<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
----------------
BUCYRUS INTERNATIONAL, INC.
(Name of Subject Company)
BUCYRUS ACQUISITION CORP.
AMERICAN INDUSTRIAL PARTNERS ACQUISITION COMPANY, LLC
(Bidders)
----------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
----------------
118902105
(CUSIP Number of Class of Securities)
----------------
LAWRENCE W. WARD, JR.
PRESIDENT
AMERICAN INDUSTRIAL PARTNERS ACQUISITION COMPANY, LLC
C/O AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND II, L.P.
ONE MARITIME PLAZA
SUITE 2525
SAN FRANCISCO, CALIFORNIA 94111
(415) 788-7354
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidder)
COPY TO:
KENTON J. KING, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR EMBARCADERO CENTER, SUITE 3800
SAN FRANCISCO, CALIFORNIA 94111
(415) 984-6400
----------------
CALCULATION OF FILING FEE
================================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- -------------------------------------------------------------------------------
$200,890,332 $40,178.07
===============================================================================
* For purposes of calculating fee only. This amount assumes (i) the purchase
of 10,534,574 outstanding shares of common stock of Bucyrus International,
Inc. and 626,000 shares of common stock of Bucyrus International, Inc.
which may be issued upon exercise of outstanding options, in each case, at
$18.00 in cash per share. The amount of the filing fee calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934,
as amended, equals 1/50 of one percentum of the value of shares to be
purchased.
[_]Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount previously paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
================================================================================
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 118902105
Name of Reporting Person S.S. or I.R.S. Identification
Nos. of Above Persons
1.
Bucyrus Acquisition Corp.
94-3279135
- --------------------------------------------------------------------------------
Check the Appropriate Box if a Member of a Group
2. (a) [_]
(b) [_]
- --------------------------------------------------------------------------------
SEC Use Only
3.
- --------------------------------------------------------------------------------
Source of Funds AF
4.
- --------------------------------------------------------------------------------
Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
5. [_]
- --------------------------------------------------------------------------------
Citizenship or Place of Organization
6.
Delaware
- --------------------------------------------------------------------------------
Aggregate Amount Beneficially Owned by Each Reporting
Person
7.
4,228,382
(see the Offer to Purchase)
- --------------------------------------------------------------------------------
Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
8.
- --------------------------------------------------------------------------------
Percent of Class Represented by Amount in Row (7)
9.
40.14%
- --------------------------------------------------------------------------------
10.
Type of Reporting Person
CO
1
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 118902105
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Persons
American Industrial Partners Acquisition Company, LLC
94-3279136
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [_]
(b) [_]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
OO
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(e) or 2(f) [_]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
4,228,382
(see the Offer to Purchase)
- --------------------------------------------------------------------------------
8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares [_]
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
40.14%
- --------------------------------------------------------------------------------
10. Type of Reporting Person
OO
- --------------------------------------------------------------------------------
2
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 118902105
Name of Reporting Person S.S. or I.R.S. Identification
Nos. of Above Persons
1.
American Industrial Partners Capital Fund II, L.P.
- --------------------------------------------------------------------------------
Check the Appropriate Box if a Member of a Group
2. (a) [_]
(b) [_]
- --------------------------------------------------------------------------------
SEC Use Only
3.
- --------------------------------------------------------------------------------
Source of Funds OO
4.
- --------------------------------------------------------------------------------
Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
5. [_]
- --------------------------------------------------------------------------------
Citizenship or Place of Organization
6.
Delaware
- --------------------------------------------------------------------------------
Aggregate Amount Beneficially Owned by Each Reporting
Person
7.
4,228,382
(see the Offer to Purchase)
- --------------------------------------------------------------------------------
Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
8.
- --------------------------------------------------------------------------------
Percent of Class Represented by Amount in Row (7)
9.
40.14%
- --------------------------------------------------------------------------------
10.
Type of Reporting Person
PN
3
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 118902105
Name of Reporting Person S.S. or I.R.S. Identification
No. of Above Persons
1.
American Industrial Partners II, L.P.
- --------------------------------------------------------------------------------
Check the Appropriate Box if a Member of a Group
2. (a) [_]
(b) [_]
- --------------------------------------------------------------------------------
SEC Use Only
3.
- --------------------------------------------------------------------------------
Source of Funds OO
4.
- --------------------------------------------------------------------------------
Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
5. [_]
- --------------------------------------------------------------------------------
Citizenship or Place of Organization
6.
Delaware
- --------------------------------------------------------------------------------
Aggregate Amount Beneficially Owned by Each Reporting
Person*
7.
4,228,382
(see the Offer to Purchase)
- --------------------------------------------------------------------------------
Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
8.
- --------------------------------------------------------------------------------
Percent of Class Represented by Amount in Row (7)
9.
40.14%
- --------------------------------------------------------------------------------
10.
Type of Reporting Person
PN
4
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 118902105
Name of Reporting Person S.S. or I.R.S. Identification
No. of Above Persons
1.
American Industrial Partners Corporation
- --------------------------------------------------------------------------------
Check the Appropriate Box if a Member of a Group
2. (a) [_]
(b) [_]
- --------------------------------------------------------------------------------
SEC Use Only
3.
- --------------------------------------------------------------------------------
Source of Funds OO
4.
- --------------------------------------------------------------------------------
Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
5. [_]
- --------------------------------------------------------------------------------
Citizenship or Place of Organization
6.
Delaware
- --------------------------------------------------------------------------------
Aggregate Amount Beneficially Owned by Each Reporting
Person*
7.
4,228,382
(see the Offer to Purchase)
- --------------------------------------------------------------------------------
Check Box if the Aggregate Amount in Row (7) Excludes [_]
Certain Shares
8.
- --------------------------------------------------------------------------------
Percent of Class Represented by Amount in Row (7)*
9.
