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[MYR LOGO]
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<S> <C>
MYR GROUP INC.
Three Continental Towers
1701 West Golf Road - Suite 1012
Rolling Meadows, IL 60008-4270
847-290-1891
847-290-1892 fax
CORPORATE OFFICE
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DECEMBER 29, 1999
Dear Stockholder:
We are pleased to inform you that MYR Group Inc. (the "Company") has
entered into an Agreement and Plan of Merger (the "Merger Agreement") with GPU,
Inc. ("Parent") and GPX Acquisition Corp. ("Offeror"). Pursuant to the Merger
Agreement, Offeror today commenced a tender offer to purchase all outstanding
shares of the Company's common stock at $30.10 per share in cash. Under the
Merger Agreement, the tender offer will be followed by a merger of Offeror with
and into the Company. In the merger, each outstanding share of common stock will
be converted into $30.10 in cash (other than shares held by dissenting
stockholders).
Your Board of Directors has unanimously approved the Merger Agreement and
determined that the tender offer and the merger are fair to and in the best
interest of the stockholders, and recommends that all stockholders of the
Company accept the offer and tender their shares pursuant to the offer.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the enclosed
Schedule 14D-9, including the opinion of Berenson Minella & Company that the
cash consideration of $30.10 per share to be received by stockholders pursuant
to the offer and the merger is fair to such stockholders from a financial point
of view. You are urged to read such opinion, which is included as Annex A to the
enclosed Schedule 14D-9, in its entirety.
In addition to the attached Schedule 14D-9 relating to the tender offer,
also enclosed is the Offer to Purchase, dated December 29, 1999, of Offeror,
together with related materials. These documents set forth the terms and
conditions of the tender offer and the merger and provide instructions as to how
to tender your shares. We urge you to read the enclosed materials carefully.
Sincerely,
[/s/ Charles M. Brennan III]
Charles M. Brennan III
Chairman and
Chief Executive Officer
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MYR GROUP INC.
(NAME OF SUBJECT COMPANY)
MYR GROUP INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
554053108
(CUSIP NUMBER OF CLASS OF SECURITIES)
BYRON D. NELSON
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
MYR GROUP INC.
1701 W. GOLF ROAD
SUITE 1012, TOWER THREE
ROLLING MEADOWS, ILLINOIS 60008-4007
(847) 290-1891
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE
AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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WITH A COPY TO:
J. CRAIG WALKER
BELL, BOYD & LLOYD
70 WEST MADISON STREET, SUITE 3300
CHICAGO, ILLINOIS 60602-4207
(312) 372-1121
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is MYR Group Inc., a Delaware corporation
(the "Company"), and the address of the principal executive offices of the
Company is 1701 W. Golf Road, Suite 1012, Tower Three, Rolling Meadows, Illinois
60008-4007. The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-9")
relates is the Company's common stock, par value $0.01 per share (the "Common
Stock"). Unless the context otherwise requires, as used herein, the term
"Shares" shall mean shares of the Common Stock.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer (the "Offer") by GPX Acquisition
Corp. ("Offeror"), a Delaware corporation and a direct wholly owned subsidiary
of GPU, Inc., a Pennsylvania corporation ("Parent"), to purchase all the issued
and outstanding Shares at a price of $30.10 per Share, net to the seller in
cash, without interest thereon, subject to the terms and conditions set forth in
Offeror's Offer to Purchase, dated December 29, 1999, and the related Letter of
Transmittal (together with the Offer to Purchase, the "Offer Documents"). The
Offer is described in the Tender Offer Statement on Schedule 14D-1 filed by
Parent and Offeror with the Securities and Exchange Commission (the
"Commission") on December 29, 1999 (as amended or supplemented, the "Schedule
14D-1"). The Offer Documents indicate that the principal executive offices of
Offeror and Parent are located at 300 Madison Avenue, Morristown, New Jersey
07962-1911.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 21, 1999 (the "Merger Agreement"), by and among the Company,
Offeror and Parent. The Merger Agreement, which is Exhibit (c)(1) to this
Schedule 14D-9, is incorporated herein by reference in its entirety.
The Merger Agreement provides that, following the consummation of the
Offer, upon the satisfaction or waiver of certain conditions, Offeror will be
merged with and into the Company (the "Merger"), with the Company continuing as
the surviving corporation (the "Surviving Corporation"). In the Merger, each
Share outstanding immediately prior to the effective time of the Merger (other
than Shares held by stockholders who properly exercise their appraisal rights
under the Delaware General Corporation Law (the "Delaware Law")) will be
converted, by virtue of the Merger and without any action by the holder thereof,
into the right to receive $30.10 per Share (or any higher price paid per Share
in the Offer), net to the seller in cash, without interest thereon (the "Offer
Price"). The Merger Agreement is summarized in Item 3 of this Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above. Unless the context otherwise
requires, references to the Company in this Schedule 14D-9 are to the Company
and its direct and indirect subsidiaries, viewed as a single entity.
(b) Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and certain of its executive officers, directors
or affiliates are described in Schedule I attached to this Schedule 14D-9 and
incorporated herein by reference.
Except as described or incorporated by reference herein, to the knowledge
of the Company, as of the date hereof, there exists no material contract,
agreement, arrangement or understanding and no actual or potential conflict of
interest between the Company or its affiliates and (i) the Company's executive
officers, directors or affiliates or (ii) Offeror, Parent or their respective
executive officers, directors or affiliates.
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ARRANGEMENTS WITH PARENT, OFFEROR OR THEIR AFFILIATES
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, a copy of which is filed with the Commission as an
exhibit to this Schedule 14D-9. Capitalized terms not otherwise defined below
shall have the meanings set forth in the Merger Agreement. The Merger Agreement
may be examined, and copies obtained, at the places and in the manner set forth
in Section 8 of Offeror's Offer to Purchase, which is enclosed with this
Schedule 14D-9.
The Offer. The Merger Agreement provides for the commencement of the
Offer. Parent and Offeror have expressly reserved the right to waive certain
conditions to the Offer, but without the prior consent of the Company, Offeror
has agreed not to (i) waive the Minimum Condition (as defined in the Merger
Agreement), (ii) reduce the number of Shares to be purchased in the Offer, (iii)
reduce the Offer Price, (iv) modify or add to the conditions to the Offer set
forth in Section 14 of the Offer to Purchase enclosed herewith, (v) change the
form of consideration payable in the Offer, or (vi) amend any other term of the
Offer in a manner adverse to the holders of Shares. Notwithstanding the
foregoing, Offeror may, without the consent of the Company, (i) extend the Offer
from time to time, beyond any scheduled expiration date for a period not to
exceed 20 business days, if at any scheduled expiration date any of the
conditions to Offeror's obligation to accept for payment, and pay for, the
Shares is not satisfied or waived, until such time within such 20 business day
period as Offeror reasonably concludes is necessary after all such conditions
are satisfied or waived, (ii) extend the Offer for any period required by any
rule, regulation, interpretation or position of the Commission or the staff
thereof applicable to the Offer, and (iii) extend the Offer for an aggregate
period of not more than 15 business days beyond the latest expiration date that
would otherwise be permitted under clause (i) or (ii) of this sentence if there
have not been tendered sufficient Shares so that the Merger can be effected in
accordance with Section 253 of the Delaware Law.
Consideration to be Paid in the Merger. The Merger Agreement provides that
upon the terms and subject to the conditions set forth in the Merger Agreement
and the applicable provisions of the Delaware Law, Offeror shall be merged with
and into the Company and the separate existence of Offeror shall cease, and the
Company shall be the Surviving Corporation and shall be a wholly owned
subsidiary of Parent. In the Merger, each share of common stock of Offeror
issued and outstanding immediately prior to the Effective Time shall continue to
remain outstanding and shall constitute one share of common stock of the
Surviving Corporation. The Merger shall become effective at the time set forth
in the certificate of merger (the "Certificate of Merger") relating to the
Merger (the "Effective Time"), in accordance with the provisions of the Delaware
Law, which time shall be on the date (which shall not be earlier than March 23,
2000) but after the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware. At the Effective Time, each outstanding Share
(other than Shares held by stockholders who properly exercise their appraisal
rights) shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive the Merger Consideration,
without interest. The Merger Agreement provides that the closing of the Merger
shall take place as soon as practicable after the approval and adoption of the
Merger Agreement by the stockholders of the Company as contemplated in Section
6.1 of the Merger Agreement (if required by law) and the satisfaction or waiver
of the other conditions of the parties to the Merger Agreement set forth in
Articles 7 and 8 thereof.
Treatment of Stock Options. The Merger Agreement provides that, as of the
Effective Time, each option to purchase Shares (a "Stock Option") outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, entitle the holder thereof
to receive in settlement of the exercisable portion thereof a cash payment from
the Company in an amount (the "Option Cash-Out Amount") equal to the product of
(i) the excess of the Merger Consideration over the per share exercise price of
such Stock Option, and (ii) the
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total number of Shares which the holder of such Stock Option is entitled to
purchase under such portion of the Stock Option (whereupon such portion of the
Stock Option will be canceled). Each Stock Option, or portion thereof, that is
not exercisable at the Effective Time, shall be canceled as of such time and the
holder thereof shall become entitled to receive on the date such Stock Option,
or portion thereof, otherwise would have become exercisable a cash payment from
the Company in an amount equal to the Option Cash-Out Amount. Notwithstanding
the foregoing, subject to the receipt of any required regulatory approvals,
within 20 business days after the Effective Time each holder of a Stock Option
may elect in writing, in lieu of the cash settlement set forth in the two
immediately preceding sentences, to have any of such outstanding Stock Options
assumed by Parent, which assumed Stock Options shall continue to have, and be
subject to, the same terms and conditions set forth in the stock option plans
and agreement pursuant to which the Stock Options were issued as in effect
immediately prior to the Effective Time, except that (a) such assumed Stock
Options shall be exercisable for that number of whole shares of common stock of
Parent, par value $2.50 per share ("Parent Common Stock"), equal to the product
of the number of Shares covered by the assumed Stock Option immediately prior to
the Effective Time multiplied by the number (the "Exchange Ratio") determined by
dividing the Merger Consideration by the average closing price of Parent Common
Stock for the five Trading Days immediately preceding the Effective Time,
rounded up to the nearest whole number of shares of Parent Common Stock, (b) the
per share exercise price for the Parent Common Stock issuable upon the exercise
of such assumed Stock Option shall be equal to the quotient determined by
dividing the exercise price per share specified for such Stock Option under the
applicable Stock Option plan or agreement immediately prior to the Effective
Time by the Exchange Ratio, rounding the resulting exercise price down to the
nearest whole cent, and (c) such assumed Stock Options shall not be entitled to
receive any amounts with respect to dividends paid on the Shares covered by such
Stock Options. Except as set forth in the Disclosure Schedule to the Merger
Agreement (the "Disclosure Schedule"), none of the provisions described in this
paragraph shall affect the schedule of vesting (or the acceleration thereof) of
the Stock Options, assumed or not assumed by Parent pursuant to the terms of the
provisions described in this paragraph. The date of grant of any Stock Option so
assumed shall be the date on which the Stock Option was originally granted. As
soon as practicable after the Effective Time, Parent shall file with the
Commission a registration statement on Form S-8 (or any successor form), or
another appropriate form, with respect to the shares of Parent Common Stock
subject to such assumed Stock Options and shall use its best efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Stock Options remain outstanding.
As set forth in the Disclosure Schedule, at its December 21, 1999 meeting,
the Company's Board of Directors amended its non-employee directors' stock
option plan to provide that all options outstanding under such plan would be
deemed to be vested immediately prior to the Effective Time.
Treatment of Restricted Stock. The Merger Agreement provides that, as of
the Effective Time, each outstanding award of Company restricted stock
("Restricted Stock") shall, by virtue of the Merger and without any action on
the part of the holder thereof, entitle the holder thereof to receive in
settlement of the vested portion thereof a cash payment from the Company in an
amount (the "Restricted Stock Cash-Out Amount") equal to the product of (i) the
Merger Consideration and (ii) the total number of vested shares of Restricted
Stock to which the holder is entitled. With respect to any shares of Restricted
Stock that are not vested at the Effective Time, each holder thereof will become
entitled to receive on the date such shares of Restricted Stock become vested a
cash payment from the Company in an amount equal to the Restricted Stock
Cash-Out Amount. With respect to any shares of Restricted Stock that are not
vested and are subject to forfeiture at the Effective Time, each holder thereof
shall become entitled to receive on the date such shares of Restricted Stock
become vested a cash payment from the Company in an amount equal to the
Restricted Stock Cash-Out Amount. Notwithstanding the foregoing, if the approval
of Parent's Board of Directors and any required regulatory approvals are
obtained, within 20 business days after the Effective Time each holder of
Restricted Stock, whether or not vested, may elect in writing, in lieu of the
cash settlement
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set forth in the preceding two sentences, to have all or any part of such
outstanding Restricted Stock converted into Parent restricted stock ("Parent
Restricted Stock"), subject to the same terms and conditions set forth in the
plans and agreements pursuant to which the Restricted Stock was issued as in
effect immediately prior to the Effective Time, except that the number of shares
of such Parent Restricted Stock shall be that number of whole shares of Parent
Common Stock equal to the product of the number of shares of converted
Restricted Stock multiplied by the number determined by dividing the Merger
Consideration by the average closing price of Parent Common Stock for the five
Trading Days immediately preceding the Effective Time, rounded up to the nearest
whole number of shares of Parent Common Stock. None of the foregoing provisions
will affect the schedule of vesting (or the acceleration thereof) of the
Restricted Stock converted or not converted by Parent pursuant to the terms
described above. As soon as practicable after the Effective Time, Parent shall
file with the Commission a registration statement on Form S-8 (or any successor
form), or another appropriate form, with respect to the shares of Parent
Restricted Stock issued as described above and shall use its best efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such shares of restricted stock remain
outstanding.
Board Representation. The Merger Agreement provides that, promptly upon
the purchase by Parent or Offeror of at least a majority of the outstanding
Shares, and from time to time thereafter, Parent and Offeror shall be entitled
to designate such number of directors, rounded up to the next whole number but
in no event more than one less than the total number of directors of the Board
of Directors of the Company, as shall give Parent and Offeror, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors of the Company equal to the product of (i) the number of directors
on the Board of Directors of the Company and (ii) the percentage that such
number of Shares purchased by Offeror or Parent bears to the number of Shares
outstanding, and the Company shall, upon request by Parent or Offeror, promptly
increase the size of the Board of Directors or exercise all reasonable efforts
to secure the resignations of such number of directors as is necessary to enable
Parent's and Offeror's designees to be so elected. At the request of Parent and
Offeror, the Company shall take, at its expense, all action necessary to effect
any such election, including mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. From
and after the date that such designees to the Board of Directors of the Company
constitute a majority of the Board of Directors of the Company, any action taken
by the Company under the Merger Agreement shall require the approval of a
majority of the members of the Board of Directors, if any, who are not designees
or affiliates of Parent or Offeror; provided, however, that if there shall be no
such directors, the Merger Agreement shall not be amended to reduce the Merger
Consideration to be less than the Offer Price or otherwise amended in a manner
materially adverse to the holders of Shares other than Parent and Offeror or
amended to permit the Merger to occur prior to March 23, 2000.
Stockholder Meeting. The Merger Agreement provides that, if required by
applicable law, the Company shall duly call and promptly hold a meeting of its
stockholders as soon as practicable following the expiration of the Offer for
the purpose of approving the Merger on the terms and conditions set forth in the
Merger Agreement and in connection therewith shall comply with the applicable
provisions of the Delaware Law relating to the calling and holding of a meeting
of stockholders for such purpose. Subject to the provisions of the Merger
Agreement relating to third party acquisition proposals, the Board of Directors
of the Company shall recommend the approval and adoption of the Merger Agreement
by the stockholders of the Company, and the Company shall use its reasonable
best efforts to obtain such adoption and approval. The Merger Agreement provides
that, notwithstanding the foregoing, if Offeror or any other subsidiary of
Parent shall acquire at least 90% of the outstanding shares of each class of
capital stock of the Company, at the request of Parent or Offeror, the parties
thereto shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer,
without a stockholders' meeting, in accordance with Section 253 of the Delaware
Law.
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Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to (i) the due
organization, existence, qualification, good standing, corporate power and
authority of the Company and its subsidiaries; (ii) the capital stock of the
Company; (iii) the due authorization, execution, delivery and performance of the
Merger Agreement and the consummation of the transactions contemplated thereby,
and the validity and enforceability thereof; (iv) required filings, consents and
approvals and the absence of any violations, breaches or defaults which would
result from performance by the Company of the Merger Agreement and the
consummation of the transactions contemplated thereby; (v) the accuracy of
reports filed by the Company with the Commission (the "SEC Reports") since
January 1, 1996; (vi) the financial statements included in the SEC Reports;
(vii) the absence of any undisclosed material liabilities; (viii) certain tax
matters; (ix) certain real estate matters; (x) the title to and condition of the
assets of the Company and its subsidiaries; (xi) the possession by the Company
and its subsidiaries of all necessary licenses and permits; (xii) certain
proprietary rights and intellectual property matters; (xiii) the adequacy of the
Company's assets, the Company's relationships with its customers and suppliers
and the existence of agreements that restrict the Company from carrying on its
business anywhere in the world; (xiv) the accuracy of certain documents and
information supplied by the Company to Parent; (xv) certain insurance matters;
(xvi) the absence of any material litigation; (xvii) the accuracy and
completeness of the records of the Company; (xviii) the absence of any material
adverse change; (xix) the absence of certain acts or events; (xx) compliance
with applicable laws; (xxi) certain environmental matters; (xxii) labor
relations; (xxiii) certain employee benefits matters; (xxiv) estimated costs and
profits for uncompleted contracts of the Company and its subsidiaries as of
September 30, 1999; (xxv) the accuracy of the Schedule 14D-9 filed by the
Company; (xxvi) the absence of brokers or finders except for the Advisor;
(xxvii) antitakeover statutes; (xxviii) the fairness opinion rendered by the
Advisor; (xxix) year 2000 compliance; and (xxx) stockholder approvals.
Parent and Offeror have also made certain representations and warranties,
including with respect to (i) the due organization, existence, good standing and
corporate power and authority of Parent and Offeror; (ii) the due authorization,
execution, delivery and performance of the Merger Agreement and the consummation
of the transactions contemplated thereby, and the validity and enforceability
thereof; (iii) required filings, consents and approvals and the absence of any
violations, breaches or defaults which would result from performance by Parent
and Offeror of the Merger Agreement and the consummation of the transactions
contemplated thereby; (iv) the absence of prior activities and the assets of
Offeror; (v) the absence of investment bankers' and brokers' fees; (vi) the
accuracy of information provided by Parent or Offeror in the Schedule 14D-1 and
the other documents pursuant to which the Offer is being made; and (vii) the
sufficiency of funds available to Parent and Offeror for the consummation of the
Offer and the Merger.
