
pay to Merger Sub its costs and expenses incurred in connection with such
litigation.
ARTICLE X
Miscellaneous
Section 10.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile or similar writing)
and shall be given,
(a) if to Merger Sub, to:
MIV Acquisition Corporation
Park Avenue Tower
65 East 55th Street, Suite 2300
New York, NY 10022
Attention: President
Facsimile: (212) 891-2899
with a copy to:
Latham & Watkins
99 Bishopsgate, Eleventh Floor
London EC2M 3XF
England
Attention: Michael S. Immordino, Esq.
Facsimile: 44-20-7374-4460
and
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022-4802
Attention: Richard M. Trobman, Esq.
Facsimile: (212) 751-4864
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(b) if to the Company, to:
Mark IV Industries, Inc.
501 John James Audubon Parkway
P.O. Box 810
Amherst, New York 14226-0810
Attention: Sal H. Alfiero, Chairman of the Board and Chief Executive
Officer
Facsimile: (716) 689-6098
with copies to:
Lippes, Silverstein, Mathias & Wexler LLP
700 Guaranty Building
28 Church Street
Buffalo, New York 14202-3950
Attention: Gerald S. Lippes, Esq.
Facsimile: (716) 853-5199
and
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: David L. Finkelman
Facsimile: 212-806-6006
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other party hereto. Each such notice, request
or other communication shall be effective when delivered or received at the
address or facsimile number specified in this Section.
Section 10.2 Non-Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or
other writing delivered pursuant hereto shall expire at and not survive the
Effective Time. This Section 10.2 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 10.3 Amendments; No Waivers.
(a) This Agreement may be amended by the parties hereto, at any time before
or after approval of matters presented in connection with the Merger by the
stockholders of the Company, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 10.4 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the other parties hereto, except that
Merger Sub may transfer or assign, in whole or from time to time in part, to
one or more of its affiliates, its rights under this Agreement.
Section 10.5 Entire Agreement; Governing Law; No Third Party
Beneficiaries. This Agreement (including any schedules hereto) and the
confidentiality agreement between the Company and Merger Sub dated July 20,
2000 (the "Confidentiality Agreement"), (a) constitute the entire agreement
with respect to the matters
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contemplated here and thereby, and (b) supersede all other prior agreements,
understandings, representations and warranties, both written and oral, among
the parties with respect to the subject matter hereof and thereof. This
Agreement shall be construed in accordance with and governed by the laws of
the State of Delaware regardless of the laws that might otherwise govern under
principles of conflicts of laws applicable thereto. This Agreement is not
intended to confer upon any person other than the parties here any rights or
remedies hereunder.
Section 10.6 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by all of the other parties hereto.
Section 10.7 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
Section 10.8 Titles. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 10.9 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 10.10 Knowledge. For the purposes of this Agreement, "to the
knowledge of Company" or "the Company's knowledge" shall mean the actual
knowledge after reasonable inquiry and review, Sal H. Alfiero, William P.
Montague, Gerard S. Lippes and Mark G. Barberio.
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
MARK IV INDUSTRIES, INC.
By: _________________________________
Name: Sal H. Alfiero
Title: Chairman of the Board and
Chief Executive Officer
MIV ACQUISITION CORPORATION
By: _________________________________
Name: Francesco Loredan
Title: President
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<PAGE>
APPENDIX B
[LETTERHEAD OF BEAR, STEARNS & CO. INC.]
May 26, 2000
The Board of Directors
Mark IV Industries, Inc.
501 John James Audubon Parkway
P.O. Box 810
Amherst, NY 14226-0810
Gentlemen:
We understand that Mark IV Industries, Inc. ("Mark IV") and MIV Acquisition
Corporation ("Merger Sub"), a Delaware corporation controlled by an investor
group that includes BC Partners Ltd. and Interbanca S.p.A. (the "Investor
Group"), propose to enter into an Agreement and Plan of Merger, dated as of
May 26, 2000 (the "Agreement"), pursuant to which Merger Sub will merge with
and into Mark IV (the "Merger"), with Mark IV as the surviving corporation of
the Merger. As a result of the Merger, each outstanding share of common stock,
par value $0.01 per share, of Mark IV ("Mark IV Common Stock") will be
converted into the right to receive $23.00 per share in cash, without interest
(the "Consideration"). We further understand that certain senior executives of
Mark IV will, in connection with the transactions contemplated by the Merger,
exchange their options to purchase Mark IV Common Stock for options to
purchase common stock of the parent corporation of Merger Sub and will be
offered the opportunity to purchase shares of common stock of the parent
corporation of Merger Sub (such senior executives, "Rollover Holders").