40.14%
- --------------------------------------------------------------------------------
10.
Type of Reporting Person
CO
5
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Bucyrus Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of American Industrial Partners
Acquisition Company, LLC, a Delaware limited liability company ("Parent"), to
purchase all of the outstanding shares (the "Shares") of common stock, par
value $.01 per share (the "Common Stock") of Bucyrus International, Inc., a
Delaware corporation (the "Company"), at $18.00 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated August 26, 1997 (the "Offer to Purchase"), a copy of which
is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (which
together constitute the "Offer"). This Statement also constitutes a Statement
on Schedule 13D of each of the Purchaser, Parent, American Industrial Partners
Capital Fund II, L.P. ("AIP Capital Fund"), American Industrial Partners II,
L.P. ("AIP LP") and American Industrial Partners Corporation ("AIP Corp.")
with respect to the option granted by Jackson National Life Insurance Company,
a Michigan corporation, to purchase up to 4,228,382 (approximately 40.14%)
Shares at $18.00 per Share. The option can be exercised only in certain
circumstances described in Section 11 of the Offer to Purchase. Each of the
Purchaser, Parent, AIP Capital Fund, AIP LP and AIP Corp. disclaims beneficial
ownership of such Shares.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Bucyrus International, Inc. and the
address of its principal executive offices is P.O. Box 500, 1100 Milwaukee
Avenue, South Milwaukee, Wisconsin 53172.
(b) The class of securities to which this Statement relates is the Common
Stock. As of August 21, 1997 there were (a) 10,534,574 shares of Common Stock,
issued and outstanding and (b) outstanding options and other rights to
purchase an aggregate of 626,000 shares of Common Stock. Purchaser is seeking
to purchase all of the outstanding Shares at a purchase price of $18.00 per
Share, net to the seller in cash.
(c) The information set forth in "Section 6--Price Range of the Shares;
Dividends on the Shares" of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser, Parent, AIP
Capital Fund, AIP LP and AIP Corp. Each of AIP Capital Fund, AIP LP and AIP
Corp. disclaims that it is a "bidder" within the meaning of Schedule 14D-1.
The information set forth in the "INTRODUCTION" and "Section 9--Certain
Information Concerning AIP Capital Fund, Parent and the Purchaser" of the
Offer to Purchase is incorporated herein by reference. The name, business
address, present principal occupation or employment, the material occupations,
positions, offices or employments for the past five years and citizenship of
each director and executive officer of AIP Corp., AIP LP, Parent and the
Purchaser and the name, principal business and address of any corporation or
other organization in which such occupations, positions, offices and
employments are or were carried on are set forth in Schedule I of the Offer to
Purchase and incorporated herein by reference.
(e)-(f) During the last five years neither the Purchaser or Parent nor, to
the best knowledge of the Purchaser and Parent, any of the persons listed in
Schedule I of the Offer to Purchase have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
6
<PAGE>
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)(1) Other than the transactions described in Item 3(b) below, neither the
Purchaser nor Parent, nor, to the best knowledge of the Purchaser and Parent,
any of the persons listed in Schedule I of the Offer to Purchase, has entered
into any transaction with the Company, or any of the Company's affiliates
which are corporations, since the commencement of the Company's third full
fiscal year preceding the date of this Statement, the aggregate amount of
which was equal to or greater than one percent of the consolidated revenues of
the Company for (i) the fiscal year in which such transaction occurred or (ii)
the portion of the current fiscal year which has occurred if the transaction
occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, neither the
Purchaser nor Parent, nor, to the best knowledge of the Purchaser and Parent,
any of the persons listed in Schedule I of the Offer to Purchase, has entered
into any transaction since the commencement of the Company's third full fiscal
year preceding the date of this Statement, with the executive officers,
directors or affiliates of the Company which are not corporations, in which
the aggregate amount involved in such transaction or in a series of similar
transactions, including all periodic installments in the case of any lease or
other agreement providing for periodic payments or installments, exceeded
$40,000.
(b) The information set forth in the "INTRODUCTION", "Section 9--Certain
Information Concerning AIP Capital Fund, Parent and the Purchaser", "Section
11--Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements" and "Section 12--Plans for the
Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 10--Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the "INTRODUCTION", "Section 11--
Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements" and "Section 12--Plans for the
Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in "Section 7--Effect of the Offer on the
Market for the Shares; Stock Listing; Exchange Act Registration; Margin
Regulations" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Section 9--Certain Information
Concerning AIP Capital Fund, Parent and the Purchaser" and "Section 11--
Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements" of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "INTRODUCTION", "Section 10--Source and
Amount of Funds", "Section 11--Background of the Offer; Purpose of the Offer
and the Merger; The Merger Agreement and Certain Other Agreements", "Section
12--Plans for the Company; Other Matters" and "Section 16--Fees and Expenses"
of the Offer to Purchase is incorporated herein by reference.
7
<PAGE>
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Section 16--Fees and Expenses" of the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Section 9--Certain Information Concerning AIP
Capital Fund, Parent and the Purchaser" of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between the Purchaser or Parent, or to the best knowledge of the Purchaser and
Parent, any of the persons listed in Schedule I of the Offer to Purchase, and
the Company, or any of the Company's executive officers, directors,
controlling persons or subsidiaries.
(b)-(c) The information set forth in the "INTRODUCTION", "Section 14--
Conditions of the Offer" and "Section 15--Certain Legal Matters" of the Offer
to Purchase is incorporated herein by reference.
(d) The information set forth in "Section 7--Effect of the Offer on the
Market for Shares; Stock Listing; Exchange Act Registration; Margin
Regulations" and "Section 15--Certain Legal Matters" of the Offer to Purchase
is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letters of
Transmittal, to the extent not otherwise incorporated herein by reference, is
hereby incorporated herein by this reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase August 26, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Letter for use by Brokers, Dealers, Banks, Trust Companies and
Nominees to their Clients.