Maintenance of the Company as Going Concern. The Merger Agreement provides
that, except as expressly contemplated or permitted by the Merger Agreement, or
to the extent Parent shall consent in writing, during the period from the date
of the Merger Agreement to the Effective Time, the Company shall conduct (and
shall cause its subsidiaries to conduct) its operations according to its
ordinary and usual course of business, and shall use its reasonable best efforts
to preserve intact its business organization, keep available the services of its
officers and employees and maintain satisfactory relations with licensors,
suppliers, distributors, customers and others having business relationships with
it. In addition, during the period from the date of the Merger Agreement to the
Effective Time, the Merger Agreement provides that representatives of each of
Parent and the Company shall confer on a regular and frequent basis with one or
more designated representatives of the other to report on operational matters
and to report the general status of ongoing operations. The Merger Agreement
also provides that the Company shall provide Offeror promptly with all documents
filed by the Company with the Commission.
Absence of Material Changes. The Merger Agreement provides that, prior to
the Effective Time, the Company and its subsidiaries shall not, other than in
the normal course of business and in
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conformity with past practices, or as contemplated by the Merger Agreement or
the Disclosure Schedule, without the consent of Parent (which consent will not
be unreasonably withheld), (i) make any material change in its business or
operations; (ii) make any material change in its accounting policies applied in
the preparation of the financial statements; (iii) declare any dividends in cash
on the issued and outstanding shares of its common stock, or make any other
distribution of any kind in respect thereof, other than regular quarterly
dividends consistent with past practices; (iv) issue, sell or otherwise
distribute any authorized but unissued shares of its capital stock (other than
upon exercise of options outstanding on the date of the Merger Agreement or
permitted to be granted thereby or upon conversion of outstanding convertible
notes) or effect any stock split, stock dividend or combination or
reclassification of any such shares or grant or commit to grant or amend or
modify any option, warrant or other right to subscribe for or purchase or
otherwise acquire any shares of its capital stock or any security convertible
into or exchangeable for any such shares (other than grants of options under
stock option plans); (v) purchase or redeem any of its capital stock (or permit
any of its subsidiaries to purchase any of its capital stock); (vi) adopt any
amendment to its charter or bylaws; or (vii) dispose, or permit any of its
subsidiaries to dispose, of any of its assets outside the ordinary course of
business. In addition, from and after the date of the Merger Agreement and prior
to the Effective Time, except as contemplated by the Disclosure Schedule,
neither the Company nor any of its subsidiaries shall, without the consent of
Parent (which consent may be granted or withheld in Parent's sole discretion):
(i) pay any bonus or increase the rate of compensation of any of their
employees, except for (A) payment of bonus compensation for the year ending
December 31, 1999 in an aggregate amount not to exceed the amount set forth in
the Disclosure Schedule, (B) salary increases for officers of the Company or any
of its subsidiaries approved by Parent (which approval shall not be unreasonably
withheld), and (C) regular annual salary increases for other salaried employees
consistent with past practice which do not exceed 5% in the aggregate of all
employees' existing salary rates; (ii) make or obligate itself to make capital
expenditures in excess of $500,000, provided that each individual expenditure in
excess of $100,000 shall be made only with Parent's approval (which approval
shall not be unreasonably withheld); (iii) voluntarily incur any material
obligations or liabilities (including any indebtedness) other than in the
ordinary course of business; (iv) make any change in the plans described in the
Disclosure Schedule or adopt new employee benefit plans or enter into any
employment or other similar agreement; or (v) amend or waive any provision of,
or grant any approval under, any standstill agreement.
Access to Information. Under the Merger Agreement, the Company and its
subsidiaries have agreed to afford to the officers, directors, employees and
authorized representatives of Parent access, during normal business hours during
the period prior to the Effective Time, to all their properties, books,
contracts, commitments and records and, during such period, the Company shall
and (shall cause its subsidiaries to) furnish promptly to Parent all information
concerning its business, properties and personnel as Parent may reasonably
request. However, any furnishing of such information and any such investigation
may not affect the right of Parent to rely on the representations and warranties
made in or pursuant to the Merger Agreement. Parent has agreed that all
information and material received by it will be treated as confidential, and
that it will not disclose, divulge or communicate such information to any other
person, except to its directors, officers, employees, attorneys, accountants,
representatives and consultants, and then only to the extent as may be necessary
to evaluate the information and any negotiations relating to the transactions
contemplated by the Merger Agreement and provided that Parent first advises such
person of the confidential nature of the information and the confidentiality and
publicity provisions of the Merger Agreement. Pursuant to the Merger Agreement,
Parent has further agreed that all such information will be used solely for the
purpose of evaluating the transactions contemplated by the Merger Agreement and
that it will not use or exploit any such information for any other purpose
whatsoever. If the Merger is not concluded for any reason, such information will
be returned to the Company. The foregoing provisions also apply to any
information previously furnished by the Company to Parent, but do not apply to
any information which Parent is required by law to disclose to a third party or
is generally known to the public other than as a result of a breach of the
foregoing provisions.
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No Solicitation. The Company has agreed in the Merger Agreement that the
Company shall immediately cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of the Merger Agreement
with any parties other than Parent with respect to any Acquisition Proposal (as
defined below). The Company shall not, and shall cause its subsidiaries and the
officers, directors, agents, employees and advisors of the Company and its
subsidiaries not to, initiate, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any Acquisition Proposal. Notwithstanding the foregoing, the Company shall
be permitted to engage in any discussions or negotiations with, or provide any
information to, any person in response to a bona fide written Acquisition
Proposal by any such person, if and only to the extent that in each such case
such proposal was not solicited in violation of the Merger Agreement and (A)
Shares shall not have been accepted for payment under the Offer; (B) the Board
of Directors of the Company determines in good faith that such Acquisition
Proposal would, if consummated, constitute a Superior Proposal (as defined
below); (C) the Board of Directors of the Company determines, in good faith
after consultation with outside counsel, that such action is legally advisable
for it to act in a manner consistent with its fiduciary duties under applicable
law; and (D) prior to providing any information or data to any person or
entering into discussions or negotiations with any person, the Company receives
from such person an executed confidentiality agreement containing terms no less
restrictive with respect to such person than the terms of the Confidentiality
Agreement with respect to Parent. The Company shall notify Parent promptly, but
in any event within 24 hours, of such inquiries, proposals, or offers received
by, any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, any of its representatives indicating,
in connection with such notice, the name of such person and the material terms
and conditions of any proposals or offers.
For the purposes of the Merger Agreement, "Acquisition Proposal" means (a)
a merger or consolidation, or any similar transaction, involving the Company
(other than mergers, consolidations or similar transactions involving solely the
Company and/or one or more wholly owned subsidiaries of the Company), (b) a
purchase or other acquisition of greater than 10% of the consolidated assets of
the Company and its subsidiaries, (c) a purchase or other acquisition (including
by way of merger, consolidation, share exchange, tender or exchange offer or
otherwise) of beneficial ownership of securities of the Company other than (1)
as a result of the exercise or conversion of securities of the Company
outstanding on the date of the Merger Agreement, or (2) in connection with any
transaction described in the Disclosure Schedule, (d) any substantially similar
transaction, or (e) any inquiry or indication of interest with respect to any of
the foregoing; in each case other than the transactions contemplated by the
Merger Agreement.
For purposes of the Merger Agreement, "Superior Proposal" means any bona
fide written proposal (a) made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, all of the
Common Stock then outstanding or all or substantially all of the consolidated
assets of the Company and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment (based on the advice of the
Advisor or another financial advisor of nationally recognized reputation) to be
more favorable to the stockholders of the Company than the transactions
contemplated by the Merger Agreement and (b) which the Board determines in good
faith is reasonably likely to be consummated on the terms set forth in the
proposal taking into account all legal, financial, regulatory and other aspects
of the proposal, including, without limitation, the nature and sufficiency of
financing for the proposal and the person making the proposal. The Company shall
advise Parent of any material developments with respect to any such proposal as
to which the Company is exercising its rights.
The Merger Agreement also provides that, with certain exceptions, neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by the Board of Directors of the Offer
and the "agreement of merger" (as such term is used in Section 251 of the
Delaware Law) contained in the Merger Agreement, (ii) approve or recommend, or
propose to approve or recom-
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<PAGE> 10
mend, any Acquisition Proposal, or (iii) cause the Company or any of its
subsidiaries to enter into any letter of intent, agreement in principle,
acquisition agreement, merger agreement or other similar agreement with respect
to any Acquisition Proposal. Notwithstanding the foregoing, in the event that
the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that it is legally advisable to do so in
order to act in a manner consistent with its fiduciary duties under applicable
law, the Board of Directors may withdraw or modify its approval or
recommendation of the Offer and the "agreement of merger" contained in the
Merger Agreement, the Merger and the Merger Agreement (or not recommend it
before a proxy statement relating to the Merger is sent to stockholders) or
approve or recommend a Superior Proposal, but in each case only at a time that
is after the third business day following Parent's receipt of a written notice
advising Parent that the Board of Directors of the Company has received a
proposal which is a Superior Proposal, specifying the material terms and
conditions of such proposal and identifying the person making such proposal.
HSR Filing. The Merger Agreement provides that Parent and the Company
shall each prepare and file with the Federal Trade Commission and the United
States Department of Justice any notification required to be filed with respect
to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or any rules or regulations promulgated thereunder.
Each of Parent and the Company shall cause any such filing it makes to be true
and accurate in all material respects and responsive to the requirements of the
HSR Act and any such rules and regulations. Each of Parent and the Company
agrees to make available to the other such information relative to its business,
assets and property as may be required for the preparation for such
notifications.
1935 Act Compliance. As promptly as practicable after the execution of the
Merger Agreement, Parent shall prepare and file with the Commission an
Application on Form U-1 seeking authorization under the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), for the acquisition by Offeror
of the Shares, the Merger and the transactions contemplated thereby.
Reasonable Best Efforts. Subject to the terms and conditions provided in
the Merger Agreement, each of the parties has agreed to use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
the Merger Agreement, including using its reasonable best efforts to satisfy the
conditions precedent to the obligations of any of the parties hereto, to obtain
all necessary waivers, consents and approvals, to effect all necessary
registrations and filings and to lift any injunction or other legal bar to the
transactions contemplated thereby (and, in such case, to proceed with the
transactions contemplated thereby as expeditiously as possible).
Other Agreements. The Merger Agreement also contains agreements on (i) the
provision by the Company to Parent of notices of material developments and other
information; (ii) publicity; and (iii) the nonsolicitation for employment of
persons employed by a party to the Merger Agreement.
Fees and Expenses. Except as otherwise provided in the Merger Agreement,
the parties agree that whether or not the Merger is consummated, Parent will pay
and bear all of the expenses incurred by it and the Company will bear all of the
expenses incurred by the Company in connection with the Merger and the Merger
Agreement.
The parties also agree that (i) if the Company terminates the Merger
Agreement pursuant to clause (g) under "Termination" below; (ii) if Parent
terminates the Merger Agreement pursuant to clause (d) under "Termination" below
due to the failure to satisfy the condition set forth in clause (g) of Section
14 of the Offer to Purchase enclosed herewith; (iii) if (a) the Company or
Parent terminates the Merger Agreement pursuant to clause (d) under
"Termination" below due to the failure to satisfy the Minimum Condition, (b) at
any time after the date of the Merger Agreement and at or before the time of the
event giving rise to such termination there shall exist an Acquisition Proposal,
and (c) within 12 months of the termination of the Merger Agreement, the Company
enters
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into a definitive agreement with any third party with respect to an Acquisition
Proposal or an Acquisition Proposal is consummated; or (iv) if Parent terminates
the Merger Agreement pursuant to clause (f) under "Termination" below, then the
Company shall, concurrently with such termination in the case of a termination
as set forth in clause (i), (ii) and (iv) and concurrently with the occurrence
of an event set forth in clause (iii)(c), pay to Parent $7 million. The payment
described above will be Parent's exclusive remedy in the event of the
termination of the Merger Agreement under circumstances where such payment is or
becomes payable.
The liability of any party to the Merger Agreement for any breach or
violation of the Merger Agreement will not be limited except as described in
this "Fees and Expenses" section.
Conditions to the Merger. The Merger Agreement provides that the
obligations of Parent and Offeror to consummate the Merger shall be subject to
the fulfillment (or waiver by Parent and Offeror) at or prior to the Effective
Time of each of the following conditions: (a) all necessary consents or
approvals of any governmental body or agency or third parties necessary for the
consummation by the Company and Parent of the transactions contemplated thereby
including, without limitation, authorization under the 1935 Act (the "1935 Act
Order") shall have been obtained and shall be in full force and effect, (b) the
waiting period imposed by the HSR Act with respect to the transactions
contemplated by the Merger Agreement shall have expired or been terminated, (c)
no court or governmental 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) or taken any action which prohibits the consummation
of the transactions contemplated by the Merger Agreement, and each party agrees
to use all reasonable efforts to remove any such prohibition on the consummation
of the transactions contemplated thereby, (d) the stockholders of the Company
shall have taken all corporate action (if required under applicable law)
necessary to effect the Merger, and the Company shall have furnished Parent with
certified copies of resolutions duly adopted by its directors and stockholders
in connection with the Merger, and (e) Offeror shall have accepted for payment
and paid for Shares tendered pursuant to the Offer.
The obligations of the Company to consummate the Merger shall be subject to
the fulfillment (or waiver by the Company) at or prior to the Effective Time of
each of the following conditions: (a) all necessary consents or approvals of any
governmental body or agency or third parties necessary for the consummation by
Parent and Offeror of the transactions contemplated thereby including, without
limitation, the 1935 Act Order, shall have been obtained and shall be in full
force and effect, (b) the waiting period imposed by the HSR Act with respect to
the transactions contemplated by the Merger Agreement shall have expired or been
terminated, (c) no court or governmental 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) or taken any action which prohibits the
consummation of the transactions contemplated by the Merger Agreement, and each
party agrees to use all reasonable efforts to remove any such prohibition on the
consummation of the transactions contemplated thereby, (d) the stockholders of
the Company shall have taken all corporate action (if required under applicable
law) necessary to effect the Merger, and Parent and Offeror shall have furnished
the Company with certified copies of resolutions duly adopted by their directors
and Offeror's stockholder in connection with the Merger, and (e) Offeror shall
have accepted for payment and paid for Shares tendered pursuant to the Offer;
however, this condition shall be deemed satisfied if Offeror fails to accept for
payment and pay for Shares pursuant to the Offer in violation of the terms of
the Offer.
Termination. Notwithstanding anything to the contrary therein, the Merger
Agreement may be terminated and the Merger may be abandoned, whether before or
after approval of the stockholders of the Company and Parent:
(a) by the mutual written consent of all of the parties thereto at any
time prior to the Effective Time;
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<PAGE> 12
(b) by Parent and Offeror (i) if due to an occurrence that would
result in a failure to satisfy any of the conditions to the Offer described
in Section 14 of the Offer to Purchase enclosed herewith, Offeror shall
have (A) failed to commence the Offer within five business days following
the date of the Merger Agreement, or (B) terminated the Offer; or (ii) if
the Company deliberately fails to perform in any material respect any of
its obligations under the Merger Agreement, and, at the time of such
failure, Parent's and Offeror's designees on the Board of Directors of the
Company do not constitute a majority of the members of the Board of
Directors of the Company;
(c) by the Company if Offeror shall have (A) failed to commence the
Offer within five business days following the date of the Merger Agreement,
(B) terminated the Offer, or (C) failed to pay (by deposit with the
Depositary) for Shares pursuant to the Offer within five business days
following the expiration of the Offer;
(d) by any party giving written notice to the other parties at any
time after the expiration or termination of the Offer without Parent or
Offeror purchasing any Shares pursuant thereto, provided that a party may
not terminate pursuant to this clause (d) if it is in material breach of
the terms of the Merger Agreement;
(e) by any party thereto if the purchase of Shares pursuant to the
Offer shall not have taken place by June 30, 2000, provided that a party
may not terminate pursuant to this clause (e) if it is in material breach
of the terms of the Merger Agreement;
(f) by Parent if the Board of Directors of the Company, prior to the
purchase of Shares pursuant to the Offer (i) shall withdraw or modify in
any adverse manner its approval or recommendation of the Merger Agreement
pursuant to the provisions of the Merger Agreement relating to third-party
acquisition proposals; (ii) shall approve or recommend any Acquisition
Proposal or Superior Proposal; or (iii) shall resolve to take any of the
actions specified in clauses (i) or (ii) above; or
(g) by the Company at any time prior to the purchase of Shares
pursuant to the Offer, upon three business days' prior notice to Parent, if
the Board of Directors of the Company shall approve a Superior Proposal;
provided, however, that (i) the Company shall have complied with the
provisions of the Merger Agreement relating to third-party acquisition
proposals, (ii) the Board of Directors of the Company shall have concluded
in good faith, after giving effect to all concessions which may be offered
by Parent pursuant to clause (iii) below, after consultation with its
financial advisors and outside counsel, that such proposal continues to be
a Superior Proposal, and (iii) prior to any such termination, the Company
shall, and shall cause its financial and legal advisors to, negotiate with
Parent to make such adjustments in the terms and conditions of the Merger
Agreement as would enable Parent to proceed with the transactions
contemplated thereby; provided, however, that it shall be a condition to
termination by the Company pursuant to this clause (g) that the Company
shall have made the payment to Parent referred to in "Fees and Expenses"
above.
Indemnification; Directors' and Officers' Insurance. The Merger Agreement
provides that Parent shall indemnify and provide advancement of expenses to all
present and former directors and officers of the Company and its subsidiaries
for acts or omissions occurring prior to the Effective Time to the fullest
extent now provided or made available to them by the Company and its
subsidiaries under applicable law, under their respective certificates or
articles of incorporation or bylaws and under existing indemnification
agreements (which Parent agrees shall continue in full force and effect after
the Effective Time).