You have asked us to render our opinion as to whether the Consideration to be
received in the Merger by the holders of Mark IV Common Stock, other than
Rollover Holders, is fair, from a financial point of view, to such holders.
In the course of performing our review and analyses for rendering this
opinion, we have:
. reviewed the Agreement and related documents;
. reviewed Mark IV's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the fiscal years ended February 28, 1997 through 1999, Mark
IV's audited, consolidated financial statements and the notes to the
consolidated financial statements for the year ended February 29, 2000
provided to us by the senior management of Mark IV, its Quarterly Reports
on Form 10-Q for the periods ended November 30, 1999, August 31, 1999 and
May 31, 1999 and its Reports on Form 8-K for the three years ended May 26,
2000;
. reviewed certain operating and financial information, including projections
for the three years ending February 28, 2003, provided to us by Mark IV's
management relating to Mark IV's business and prospects;
. met with certain members of Mark IV's senior management to discuss Mark
IV's business, operations, historical and projected financial results and
future prospects;
. reviewed the historical prices, trading multiples and trading volumes of
Mark IV Common Stock;
. reviewed publicly available financial data, stock market performance data
and trading multiples of companies which we deemed generally comparable to
Mark IV;
. reviewed the terms of recent mergers and acquisitions of companies which we
deemed generally comparable to Mark IV;
. performed sum-of-the-parts analysis based on the business segments and tax
basis information furnished to us by Mark IV;
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Mark IV Industries, Inc.
May 26, 2000
Page 2
. performed discounted cash flow analysis based on the projections for Mark
IV furnished to us; and
. conducted such other studies, analyses, inquiries and investigations as we
deemed appropriate.
We have relied upon and assumed, without independent verification, the
accuracy and completeness of the financial and other information, including
without limitation the projections, provided to us by Mark IV. With respect to
the projections provided to us by Mark IV, we have been advised that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of Mark IV as to the expected future
performance of Mark IV. We have not assumed any responsibility for the
independent verification of any such information or of the projections
provided to us, and we have further relied upon the assurances of the senior
management of Mark IV that they are unaware of any facts that would make the
information or projections provided to us incomplete or misleading.
In arriving at our opinion, we have not performed or obtained any independent
appraisal of the assets or liabilities of Mark IV, contingent or otherwise,
nor have we been furnished with any such appraisals. During the course of our
engagement, we were asked by the Board of Directors of Mark IV to solicit
indications of interest from various third parties regarding a transaction
with Mark IV, and we have considered the results of such solicitation in
rendering our opinion. We have assumed, with your consent, that the Merger
will be consummated in a timely manner and in accordance with the terms of the
Agreement without any regulatory limitations, restrictions, conditions,
amendments or modifications that collectively would have a material effect on
the consummation of the Merger.
We do not express any opinion as to the price or range of prices at which Mark
IV Common Stock may trade subsequent to the announcement of the Merger.
We have acted as a financial advisor to Mark IV in connection with the Merger
and will receive a customary fee for such services, a substantial portion of
which is contingent on successful consummation of the Merger and a portion of
which is payable upon delivery of this opinion. Bear Stearns has been
previously engaged by Mark IV to provide certain investment banking and
financial advisory services for which we received customary compensation. In
the ordinary course of business, Bear Stearns may actively trade the equity
and debt securities of Mark IV and/or of Interbanca S.p.A. and its affiliates
for our own account and for the accounts of our customers and, accordingly,
may at any time hold a long or short position in such securities.
It is understood that this letter is limited to the fairness, from a financial
point of view, of the Consideration to be received in the Merger by the
holders of Mark IV Common Stock (other than Rollover Holders), is intended for
the benefit and use of the Board of Directors of Mark IV in its evaluation of
the Merger and does not constitute a recommendation to the Board of Directors
or any holders of Mark IV Common Stock as to how to vote in connection with
the Merger. This opinion does not address Mark IV's underlying decision to
pursue the Merger, the relative merits of the Merger as compared to any
alternative business strategies that might exist for Mark IV or the effects of
any other transaction in which Mark IV might engage. Our opinion is subject to
the assumptions and conditions herein and is necessarily based on economic,
market and other conditions, and the information available to us, as of the
date hereof. We assume no responsibility for updating or revising our opinion
based on circumstances or events occurring after the date hereof. This letter
is not to be used for any other purpose, or to be reproduced, disseminated,
quoted from or referred to at any time, in whole or in part, without our prior
written consent; provided, however, that this letter may be included in its
entirety in any proxy statement to be distributed to the holders of Mark IV
Common Stock in connection with the Merger.
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Mark IV Industries, Inc.
May 26, 2000
Page 3
Based on and subject to the foregoing, it is our opinion that, as of the date
hereof, the Consideration to be received in the Merger by the holders of Mark
IV Common Stock, other than Rollover Holders, is fair, from a financial point
of view, to such holders.