(a)(4) Letter to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release jointly issued by Parent and the Company dated
August 21, 1997.
(a)(8) Form of Summary Advertisement dated August 26, 1997.
(a)(9) Fairness Opinion of Jefferies & Company, Inc., dated August 19, 1997.
(b)(1) Commitment Letter, dated August 13, 1997 from Bank One, Wisconsin to
the Company.
(b)(2) Salomon Brothers, Inc Highly Confident Letter.
(c)(1) Agreement and Plan of Merger, dated as of August 21, 1997, by and
among Parent, the Purchaser and the Company.
(c)(2) Stockholder Agreement, dated August 21, 1997, by and among Parent,
the Purchaser and Jackson National Life Insurance Company.
(c)(3) Guarantee, dated August 21, 1997, by and between the Company and AIP
Capital Fund.
(c)(4) Confidentiality Agreement, dated July 1, 1997, by and between AIP
Capital Fund and the Company.
(d) None.
(e) Not applicable.
(f) None.
8
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 26, 1997
Bucyrus Acquisition Corp.
By: /s/ Lawrence W. Ward, Jr.
----------------------------------
Name: Lawrence W. Ward, Jr.
Title: President
9
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 26, 1997
American Industrial Partners
Acquisition Company, LLC
By: /s/ Lawrence W. Ward, Jr.
----------------------------------
Name: Lawrence W. Ward, Jr.
Title: President
10
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 26, 1997
American Industrial Partners Capital
Fund II, L.P.
By: American Industrial Partners II,
L.P., its general partner
By: American Industrial Partners
Corporation, its general partner
By: /s/ W. Richard Bingham
----------------------------------
Name: W. Richard Bingham
Title: President, Treasurer and
Assistant Secretary
11
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 26, 1997
American Industrial Partners II, L.P.
By: American Industrial Partners
Corporation, its general partner
By: /s/ W. Richard Bingham
----------------------------------
Name: W. Richard Bingham
Title: President, Treasurer and
Assistant Secretary
12
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 26, 1997
American Industrial Partners
Corporation
By: /s/ W. Richard Bingham
----------------------------------
Name: W. Richard Bingham
Title: President, Treasurer and
Assistant Secretary
13
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
(a)(1) Offer to Purchase August 26, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Letter for use by Brokers, Dealers, Banks, Trust Companies and
Nominees to their Clients.
(a)(4) Letter to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release jointly issued by Parent and the Company dated August
21, 1997.
(a)(8) Form of Summary Advertisement dated August 26, 1997.
(a)(9) Fairness Opinion of Jefferies & Company, Inc., dated August 19, 1997.
(b)(1) Commitment Letter, dated August 13, 1997 from Bank One, Wisconsin to
the Company.
(b)(2) Salomon Brothers, Inc Highly Confident Letter.
(c)(1) Agreement and Plan of Merger, dated as of August 21, 1997, by and
among Parent, the Purchaser and the Company.
(c)(2) Stockholder Agreement, dated August 21, 1997, by and among Parent, the
Purchaser and Jackson National Life Insurance Company.
(c)(3) Guarantee, dated August 21, 1997, by and between the Company and AIP
Capital Fund.
(c)(4) Confidentiality Agreement, dated July 1, 1997, by and between AIP
Capital Fund and the Company.
(d) None.
(e) Not applicable.
</TABLE>
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
BUCYRUS INTERNATIONAL, INC.
by
BUCYRUS ACQUISITION CORP.
a corporation formed
at the direction of American Industrial Partners Capital Fund II, L.P.
at
$18.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, SEPTEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED AS
OF AUGUST 21, 1997 AMONG AMERICAN INDUSTRIAL PARTNERS ACQUISITION COMPANY,
LLC, BUCYRUS ACQUISITION CORP. AND BUCYRUS INTERNATIONAL, INC. THE BOARD OF
DIRECTORS OF BUCYRUS INTERNATIONAL, INC. HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER
OF SHARES, WHICH REPRESENTS AT LEAST FIFTY-ONE PERCENT (51%) OF THE SHARES OF
COMMON STOCK OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"),
AND (II) THE RECEIPT AND IMMEDIATE AVAILABILITY OF FINANCING SUFFICIENT IN
AMOUNT TO ENABLE THE PURCHASER TO CONSUMMATE THE OFFER AND THE MERGER AND TO
REFINANCE CERTAIN INDEBTEDNESS FOR BORROWED MONEY OF THE COMPANY AND TO PAY
RELATED FEES AND EXPENSES, AND THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO
PURCHASE. SEE SECTION 14.
---------------
IMPORTANT
Any stockholder who desires to tender all or any portion of such
stockholder's Shares (as defined herein) should either (i) complete and sign
the Letter of Transmittal (or facsimile thereof) in accordance with the
instructions in the Letter of Transmittal, mail or deliver it and any other
required documents to the Depositary and either deliver the certificates for
such Shares to the Depositary or tender such Shares pursuant to the procedures
for book-entry transfer set forth in Section 3, or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
effect the transaction for such stockholder. Any stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in
Section 3.