For a period of six years after the Effective Time, Parent shall, or shall
cause the Surviving Corporation to, maintain in effect, if available, directors'
and officers' liability insurance covering those persons who are covered as of
the date of the Merger Agreement by the Company's directors' and officers'
liability insurance policy to the extent that it provides coverage for events
occurring on or
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<PAGE> 13
prior to the Effective Time, on terms that are no less favorable to such persons
than the terms now applicable to them under the Company's current policies;
provided, however, that in no event shall Parent or the Surviving Corporation be
required to expend more than 200% of the annual premium currently paid by the
Company for such coverage; and provided, further, that if the premium for such
coverage exceeds such amount, Parent or the Surviving Corporation shall purchase
a policy with the greatest coverage available for such annual premium.
Certain Employee Matters. The Merger Agreement provides that each benefit
plan of the Company described in the Disclosure Schedule (a "Plan") with respect
to which any current or former employee of the Company or any of its
subsidiaries (each, an "Employee") participates immediately prior to the
Effective Time shall become obligations of the Surviving Corporation at the
Effective Time and, for at least one year thereafter, Parent shall, or shall
cause the Surviving Corporation to, either maintain the Plans or provide
benefits that are comparable, in the aggregate, to the benefits provided to the
Employees, considered as a group, under such Plans as in effect immediately
prior to the Effective Time.
With respect to any employee benefit plans covering employees of Parent and
its subsidiaries ("Parent Plans"), Parent shall, or shall cause the Surviving
Corporation to: (i) with respect to any medical or health plan, waive any
pre-existing condition or exclusion in any Parent Plans in which any Employee
may be entitled to participate that would result in a lack of coverage for any
condition for which an Employee would have been entitled to coverage under the
corresponding Plan; (ii) provide each Employee with credit for any co-payments
and deductibles paid prior to the Effective Time (to the same extent such credit
was given under the analogous Plan prior to the Effective Time) in satisfying
any applicable deductible or out-of-pocket requirements under any Parent Plans
in which such employees may be eligible to participate after the Effective Time;
and (iii) recognize all service of the Employees with the Company or any of its
subsidiaries for purposes of eligibility to participate and vesting credit in
any Parent Plan in which the Employees may be eligible to participate after the
Effective Time; provided that the foregoing shall not apply to the extent it
would result in duplication of benefits. In addition, Parent represents that
there are no waiting periods under any of its current medical or health plans.
Amendment. The parties to the Merger Agreement may amend, modify and
supplement the Merger Agreement in such manner as may be agreed upon by them in
writing, whether before or after approval of the stockholders of the Company,
except that after such approval is obtained, any amendment, modification or
supplement which requires stockholder approval under applicable law shall not be
made without such required approval.
BRENNAN/NELSON AGREEMENT
Parent and Offeror have entered into an agreement with Charles M. Brennan
III, the Company's Chairman and Chief Executive Officer, and Byron D. Nelson,
the Company's Senior Vice President, General Counsel and Secretary (the
"Brennan/Nelson Agreement"). Pursuant to that agreement, each of Messrs. Brennan
and Nelson agrees that (a) if the Offer is consummated prior to March 23, 2000,
(i) he will tender to Offeror and not withdraw all of his Shares, other than
Withheld Shares (consisting of 319,446 Shares held by Mr. Brennan and 27,779
Shares held by Mr. Nelson which, if sold prior to March 23, 2000, could subject
such individuals to substantial adverse income tax consequences), pursuant to
the Offer and (ii) promptly after March 22, 2000, he will, upon Offeror's
written request, sell to Offeror all of his Withheld Shares for a price equal to
the Offer Price; and (b) if the Offer is consummated on or after March 23, 2000,
he will tender to Offeror and not withdraw all of his Shares, including the
Withheld Shares, pursuant to the Offer. The Brennan/Nelson Agreement also
provides that neither Mr. Brennan nor Mr. Nelson will transfer his Shares except
pursuant to the Brennan/ Nelson Agreement. The Brennan/Nelson Agreement, which
is Exhibit (c)(5) to this Schedule 14D-9, is incorporated herein by reference in
its entirety.
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ARRANGEMENTS WITH EXECUTIVE OFFICERS AND DIRECTORS
Employment Agreements
The Company has employment agreements with Charles M. Brennan III, Chairman
and Chief Executive Officer, William S. Skibitsky, President and Chief Operation
Officer, William A. Koertner, Senior Vice President, Chief Financial Officer and
Treasurer, Byron D. Nelson, Senior Vice President, General Counsel and
Secretary, and Michael F. Knapp, Vice President -- Commercial Industrial,
described under the section captioned "Employment Contracts" in Schedule I
hereto. In the event of a change of control (as defined therein), Messrs.
Brennan, Skibitsky, Koertner, Nelson and Knapp may, under certain circumstances,
in the event of termination of their employment, be entitled to lump sum
payments equal to all salary and bonus owed for the periods specified in their
respective agreements, as well as acceleration of vesting of outstanding stock
options and restricted stock. The purchase of Shares pursuant to the Offer will
constitute a change of control for purposes of those agreements. The lump sum
amounts that would be payable to Messrs. Brennan, Skibitsky, Koertner, Nelson
and Knapp if their respective employment were terminated in accordance with
their terms (including the assumed payment of the cash value of accelerated
options and restricted stock, but excluding any tax "gross up" payments which
may be payable under their respective agreements under certain circumstances)
would be up to approximately $9,067,946, $3,460,225, $1,934,175, $2,091,125 and
$714,000, respectively, at December 31, 1999.
Options and Restricted Stock Held by Executive Officers and Directors
The discussion under the sections "Merger Agreement -- Treatment of Stock
Options" and "-- Treatment of Restricted Stock" above is incorporated herein by
reference.
Director and Officer Indemnification and Insurance
The discussion under the section "Merger Agreement -- Indemnification;
Directors' and Officers' Insurance" above is incorporated herein by reference.
APPRAISAL RIGHTS
Stockholders do not have dissenters' rights as a result of the Offer.
However, if the Merger is consummated, stockholders of the Company at the time
of the Merger who do not vote in favor of or consent in writing to the Merger
will have the right under the Delaware Law to dissent and demand appraisal of
their Shares in accordance with Section 262 of the Delaware Law. Under said
Section 262, dissenting stockholders who comply with the statutory procedures
will be entitled to receive a judicial determination of the fair value of their
Shares (exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest, if any. Any such judicial determination
of the fair value of the Shares could be based upon considerations other than or
in addition to the price paid in the Offer (or the Merger) and the market value
of the Shares. Stockholders should recognize that the value so determined could
be higher or lower than the price per Share paid pursuant to the Offer or the
Merger. Moreover, Parent or Offeror may argue in an appraisal proceeding that,
for purposes of such a proceeding, the fair value of the Shares is less than the
price paid in the Offer (or the Merger). THE FOREGOING SUMMARY OF THE RIGHTS OF
DISSENTING STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF
PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE THEIR DISSENTERS'
RIGHTS.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors.
The Company's Board of Directors has unanimously approved the Merger
Agreement and determined that the Offer and the Merger are fair to and in the
best interests of the stockholders of the
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<PAGE> 15
Company (other than Parent and its subsidiaries) and recommends that all
stockholders of the Company accept the Offer and tender all their Shares
pursuant to the Offer. This recommendation is based in part upon an opinion
received by the Company from Berenson Minella & Company, the Company's financial
advisor (the "Advisor"), that the Offer Price to be received by the holders of
Common Stock in the Offer and in the Merger is fair to such stockholders from a
financial point of view. The full text of the fairness opinion received by the
Company from the Advisor (the "Berenson Minella Opinion") is filed as an exhibit
to this Schedule 14D-9 and attached as Annex A hereto. Stockholders are urged to
read such opinion in its entirety.
As set forth in the Offer Documents, Offeror will purchase Shares tendered
prior to the close of the Offer if the Minimum Condition has been satisfied by
that time and if all other conditions to the Offer have been satisfied or
waived. Stockholders should be aware that if as a consequence of their failure
to tender the Minimum Condition is not satisfied, or any of the other conditions
to the Offer are not satisfied, Offeror is not obligated to purchase any Shares,
and subject to the limitations under the Merger Agreement, can terminate the
Offer and the Merger Agreement and not proceed with the Merger. Under the
Delaware Law, the approval of the Board and the affirmative vote of the holders
of a majority of the outstanding Shares are required to approve the Merger.
Accordingly, if the Minimum Condition is satisfied, Offeror will have sufficient
voting power to cause the approval of the Merger without the vote of any other
stockholder.
The Offer is scheduled to expire at 12:00 midnight, New York City time, on
February 29, 2000, unless Offeror, as required under the Merger Agreement as
described above or otherwise in its discretion, elects to extend the period in
which the Offer is open. A copy of the press release issued jointly by the
Company and Parent on December 22, 1999 announcing the Merger and the Offer is
filed as an exhibit to this Schedule 14D-9 and is incorporated herein by
reference in its entirety.
(b) Background of the Offer; Reasons for the Recommendation.
BACKGROUND
In August 1998, Charles M. Brennan III, Chairman and Chief Executive
Officer of the Company, was independently contacted by representatives of two
separate companies, each expressing an interest in acquiring the Company. Mr.
Brennan responded to each company that he would consider any proposals they
made. One of these companies had subsequent discussions with Mr. Brennan in
November 1998 and February 1999, but such discussions did not lead to serious
negotiations.
In February 1999, Mr. Brennan was invited to meet with the CEO of a third
company concerning a possible business combination. He and other representatives
of the Company had further discussions with representatives of that company
through July 1999, with the Company engaging the Advisor (in June 1999) to
assist it in such discussions. Those discussions were terminated by Mr. Brennan
on July 18, 1999.
In July 1999, Parent contacted representatives of the Company to determine
mutual interest in a potential transaction involving Parent and the Company.
Parent expressed an interest in pursuing discussions with the Company regarding
a potential acquisition of the Company by Parent.
On July 22, 1999, representatives of the Company met with representatives
of Parent, at Parent's invitation, concerning a possible acquisition of the
Company by Parent. In early August, in light of the apparent interest of several
parties in an acquisition of or other possible business combination with the
Company, management of the Company determined to explore the possible sale of
the Company on a more formal basis, and began consulting with the Advisor for
that purpose.
In August 1999, the Advisor contacted Parent to discuss the timing and
procedures associated with the Company's exploratory process.
On September 14, 1999, Parent executed a confidentiality agreement, and on
that date a confidential information memorandum (the "Information Memorandum")
describing the Company
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<PAGE> 16
and its business was sent to Parent. Also on that date, the Information
Memorandum was delivered to one of the other companies ("Company 1") which had
previously held discussions with management of the Company. Two other potential
purchasers ("Company 2" and "Company 3") received copies of the Information
Memorandum on October 12, 1999 and October 14, 1999, respectively, and an
additional potential purchaser received the Information Memorandum on November
4, 1999.
On September 27, 1999, a representative of the Advisor met with
representatives of Parent to discuss general information concerning the Company.
On October 7, 1999, members of the Company's management met with
representatives of the Advisor to provide the Advisor with information for the
preparation of management presentation meetings. Later that day, Parent and
Company 1 submitted preliminary indications of interest to the Advisor. On
November 10, 1999, Company 2 submitted a preliminary indication of interest to
the Advisor. On November 19, 1999, Company 3 submitted a preliminary indication
of interest to the Advisor, which was subsequently revised by Company 3 on
November 22, 1999.
At an October 22, 1999 meeting of the Company's Board of Directors, Mr.
Brennan reported on the status of negotiations to the Board of Directors.
On November 2, 1999, a representative of the Advisor and a representative
of Parent met and had further general discussions concerning the Company and the
exploratory process.
On November 5, 1999, management of the Company made a presentation to
representatives of Company 1, and Company 1 began an extensive due diligence
review of the Company.
On November 8, 1999, management of the Company made a presentation to
representatives of Parent, and Parent, together with representatives of
PriceWaterhouseCoopers LLP, Parent's accountants, and other advisors of Parent,
began their due diligence review of the Company, which included meeting with
representatives of Ernst & Young, the Company's independent auditors.
Between November 8 and November 20, 1999, representatives of
PriceWaterhouseCoopers had several telephone discussions with a representative
of the Company concerning PriceWaterhouseCoopers' due diligence review on behalf
of Parent.
On November 16, 1999, representatives of PriceWaterhouseCoopers visited the
Company's offices to conduct due diligence of the Company and representatives of
Parent, PriceWaterhouseCoopers, the Advisor and the Company discussed due
diligence matters by telephone conference.
On November 29, 1999, Mr. Brennan met with Fred D. Hafer, Chairman,
President and Chief Executive Officer of Parent, to discuss terms of the
potential transaction.
On November 30, 1999, management of the Company made a presentation to
Company 3, which began its due diligence review of the Company on that date.
On December 1, 1999, the Advisor provided forms of acquisition agreements
to Parent, Company 1 and Company 3, and on December 3, 1999, the Advisor sent
requests for final firm offers to Parent, Company 1 and Company 3. The Advisor's
request specified that offers should indicate a firm price per share and include
a mark-up of the form of agreement provided, and should be submitted by the
close of business on December 7, 1999. The due date for offers was subsequently
extended to December 10, 1999. As of December 10, 1999, the Company had received
proposals in response to the Advisor's request from the Parent, Company 1 and
Company 3.
The Company's Board of Directors met on December 13, 1999. At that meeting,
the Advisor made a presentation concerning the Company and the sale process and
provided its evaluation of the responses of the participants in that process.
After hearing the Advisor's presentation, the Company's Board of Directors
unanimously determined that Parent's proposal was the most comprehensive and
complete, but that a higher price should be pursued. Management was therefore
instructed to seek a
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<PAGE> 17
higher price from Parent, and if such a higher price, acceptable to management,
could be obtained, to thereafter negotiate exclusively with Parent.
Later on December 13, 1999, a representative of the Advisor negotiated with
a representative of Parent concerning price. On December 14, 1999, the Company
informed Parent that, subject to the negotiation and execution of a definitive
merger agreement, Parent would be the successful bidder.
On December 14, 1999, counsel for the Company and counsel for Parent began
negotiating the terms of the Merger Agreement. On December 16, 1999, Mr. Brennan
and William S. Skibitsky, President and Chief Operating Officer of the Company,
met with Mr. Hafer and negotiated certain provisions of the Merger Agreement.
Negotiations concerning those and other provisions continued among counsel and
other representatives of both parties through December 21, when the terms of the
Merger Agreement were finalized.
The Company's Board of Directors met on December 21, 1999 to consider the
Merger Agreement. After Mr. Brennan discussed developments since the December 13
board meeting, the Company's counsel made a presentation discussing the terms of
the Merger Agreement. The Advisor then made a presentation reviewing the
financial terms of the Offer and the Merger, and delivered its opinion to the
effect that, as of the date thereof, based upon its review and subject to the
various assumptions, qualifications, and limitations set forth therein, the
consideration to be paid to the stockholders of the Company pursuant to the
Offer and the Merger is fair to such stockholders from a financial point of
view. The Board of Directors then unanimously approved the Offer and the Merger,
and the Merger Agreement was executed after the market closed that day.
REASONS FOR THE RECOMMENDATION
In reaching its conclusions to approve the Merger and recommend that
stockholders accept the Offer, the Board of Directors of the Company considered
a number of factors, including, without limitation, the following:
(i) the financial and other terms and conditions of the Offer and
the Merger Agreement;
(ii) the competitive environment in which the Company operates;
(iii) the Board of Directors' review over the last several months
of the Company's strategic plan and its reevaluation of whether
remaining independent was the best means to achieve the Company's
business goals;
(iv) that the $30.10 per Share price to be received by the
Company's stockholders in both the Offer and the Merger represents an
approximately 43.8% premium over the closing market price of $20.9375
per Share on December 20, 1999, the last full trading day prior to the
meeting of the Board of Directors at which the Board approved the Merger
Agreement, and premiums of approximately 44.7%, 48.1% and 89.9% over the
average closing prices for the one-week period, the one-month period and
the 12-month period, respectively, through December 20, 1999, and that
such price would be payable in cash, thus eliminating any uncertainties
in valuing the consideration to be received by the Company's
stockholders;
(v) that the Offer and the Merger would not be subject to any
financing condition and that Parent has represented that the funds
necessary to consummate the Offer and the Merger are available and will
be provided to Offeror;
(vi) the written opinion of the Advisor that the Offer Price to be
received by the holders of Common Stock in the Offer and the Merger is
fair to such stockholders from a financial point of view; a copy of the
Berenson Minella Opinion is attached to this Schedule 14D-9 as Annex A
and is incorporated herein by reference;
(vii) the presentation of the Advisor to the Board of Directors at
its meetings on December 13, 1999 and December 21, 1999, respectively,
as to various financial and other
16
<PAGE> 18
matters involving the Company and the transaction which the Board of
Directors deemed relevant, including, among other things, (a) a review
of the Company's historical and projected financial performance and
other data provided to the Advisor by the Company relating to the
Company's business, (b) a review of the historical stock prices and
trading volumes of the Shares, (c) a review of certain information
regarding publicly traded companies deemed comparable by the Advisor,
(d) a review of certain merger and acquisition transactions deemed
comparable by the Advisor, (e) a review of premiums paid in certain
other transactions deemed comparable by the Advisor, (f) a discounted
cash flow valuation of the Company, and (g) a leveraged buyout analysis
of the Company;
(viii) the fact that the evaluation process included several
companies which the Company reasonably considered to be potential
interested parties concerning possible business combinations;
(ix) the fact that, to the extent required by the fiduciary
obligations of the Company's Board of Directors to the stockholders
under the Delaware Law, the Company may terminate the Merger Agreement
in order to approve a tender offer or exchange offer for the Shares or
other proposed business combination by a third party on terms more
favorable to the Company's stockholders than the Offer and the Merger
taken together, upon the payment of a $7 million termination fee;
(x) the future of the Company's employees and Parent's expressed
intention to keep the Company's existing work force substantially in
place; and
(xi) the impact of the Offer and the Merger on existing options,
shares of restricted stock and employment agreements with Company
personnel.
The foregoing is not intended to be exhaustive, but is intended to include
many of the material factors considered by the Company's Board. In view of the
complexity and variety of the issues, the Board did not attempt to quantify or
otherwise attempt to assign any relative or specific weights to the specific
factors considered, and individual directors may have given differing weights to
different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained the Advisor as its financial advisor in connection
with a possible transaction involving the Company. Pursuant to its agreement
with the Advisor, the Company agreed to pay the Advisor (i) a retainer fee of
$50,000 per quarter subject to a maximum total retainer fee of $100,000 and (ii)
an opinion fee of $250,000 payable upon the delivery of a fairness opinion with
respect to a transaction. In addition, the Advisor is to receive a transaction
fee upon successful completion of the Merger equal to approximately $2.6
million. The fees referred to in (i) and (ii) above will be credited against
this transaction fee. In addition, the Company has agreed to reimburse the
Advisor for its reasonable out-of-pocket expenses, including the fees and
disbursements of its counsel, and to indemnify the Advisor and certain related
persons against certain liabilities in connection with its engagement, including
certain liabilities which may arise under Federal securities laws.