Very truly yours,
BEAR, STEARNS & CO. INC.
/s/ Michael Hyatt
By:
-------------------------
Senior Managing
Director
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<PAGE>
APPENDIX C
EXCERPTS FROM THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE RELATING TO THE RIGHTS OF
DISSENTING SHAREHOLDERS
262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to (S) 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S) 251 (other than a merger effected pursuant to (S)
251(g) of this title), (S) 252, (S) 254, (S) 257, (S) 258, (S) 263 or (S) 264
of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of (S) 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to (S)(S)
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S) 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior
to the meeting, shall notify each of its stockholders who was such on
the record date for such meeting with respect to shares for which
appraisal rights are available pursuant to subsection (b) or (c) hereof
that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of
this section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand for
appraisal of such stockholder's shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to (S) 228
or (S) 253 of this title, each consitutent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constitutent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or
series of stock of such constituent corporation, and shall include in
such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to
all such holders of any class or series of stock of a constituent
corporation that are entitled to appraisal rights. Such notice may,
and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective
date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation
the appraisal of such holder's shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation,
either (i) each such constitutent corporation shall send a second
notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constitutent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days following
the sending of the first notice, such second notice need only be sent
to each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein. For purposes of
determining
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the stockholders entitled to receive either notice, each constitutent
corporation may fix, in advance, a record date that shall be not more
than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw such stockholder's demand for appraisal
and to accept the terms offered upon the merger or consolidation. Within
120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and
(d) hereof, upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor
of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is
received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and
place fixed for the hearing of such petition by registered or certified
mail to the surviving or resulting corporation and to the stockholders
shown on the list at the addresses therein stated. Such notice shall also
be given by 1 or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The
forms of the notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or resulting
corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented
by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court may
dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining
such fair value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of
the proceeding. Upon application by the surviving or resulting corporation
or by any stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder
whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
submitted such stockholder's certificates of stock to the Register in
Chancery, if such is required, may participate fully in all proceedings
until it is finally determined that such stockholder is not entitled to
appraisal rights under this section.
C-3
<PAGE>
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation
to the stockholders entitled thereto. Interest may be simple or compound,
as the Court may direct. Payment shall be so made to each such stockholder,
in the case of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree
may be enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of this
State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a
date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholder's demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection (e)
of this section or thereafter with the written approval of the corporation,
then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of
Chancery shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms as the
Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.
C-4
<PAGE>
FORM OF PROXY CARD FOR THE SPECIAL MEETING OF STOCKHOLDERS OF
MARK IV INDUSTRIES, INC.
PROXY
MARK IV INDUSTRIES, INC.
The undersigned hereby appoints Sal H. Alfiero, and William P. Montague and
each of them, with power of substitution, attorneys and proxies to represent and
vote all shares of common stock of Mark IV Industries, Inc., a Delaware
corporation (the "Company"), held of record by the undersigned at the Special
Meeting of Stockholders to be held on __________________,2000 at ____ a.m. local
time, and at any adjournments and postponements of the Special Meeting. The
undersigned hereby revokes any previous proxies with respect to the matters
covered in this proxy.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
SPECIFIED BELOW. IF THIS CARD IS PROPERLY EXECUTED BUT NO VOTE IS SPECIFIED,
THIS PROXY WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" BOTH PROPOSAL 1 AND 2.
(TO BE VOTED AND SIGNED ON REVERSE)
<PAGE>
Please date, sign and mail your proxy card back as soon as possible!
Special Meeting of Stockholders
Mark IV Industries, Inc.
, 2000
------
/X/ Please mark your votes as in this example.
1. Proposal to adopt the agreement and plan of merger dated as of May 26, 2000
between Mark IV Industries, Inc. and MIV Acquisition Corporation and approve the
transactions contemplated thereby, including the merger, as described in the
proxy statement for the special meeting.
FOR / / AGAINST / / ABSTAIN / /
2. Proposal to permit the proxies, in their discretion, to adjourn the meeting
for the sole purpose of soliciting more votes or proxies in favor of adoption of
the merger agreement.
FOR / / AGAINST / / ABSTAIN / /
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement of the meeting.
_______________________________________ Date _______________ , 2000
Signature(s)
_______________________________________ Date _______________ , 2000
Signature(s)
Please complete, sign, date and return this proxy promptly in the envelope
provided, which requires no postage if mailed in the United States.
NOTE: Stockholders should date this proxy and sign here exactly as their name
appears above. If shares of common stock are held jointly, both owners should
sign this proxy. Executors, administrators, trustees, guardians and others
signing in a representative capacity should indicate the capacity in which they
sign.