Questions and requests for assistance may be directed to the Information
Agent at the location and telephone numbers set forth on the back cover of
this Offer to Purchase. Requests for additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent, or the Depositary, or to brokers,
dealers, commercial banks or trust companies. A stockholder also may contact
brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
---------------
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF MACKENZIE PARTNERS, INC. APPEARS HERE]
---------------
August 26, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION
THE OFFER
1. Terms of the Offer............................................... 3
2. Acceptance for Payment and Payment............................... 4
3. Procedure for Tendering Shares................................... 5
4. Withdrawal Rights................................................ 8
5. Certain Federal Income Tax Consequences.......................... 8
6. Price Range of the Shares; Dividends on the Shares............... 9
7. Effect of the Offer on the Market for the Shares; Stock Listing;
Exchange Act Registration; Margin Regulations .................. 9
8. Certain Information Concerning the Company....................... 10
9. Certain Information Concerning American Industrial Partners,
Capital Fund II, L.P., Parent and the Purchaser................. 13
10. Source and Amount of Funds....................................... 15
11. Background of the Offer; Purpose of the Offer and the Merger; The
Merger Agreement and Certain Other Agreements................... 17
12. Plans for the Company; Other Matters............................. 31
13. Dividends and Distributions...................................... 34
14. Conditions of the Offer.......................................... 34
15. Certain Legal Matters............................................ 36
16. Fees and Expenses................................................ 38
17. Miscellaneous.................................................... 39
</TABLE>
SCHEDULE I--The Sole Member, General Partners, Directors and Executive
Officers of Bucyrus Acquisition Corp., American Industrial Partners
Acquisition Company, LLC, American Industrial Partners Capital Fund II, L.P.,
American Industrial Partners II, L.P., and American Industrial Partners
Corporation.
i
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF BUCYRUS INTERNATIONAL, INC.:
INTRODUCTION
BUCYRUS ACQUISITION CORP., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of AMERICAN INDUSTRIAL PARTNERS ACQUISITION COMPANY,
LLC, a Delaware limited liability company ("Parent"), hereby offers to
purchase any and all issued and outstanding shares of common stock ("Common
Stock"), par value $.01 per share (the "Shares") of Bucyrus International,
Inc., a Delaware corporation (the "Company"), at a price of $18.00 per Share
(the "Offer Price"), net to the seller in cash, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer"). Tendering stockholders will not
be obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, transfer taxes on the sale of
Shares pursuant to the Offer. The Purchaser will pay all fees and expenses
incurred of MacKenzie Partners, Inc., which is acting as the Information Agent
(the "Information Agent") in connection with the Offer, and American Stock
Transfer & Trust Company which is acting as the Depositary (the "Depositary")
in connection with the Offer.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER
OF SHARES OF COMMON STOCK WHICH REPRESENTS AT LEAST FIFTY-ONE PERCENT (51%) OF
THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). SEE
SECTION 14. As used in this Offer to Purchase, "fully diluted basis" takes
into account the conversion or exercise of all outstanding options and other
rights and securities exercisable or convertible into shares of Common Stock.
The Company has informed the Purchaser that, as of August 21, 1997, there were
(i) 10,534,574 shares of Common Stock issued and outstanding and (ii)
outstanding options and other rights to purchase an aggregate of 626,000
shares of Common Stock. The Merger Agreement (as defined below) provides,
among other things, that the Company will not, without the prior written
consent of Parent, issue any additional Shares (except on the exercise of
outstanding options and other rights and securities). Based on the foregoing
and giving effect to the exercise of all outstanding options and other rights,
the Purchaser believes that the Minimum Condition will be satisfied if
5,691,893 shares of Common Stock are validly tendered and not withdrawn prior
to the expiration of the Offer.
As a condition and inducement to Parent's and the Purchaser's entering into
the Merger Agreement and incurring the liabilities therein concurrently with
the execution and delivery of the Merger Agreement, Jackson National Life
Insurance Company, a Michigan corporation (the "Stockholder"), which together
with PPM America, Inc., a Delaware corporation, shares voting power and
dispositive power with respect to 4,228,382 Shares, has entered into a
Stockholder Agreement (the "Stockholder Agreement"), dated as of August 21,
1997, with Parent and the Purchaser. Pursuant to the Stockholder Agreement,
the Stockholder has agreed, among other things, to tender its Shares in the
Offer, to grant Parent a proxy with respect to the voting of such Shares in
favor of the Merger and to grant Parent an option (the "JNL Option") with
respect to such Shares upon the terms and subject to the conditions set forth
therein.
As an inducement to the Company's entering into the Merger Agreement,
concurrently with the execution and delivery of the Merger Agreement, American
Industrial Partners Capital Fund II, L.P., a Delaware limited partnership
("AIP Capital Fund"), and the Company have entered into a Guarantee, dated as
of August 21, 1997 (the "Guarantee"), pursuant to which, among other things,
AIP Capital Fund has agreed unconditionally and irrevocably, for the benefit
of the Company to guarantee the performance of all obligations of Parent and
the Purchaser pursuant to the Merger Agreement; provided that the aggregate
liability to which AIP Capital Fund may become subject pursuant to the
Guarantee or otherwise in connection with the transactions contemplated by the
Merger Agreement will not in any event exceed $7,000,000. The Guarantee
terminates upon the earliest of (i) the consummation of the Merger, (ii)
October 7, 2004 or (iii) the performance of all obligations of Parent and the
Purchaser pursuant to the Merger Agreement.
<PAGE>
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 21, 1997 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company pursuant to which, as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions to the Merger (as defined below), the Purchaser will be merged with
and into the Company and the separate corporate existence of the Purchaser
will thereupon cease. The merger, as effected pursuant to the immediately
preceding sentence, is referred to herein as the "Merger," and the Company as
the surviving corporation of the Merger is sometimes herein referred to as the
"Surviving Corporation." At the effective time of the Merger (the "Effective
Time"), each share of Common Stock then outstanding (other than Shares held by
Parent or the Purchaser and Shares held by stockholders who properly perfect
their dissenters' rights under Delaware law) will be cancelled and
extinguished and converted into the right to receive the Offer Price or any
higher price per share of Common Stock paid in the Offer (the "Merger
Consideration"), in cash payable to the holder thereof without interest. The
Merger Agreement is more fully described in Section 11.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED THEREBY INCLUDING THE OFFER AND
THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK, AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
Jefferies & Company, Inc., the Company's financial advisor ("Jefferies"),
has delivered to the Company's Board of Directors its written opinion (the
"Fairness Opinion") to the effect that the consideration to be received by the
holders of Common Stock pursuant to the Offer and under the terms of the
Merger Agreement, is fair to such holders, from a financial point of view.