The Company's Board of Directors selected the Advisor to act as its
financial advisor because of its experience and expertise. The Advisor has a
nationally recognized merger and acquisition advisory business. As part of its
investment banking business, the Advisor is continually engaged in the valuation
of businesses and their securities in connection with mergers and acquisitions,
leveraged buyouts, and private placements. The Advisor has, in the past,
provided financial advisory services to the Company and has received customary
fees as compensation for such services.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer and the Merger.
17
<PAGE> 19
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past 60 days, no transactions in the Shares have been
effected by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate, or subsidiary of the Company, except as
follows:
On December 21, 1999, the following executive officers of the Company
acquired Shares pursuant to exercise of outstanding stock options previously
granted under the Company's stock option and restricted stock plans, as set
forth below:
<TABLE>
<CAPTION>
NUMBER OF
EXECUTIVE OFFICER SHARES ACQUIRED EXERCISE PRICE
- ----------------- --------------- --------------
<S> <C> <C>
Charles M. Brennan III.................................. 44,445 $ 6.90
66,667 4.90
12,500 13.00
William S. Skibitsky.................................... 55,557 5.09
22,224 6.53
7,500 13.00
William A. Koertner..................................... 12,500 11.69
Byron D. Nelson......................................... 22,224 4.25
27,779 4.89
3,750 13.00
</TABLE>
The Company made loans to the executive officers to finance the acquisition
of such Shares, as described under "Indebtedness of Management" in Schedule I
hereto.
In addition, on December 17, 1999, the Company granted shares of restricted
stock (subject to forfeiture for a period of seven years) to the following
executive officers under the Company's stock option and restricted stock plans
in the amount set forth below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
EXECUTIVE OFFICER RESTRICTED STOCK RECEIVED
- ----------------- -------------------------
<S> <C>
Charles M. Brennan III 10,000
William S. Skibitsky 7,500
William A. Koertner 5,000
Byron D. Nelson 5,000
</TABLE>
On December 28, 1999, Mr. Brennan donated 35,000 Shares to a foundation of
which he is trustee.
(b) To the best knowledge of the Company, all of its executive officers and
directors currently intend to tender pursuant to the Offer all Shares held of
record or beneficially owned by them (including the Shares held by the
foundation referred to above), provided that, pursuant to the Brennan/Nelson
Agreement summarized under Item 3(b) of this Schedule 14D-9, the Withheld Shares
(which consist of 319,446 Shares held by Mr. Brennan and 27,779 Shares held by
Mr. Nelson, as to which those individuals will be entitled to long-term capital
gain tax treatment after March 22, 2000) will not be tendered if the Offer is
consummated prior to March 23, 2000, but will be sold to the Offeror upon
Offeror's request on or after that date at the Offer Price.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relates
to or would result in one or more of the events referred to in Item 7(a) above.
18
<PAGE> 20
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) State Business Combination Law
Delaware. The Company is subject to Section 203 of the Delaware Law.
Section 203 of the Delaware Law prevents an "Interested Stockholder" (defined
generally as a person owning 15% or more of the corporation's outstanding voting
stock) from engaging in a "Business Combination" (defined to include a variety
of transactions, including mergers) with a Delaware corporation for three years
following the date such person becomes an Interested Stockholder, unless (i)
before such person became an Interested Stockholder, the board of directors of
the corporation approved the transaction in which the Interested Stockholder
became an Interested Stockholder or approved the Business Combination, or (ii)
upon consummation of the transaction which resulted in the Interested
Stockholder becoming an Interested Stockholder, the Interested Stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
of the corporation and by certain employee stock ownership plans), or (iii)
following the transaction in which such person became an Interested Stockholder,
the Business Combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the affirmative vote
of the holders of at least two-thirds of the outstanding voting stock of the
corporation not owned by the Interested Stockholder. The Board of Directors has
unanimously approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, for purposes of Section 203 of the
Delaware Law, and the restrictions of such Section 203 are, accordingly, not
applicable to Parent, Offeror or their affiliates or associates as a result of
the consummation of the transactions contemplated by the Offer.
Company's Certificate of Incorporation. Article Tenth of the Company's
certificate of incorporation ("Article Tenth") provides that the affirmative
vote of the holders of at least 80% of all the securities of the Company
entitled to vote will be necessary for the authorization of certain business
combinations with any person who, as of the record date for the determination of
holders entitled to vote, is the beneficial owner, directly or indirectly, of
more than 10% of the outstanding securities of the Company then entitled to
vote. However, this provision is not applicable to, among other things, any
business combination on terms substantially consistent with those set forth in a
memorandum of understanding with such person approved by the Board of Directors
of the Company prior to the time such person shall have become a holder of more
than 10% of the outstanding securities of the Company then entitled to vote. The
Merger Agreement constitutes a memorandum of understanding under Article Tenth
and, therefore, the provisions of Article Tenth are inapplicable to the Offer,
the Merger and the Merger Agreement and the transactions contemplated thereby.
Article Eleventh of the Company's certificate of incorporation ("Article
Eleventh") provides that the affirmative vote of the holders of at least 95% of
all of the securities of the Company then entitled to vote will be necessary for
the adoption or authorization of any business combination with any person who,
as of the record date for the determination of holders entitled to vote, is the
beneficial owner, directly or indirectly, of more than 30% of the outstanding
securities of the Company then entitled to vote. However, this provision is not
applicable to, among other things, any business combination on terms
substantially consistent with those set forth in a memorandum of understanding
with such person approved by the Board of Directors of the Company prior to the
time such person shall have become a holder of more than 10% of the outstanding
securities of the Company then entitled to vote. The Merger Agreement
constitutes a memorandum of understanding under Article Eleventh and, therefore,
the provisions of Article Eleventh are inapplicable to the Offer, the Merger and
the Merger Agreement and the transactions contemplated thereby.
(b) Antitrust
Under the HSR Act and the rules that have been promulgated thereunder by
the Federal Trade Commission ("FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust
19
<PAGE> 21
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer is subject to these
requirements.
A Notification and Report Form with respect to the Offer is expected to be
filed under the HSR Act as soon as practicable following commencement of the
Offer by each of the Company and Parent. Under the provisions of the HSR Act
applicable to the Offer, the purchase of Shares pursuant to the Offer may not be
consummated until the expiration of a 15-calendar-day waiting period following
the filing by Parent, unless the Antitrust Division and the FTC terminate the
waiting period prior thereto. In addition, the Antitrust Division or the FTC may
extend such waiting period by requesting additional information or documentary
material from Parent. If such a request is made with respect to the Offer, the
waiting period related to the Offer will expire at 11:59 p.m., Washington, D.C.
time, on the tenth day after substantial compliance by Parent with such request.
With respect to each acquisition, the Antitrust Division or the FTC may issue
only one request for additional information. In practice, complying with a
request for additional information or material can take a significant amount of
time. Expiration or termination of applicable waiting periods under the HSR Act
is a condition to Offeror's obligation to accept for payment and pay for Shares
tendered pursuant to the Offer.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Offeror's proposed acquisition of the
Company. At any time before or after Offeror's purchase of Shares pursuant to
the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Offeror or the divestiture of substantial assets of Parent or its subsidiaries,
or the Company or its subsidiaries. Private parties may also bring legal action
under the antitrust laws under certain circumstances. There can be no assurance
that a challenge to the Offer on antitrust grounds will not be made or, if such
a challenge is made, of the results thereof.
(c) Public Utility Holding Company Act of 1935
The Commission must approve the acquisition of the Shares pursuant to the
Offer and the consummation of the Merger under the 1935 Act. Parent and Offeror
expect to file an application for approval with the Commission as soon as
practicable following commencement of the Offer.
The 1935 Act directs the Commission to approve any proposed acquisition
unless it finds that (1) the proposed acquisition would tend to create
detrimental interlocking relations or detrimental concentration of control, (2)
the consideration to be paid in connection with the acquisition is not
reasonable or (3) the proposed acquisition would unduly complicate the capital
structure of the holding company system after the Merger or would be detrimental
to the proper functioning of that holding company system. The Commission must
also find that the proposed acquisition complies with applicable state law,
tends toward the development of an integrated public utility system and
otherwise conforms to the 1935 Act's integration and corporate simplification
standards. Under these statutory standards, the Commission has in the past
permitted registered holding companies to acquire interests in other businesses
which are reasonably incidental and functionally related to the holding
company's public utility business. There can be no assurance that the Commission
will approve the acquisition of Shares pursuant to the Offer or the Merger.
20
<PAGE> 22
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
(a) None
(b) None
(c)(1) Merger Agreement among the Company, GPU, Inc. and GPX
Acquisition Corp. dated as of December 21, 1999
(incorporated herein by reference to Exhibit (c)(1) to
Schedule 14D-1 of GPU, Inc. (Commission File No. 1-6047) and
GPX Acquisition Corp., filed on December 29, 1999).
(c)(2) Amended Employment Agreement between Charles M. Brennan III
and the Company (incorporated herein by reference to (1) to
Exhibit 10.10 to the Company's annual report on Form 10-K
for 1996 (Commission File No. 1-8325)).
(c)(3) Change of Control Agreements with William S. Skibitsky,
William A. Koertner, Byron D. Nelson and Michael F. Knapp.
(c)(4) Form of Promissory Note issued by Executive Officers in
favor of the Company.
(c)(5) Letter Agreement, dated December 21, 1999, among GPU, Inc.,
GPX Acquisition Corp., Charles M. Brennan III and Byron D.
Nelson (incorporated by reference to Exhibit (c)(2) to
Schedule 14D-1 of GPU, Inc. (Commission File No. 1-6047) and
GPX Acquisition Corp. filed on December 29, 1999).
(c)(6) Opinion of Berenson Minella & Company, dated December 21,
1999 (attached to Schedule 14D-9 mailed to stockholders as
Annex A).
(c)(7) Consent of Berenson Minella & Company (included in Exhibit
(c)(6)).
(c)(8) Press Release issued jointly by the Company and GPU, Inc. on
December 22, 1999 (incorporated herein by reference to
Exhibit 99.1 to the Company's current report on Form 8-K
dated December 22, 1999).
(c)(9) Confidentiality Agreement dated September 13, 1999 between
the Company and GPU, Inc. (incorporated herein by reference
to Exhibit (c)(3) to Schedule 14D-1 of GPU, Inc. (Commission
File No. 1-6047) and GPX Acquisition Corp., filed on
December 29, 1999).
(c)(10) Letter dated December 29, 1999 from Charles M. Brennan III
to the stockholders of the Company (included with Schedule
14D-9 mailed to stockholders).
</TABLE>
21
<PAGE> 23
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
MYR GROUP INC.
By: /s/ CHARLES M. BRENNAN III
------------------------------------
Charles M. Brennan III
Chairman and Chief Executive Officer
December 29, 1999
22
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(a) None
(b) None
(c)(1) Merger Agreement among the Company, GPU, Inc. and GPX
Acquisition Corp. dated as of December 21, 1999
(incorporated herein by reference to Exhibit (c)(1) to
Schedule 14D-1 of GPU, Inc. (Commission File No. 1-6047) and
GPX Acquisition Corp., filed on December 29, 1999).
(c)(2) Amended Employment Agreement between Charles M. Brennan III
and the Company (incorporated herein by reference to (1) to
Exhibit 10.10 to the Company's annual report on Form 10-K
for 1996 (Commission File No. 1-8325)).
(c)(3) Change of Control Agreements with William S. Skibitsky,
William A. Koertner, Byron S. Nelson and Michael F. Knapp.
(c)(4) Form of Promissory Note issued by Executive Officers in
favor of the Company.
(c)(5) Letter Agreement, dated December 21, 1999, among GPU, Inc.,
GPX Acquisition Corp., Charles M. Brennan III and Byron D.
Nelson (incorporated by reference to Exhibit (c)(2) to
Schedule 14D-1 of GPU, Inc. (Commission File No. 1-6047) and
GPX Acquisition Corp. filed on December 29, 1999).
(c)(6) Opinion of Berenson Minella & Company, dated December 21,
1999 (attached to Schedule 14D-9 mailed to stockholders as
Annex A).
(c)(7) Consent of Berenson Minella & Company (included in Exhibit
(c)(6)).
(c)(8) Press Release issued jointly by the Company and GPU, Inc. on
December 22, 1999 (incorporated herein by reference to
Exhibit 99.1 to the Company's current report on Form 8-K
dated December 22, 1999).
(c)(9) Confidentiality Agreement dated September 13, 1999 between
the Company and GPU, Inc. (incorporated herein by reference
to Exhibit (c)(3) to Schedule 14D-1 of GPU, Inc. (Commission
File No. 1-6047) and GPX Acquisition Corp., filed on
December 29, 1999).
(c)(10) Letter dated December 29, 1999 from Charles M. Brennan III
to the stockholders of the Company (included with Schedule
14D-9 mailed to stockholders).
</TABLE>
23
<PAGE> 25
[BerensonMinella]
ANNEX A
December 21, 1999
The Board of Directors
MYR Group Inc.
Three Continental Towers
1701 W. Golf Road, Suite 1012
Rolling Meadows, Illinois 60008
Gentlemen:
MYR Group Inc., a Delaware corporation (the "Company"), has entered into an
Agreement and Plan of Merger (the "Merger Agreement") with GPU, Inc., a
Pennsylvania corporation ("Parent"), and GPX Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub"), whereby Sub will
commence a tender offer (the "Offer") to purchase all of the issued and
outstanding shares of common stock, par value $.01 per share (the "Common
Stock"), of the Company at a price of $30.10 per share, net to the seller in
cash (the "Consideration"). The Merger Agreement also provides that, following
the consummation of the Offer, Sub will be merged with and into the Company in a
transaction (the "Merger") pursuant to which each outstanding share of Common
Stock not owned by Parent, Sub or their respective affiliates (other than shares
as to which dissenters' rights have been perfected) will be converted into the
right to receive an amount in cash equal to the per share consideration paid in
the Offer and the Company will become a wholly-owned subsidiary of Parent. You
have asked us to render an opinion to you as to whether or not the Consideration
to be paid to the stockholders of the Company is fair to the stockholders of the
Company from a financial point of view.
In arriving at our opinion, we have, among other things:
(i) reviewed the latest draft of the Merger Agreement dated December
20, 1999;
(ii) reviewed, and discussed with members of management of the
Company, certain business and financial information relating to the Company
that we deemed relevant, including the Company's recent public filings and
financial statements;
(iii) reviewed, and discussed with members of management of the
Company, certain information including budgets and financial forecasts
(collectively, the "Forecasts") relating to the business, earnings, cash
flows, assets, liabilities and prospects of the Company;
(iv) reviewed the historical stock prices and trading volumes of the
Company's Common Stock;
(v) reviewed certain publicly available information regarding publicly
traded companies we deemed reasonably comparable to the Company;
(vi) reviewed certain publicly available information regarding
comparable merger and acquisition transactions we deemed relevant;
(vii) reviewed certain information regarding premiums paid in all-cash
acquisitions of publicly traded companies of a size comparable to the Offer
and the Merger;
(viii) performed discounted cash flow analyses based on the Forecasts;
(ix) performed leveraged buyout analyses based on the Forecasts;
(x) participated in discussions with a limited number of other
potential acquirers as agreed to by the Company's management with respect
to potential merger and acquisition transactions involving the Company;
(xi) participated in certain discussions among management of the
Company and Parent regarding the Company and the Offer and the Merger; and
(xii) reviewed such other information, performed such other analyses
and taken into account such other factors as we deemed relevant.
For purposes of rendering our opinion, we have assumed and relied upon the
accuracy and completeness of all information provided to us by and on behalf of
the Company and have not assumed
A-1
<PAGE> 26
any responsibility for independent verification of such information or for any
independent valuation or appraisal of any assets of the Company, nor were we
furnished with any such valuations or appraisals. We have assumed, without
independent investigation, the accuracy of all representations and statements
made by officers and management of the Company. With respect to the Forecasts,
we have assumed that they were reasonably prepared on bases reflecting the best
estimates and good faith judgment of the Company's management as of the date of
their preparation and that management has informed us of all circumstances
occurring since such date that could make the Forecasts incomplete or
misleading. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and information made available to us as of, the date
hereof.
This opinion was provided at the request and solely for the benefit of the
Board of Directors of the Company in connection with its consideration of the
Offer and the Merger and shall not be reproduced, summarized, described, relied
upon, or referred to, or furnished to any other person without, in each
instance, Berenson Minella's prior written consent; provided that, subject to
our prior review, the Company may refer to this opinion on any
Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company
with respect to the Offer or any Proxy Statement filed by the Company with
respect to the Merger, without such written consent. This opinion does not and
will not constitute a recommendation to stockholders of the Company to tender
their shares in the Offer or to vote in favor of the Merger. This opinion is
delivered subject to the conditions, scope of engagement, standard of care,
limitations, and understandings set forth in the engagement agreement between
Berenson Minella and the Company, dated December 20, 1999.
This opinion is delivered with the explicit understanding that this opinion
is based on standards of assessment in existence as of the date hereof, and that
standards of assessment may change in the future. Berenson Minella disclaims any
responsibility for any impact any such changes may have on the assessment of the
Offer and the Merger. Unforeseen future events that could affect the fairness of
the Consideration to be paid to the stockholders in the Offer and the Merger,
from a financial point of view, have not been factored into this opinion.
Berenson Minella disclaims any obligation to update or revise this opinion for
events occurring subsequent to the date hereof, whether foreseen or unforeseen.
This opinion is a fairness opinion only from a financial point of view.
Berenson Minella makes no representations with respect to questions of legal
interpretation or enforceability and expressly disclaims that this opinion may
be construed in any way as a legal opinion. Our opinion is limited to the
matters expressly set forth in this letter, and no opinions may be implied or
may be inferred beyond the matters expressly so stated.
We note that we have acted as financial advisor to the Company in
connection with the Offer and the Merger and will receive a fee for our
services, which fee is contingent upon the consummation of the Offer. Berenson
Minella has performed investment banking and other services for the Company in
the past and has received customary compensation for such services.
Based upon and subject to the foregoing, and subject to the various
assumptions, qualifications, and limitations set forth herein, it is our opinion
that, as of the date hereof, the Consideration to be paid to the stockholders of
the Company pursuant to the Offer and the Merger is fair to the stockholders of
the Company from a financial point of view.