Such opinion is set forth in full as an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
that is being mailed to stockholders of the Company.
The Merger Agreement provides that the initial scheduled expiration date of
the Offer shall be twenty (20) business days after the date the Offer is
commenced, but that if all conditions to the Offer shall not have been
satisfied or waived by such date, the Purchaser may, from time to time, in its
sole discretion, extend the expiration date. In addition, the Merger Agreement
provides that the Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
purchase, as soon as permitted under the terms of the Offer, all Shares
validly tendered and not withdrawn prior to the expiration of the Offer;
provided, however, that if, immediately prior to the initial expiration date
of the Offer (as it may be extended), the Shares tendered and not withdrawn
pursuant to the Offer equal less than 90% of the outstanding shares of Common
Stock, the Purchaser may extend the Offer for a period not to exceed ten (10)
business days, notwithstanding that all conditions to the Offer are satisfied
as of such expiration date of the Offer, so long as the Purchaser expressly
irrevocably waives any condition (other than the Minimum Condition) that
subsequently may not be satisfied during such extension of the Offer. The
Offer will not remain open following the time Shares are accepted for payment.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement, if required by applicable law in order to consummate the
Merger. See Section 11. Under the Delaware General Corporation Law (the
"DGCL"), except as otherwise provided below, the affirmative vote of a
majority of the outstanding shares of Common Stock is required to approve the
Merger Agreement and the Merger.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of another corporation, the corporation
holding such stock may merge such other corporation into itself without any
action or vote on the part of the board of directors or the stockholders of
such other corporation (a "short-form merger"). In the event that Parent and
the Purchaser acquire in the aggregate at least 90% of the outstanding shares
of Common Stock pursuant to the Offer or otherwise, then, at the election of
Parent, a short-form merger could be effected without any approval of the
Board of Directors or the stockholders of the Company, subject to compliance
with the provisions of Section 253 of the DGCL. Even if Parent and the
2
<PAGE>
Purchaser do not own 90% of the outstanding shares of Common Stock following
consummation of the Offer, Parent and the Purchaser could seek to purchase
additional shares in the open market or otherwise in order to reach the 90%
threshold and employ a short-form merger. The per share consideration paid for
any Shares so acquired may be greater or less than that paid in the Offer.
Parent presently intends to effect a short-form merger if permitted to do so
under the DGCL.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
THE OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer, the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 of this Offer to Purchase. The term "Expiration
Date" shall mean 12:00 Midnight, New York City time, on Tuesday, September 23,
1997, unless and until the Purchaser, in accordance with the terms of the
Merger Agreement, shall have extended the period of time for which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition, the receipt, and immediate availability of financing
sufficient in amount to enable the Purchaser to consummate the Offer and the
Merger, and to refinance certain indebtedness for borrowed money of the
Company and to pay related fees and expenses, and the expiration or
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder (the "HSR
Act"). See Section 14. If such conditions are not satisfied prior to the
Expiration Date, the Purchaser reserves the right (but shall not be obligated)
to (i) decline to purchase any of the Shares tendered and terminate the Offer,
subject to the terms of the Merger Agreement, (ii) waive any of the conditions
to the Offer, to the extent permitted by applicable law and the provisions of
the Merger Agreement, and, subject to complying with applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"),
purchase all Shares validly tendered or (iii) subject to the terms of the
Merger Agreement, extend the Offer and, subject to the right of stockholders
to withdraw Shares until the Expiration Date, retain the Shares which will
have been tendered during the period or periods for which the Offer is open or
extended.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, any Shares, by giving
oral or written notice of such extension to the Depositary and (ii) to amend
the Offer in any respect (including, without limitation, by decreasing or
increasing the Offer Price and/or by decreasing the number of Shares being
sought in the Offer), by giving oral or written notice of such amendment to
the Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer as described in
Section 14. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement thereof, the announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date
in accordance with the public announcement requirements of Rule 14d-4(c) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Without
limiting the obligation of the Purchaser under such Rule or the manner in
which the Purchaser may choose to make any public announcement, the Purchaser
currently intends to make announcements by issuing a press release to the Dow
Jones News Service. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER
PRICE TO BE PAID BY THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION
OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Merger Agreement provides that the Purchaser will not amend or waive the
Minimum Condition and will not decrease the Offer Price or change the form of
consideration payable in the Offer or decrease the number
3
<PAGE>
of Shares sought, or impose additional conditions to the Offer, or amend any
other term of the Offer in any manner adverse to the holders of the Shares
without the written consent of the Company; provided, however, that if on the
initial scheduled Expiration Date of the Offer, which is twenty business days
after the date the Offer is commenced, all conditions to the Offer shall not
have been satisfied or waived, the Purchaser may, from time to time, in its
sole discretion, extend the Expiration Date. In addition, under the terms of
the Merger Agreement, if, immediately prior to the initial Expiration Date,
the Shares tendered and not withdrawn equal less than 90% of the outstanding
shares of Common Stock, the Purchaser may extend the Offer for a period not to
exceed ten (10) business days, notwithstanding that all conditions to the
Offer may have been satisfied, so long as the Purchaser expressly irrevocably
waives any condition (other than the Minimum Condition) that subsequently may
not be satisfied during such extension of the Offer.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability
of the Purchaser to delay the payment for Shares which the Purchaser has
accepted for payment is limited by Rule 14e-l(c) under the Exchange Act, which
requires that a bidder pay the consideration offered or return the securities
deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the Commission has stated that in its view an offer must
remain open for a minimum period of time following a material change in the
terms of the Offer and that waiver of a material condition, such as the
Minimum Condition, is a material change in the terms of the Offer. The release
states that an offer should remain open for a minimum of five business days
from the date a material change is first published, sent or given to security
holders and that, if material changes are made with respect to information not
materially less significant than the offer price and the number of shares
being sought, a minimum of ten business days may be required to allow adequate
dissemination and investor response. The requirement to extend the Offer will
not apply to the extent that the number of business days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
amendment. As used in this Offer to Purchase, "business day" has the meaning
set forth in Rule 14d-1 under the Exchange Act.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed by the Purchaser to record holders of Shares and
will be furnished by the Purchaser to brokers, dealers, banks and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the Purchaser will
accept for payment and will pay, promptly after the Expiration Date, for all
Shares validly tendered prior to the Expiration Date and not properly
withdrawn in accordance with Section 4. All determinations concerning the
satisfaction of such terms and conditions will be within the Purchaser's
discretion, which determinations will be final and binding. See Sections 1 and
14. The Purchaser expressly reserves the right, in its sole discretion, to
delay acceptance for payment of or payment for Shares in order to comply in
whole
4
<PAGE>
or in part with any applicable law, including, without limitation, the HSR
Act. Any such delays will be effected in compliance with Rule 14e-l(c) under
the Exchange Act (relating to a bidder's obligation to pay the consideration
offered or return the securities deposited by or on behalf of holders of
securities promptly after the termination or withdrawal of such bidder's
offer).
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
for such Shares (or a timely Book-Entry Confirmation (as defined below) with
respect thereto), (ii) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined
below), and (iii) any other documents required by the Letter of Transmittal.
The per share consideration paid to any holder of Common Stock pursuant to the
Offer will be the highest per Share consideration paid to any other holder of
such shares pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE
PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of, or payment
for, Shares or is unable to accept for payment or pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer (including such rights as are set forth in Sections 1 and 14)
(but subject to compliance with Rule 14e-1(c) under the Exchange Act), the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility (as defined below) pursuant to the procedures set forth in
Section 3, such Shares will be credited to an account maintained at the Book-
Entry Transfer Facility), as promptly as practicable after the expiration or
termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or in part,
to Parent or to any affiliate of Parent, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
the Purchaser of its obligations under the Offer and will in no way prejudice
the rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message (as defined below), and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received
by the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
Book-Entry Confirmation received by the Depositary), in each case, prior to
the Expiration Date or (ii) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below.
The Depositary will establish an account with respect to the Shares at The
Depositary Trust Company or the Philadelphia Depositary Trust Company (either,
the "Book-Entry Transfer Facility") for purposes of the
5
<PAGE>
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
in accordance with the Book-Entry Transfer Facility's procedure for such
transfer. However, although delivery of Shares may be effected through book-
entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents must, in any case, be transmitted
to, and received by, the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agent's Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all
other cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
6
<PAGE>
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
such Shares, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the National Association of Securities
Dealers Automated Quotation System, Inc. (the "NASDAQ") is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser, and
each of them, as such stockholder's attorneys-in-fact and proxies in the
manner set forth in the Letter of Transmittal, each with full power of
substitution, to the full extent of such stockholder's rights with respect to
the Shares tendered by such stockholder and accepted for payment by the
Purchaser and with respect to any and all other Shares or other securities or
rights issued or issuable in respect of such Shares. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given by such stockholder (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares and other securities or rights, including, without limitation, in
respect of any annual, special or adjourned meeting of the Company's
stockholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting, consent and other
rights with respect to such Shares and other related securities or rights,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of, or payment for which may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right, in its sole discretion, subject to the provisions of the
Merger Agreement, to waive any of the conditions of the Offer or any defect or
irregularity in the tender of any Shares of any particular stockholder,
whether or not similar defects or irregularities are waived in the case of
other stockholders. No tender of Shares will be deemed to have been validly
made until all defects or irregularities relating thereto have been cured or
waived. None of the Purchaser,
7
<PAGE>
Parent, the Depositary, the Information Agent, the Company or any other person
will be under any duty to give notification of any defects or irregularities
in tenders or incur any liability for failure to give any such notification.
Subject to the terms of the Merger Agreement, the Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding.
Backup Withholding. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or his assignee (in
either case, the "Payee"), satisfies the conditions described in Instruction 9
of the Letter of Transmittal or is otherwise exempt, the cash payable as a
result of the Offer may be subject to backup withholding tax at a rate 31% of
the gross proceeds. To prevent backup withholding, each Payee should complete
and sign the Substitute Form W-9 provided in the Letter of Transmittal. See
Instruction 9 of the Letter of Transmittal.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for
by the Purchaser pursuant to the Offer, may also be withdrawn at any time
after September 23, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates for Shares have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant
to the procedures for book-entry transfer as set forth in Section 3, any
notice of withdrawal must also specify the name and number of the account at
the appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 3 any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, or any other person
will be under any duty to give notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failure to give any
such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or the Merger will be a taxable transaction for U.S.
federal income tax purposes and also may be a taxable transaction under state,
local or foreign tax laws. In general, a stockholder who tenders Shares in the
Offer or receives cash in exchange for Shares in the Merger will recognize
gain or loss for federal income tax purposes equal to the difference, if any,
between the amount of cash received and the stockholder's tax basis in the
Shares sold. Gain or loss will be determined separately for each block of
Shares (i.e., Shares acquired at the same time and price) exchanged pursuant
to the Offer or the Merger. Such gain or loss generally will be capital gain
or loss if the Shares disposed of were held as capital assets by the
stockholder, and will be long-term capital gain or loss if the Shares disposed
of were held for more than eighteen (18) months at the date of sale.