Very truly yours,
BERENSON MINELLA & COMPANY
A-2
<PAGE> 27
SCHEDULE I
MYR GROUP INC.
1701 WEST GOLF ROAD
SUITE 1012, TOWER THREE
ROLLING MEADOWS, ILLINOIS 60008-4007
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about December 29, 1999 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of MYR Group Inc. (the "Company") to the holders of record of
shares of Common Stock, par value $0.01 per share, of the Company (the
"Shares"). You are receiving this Information Statement in connection with the
possible election of persons designated by Offeror (as defined below) to a
majority of the seats on the Board of Directors of the Company.
On December 21, 1999, the Company, GPU, Inc., a Pennsylvania corporation
("Parent"), and GPX Acquisition Corp, a Delaware corporation and a direct wholly
owned subsidiary of Parent ("Offeror"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") in accordance with the terms and subject to the
conditions of which (i) Parent will cause the Offeror to commence a tender offer
(the "Offer") for all outstanding Shares, at a price of $30.10 per Share net to
the seller in cash, without interest thereon, and (ii) Offeror will be merged
with and into the Company (the "Merger"). As a result of the Offer and the
Merger, the Company will become a wholly owned subsidiary of Parent.
The Merger Agreement requires the Company to take such action as Offeror
may reasonably request to cause Offeror's designees to be elected to the Board
of Directors under the circumstances described therein. See "Board of Directors
and Executive Officers -- Right to Designate Directors; Offeror Designees"
below.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Schedule
14D-9.
Pursuant to the Merger Agreement, Offeror commenced the Offer on December
29, 1999. The Offer is scheduled to expire at 12:00 midnight, New York City
Time, on Tuesday, February 29, 2000, unless the Offer is extended.
The information contained in this Information Statement concerning Offeror
and Parent has been furnished to the Company by Offeror and Parent, and the
Company assumes no responsibility for the accuracy or completeness of such
information.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of December 21, 1999, there were
6,429,135 Shares outstanding, 756,650 shares reserved for issuance upon exercise
of outstanding options and 882,086 shares reserved for issuance upon conversion
of outstanding convertible notes (with the Company having the right to
repurchase 600,183 of such shares at $5.67954 per share if issued upon
conversion). The Board of Directors currently consists of five members, divided
into three Classes with staggered terms of three years. At each annual meeting
of stockholders, directors of the Class whose term expires on the date of such
meeting are elected to hold office for three years.
I-1
<PAGE> 28
RIGHT TO DESIGNATE DIRECTORS; OFFEROR DESIGNEES
The Merger Agreement provides that, promptly upon the purchase of and
payment for at least a majority of the outstanding Shares, Parent and Offeror
shall be entitled to designate the number of directors, rounded up to the
nearest whole number but in no event more than one less than the total number of
directors on the Company's Board of Directors, as will give Parent and Offeror
representation on the Company's Board of Directors equal to the product of (i)
the total number of directors on the Company's Board of Directors (giving effect
to the directors designated by Parent and Offeror) and the percentage that the
aggregate number of Shares so purchased bears to the total number of Shares then
outstanding. The Company has agreed that, upon request of Parent, it will
promptly either increase the size of its Board of Directors or exercise all
reasonable efforts to secure the resignations of such number of its incumbent
directors as is necessary to enable Parent's and Offeror's designees to be so
elected or appointed to the Company's Board of Directors, and that it shall
cause Parent's and Offeror's designees to be so elected or appointed at such
time.
Parent and Offeror have indicated that they will designate Fred D. Hafer,
Bruce L. Levy and David C. Brauer as Parent's and Offeror's designees (the
"Offeror Designees").
OFFEROR DESIGNEES
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION;
NAME AND AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------ --------------------------------------------------
<S> <C>
Fred D. Hafer (58)................... Chairman and Director of Offeror. Chairman, Chief Executive
Officer, President and Director of Parent and GPU Service,
Inc. ("GPUS"). Became President, Chief Operating Officer and
a Director of Parent and GPUS in July 1996 and was elected
to the additional positions of Chairman and Chief Executive
Officer in May 1997. Also Chairman, Chief Executive Officer
and a Director of Jersey Central Power & Light Company
("JCP&L"), Metropolitan Edison Company ("Met-Ed") and
Pennsylvania Electric Company ("Penelec"); Chairman and a
Director of GPU Nuclear, Inc.; Chairman, Chief Executive
Officer and a Director of GPU Advanced Resources, Inc.;
Chairman and Director of GPU Capital, Inc.; and a Director
of GPU Telcom Services, Inc., GPU Electric, Inc., GPU
International, Inc. ("GPUI"), GPU Power, Inc., Saxton
Nuclear Experimental Corporation, Avon Energy Partners
Holdings ("Avon"), Midlands Electricity plc ("Midlands") and
GPU PowerNet PTY Ltd., all subsidiaries of Parent. Served as
President of Met-Ed from 1986 to 1996, and as President of
Penelec from 1994 to 1996. Director of the U.S. Chamber of
Commerce, Utilities Mutual Insurance Company, a director and
past president of the Manufacturers Association of Berks
County and a past Chairman of the Board of the Pennsylvania
Electric Association. Director of the Reading Hospital and
Medical Center, a trustee of the Caron Foundation, and
immediate past chairman and a member of the Board of
Trustees of Drug-Free Pennsylvania.
</TABLE>
I-2
<PAGE> 29
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION;
NAME AND AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------ --------------------------------------------------
<S> <C>
Bruce L. Levy (44)................... President and Director of Offeror. Senior Vice President and
Chief Financial Officer of Parent since 1998; President and
Director of GPU Capital, Inc. Executive Vice President and a
Director of GPUS and Vice President of JCP&L, Met-Ed and
Penelec since 1998. Director of GPUI, GPU Power, Inc., GPU
Electric, Inc., Avon, Midlands and GPU PowerNet PTY Ltd.,
GPU GasNet Pty Ltd. and Parent's South American
subsidiaries, Empresa Distribuidora Electrica Regional S.A.,
Empresa Distribuidora San Luis S.A., Empresa Distribuidora
del Electricidad de la Rioja S.A. and Empresa Distribuidora
de Electricidad de Salta S.A. President and Chief Executive
Officer of GPUI from 1991 to 1998.
D.C. Brauer (46)..................... Vice President and Director of Offeror; Vice President of
GPUS since 1997. Director of GPU PowerNet PTY Ltd. and GPU
GasNet Pty Ltd. Vice President -- Finance and Treasurer of
GPUI from 1993 to 1997, of GPU Power, Inc. from 1994 to 1997
and of GPU Electric, Inc. from 1995 to 1997.
</TABLE>
None of the Offeror Designees (i) is currently a director of, or holds any
position with, the Company, (ii) has a familial relationship with any directors
or executive officers of the Company, or (iii) to the best knowledge of the
Parent and Offeror, beneficially owns any securities (or rights to acquire such
securities) of the Company. The Company has been advised by Parent and Offeror
that, to the best of Parent's and Offeror's knowledge, none of the Offeror
Designees has been involved in any transactions with the Company or any of its
directors, executive officers or affiliates which are required to be disclosed
herein or in the Schedule 14D-9.
It is expected that the Offeror Designees may assume office at any time
following the acceptance for payment of, and payment for, any Shares pursuant to
the Offer, and that, upon assuming office, the Offeror Designees will thereafter
constitute at least a majority of the Board of Directors.
I-3
<PAGE> 30
DIRECTORS
The names of the members of the Board of Directors of the Company, and
certain information with respect to each, are as follows:
<TABLE>
<CAPTION>
NAME, AGE, OCCUPATION YEAR FIRST
AND BUSINESS EXPERIENCE ELECTED A DIRECTOR
----------------------- ------------------
<S> <C>
CLASS I DIRECTORS
WILLIAM G. BROWN, 57........................................ 1990
Partner in the law firm of Bell, Boyd & Lloyd, Chicago,
Illinois (since 1976). Mr. Brown is also a director of
Dovenmuehle Mortgage Inc., CFC International, Inc. and
Lifemark Corporation(1)(2)
JOHN M. HARLAN, 66........................................ 1995
Former Chairman and President of Harlan Electric
Company, an electrical construction firm
(1963 -- 1994).(1)
CLASS II DIRECTORS
ALLAN E. BULLEY, JR., 66.................................. 1992
Chairman (since 1991) and Chief Executive Officer
(since 1970) of Bulley and Andrews, a general
construction firm, Chicago, Illinois.(1)(2)
BIDE L. THOMAS, 64........................................ 1993
Former President and Chief Operating Officer of
Commonwealth Edison Company, an investor owned electric
utility, Chicago, Illinois. Mr. Thomas is also a
director of Northern Trust Corporation, The Northern
Trust Company and R.R Donnelley & Sons Company.(1)(2)
CLASS III DIRECTOR
CHARLES M. BRENNAN III, 57................................ 1986
Chairman (since 1988) and Chief Executive Officer
(since 1989) of the Company.
</TABLE>
- ---------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
BOARD COMMITTEES AND ACTIONS
The Board of Directors of the Company held four meetings during 1998. The
Board has two committees, the Audit Committee, which held two meetings during
1998, and the Compensation Committee, which held three meetings during 1998.
During 1998, no director attended less than 75% of all meetings of the Board of
Directors and all meetings of committees of which he was a member.
The primary functions of the Audit Committee are to review the Company's
interim and annual financial statements and the reports of its management and
auditors thereon, and to report its findings and recommendations to the Board of
Directors.
The primary purposes of the Compensation Committee are to review the
Company's overall compensation programs, to set the compensation of the Chief
Executive Officer and other executive officers and to administer the Company's
management incentive plans. The Board of Directors has also established a
committee of Mr. Thomas and Mr. Bulley, two non-employee directors, to
administer the Company's stock option and restricted stock plans.
I-4
<PAGE> 31
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of three non-employee directors:
William G. Brown, Allan E. Bulley, Jr. and Bide L. Thomas.
For the year ended December 31, 1998, the Company paid legal fees to Bell,
Boyd & Lloyd in the amount of $48,972. Mr. Brown, a Director and member of the
Compensation Committee, is a partner in Bell, Boyd & Lloyd. The Company
anticipates that Bell, Boyd & Lloyd will continue to provide legal services to
the Company.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or any
of its subsidiaries is paid a fee of $12,000 annually ("Annual Retainer") plus
$1,000 for each meeting of the Board of Directors or committee of the Board
which he attends, with a maximum of one meeting fee payable for any calendar
day.
Under the terms of the 1993 Non-Employee Directors' Stock Option Plan each
non-employee director, upon his or her first election to the Board of Directors,
receives an option to purchase 10,000 shares of Common Stock (as adjusted as
hereinafter described). The plan further provides that each director shall
receive an option to purchase an additional 1,000 shares of Common Stock (as
adjusted as hereinafter described) on the date each annual meeting of
stockholders is held after the year in which the non-employee director was first
elected to Board of Directors. The terms of the initial option grant and of each
of the subsequent annual grants are: (i) the option price shall be the average
of the high and low prices of a share of common stock on the New York Stock
Exchange on the date of grant; (ii) the option shall vest with respect to 25% of
the shares six months after the date of grant, with respect to an additional 25%
of the shares one year after the date of grant, with respect to an additional
25% of the shares two years after the date of the grant, and with respect to the
final 25% of the shares three years after the date of the grant; (iii) the
option shall expire ten years after the date of the grant. On December 15, 1995,
the Company paid a stock dividend of one share of Common Stock for each three
shares of Common Stock held by stockholders as of the record date of December 1,
1995 (the "1995 Stock Dividend"). On December 15, 1997, the Company paid a stock
dividend of two shares of Common Stock for every three shares of Common Stock
held by the stockholders as of the record date of December 1, 1997 (the "1997
Stock Dividend"). Under the terms of the Company's stock option plans, the
number of shares subject to the plans and to options granted under the plans are
proportionately adjusted in the event of a stock dividend or other events
described in the plans. As a result of the 1995 and 1997 Stock Dividends, the
number of shares covered by the initial stock option grants to Messrs. Brown,
Bulley, Harlan and Thomas were adjusted to 22,224 shares. The number of shares
covered by grants of option on the dates of annual meetings of stockholders are
adjusted to 2,224 shares.
Under the terms of the Company's 1996 Non-employee Director Stock Ownership
Plan ("1996 Plan") a non-employee Director may elect to receive his or her
Annual Retainer in shares of restricted Common Stock. The restrictions lapse on
the fifth anniversary date of award or the Director's earlier death, disability
or retirement. Messrs. Brown and Bulley each elected to receive his Annual
Retainer in shares of restricted Common Stock under the 1996 Plan. The number of
restricted shares awarded to Mr. Brown and Mr. Bulley under the 1996 Plan
(adjusted for the 1997 Stock Dividend) on the dates of the 1996, 1997 and 1998
annual meetings of stockholders were 1,891 shares, 1,588 shares and 947 shares,
respectively.
I-5
<PAGE> 32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 3, 1995, the Company acquired all of the issued and outstanding
shares of capital stock of Harlan Electric Company in accordance with the terms
of a Merger Agreement for a consideration consisting of cash and certain Escrow
and Non-Escrow Notes. The Escrow and Non-Escrow Notes provide that they may be
converted into shares of Common Stock at a conversion price of $12.6212. As a
result of the 1995 and 1997 Stock Dividends and in accordance with the terms of
the Escrow and Non-Escrow Notes the conversion price was decreased to $5.67954.
John M. Harlan and his five brothers and sisters (the "Noteholders") received
all of the Escrow and Non-Escrow Notes. Both the Escrow and Non-Escrow Notes
bear interest at the rate of 7% and are for a term of seven years with interest
being paid semi-annually and the principal being repaid in three equal payments
on January 3, 2000, 2001 and 2002 respectively. The Escrow and the Non-Escrow
Notes may be redeemed by the Company at any time after January 3, 2000 or at any
earlier time with the consent of the Noteholder. As a result of a settlement
between the Company and the Noteholders related to certain claims against the
Escrow Notes by the Company under the Merger Agreement, each of the Noteholders
has granted an option to the Company to purchase any and all shares into which
he or she elects to convert his or her Escrow Note and one of his or her two
Non-Escrow Notes at an exercise price of $5.67954 per share. In the case of Mr.
Harlan, he has granted an option to the Company to purchase any and all shares
into which he elects to convert his Escrow Note in the amount of $279,096 and
one of his two Non-Escrow Notes in the amount of $210,776. The other Non-Escrow
Note held by Mr. Harlan is in the amount of $326,322.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
POSITION(S) HELD OFFICER OF THE
NAME WITH THE COMPANY COMPANY SINCE
- ---- ---------------- --------------
<S> <C> <C>
Charles M. Brennan III.................. Chairman and Chief Executive Officer 1988
William S. Skibitsky(1)................. President and Chief Operating Officer 1994
William A. Koertner(2).................. Senior Vice President, Chief Financial 1998
Officer and Treasurer
Byron D. Nelson(3)...................... Senior Vice President, General Counsel 1984
and Secretary
Michael F. Knapp(4)..................... Vice President -- Commercial 1999
Industrial
</TABLE>
- ---------------
(1) Mr. Skibitsky was elected President and Chief Operating Officer of the
Company on July 23, 1996 and had been previously elected Executive Vice
President of the Company and President of The L.E. Myers Co. (a wholly
owned subsidiary of the Company) on May 12, 1994.
(2) Mr. Koertner was elected Senior Vice President, Chief Financial Officer and
Treasurer on November 9, 1998. Mr. Koertner was Vice President at Central
Illinois Public Service Company from 1993 to November 1998.
(3) Mr. Nelson was elected Vice President, General Counsel and Secretary in
February 1984 and Senior Vice President in 1987.
(4) Michael F. Knapp was Vice President and Program Director at Parsons Energy
& Chemicals Group Inc. from 1996 to December 1998 and Vice President,
Regional Operations at International Technology Corporation from 1994 to
1996.
I-6
<PAGE> 33
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table, including footnotes, shows for the years 1998, 1997,
and 1996, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to the named Executive Officers in
all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
AWARDS
ANNUAL COMPENSATION ---------------------
----------------------------------- RESTRICTED
OTHER ANNUAL STOCK ALL OTHER
SALARY COMPENSATION AWARD(S) OPTION/ COMPENSATION
YEAR ($)(1) BONUS($) ($)(2)(3) ($)(4) SAR(#) ($)(5)(6)
---- ------- -------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles M. Brennan III..... 1998 404,039 307,990 88,800 306,250 50,000 0
Chairman and 1997 357,548 293,000 120,783 191,250 0 0
Chief Executive Officer 1996 307,500 217,000 142,843 161,250 0 0
William S. Skibitsky....... 1998 269,288 197,400 20,800 245,000 30,000 26,889
President and Chief 1997 232,885 187,000 21,693 143,438 0 34,153
Operating Officer 1996 207,200 155,000 25,834 85,312 0 0
Byron D. Nelson............ 1998 187,346 115,800 20,800 91,875 15,000 20,236
Senior Vice President 1997 168,750 115,000 25,833 76,500 0 4,973
General Counsel and 1996 159,000 77,500 24,945 56,875 0 9,680
Secretary
William A. Koertner(7)..... 1998 28,664 10,000 0 116,900 50,000 0
Senior Vice President
Chief Financial Officer
and Treasurer
Elliott C. Robbins(8)...... 1998 139,274 0 1,333 91,875 0 0
Senior Vice President 1997 168,750 115,000 25,833 76,500 0 4,937
Treasurer and Chief 1996 159,000 67,500 24,956 56,875 0 9,686
Financial Officer
</TABLE>
- ---------------
NOTES TO SUMMARY COMPENSATION TABLE
(1) Includes amounts deferred at the election of the named executive officers
under the 401(k) feature of the Company's Profit Sharing and Thrift Plan.
Includes automobile allowances of $600 per month for Mr. Skibitsky (through
May 1998), and $500 per month for Messrs. Nelson, Robbins (through August
1998), and Koertner (November and December), respectively. Mr. Brennan and
Mr. Skibitsky (since June 1998) are each provided with an automobile by the
Company.
(2) Includes: (i) the vested portion of Company contributions to the Profit
Sharing and Thrift Plan and (ii) dividend equivalent payments under the
Company's Stock Option and Restricted Stock Plans on stock options held by
the named executive officers for all reported years. Effective with the
third quarter 1997 dividend, the named executive officers are no longer
entitled to these dividend equivalent payments.
(3) In 1991, in lieu of any other retirement benefit not available generally to
all employees, Mr. Brennan was granted an option to purchase 50,000 shares
of Common Stock and borrowed the exercise price from the Company to exercise
the option. Included in the amount set forth is a payment of $68,000 to Mr.
Brennan which is equal to the amount of principal payment payable to the
Company by Mr. Brennan on December 31, 1996, 1997 and 1998 under the terms
of the promissory note evidencing the loan. Upon receipt, Mr. Brennan
immediately paid these amounts to the Company as payment of the principal
due on the note. The amount does not include an additional payment of
$21,432 for 1998, $26,790 for 1997, and $32,148 for 1996, which is equal to
the amount of interest accrued on the promissory note at the applicable
Federal rate under Section 1274(d) of the Internal Revenue Code of 1986, as
amended. On December 31, 1998, December 31, 1997 and December 31, 1996,
respectively, Mr. Brennan received payments equal to
I-7
<PAGE> 34
these amounts which he immediately paid to the Company as payment of the
interest amount due on the note. There is no net income or expense effect
from these interest payments since the interest income earned by the Company
offsets the payment expense. (See "Employment Contracts.")
(4) Amount is determined by multiplying the number of shares times the closing
price of a share of Common Stock on the NYSE on the date of grant. Unless
otherwise amended by the Committee of the Board of Directors which
administers the Company's Stock Option and Restricted Stock Plans, the
restrictions lapse on the 7th anniversary date of the date of grant or upon
the named executive officer's earlier death, disability or retirement.
Dividends are paid on restricted shares. As of December 31, 1998 the total
number of and value of restricted shares held by the Company for Messrs.
Brennan, Skibitsky, Nelson and Koertner were 66,666 shares/$766,659; 45,000
shares/$517,500; 22,500 shares/$258,750; and 10,000 shares/$115,000,
respectively.
(5) Includes amounts accrued by the Company as unfunded liabilities for Messrs.
Nelson and Robbins pursuant to Supplemental Retirement and Death Benefit
Agreements (SRDB Agreements) entered into in 1984 between the Company and
each of them. Under the SRDB Agreements the named executive officers are
entitled, upon retirement or permanent disability, to an aggregate amount
equal to two times their highest base salary (Benefit Amount) payable in 120
equal monthly installments over a period of 10 years (or, in the event of
death, to their beneficiary over 15 years). The Benefit Amount is reduced by
15%, 25%, 33.3%, 40% and 45% in the event the named executive officer
retires at age 64, 63, 62, 61, or 60, respectively. No benefit shall be paid
in the event of the named executive officer's retirement prior to age 60.
(6) The amount included for Mr. Skibitsky represents reimbursement for certain
costs associated with the sale of his previous residence in Connecticut,
which the Company had agreed to pay at the time Mr. Skibitsky was employed
by the Company.
(7) Mr. Koertner joined the Company and was elected Senior Vice President, Chief
Financial Officer and Treasurer on November 9, 1998.
(8) Mr. Robbins resigned from the Company effective August 14, 1998.
STOCK OPTIONS
The following tables contain information concerning the stock options
granted to, exercised by and held by the named executive officers in 1998. The
Company's stock option and restricted stock plans do not provide for the grant
of SARs. The Potential Realizable Values set forth result from calculations
assuming 5% and 10% growth rates in accordance with rules and regulations
promulgated by the Securities Exchange Commission. The Value of Unexercised
In-the-Money Options is calculated using the difference between fair market
value of the Common Stock at December 31, 1998 ($11.50 per share) and the
exercise price of the options.
OPTION/SAR GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
% OF TOTAL OF STOCK PRICE
OPTIONS/SARS EXERCISE APPRECIATION FOR OPTION
OPTIONS/ GRANTED TO OR TERM
SARS EMPLOYEES BASE EXPIRATION --------------------------
NAME GRANTED(#) IN FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- ---- ---------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
C.M. Brennan.................. 50,000 24.5% $13.00 05/06/08 286,614 841,402
W.S. Skibitsky................ 30,000 14.7% 13.00 05/06/08 171,969 504,841
B.D. Nelson................... 15,000 7.3% 13.00 05/06/08 85,984 252,421
W.A. Koertner(1).............. 50,000 24.5% 11.69 11/09/08 352,114 906,902
E.C. Robbins(2)............... 0 0 n/a n/a 0 0
</TABLE>
I-8
<PAGE> 35
AGGREGATED OPTION/SAR EXERCISES IN
1998 AND YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
NO. SHARES DOLLAR FY-END(#) AT FY-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Brennan III..... -- -- 430,558 172,222 3,500,296 562,221
William S. Skibitsky....... -- -- 72,225 35,556 438,960 27,613
Byron D. Nelson............ -- -- 77,782 15,000 593,087 0
William A. Koertner(1)..... -- -- 0 50,000 0 0
Elliott C. Robbins(2)...... 66,392 $597,945 0 0 0 0
</TABLE>
- ---------------
(1) Mr. Koertner was elected Sr. Vice President, Chief Financial Officer and
Treasurer November 9, 1998.
(2) Mr. Robbins resigned from the Company effective August 14, 1998.
EMPLOYMENT CONTRACTS
The Company and Charles M. Brennan III entered into an employment agreement
effective January 1, 1998 (the "Brennan Agreement") which replaced a prior
agreement between the Company and Mr. Brennan which expired December 31, 1996.
The initial term of the Brennan Agreement was from January 1, 1998 through
December 31, 1998 and the agreement provides that it will renew automatically
for successive one-year terms thereafter unless terminated in accordance with
the terms of the agreement. The Brennan Agreement provides that the Company
shall employ Mr. Brennan as Chairman and Chief Executive Officer at a base
compensation per year of not less than $312,500. The Agreement provides that Mr.
Brennan is entitled to receive an incentive bonus in accordance with the terms
of any incentive compensation plan which may exist from time to time during the
term of the Brennan Agreement.
The Brennan Agreement further provides that, upon termination of employment
for certain defined reasons set forth in the Brennan Agreement, Mr. Brennan (or
his estate) will receive an amount equal to from one to two times his annual
base salary plus an amount equal to from one to two times his annual incentive
amount determined on the basis of the Company having achieved 100% of its
financial goals. The amounts of these payments are determined based upon the
reason for the termination of Mr. Brennan's employment. In addition, all stock
options and restricted stock grants to Mr. Brennan shall become fully vested and
the amount of remaining indebtedness, if any, of Mr. Brennan to the Company
described under the heading "Indebtedness of Management" shall be forgiven.
The Company has agreements with Messrs. Skibitsky, Nelson, Koertner and
Knapp that provide for certain benefits that are activated only on a change of
control (defined as (i) the filing of a report on Schedule 13D promulgated under
the Securities Exchange Act of 1934 disclosing that any person, other than
Charles M. Brennan III, has become the beneficial owner of 20% or more of the
issued and outstanding shares of voting securities of the Company or (ii) the
acquisition of 20% or more of the issued and outstanding shares of voting
securities of the Company by any person which would otherwise require the filing
of a report on Schedule 13D). Provided that the individual is still serving as
an officer at the time of such a change of control, each such agreement provides
for the payment of compensation and benefits and acceleration of vesting of all
unvested stock options and restricted stock if the officer's employment is
terminated following a change of control of the Company. An officer whose
employment is terminated within the employment period (as specified in such
officer's agreement) following a change of control will receive compensation and
other benefits, which decrease with time, under the agreement only if the
termination was by the Company without good cause or by the executive for a good
reason (any significant change in the nature of the principal duties of the
officer or any significant diminution of the officer's status or
responsibilities, any decrease in the officer's salary or cash incentive
opportunity below the level the officer was earning at the time
I-9
<PAGE> 36
of a change of control, the Company's failure to obtain the agreement of a
successor entity to assume the obligations under the agreement or the Company
requiring the officer to be based in any location that would materially increase
the officer's commuting time). Mr. Skibitsky's and Mr. Nelson's agreements
specify an employment period of four years and Mr. Koertner's and Mr. Knapp's
agreements specify an employment period of five years. Each officer may also
terminate the agreement within the 90-day period following the second
anniversary of (in the case of Messrs. Koertner and Knapp, within the 90-day
period following the end of the 30th month after) a change of control and
receive compensation and other benefits provided that the officer offers to
continue employment at the request of the Company for a period of up to six
months. In addition, if an excise tax is imposed pursuant to the applicable
provisions of the Internal Revenue Code upon any payments to Messrs. Skibitsky,
Nelson and Koertner by the Company, the agreements provide that they will be
paid an additional amount calculated so as to provide them with the same
compensation they would have received had no excise tax been imposed.
INDEBTEDNESS OF MANAGEMENT
During 1991, the Board of Directors granted to Mr. Brennan, in lieu of any
retirement benefit generally not available to all salaried employees, a stock
option to purchase 50,000 shares of Common Stock under the Company's 1990 Stock
Option Plan (the "Brennan Option") and the Board of Directors provided Mr.
Brennan a cash grant of $731,500 restricted in its use to the exercise of the
Brennan Option under the terms of an employment agreement between the Company
and Mr. Brennan. At the expiration of its term the employment agreement was
replaced with a new agreement. (See "Employment Agreement.") As part of the
employment agreement, the Company agreed to lend $680,000 to Mr. Brennan and to
provide him a cash grant of $51,500 upon his execution of the agreement. Mr.
Brennan used the proceeds of the loan and the $51,500 to return to the Company
the $731,500 previously received by him and used for the exercise of the stock
option. The loan of $680,000 is evidenced by a promissory note delivered to the
Company by Mr. Brennan and is payable in equal installments of $68,000 (plus
interest thereon at the applicable Federal rate under Section 1274(d) of the
Internal Revenue Code of 1986) on December 31 of each year commencing on
December 31, 1992 and thereafter through December 31, 2001. The promissory note
is secured by shares of Common Stock. As of January 1, 1999, the remaining
principal on the note was $272,000. The Brennan Agreement provides that Mr.
Brennan is entitled to receive, on December 31 of each year covered by the
Brennan Agreement and its predecessor agreements, a payment in an amount equal
to the principal and interest payment due to the Company from Mr. Brennan for
such years under the above described promissory note. The Brennan Agreement
provides that, in the event Mr. Brennan's employment terminates as a result of
his death or disability, the Company will forgive all remaining unpaid principal
and interest under the promissory note described above.
On March 22, 1999, the Compensation Committee of the Board of Directors
approved a loan to each of Messrs. Brennan and Nelson restricted in its use to
(i) the exercise of stock options to purchase 319,446 Shares in the case of Mr.
Brennan and 27,779 Shares in the case of Mr. Nelson and (ii) payment of related
taxes. Each note will mature on March 22, 2001. The principal amounts of the
notes delivered by Messrs. Brennan and Nelson are $1,500,000 and $145,000,
respectively. The principal amount of each note bears interest, payable at
maturity, at the rate equal to the prime rate as quoted from time to time by
Harris Trust and Savings Bank, Chicago, Illinois.
On December 17, 1999, the Compensation Committee of the Board of Directors
approved a loan to each of Messrs. Brennan, Skibitsky, Nelson and Koertner
restricted in its use to the exercise of stock options vested on such date and
payment of related taxes, in consideration of delivery by such officer of a
promissory note in favor of the Company. Each note will mature on the earlier of
(i) the 10th day after sale of Shares acquired upon such exercise of stock
options or (ii) December 31, 2000. The principal amounts of the notes delivered
by Messrs. Brennan, Skibitsky, Nelson and Koertner are $1,377,436.08,
$934,330.77, $553,702.05 and $183,635.17, respectively. The principal amount of
each note bears interest, payable at maturity, at the rate equal to 150 basis
points over the 90 day LIBOR rate as quoted from time to time by Harris Trust &
Savings Bank, Chicago Illinois.
I-10
<PAGE> 37
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF MANAGEMENT
The table set forth below, including the footnotes, certain information as
of December 21, 1999 concerning beneficial ownership of Common Stock by the
directors, named executive officers of the Company and by all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
PERCENTAGE
SHARES EXERCISABLE OF THE
BENEFICIALLY STOCK SHARES
OWNED OPTIONS OUTSTANDING
------------ ----------- -----------
<S> <C> <C> <C>
Charles M. Brennan III(1)............................... 1,390,479 0 21.6
William G. Brown........................................ 115,420 32,232 2.3
Allan E. Bulley, Jr. ................................... 35,047 32,232 1.0
John M. Harlan(2)....................................... 0 85,219 1.3
Bide L. Thomas.......................................... 3,333 32,232 0.6
William S. Skibitsky(1)................................. 152,781 0 2.4
William A. Koertner(1).................................. 27,500 0 0.4
Byron D. Nelson(1)...................................... 144,308 0 2.2
Michael F. Knapp(1)..................................... 5,000 0 0.1
--------- ------- ----
All directors and executive officers.................... 1,873,868 181,915 31.1
</TABLE>
- ---------------
(1) Includes shares of restricted stock awarded to the named individuals the
restrictions on which have not expired.
(2) Includes a conversion right for 57,455 shares under the Non-Escrow Notes
described in "Certain Relationships and Related Transactions."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table set forth below contains information as of March 1, 1999 (except
as otherwise indicated) concerning other principal stockholders known to the
Company to own beneficially more than five percent of the Company's outstanding
shares of Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND ADDRESS SHARES OF SHARES
OF BENEFICIAL OWNERS BENEFICIALLY OWNED OUTSTANDING
-------------------- ------------------ -----------
<S> <C> <C>
Heartland Advisors, Inc. ................................... 889,162 15.8
790 N. Milwaukee Street
Milwaukee WI 53202
T. Rowe Price Associates, Inc. ............................. 433,333 7.7
PO Box 89000
Baltimore MD 21289-1009
</TABLE>
I-11
<PAGE> 38
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND ADDRESS SHARES OF SHARES
OF BENEFICIAL OWNERS BENEFICIALLY OWNED OUTSTANDING
-------------------- ------------------ -----------
<S> <C> <C>
FMR Corp(1)................................................. 617,300 10.3
82 Devonshire Street
Boston MA 02109
Dimensional Fund Advisors Inc. ............................. 337,381 6.0
1299 Ocean Avenue
Santa Monica CA 90401
</TABLE>
- ---------------
(1) As of August 31, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each director and officer of the Company is required to report to the
Securities and Exchange Commission his or her transactions in the Common Stock
of the Company. During 1998, all reports were filed on a timely basis.
I-12
<PAGE> 1
Exhibit(c)(3)
CHANGE OF CONTROL AGREEMENT
AGREEMENT by and between MYR Group, Inc. (the "Company") and William A.
Koertner (the "Employee"), dated as of the 21st day of December, 1999.
The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication of the Employee, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the distraction
of the Employee by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Employee's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Employee with
compensation and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Employee will be
satisfied and which are competitive with those of other corporations. Therefore,
in order to accomplish these objectives the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Term of Agreement. This Agreement shall terminate if a Change of
Control Date (as hereinafter defined) does not occur on or before December 31,
2001.
2. Change of Control. For purposes of this Agreement, a "Change of
Control" shall be defined as the occurrence of any of the following events:
(a) There is a report filed on Schedule 13D (or any successor
schedule, form or report) as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as generally in effect on the date
hereof, disclosing that any person (as the term "person" is used in Section
13(d)(3) of the Exchange Act), other than Charles M. Brennan III, has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of 20% or
more of the issued and outstanding shares of voting securities of the Company;
or
(b) The acquisition of 20% or more of the issued and
outstanding shares of voting securities of the Company by any person which would
otherwise require the filing of a report as described in (a) above.
3. Change of Control Date. For purposes of this Agreement, the "Change
of Control Date" shall mean the first date during the term of this Agreement on
which a Change of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Employee's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Employee that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or in anticipation of a Change of Control, then for all
purposes of this Agreement the "Change of
<PAGE> 2
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
4. Termination of Employment
(a) Good Cause. For purposes of this Agreement, "Good Cause"
shall mean (i) the Employee's commission of a felony, (ii) the Employee's
material breach of any of his obligations or duties, including the Employee's
willful failure to substantially perform his duties other than as a result of
his incapacity due to illness or injury, or (iii) the Employee's commission of a
willful act, such as embezzlement, against the Company intended to enrich the
Employee at the expense of the Company. No termination for Good Cause may be
effected under clause (ii) of the preceding sentence unless (a) the Company
shall have given written notice to the Employee specifying with particularity
the basis for the Company's decision to terminate the Employee's employment, and
(b) the Employee shall have failed to cease or correct the performance (or
nonperformance) which forms the basis for the Company's decision within 30 days
following the date of the Company's written notice.
(b) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following which occurs without the written consent of the
Employee:
(i) Any significant change in the nature of Employee's
principal duties or any significant diminution in the
Employee's status or responsibilities;
(ii) Any decrease in the Employee's salary or cash
incentive opportunity below the level the Employee
was earning at the time of a Change of Control;
(iii) The Company's failure to obtain the agreement of a
successor entity to assume the obligations under this
Agreement; or
(iv) The Company's requiring the Employee to be based in
any location which would materially increase the
Employee's commuting time.
(c) Disability. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's duties with the
Company on a full-time basis for 180 consecutive days as a result of incapacity
due to mental or physical illness which is determined to be total and permanent
by a physician selected by the Company or its insurers and reasonably acceptable
to the Executive or the Executive's legal representative.
5. Notice of Termination. Any termination by the Company for Good
Cause, or by the Employee for Good Reason, shall be communicated by a Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated and (iii) if the Date
of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the
2
<PAGE> 3
Employee or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Good Cause shall
not waive any right of the Employee or the Company, respectively, hereunder or
preclude the Employee or the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.
6. Date of Termination. For purposes of this Agreement, "Date of
Termination" means (a) if the Employee's employment is terminated by the Company
for Good Cause, or by the Employee for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be,
(b) if the Employee's employment is terminated by the Company other than for
Good Cause, death or Disability, the date on which the Company notifies the
Employee of such termination and (c) if the Employee's employment is terminated
by reason of death or Disability, the date of death of the Employee or the date
of the determination that the Employee's Disability is determined to be total
and permanent, as the case may be.