A holder of Shares who perfects such stockholder's appraisal rights, if any,
under the DGCL probably will recognize gain or loss at the Effective Time in
an amount equal to the difference between the "amount realized" and such
stockholder's adjusted tax basis of such Shares. For this purpose, although
there is no authority to this effect directly on point, the amount realized
generally should equal the trading value per share of the Shares at the
Effective Time. Ordinary interest income and/or capital gain (or capital loss,
assuming that the Shares were
8
<PAGE>
held as capital assets) should be recognized by such stockholder at the time
of actual receipt of payment, to the extent that such payment exceeds (or is
less than) the amount realized at the Effective Time.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Offer and the Merger without regard to
the particular facts and circumstances of each stockholder of the Company and
is based on the provisions of the Internal Revenue Code of 1986, as amended,
Treasury Department Regulations issued pursuant thereto and published rulings
and court decisions in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. Special tax consequences not
described herein may be applicable to certain stockholders subject to special
tax treatment (including, but not limited to, insurance companies, tax-exempt
organizations, financial institutions or broker dealers, foreign stockholders
and stockholders who have acquired their Shares pursuant to the exercise of
employee stock options or otherwise as compensation). ALL STOCKHOLDERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO SPECIFIC TAX EFFECTS APPLICABLE TO
THEM OF THE OFFER AND THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF
THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES. The shares of Common
Stock are traded on the NASDAQ under the symbol "BCYR". The following table
sets forth, for each of the calendar quarters indicated, the high and low
reported sales price per share of Common Stock on the NASDAQ and quarterly
cash dividends based on published financial sources.
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------
HIGH LOW CASH DIVIDENDS
------- ---- --------------
<S> <C> <C> <C>
1995
First Quarter.............................. $ 7 7/8 $ 4 $--
Second Quarter............................. 6 7/8 4 3/16 --
Third Quarter.............................. 11 1/4 5 1/16 --
Fourth Quarter............................. 9 1/4 7 --
1996
First Quarter.............................. $10 1/4 6 3/4 $--
Second Quarter............................. 11 3/4 7 --
Third Quarter.............................. 10 1/2 8 1/4 --
Fourth Quarter............................. 9 3/4 7 3/8 --
1997
First Quarter.............................. $ 8 5/8 6 5/8 --
Second Quarter............................. 11 1/2 8 --
Third Quarter (through August 21, 1997).... 18 10 1/2 --
</TABLE>
On July 29, 1997, the last full trading day prior to the public announcement
of the execution of a letter of intent by the Company and AIP Capital Fund
regarding the proposed acquisition of the Company by AIP Capital Fund or an
affiliated entity, the last reported sales price of the Shares on the NASDAQ
was $12 5/8 per share of Common Stock. On August 25, 1997, the last full
trading day prior to the commencement of the Offer, the last reported sales
price of the Shares on the NASDAQ was $17 3/4 per share of Common Stock.
Stockholders are urged to obtain a current market quotation for the Shares.
The payment of Common Stock dividends is restricted under the terms of an
agreement with the Company's lenders. Under such restrictions, the payment of
Common Stock dividends is not currently permitted. In addition, under the
terms of the Merger Agreement, the Company is not permitted to declare or pay
dividends on the Common Stock.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares by the Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly
and will reduce the number of holders of Shares, which could adversely affect
the liquidity and market value of the remaining Shares held by the public.
9
<PAGE>
Stock Listing. The Common Stock is listed on the NASDAQ. Depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer
meet the requirements of the National Association of Securities Dealers, Inc.
(the "NASD") for continued inclusion on the NASDAQ System. The NASD requires
that an issuer have at least 100,000 publicly held shares, held by at least
300 shareholders, with a market value of at least $200,000, have total assets
of at least $2 million and have capital and surplus (total shareholders'
equity) of at least $1 million. If the NASDAQ System were to cease to publish
quotations for the Shares, it is possible that the Shares would continue to
trade in the over-the-counter market and that price or other quotations would
be reported by other sources. The extent of the public market for such Shares
and the availability of such quotations would depend, however, upon such
factors as the number of shareholders and/or the aggregate market value of
such securities remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act as described below, and other factors. The
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for, or marketability of, the Shares or whether it would
cause future market prices to be greater or lesser than the Offer Price. The
Company has represented that, as of August 21, 1997, 10,534,574 Shares were
issued and outstanding.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act, assuming there are no other securities of the Company subject to
registration, would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement pursuant to Section 14(a) in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Company. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144
or Rule 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), may be impaired or eliminated. If registration of the
Common Stock under the Exchange Act were terminated, such Shares would no
longer be "margin securities" or be eligible for continued listing on any
stock exchange. The Purchaser may seek to cause the Company to apply for
termination of registration of the Shares under the Exchange Act as soon after
the completion of the Offer as the requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from the NASDAQ and the registration of the Shares
under the Exchange Act will be terminated following the consummation of the
Merger.
Margin Regulations. The Shares presently are "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would
no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or
based upon publicly available documents and records on file with the
Commission and other public
10
<PAGE>
sources. Neither Parent nor the Purchaser assumes responsibility for the
accuracy or completeness of the information concerning the Company contained
in such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of
any such information but which are unknown to Parent or the Purchaser.
The Company is a major manufacturer of large-scale excavation equipment used
in surface mining and other earth moving operations. The Company is a Delaware
corporation with its principal executive offices at P.O. Box 500, 1100
Milwaukee Avenue, South Milwaukee, WI 53172. The telephone number of the
Company at such offices is (414) 768-4000.