7. Obligations of the Company upon Termination.
(a) Termination by Company Not for Good Cause; Resignation by
Employee for Good Reason. If, on or within two years after a Change of Control
Date , the Company shall terminate the Employee's employment other than for Good
Cause, Disability or death, or the Employee shall terminate employment for Good
Reason within two years after the Change of Control Date, the Employee will
receive, in addition to all benefits to which the Employee is legally entitled:
(i) Acceleration of all unvested MYR stock option grants
and MYR restricted stock awards or, at the sole
discretion of MYR's Board of Directors, their cash
equivalent;
(ii) Any earned but unpaid bonus for the year preceding
the year in which termination occurs;
(iii) A pro-rated target bonus for the worked portion of
the year in which termination occurs;
(iv) Two years of current salary (not lower than the
Employee's salary on the Change of Control Date,
increased by the supplemental payments and relocation
payments described in Exhibit A due during the
two-year period following the employment termination)
and two years of target bonus;
(v) Two years of post-termination medical coverage on
the same basis as if the Employee was a current
employee;
(vi) Reimbursement of legal expenses incurred, in
accordance with Section 9, to enforce this
Agreement;
(vii) The benefits of the "Put Option" as described in
that certain letter agreement dated June 30, 1999
between Employee and the Company; and
3
<PAGE> 4
(viii) In the event that the foregoing provisions of this
Section 7 result in the receipt by the Employee of a
parachute payment (as defined in Section 280G of the
Internal Revenue Code of 1986, as amended), then the
Company shall make an additional payment to the
Employee in an amount in cash such that the amount
of the after-tax proceeds of the Employee from the
payments provided for in this Agreement, taking into
account federal and state income and excise taxes,
is equal to the amount of the after-tax proceeds the
Employee would have received from the payments
provided for in this Agreement had such payments not
resulted in the receipt by the Employee of a
parachute payment. The Employee agrees to give the
Company prompt written notice of any claim by the
Internal Revenue Service that any payments made
pursuant to this Agreement result in the receipt by
the Employee of a parachute payment. In such event
the Company shall have the right to assume and
control the defense of an such claim with counsel of
its own selection. The Employee agrees to cooperate
with the Company in connection with any defense of
such claim.
If the Employee is terminated from employment more than two years but less than
four years after a Change of Control Date for other than Good Cause, Disability
or death, the Employee will receive items (i), (ii), (iii), (vi), (vii) and
(viii) above, plus one year of current salary (not lower than the Employee's
salary on the Change of Control Date, increased by the supplemental payments and
relocation payments described in Exhibit A due during the one-year period
following the employment termination), one year of target bonus and one year of
medical coverage.
In addition, for a period of 90 days following the second anniversary of a
Change of Control Date, the Employee may elect to terminate employment at the
Employee's discretion provided that the Employee offers to continue employment
at the request of the Company for a period of up to six months. In the event of
such termination at the discretion of the Employee, the Employee shall receive
items (i) through (vii) above. The Employee will also be entitled to receive all
other benefits to which the Employee is entitled under the Company's various
policies or plans or to which the Employee is otherwise legally entitled. Solely
for purposes of the computation of benefits under this Agreement, payments made
by the Company as the result of such a termination at the discretion of the
Employee that are required to be taken into account with respect to the Employee
under Section 280G(b)(2)(A)(ii) of the Code shall not, in the aggregate, exceed
2.99 times the Employee's "base amount" as that term is defined in Section
280G(b)(3) of the Code. If the limitation contained in the immediately preceding
sentence applies, any reduction in payments will in no event affect the
computation of payments hereunder which do not constitute "excess parachute
payments" within the meaning of Section 280G(b) of the Code.
(b) Death. If the Employee dies during the term of this
Agreement prior to the Change in Control Date, this Agreement shall terminate
without further obligation of the Company to the Employee or his estate other
than the obligation to pay any compensation or benefits that have been earned
but not paid on the Date of Termination, and any post-
4
<PAGE> 5
termination, life insurance or death benefits that are provided under the
Company's normal benefit plans and policies.
(c) Disability. If the Employee's employment shall be
terminated during the term of this Agreement prior to the Change in Control Date
by reason of the Employee's Disability, this Agreement shall terminate without
further obligation of the Company to the Employee other than the obligation to
pay any compensation or benefits that have been earned but not paid on the Date
of Termination, and any post-termination benefits or disability benefits that
are provided under the Company's normal benefit plans and policies.
(d) Good Cause; Other than for Good Reason. If, whether before
or after a Change of Control Date, the Employee's employment shall be terminated
for Good Cause, or if the Employee shall resign other than for Good Reason, this
Agreement shall terminate without further obligation to the Employee other than
the obligation to pay any compensation or benefits that have been earned but not
paid on the Date of Termination, and any post-termination benefits that are
provided under the Company's normal benefit plans and policies.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Employee's continuing or future participation in any plan, program,
policy or practice provided by the Company and for which the Employee may
qualify, nor, subject to Section 12(g), shall anything herein limit or otherwise
affect such rights as the Employee may have under any contract or agreement with
the Company. Amounts which are vested benefits or which the Employee is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
9. Full Settlement; Legal Fees. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Employee obtains other employment. In
the event the Employee incurs legal fees and expenses in seeking to obtain any
benefit under this Agreement and it is ultimately determined by a court of
competent jurisdiction that the Employee is entitled to receive all or any part
of such benefit, then the Company shall pay to the Employee the reasonable legal
fees and expenses so incurred by the Employee.
10. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company, and their respective businesses,
which shall have been obtained by the Employee during the Employee's employment
by the Company and which shall not be or become public knowledge (other than by
acts by the Employee or representatives of the Employee in violation of this
Agreement). After termination of the Employee's employment with the Company, the
Employee shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or
5
<PAGE> 6
data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 10 constitute a
basis for deferring or withholding any amounts otherwise payable to the Employee
under this Agreement.
11. Successors.
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes this Agreement by operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee: William A. Koertner
58 S. Wynstone Dr.
Barrington, IL 60010
If to the Company: MYR Group, Inc.
Three Continental Towers
1701 W. Golf Road, Suite 1012
Rolling Meadows, Illinois 60008-4007
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
6
<PAGE> 7
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) This Agreement represents the entire agreement between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior or contemporaneous oral or written negotiations, understandings and
agreements between the parties hereto.
(e) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Employee or the Company may have hereunder, including, without
limitation, the right of the Employee to terminate employment for Good Reason
pursuant to Section 4(b) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(g) The Employee and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the Employee
and the Company, the employment of the Employee by the Company is "at will" and,
prior to the Change of Control Date, the Employee's employment may be terminated
by either the Employee or the Company at any time prior to the Change of Control
Date, in which case the Employee shall have no further rights under this
Agreement. From and after the Change of Control Date this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof.
7
<PAGE> 8
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
----------------------------------------
William A. Koertner
MYR GROUP, INC.
By:
-----------------------------------------
Its:
----------------------------------------
8
<PAGE> 9
CHANGE OF CONTROL AGREEMENT
AGREEMENT by and between MYR Group, Inc. (the "Company") and Byron D.
Nelson (the "Employee"), dated as of the 21st day of December, 1999.
The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication of the Employee, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the distraction
of the Employee by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Employee's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Employee with
compensation and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Employee will be
satisfied and which are competitive with those of other corporations. Therefore,
in order to accomplish these objectives the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Term of Agreement. This Agreement shall terminate if a Change of
Control Date (as hereinafter defined) does not occur on or before December 31,
2001.
2. Change of Control. For purposes of this Agreement, a "Change of
Control" shall be defined as the occurrence of any of the following events:
(a) There is a report filed on Schedule 13D (or any successor
schedule, form or report) as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as generally in effect on the date
hereof, disclosing that any person (as the term "person" is used in Section
13(d)(3) of the Exchange Act), other than Charles M. Brennan III, has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of 20% or
more of the issued and outstanding shares of voting securities of the Company;
or
(b) The acquisition of 20% or more of the issued and
outstanding shares of voting securities of the Company by any person which would
otherwise require the filing of a report as described in (a) above.
3. Change of Control Date. For purposes of this Agreement, the "Change
of Control Date" shall mean the first date during the term of this Agreement on
which a Change of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Employee's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Employee that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or in anticipation of a Change of Control, then for all
purposes of this Agreement the "Change of
<PAGE> 10
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
4. Termination of Employment
(a) Good Cause. For purposes of this Agreement, "Good Cause" shall mean
(i) the Employee's commission of a felony, (ii) the Employee's material breach
of any of his obligations or duties, including the Employee's willful failure to
substantially perform his duties other than as a result of his incapacity due to
illness or injury, or (iii) the Employee's commission of a willful act, such as
embezzlement, against the Company intended to enrich the Employee at the expense
of the Company. No termination for Good Cause may be effected under clause (ii)
of the preceding sentence unless (a) the Company shall have given written notice
to the Employee specifying with particularity the basis for the Company's
decision to terminate the Employee's employment, and (b) the Employee shall have
failed to cease or correct the performance (or nonperformance) which forms the
basis for the Company's decision within 30 days following the date of the
Company's written notice.
(b) Good Reason. For purposes of this Agreement, "Good Reason" shall
mean any of the following which occurs without the written consent of the
Employee:
(i) Any significant change in the nature of Employee's
principal duties or any significant diminution in the
Employee's status or responsibilities;
(ii) Any decrease in the Employee's salary or cash
incentive opportunity below the level the Employee
was earning at the time of a Change of Control;
(iii) The Company's failure to obtain the agreement of a
successor entity to assume the obligations under this
Agreement; or
(iv) The Company's requiring the Employee to be based in
any location which would materially increase the
Employee's commuting time.
(c) Disability. For purposes of this Agreement, "Disability" shall mean
the absence of the Executive from the Executive's duties with the Company on a
full-time basis for 180 consecutive days as a result of incapacity due to mental
or physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and reasonably acceptable to the
Executive or the Executive's legal representative.
5. Notice of Termination. Any termination by the Company for Good
Cause, or by the Employee for Good Reason, shall be communicated by a Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated and (iii) if the Date
of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the
2
<PAGE> 11
Employee or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Good Cause shall
not waive any right of the Employee or the Company, respectively, hereunder or
preclude the Employee or the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.
6. Date of Termination. For purposes of this Agreement, "Date of
Termination" means (a) if the Employee's employment is terminated by the Company
for Good Cause, or by the Employee for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be,
(b) if the Employee's employment is terminated by the Company other than for
Good Cause, death or Disability, the date on which the Company notifies the
Employee of such termination and (c) if the Employee's employment is terminated
by reason of death or Disability, the date of death of the Employee or the date
of the determination that the Employee's Disability is determined to be total
and permanent, as the case may be.
7. Obligations of the Company upon Termination.
(a) Termination by Company Not for Good Cause; Resignation by
Employee for Good Reason. If, on or within two years after a Change of Control
Date , the Company shall terminate the Employee's employment other than for Good
Cause, Disability or death, or the Employee shall terminate employment for Good
Reason within two years after the Change of Control Date, the Employee will
receive, in addition to all benefits to which the Employee is legally entitled:
(i) Acceleration of all unvested MYR stock option grants
and MYR restricted stock awards or, at the sole
discretion of MYR's Board of Directors, their cash
equivalent;
(ii) Any earned but unpaid bonus for the year preceding
the year in which termination occurs;
(iii) A pro-rated target bonus for the worked portion of
the year in which termination occurs;
(iv) Two years of current salary (not lower than the
Employee's salary on the Change of Control Date) and
two years of target bonus;
(v) Two years of post-termination medical coverage on the
same basis as if the Employee was a current employee;
(vi) Reimbursement of legal expenses incurred, in
accordance with Section 9, to enforce this Agreement;
and
(vii) In the event that the foregoing provisions of this
Section 7 result in the receipt by the Employee of a
parachute payment (as defined in Section 280G of the
Internal Revenue Code of 1986, as amended), then the
Company shall make an additional payment to the
Employee in an amount
3
<PAGE> 12
in cash such that the amount of the after-tax
proceeds of the Employee from the payments provided
for in this Agreement, taking into account federal
and state income and excise taxes, is equal to the
amount of the after-tax proceeds the Employee would
have received from the payments provided for in this
Agreement had such payments not resulted in the
receipt by the Employee of a parachute payment. The
Employee agrees to give the Company prompt written
notice of any claim by the Internal Revenue Service
that any payments made pursuant to this Agreement
result in the receipt by the Employee of a parachute
payment. In such event the Company shall have the
right to assume and control the defense of an such
claim with counsel of its own selection. The Employee
agrees to cooperate with the Company in connection
with any defense of such claim.
If the Employee is terminated from employment more than two years but less than
four years after a Change of Control Date for other than Good Cause, Disability
or death, the Employee will receive items (i), (ii), (iii), (vi) and (vii)
above, plus one year of current salary (not less than the Employee's salary on
the Change of Control Date), one year of target bonus and one year of medical
coverage.
In addition, for a period of 90 days following the second anniversary of a
Change of Control Date, the Employee may elect to terminate employment at the
Employee's discretion provided that the Employee offers to continue employment
at the request of the Company for a period of up to six months. In the event of
such termination at the discretion of the Employee, the Employee shall receive
items (i) through (vi) above. The Employee will also be entitled to receive all
other benefits to which the Employee is entitled under the Company's various
policies or plans or to which the Employee is otherwise legally entitled. Solely
for purposes of the computation of benefits under this Agreement, payments made
by the Company as the result of such a termination at the discretion of the
Employee that are required to be taken into account with respect to the Employee
under Section 280G(b)(2)(A)(ii) of the Code shall not, in the aggregate, exceed
2.99 times the Employee's "base amount" as that term is defined in Section
280G(b)(3) of the Code. If the limitation contained in the immediately preceding
sentence applies, any reduction in payments will in no event affect the
computation of payments hereunder which do not constitute "excess parachute
payments" within the meaning of Section 280G(b) of the Code.
(b) Death. If the Employee dies during the term of this
Agreement prior to the Change in Control Date, this Agreement shall terminate
without further obligation of the Company to the Employee or his estate other
than the obligation to pay any compensation or benefits that have been earned
but not paid on the Date of Termination, and any post-termination, life
insurance or death benefits that are provided under the Company's normal benefit
plans and policies.
(c) Disability. If the Employee's employment shall be
terminated during the term of this Agreement prior to the Change in Control Date
by reason of the Employee's Disability, this Agreement shall terminate without
further obligation of the Company to the Employee other than the obligation to
pay any compensation or benefits that have been earned
4
<PAGE> 13
but not paid on the Date of Termination, and any post-termination benefits or
disability benefits that are provided under the Company's normal benefit plans
and policies.
(d) Good Cause; Other than for Good Reason. If, whether before
or after a Change of Control Date, the Employee's employment shall be terminated
for Good Cause, or if the Employee shall resign other than for Good Reason, this
Agreement shall terminate without further obligation to the Employee other than
the obligation to pay any compensation or benefits that have been earned but not
paid on the Date of Termination, and any post-termination benefits that are
provided under the Company's normal benefit plans and policies.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Employee's continuing or future participation in any plan, program,
policy or practice provided by the Company and for which the Employee may
qualify, nor, subject to Section 12(g), shall anything herein limit or otherwise
affect such rights as the Employee may have under any contract or agreement with
the Company. Amounts which are vested benefits or which the Employee is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
9. Full Settlement; Legal Fees. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Employee obtains other employment. In
the event the Employee incurs legal fees and expenses in seeking to obtain any
benefit under this Agreement and it is ultimately determined by a court of
competent jurisdiction that the Employee is entitled to receive all or any part
of such benefit, then the Company shall pay to the Employee the reasonable legal
fees and expenses so incurred by the Employee.
10. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company, and their respective businesses,
which shall have been obtained by the Employee during the Employee's employment
by the Company and which shall not be or become public knowledge (other than by
acts by the Employee or representatives of the Employee in violation of this
Agreement). After termination of the Employee's employment with the Company, the
Employee shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under this Agreement.
5
<PAGE> 14
11. Successors.
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes this Agreement by operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee: Byron D. Nelson
629 W. Gartner Road
Naperville, IL 60540
If to the Company: MYR Group, Inc.
Three Continental Towers
1701 W. Golf Road, Suite 1012
Rolling Meadows, Illinois 60008-4007
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
6
<PAGE> 15
(d) This Agreement represents the entire agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all prior or
contemporaneous oral or written negotiations, understandings and agreements
between the parties hereto.
(e) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(f) The Employee's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Employee or the Company may have hereunder, including, without
limitation, the right of the Employee to terminate employment for Good Reason
pursuant to Section 4(b) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(g) The Employee and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Employee and
the Company, the employment of the Employee by the Company is "at will" and,
prior to the Change of Control Date, the Employee's employment may be terminated
by either the Employee or the Company at any time prior to the Change of Control
Date, in which case the Employee shall have no further rights under this
Agreement. From and after the Change of Control Date this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
----------------------------------------
Byron D. Nelson
MYR GROUP, INC.
By:
----------------------------------------
Its:
---------------------------------------
7
<PAGE> 16
CHANGE OF CONTROL AGREEMENT
AGREEMENT by and between MYR Group, Inc. (the "Company") and Michael F.
Knapp (the "Employee"), dated as of the 21st day of December, 1999.
The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication of the Employee, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the distraction
of the Employee by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Employee's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Employee with
compensation and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Employee will be
satisfied and which are competitive with those of other corporations. Therefore,
in order to accomplish these objectives the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Term of Agreement. This Agreement shall terminate if a Change of
Control Date (as hereinafter defined) does not occur on or before December 31,
2001.
2. Change of Control. For purposes of this Agreement, a "Change of
Control" shall be defined as the occurrence of any of the following events:
(a) There is a report filed on Schedule 13D (or any successor
schedule, form or report) as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as generally in effect on the date
hereof, disclosing that any person (as the term "person" is used in Section
13(d)(3) of the Exchange Act), other than Charles M. Brennan III, has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of 20% or
more of the issued and outstanding shares of voting securities of the Company;
or
(b) The acquisition of 20% or more of the issued and
outstanding shares of voting securities of the Company by any person which would
otherwise require the filing of a report as described in (a) above.
3. Change of Control Date. For purposes of this Agreement, the "Change
of Control Date" shall mean the first date during the term of this Agreement on
which a Change of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Employee's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Employee that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or in anticipation of a Change of Control, then for all
purposes of this Agreement the "Change of
<PAGE> 17
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
4. Termination of Employment
(a) Good Cause. For purposes of this Agreement, "Good Cause"
shall mean (i) the Employee's commission of a felony, (ii) the Employee's
material breach of any of his obligations or duties, including the Employee's
willful failure to substantially perform his duties other than as a result of
his incapacity due to illness or injury, or (iii) the Employee's commission of a
willful act, such as embezzlement, against the Company intended to enrich the
Employee at the expense of the Company. No termination for Good Cause may be
effected under clause (ii) of the preceding sentence unless (a) the Company
shall have given written notice to the Employee specifying with particularity
the basis for the Company's decision to terminate the Employee's employment, and
(b) the Employee shall have failed to cease or correct the performance (or
nonperformance) which forms the basis for the Company's decision within 30 days
following the date of the Company's written notice.
(b) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following which occurs without the written consent of the
Employee:
(i) Any significant change in the nature of Employee's
principal duties or any significant diminution in the
Employee's status or responsibilities;
(ii) Any decrease in the Employee's salary or cash
incentive opportunity below the level the Employee
was earning at the time of a Change of Control;
(iii) The Company's failure to obtain the agreement of a
successor entity to assume the obligations under this
Agreement; or
(iv) The Company's requiring the Employee to be based in
any location which would materially increase the
Employee's commuting time.
(c) Disability. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's duties with the
Company on a full-time basis for 180 consecutive days as a result of incapacity
due to mental or physical illness which is determined to be total and permanent
by a physician selected by the Company or its insurers and reasonably acceptable
to the Executive or the Executive's legal representative.
5. Notice of Termination. Any termination by the Company for Good
Cause, or by the Employee for Good Reason, shall be communicated by a Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated and (iii) if the Date
of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the
2
<PAGE> 18
Employee or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Good Cause shall
not waive any right of the Employee or the Company, respectively, hereunder or
preclude the Employee or the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.
6. Date of Termination. For purposes of this Agreement, "Date of
Termination" means (a) if the Employee's employment is terminated by the Company
for Good Cause, or by the Employee for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be,
(b) if the Employee's employment is terminated by the Company other than for
Good Cause, death or Disability, the date on which the Company notifies the
Employee of such termination and (c) if the Employee's employment is terminated
by reason of death or Disability, the date of death of the Employee or the date
of the determination that the Employee's Disability is determined to be total
and permanent, as the case may be.
7. Obligations of the Company upon Termination.
(a) Termination by Company Not for Good Cause; Resignation by
Employee for Good Reason. If, on or within five years after a Change of Control
Date, the Company shall terminate the Employee's employment other than for Good
Cause, Disability or death, or the Employee shall terminate employment for Good
Reason within five years after the Change of Control Date, the Employee will
receive, in addition to all benefits to which the Employee is legally entitled:
(i) Acceleration of all unvested MYR stock option grants
and MYR restricted stock awards or, at the sole
discretion of MYR's Board of Directors, their cash
equivalent;
(ii) Any earned but unpaid bonus for the year preceding
the year in which termination occurs;
(iii) A pro-rated target bonus for the worked portion of
the year in which termination occurs;
(iv) One year of current salary (not lower than the
Employee's salary on the Change of Control Date) and
one year of target bonus;
(v) One year of post-termination medical coverage on the
same basis as if the Employee was a current employee;
(vi) Reimbursement of legal expenses incurred, in
accordance with Section 9, to enforce this Agreement;
and
In addition, for a period of 90 days following the thirtieth month anniversary
of a Change of Control Date, the Employee may elect to terminate employment at
the Employee's discretion provided that the Employee offers to continue
employment at the request of the Company for a period of up to six months. In
the event of such termination at the discretion of the Employee,
3
<PAGE> 19
the Employee shall receive items (i) through (vi) above. The Employee will also
be entitled to receive all other benefits to which the Employee is entitled
under the Company's various policies or plans or to which the Employee is
otherwise legally entitled.
For purposes of the computation of benefits under this Agreement, payments made
by the Company as the result of such a termination that are required to be taken
into account with respect to the Employee under Section 280G(b)(2)(A)(ii) of the
Code shall not, in the aggregate, exceed 2.99 times the Employee's "base amount"
as that term is defined in Section 280G(b)(3) of the Code. If the limitation
contained in the immediately preceding sentence applies, any reduction in
payments will in no event affect the computation of payments hereunder which do
not constitute "excess parachute payments" within the meaning of Section 280G(b)
of the Code.
(b) Death. If the Employee dies during the term of this
Agreement prior to the Change in Control Date, this Agreement shall terminate
without further obligation of the Company to the Employee or his estate other
than the obligation to pay any compensation or benefits that have been earned
but not paid on the Date of Termination, and any post-termination, life
insurance or death benefits that are provided under the Company's normal benefit
plans and policies.
(c) Disability. If the Employee's employment shall be
terminated during the term of this Agreement prior to the Change in Control Date
by reason of the Employee's Disability, this Agreement shall terminate without
further obligation of the Company to the Employee other than the obligation to
pay any compensation or benefits that have been earned but not paid on the Date
of Termination, and any post-termination benefits or disability benefits that
are provided under the Company's normal benefit plans and policies.
(d) Good Cause; Other than for Good Reason. If, whether before
or after a Change of Control Date, the Employee's employment shall be terminated
for Good Cause, or if the Employee shall resign other than for Good Reason, this
Agreement shall terminate without further obligation to the Employee other than
the obligation to pay any compensation or benefits that have been earned but not
paid on the Date of Termination, and any post-termination benefits that are
provided under the Company's normal benefit plans and policies.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Employee's continuing or future participation in any plan, program,
policy or practice provided by the Company and for which the Employee may
qualify, nor, subject to Section 12(g), shall anything herein limit or otherwise
affect such rights as the Employee may have under any contract or agreement with
the Company. Amounts which are vested benefits or which the Employee is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
9. Full Settlement; Legal Fees. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others. In no event shall the Employee be
4
<PAGE> 20
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Employee under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Employee
obtains other employment. In the event the Employee incurs legal fees and
expenses in seeking to obtain any benefit under this Agreement and it is
ultimately determined by a court of competent jurisdiction that the Employee is
entitled to receive all or any part of such benefit, then the Company shall pay
to the Employee the reasonable legal fees and expenses so incurred by the
Employee.
10. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company, and their respective businesses,
which shall have been obtained by the Employee during the Employee's employment
by the Company and which shall not be or become public knowledge (other than by
acts by the Employee or representatives of the Employee in violation of this
Agreement). After termination of the Employee's employment with the Company, the
Employee shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under this Agreement.
11. Successors.
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes this Agreement by operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
5
<PAGE> 21
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee: Michael F. Knapp
1220A Oak Hill Rd.
Lake Barrington Shores, IL 60010
If to the Company: MYR Group, Inc.
Three Continental Towers
1701 W. Golf Road, Suite 1012
Rolling Meadows, Illinois 60008-4007
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) This Agreement represents the entire agreement between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior or contemporaneous oral or written negotiations, understandings and
agreements between the parties hereto.
(e) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Employee or the Company may have hereunder, including, without
limitation, the right of the Employee to terminate employment for Good Reason
pursuant to Section 4(b) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(g) The Employee and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the Employee
and the Company, the employment of the Employee by the Company is "at will" and,
prior to the Change of Control Date, the Employee's employment may be terminated
by either the Employee or the Company at any time prior to the Change of Control
Date, in which case the Employee shall have no further rights under this
Agreement. From and after the Change of Control Date this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof.
6
<PAGE> 22
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
----------------------------------------
Michael F. Knapp
MYR GROUP, INC.
By:
------------------------------------
Its:
------------------------------------
7
<PAGE> 23
CHANGE OF CONTROL AGREEMENT
AGREEMENT by and between MYR Group, Inc. (the "Company") and William S.
Skibitsky (the "Employee"), dated as of the 21st day of December, 1999.
The Board of Directors of the Company (the "Board") has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication of the Employee, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the distraction
of the Employee by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the Employee's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Employee with
compensation and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Employee will be
satisfied and which are competitive with those of other corporations. Therefore,
in order to accomplish these objectives the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Term of Agreement. This Agreement shall terminate if a Change of
Control Date (as hereinafter defined) does not occur on or before December 31,
2001.
2. Change of Control. For purposes of this Agreement, a "Change of
Control" shall be defined as the occurrence of any of the following events:
(a) There is a report filed on Schedule 13D (or any successor
schedule, form or report) as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as generally in effect on the date
hereof, disclosing that any person (as the term "person" is used in Section
13(d)(3) of the Exchange Act), other than Charles M. Brennan III, has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of 20% or
more of the issued and outstanding shares of voting securities of the Company;
or
(b) The acquisition of 20% or more of the issued and
outstanding shares of voting securities of the Company by any person which would
otherwise require the filing of a report as described in (a) above.
3. Change of Control Date. For purposes of this Agreement, the "Change
of Control Date" shall mean the first date during the term of this Agreement on
which a Change of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Employee's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Employee that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or in anticipation of a Change of Control, then for all
purposes of this Agreement the "Change of
<PAGE> 24
Control Date" shall mean the date immediately prior to the date of such
termination of employment.
4. Termination of Employment
(a) Good Cause. For purposes of this Agreement, "Good Cause"
shall mean (i) the Employee's commission of a felony, (ii) the Employee's
material breach of any of his obligations or duties, including the Employee's
willful failure to substantially perform his duties other than as a result of
his incapacity due to illness or injury, or (iii) the Employee's commission of a
willful act, such as embezzlement, against the Company intended to enrich the
Employee at the expense of the Company. No termination for Good Cause may be
effected under clause (ii) of the preceding sentence unless (a) the Company
shall have given written notice to the Employee specifying with particularity
the basis for the Company's decision to terminate the Employee's employment, and
(b) the Employee shall have failed to cease or correct the performance (or
nonperformance) which forms the basis for the Company's decision within 30 days
following the date of the Company's written notice.
(b) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following which occurs without the written consent of the
Employee:
(i) Any significant change in the nature of Employee's
principal duties or any significant diminution in the
Employee's status or responsibilities;
(ii) Any decrease in the Employee's salary or cash
incentive opportunity below the level the Employee
was earning at the time of a Change of Control;
(iii) The Company's failure to obtain the agreement of a
successor entity to assume the obligations under this
Agreement; or
(iv) The Company's requiring the Employee to be based in
any location which would materially increase the
Employee's commuting time.
(c) Disability. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's duties with the
Company on a full-time basis for 180 consecutive days as a result of incapacity
due to mental or physical illness which is determined to be total and permanent
by a physician selected by the Company or its insurers and reasonably acceptable
to the Executive or the Executive's legal representative.
5. Notice of Termination. Any termination by the Company for Good
Cause, or by the Employee for Good Reason, shall be communicated by a Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated and (iii) if the Date
of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the
2
<PAGE> 25
Employee or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Good Cause shall
not waive any right of the Employee or the Company, respectively, hereunder or
preclude the Employee or the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's rights hereunder.
6. Date of Termination. For purposes of this Agreement, "Date of
Termination" means (a) if the Employee's employment is terminated by the Company
for Good Cause, or by the Employee for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be,
(b) if the Employee's employment is terminated by the Company other than for
Good Cause, death or Disability, the date on which the Company notifies the
Employee of such termination and (c) if the Employee's employment is terminated
by reason of death or Disability, the date of death of the Employee or the date
of the determination that the Employee's Disability is determined to be total
and permanent, as the case may be.
7. Obligations of the Company upon Termination.
(a) Termination by Company Not for Good Cause; Resignation by
Employee for Good Reason. If, on or within five years after a Change of Control
Date, the Company shall terminate the Employee's employment other than for Good
Cause, Disability or death, or the Employee shall terminate employment for Good
Reason within five years after the Change of Control Date, the Employee will
receive, in addition to all benefits to which the Employee is legally entitled:
(i) Acceleration of all unvested MYR stock option grants
and MYR restricted stock awards or, at the sole
discretion of MYR's Board of Directors, their cash
equivalent;
(ii) Any earned but unpaid bonus for the year preceding
the year in which termination occurs;
(iii) A pro-rated target bonus for the worked portion of
the year in which termination occurs;
(iv) One year of current salary (not lower than the
Employee's salary on the Change of Control Date) and
one year of target bonus;
(v) One year of post-termination medical coverage on the
same basis as if the Employee was a current employee;
(vi) Reimbursement of legal expenses incurred, in
accordance with Section 9, to enforce this Agreement;
and
(vii) In the event that any of the foregoing provisions of
this Section 7 result in the receipt by the Employee
of a "parachute payment" (as defined in Section 280G
of the Internal Revenue Code of 1986, as amended (the
"Code")), then the Company shall make an additional
payment to the
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<PAGE> 26
Employee in an amount in cash such that the amount of
the after-tax proceeds of the Employee from the
payments provided for in this Agreement, taking into
account federal and state income and excise taxes, is
equal to the amount of the after-tax proceeds the
Employee would have received from the payments
provided for in this Agreement had such payments not
resulted in the receipt by the Employee of a
parachute payment. The Employee agrees to give the
Company prompt written notice of any claim by the
Internal Revenue Service that any payments made
pursuant to this Agreement result in the receipt by
the Employee of a parachute payment. In such event
the Company shall have the right to assume and
control the defense of an such claim with counsel of
its own selection. The Employee agrees to cooperate
with the Company in connection with any defense of
such claim.
In addition, for a period of 90 days following the thirtieth month anniversary
of a Change of Control Date, the Employee may elect to terminate employment at
the Employee's discretion provided that the Employee offers to continue
employment at the request of the Company for a period of up to six months. In
the event of such termination at the discretion of the Employee, the Employee
shall receive items (i) through (vi) above. The Employee will also be entitled
to receive all other benefits to which the Employee is entitled under the
Company's various policies or plans or to which the Employee is otherwise
legally entitled. Solely for purposes of the computation of benefits under this
Agreement, payments made by the Company as the result of such a termination at
the discretion of the Employee that are required to be taken into account with
respect to the Employee under Section 280G(b)(2)(A)(ii) of the Code shall not,
in the aggregate, exceed 2.99 times the Employee's "base amount" as that term is
defined in Section 280G(b)(3) of the Code. If the limitation contained in the
immediately preceding sentence applies, any reduction in payments will in no
event affect the computation of payments hereunder which do not constitute
"excess parachute payments" within the meaning of Section 280G(b) of the Code.
(b) Death. If the Employee dies during the term of this
Agreement prior to the Change in Control Date, this Agreement shall terminate
without further obligation of the Company to the Employee or his estate other
than the obligation to pay any compensation or benefits that have been earned
but not paid on the Date of Termination, and any post-termination, life
insurance or death benefits that are provided under the Company's normal benefit
plans and policies.
(c) Disability. If the Employee's employment shall be
terminated during the term of this Agreement prior to the Change in Control Date
by reason of the Employee's Disability, this Agreement shall terminate without
further obligation of the Company to the Employee other than the obligation to
pay any compensation or benefits that have been earned but not paid on the Date
of Termination, and any post-termination benefits or disability benefits that
are provided under the Company's normal benefit plans and policies.
(d) Good Cause; Other than for Good Reason. If, whether before
or after a Change of Control Date, the Employee's employment shall be terminated
for Good Cause, or if the Employee shall resign other than for Good Reason, this
Agreement shall terminate without
4
<PAGE> 27
further obligation to the Employee other than the obligation to pay any
compensation or benefits that have been earned but not paid on the Date of
Termination, and any post-termination benefits that are provided under the
Company's normal benefit plans and policies.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Employee's continuing or future participation in any plan, program,
policy or practice provided by the Company and for which the Employee may
qualify, nor, subject to Section 12(g), shall anything herein limit or otherwise
affect such rights as the Employee may have under any contract or agreement with
the Company. Amounts which are vested benefits or which the Employee is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
9. Full Settlement; Legal Fees. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Employee or others. In no event shall the Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Employee under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Employee obtains other employment. In
the event the Employee incurs legal fees and expenses in seeking to obtain any
benefit under this Agreement and it is ultimately determined by a court of
competent jurisdiction that the Employee is entitled to receive all or any part
of such benefit, then the Company shall pay to the Employee the reasonable legal
fees and expenses so incurred by the Employee.
10. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company, and their respective businesses,
which shall have been obtained by the Employee during the Employee's employment
by the Company and which shall not be or become public knowledge (other than by
acts by the Employee or representatives of the Employee in violation of this
Agreement). After termination of the Employee's employment with the Company, the
Employee shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under this Agreement.
11. Successors.
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
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<PAGE> 28
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes this Agreement by operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee: William S. Skibitsky
RFD 1357
Long Grove, IL 60047
If to the Company: MYR Group, Inc.
Three Continental Towers
1701 W. Golf Road, Suite 1012
Rolling Meadows, Illinois 60008-4007
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) This Agreement represents the entire agreement between the parties hereto
with respect to the subject matter hereof, and supersedes all prior or
contemporaneous oral or written negotiations, understandings and agreements
between the parties hereto.
(e) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(f) The Employee's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Employee or the Company may have hereunder, including, without
limitation, the right of the Employee to
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<PAGE> 29
terminate employment for Good Reason pursuant to Section 4(b) of this Agreement,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
(g) The Employee and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the Employee
and the Company, the employment of the Employee by the Company is "at will" and,
prior to the Change of Control Date, the Employee's employment may be terminated
by either the Employee or the Company at any time prior to the Change of Control
Date, in which case the Employee shall have no further rights under this
Agreement. From and after the Change of Control Date this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
----------------------------------------
William S. Skibitsky
MYR GROUP, INC.
By:
------------------------------------
Its:
------------------------------------
7
<PAGE> 1
Exhibit (c)(4)
PROMISSORY NOTE
$_______ December 21, 1999
Rolling Meadows, Illinois
FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of
MYR Group Inc., a Delaware corporation (the "Company'), the principal sum of
_______________ ________________________________ ($____________) with interest
(computed on the basis of the actual number of days elapsed over a 365-day year)
on the unpaid balance thereof at the rate equal to 150 basis points over the 90
day LIBOR rate as quoted from time to time by Harris Trust & Savings Bank,
Chicago Illinois from the date hereof until the principal amount of this Note is
paid in full, which interest shall be payable at maturity. The principal amount
of this Note shall be payable on the earlier of the sale by the undersigned of
the Shares (as hereinafter defined) or December 31, 2000.
Payments of principal and interest on this Note shall be payable at the
offices of the Company, 1701 W. Golf Rd, Suite 1012, Rolling Meadows, IL 60008,
or such other place as the holder of this Note may from time to time designate
in writing.
This Note has been issued in connection with the purchase of shares of
common stock, $0.01 par value per share, of the Company (the "Shares"), pursuant
to the exercise of one or more options granted to the undersigned by the
Company. Without in any manner impacting the full recourse nature of this Note,
the undersigned hereby assigns, transfers and pledges all of the Shares to the
Company to secure the performance by the undersigned of his obligations under
this Note. The undersigned will deliver to the Company, within 5 business days
of the date of this Note, a stock certificate representing the Shares to serve
as security accompanied by a duly executed stock power.
The undersigned shall have the right to prepay this Note, in whole or in
part, without premium or penalty at any time after six months following the date
of this Note.
The undersigned hereby waives presentment, notice of dishonor or protest
of dishonor of this Note.
This Note shall be governed by and construed in accordance with the laws
of the State of Illinois.
---------------------------
[Name of Executive Officer]