On August 26, 1997, the Company consummated the acquisition (the "Marion
Acquisition") of certain assets and liabilities of The Marion Power Shovel
Company, a subsidiary of Global Industrial Technologies, Inc. ("Global") and
certain subsidiaries and divisions of Global that represent Global's surface
mining equipment business in Australia, Canada and South Africa (collectively,
"Marion"). The purchase price for Marion was $40.1 million, subject to post-
closing adjustments which would have reduced the purchase price by
approximately $3.7 million if the Marion Acquisition had been consummated on
June 30, 1997. The Company financed the Marion Acquisition and related fees
and expenses using an unsecured bridge loan (the "Bridge Loan") provided by
PPM America Special Investments Fund, L.P. (the "PPM Fund"), an affiliate of
the Stockholder. The Bridge Loan was funded on August 26, 1997 (immediately
prior to consummation of the Marion Acquisition) in the amount of $45.0
million.
Selected Financial Information. Set forth below is certain selected
consolidated financial information with respect to the Company, excerpted or
derived from the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and its Quarterly Report on Form 10-Q for the six
months ended June 30, 1997, both filed with the Commission pursuant to the
Exchange Act.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following
summary is qualified in its entirety by reference to such reports and other
documents and all of the financial information (including any related notes)
contained therein. Such reports and other documents may be inspected and
copies may be obtained from the Commission in the manner set forth below.
11
<PAGE>
BUCYRUS INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEARS ENDED PERIOD ENDED
----------------- ------------------------- ------------
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1996 1995 1994(1)
-------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net Sales............. $143,762 $130,820 $263,786 $231,921 $7,810
Operating Income
(loss)............... 9,771 6,407 13,193 (6,508) (143)
Net Earnings (loss)... 3,423 910 2,878 (18,772) (552)
Net Earnings (loss)
per share............ 0.33 0.09 0.28 (1.84) (.05)
BALANCE SHEET DATA (AT
END OF PERIOD):
Total Assets.......... 198,513 173,322 172,895 174,038 --
Total Liabilities..... 157,446 138,160 135,434 139,358 --
Stockholders' Equity.. 41,067 35,162 37,461 34,680 --
</TABLE>
- --------
(1) As discussed in the Company's Form 10-K for the fiscal year ending
December 31, 1996, the Company accounted for reorganization under Chapter
11 of the Bankruptcy Code effective December 14, 1994 using the principles
of fresh start reporting as required by AICPA Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code". Accordingly, the consolidated financial statements of the Company
are not comparable to the consolidated financial statements of periods
prior to December 14, 1994.
Approximately 40.14% of the Shares are held by the Stockholder, who has
agreed, among other things, to tender, or cause to be tendered, all Shares
owned by it pursuant to the Offer. The Stockholder also has granted to Parent
a proxy to vote the Shares owned by them in favor of the Merger. See Section
11.
Certain Company Projections. To the knowledge of Parent and the Purchaser,
the Company does not as a matter of course, make public forecasts as to its
future financial performance. However, in connection with the preliminary
discussions concerning the Offer and the Merger, the Company furnished Parent
with financial projections that were prepared in connection with the senior
notes offering that the Company had been considering. These projections are
based on numerous assumptions concerning future events, and give effect to the
Marion Acquisition and the senior notes offering which was anticipated to be
$100 million at the time the projections were prepared.
The Company's projections for the years 1997 through 2001anticipated total
sales of $344.5 million in 1997, increasing thereafter an average of
approximately 7.5% per year for the next four years reaching $460.0 million in
2001. Fiscal 1997 net income was projected at $10.5 million, and was projected
to increase at an average of 22.3% annually reaching $23.5 million in 2001.
EBITDA was projected to be $34.3 million in 1997 and to increase at an average
rate of approximately 9.6% per year reaching $49.5 million in 2001. The net
income amounts did not reflect the effects of purchase accounting and other
material assumptions.
Such projections were prepared for the limited purpose of obtaining a rating
for the senior notes and have not been made public by the Company. They do not
reflect recent developments which have occurred since they were prepared, such
as the Offer and the Merger, the increase in the principal amount of the
senior notes offering to $150 million and the Bridge Loan. This reference to
the projections is provided solely because such projections have been provided
to the Purchaser and neither the Purchaser, Parent, or the Company believes
that such projections should be relied upon.
12
<PAGE>
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
REGARDING PROJECTIONS OR FORECASTS. THESE FORWARD-LOOKING STATEMENTS (AS THAT
TERM IS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995) ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE PROJECTIONS. THE PROJECTIONS REFLECT NUMEROUS
ASSUMPTIONS (NOT ALL OF WHICH WERE PROVIDED TO PARENT), ALL MADE BY MANAGEMENT
OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS,
ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, INCLUDING ASSUMED
INTEREST EXPENSE AND EFFECTIVE TAX RATES CONSISTENT WITH HISTORICAL LEVELS FOR
THE COMPANY, ALL OF WHICH ARE DIFFICULT TO PREDICT, MANY OF WHICH ARE BEYOND
THE COMPANY'S CONTROL AND NONE OF WHICH WERE SUBJECT TO APPROVAL BY PARENT OR
THE PURCHASER. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS
MADE IN PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY
BE MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE
INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION
THAT ANY OF PARENT, THE PURCHASER, THE COMPANY OR THEIR RESPECTIVE AFFILIATES
OR REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE
PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS
SUCH. NONE OF PARENT, THE PURCHASER, THE COMPANY AND ANY OF THEIR RESPECTIVE
AFFILIATES OR REPRESENTATIVES HAS MADE, OR MAKES ANY REPRESENTATION TO ANY
PERSON REGARDING THE INFORMATION CONTAINED IN THE PROJECTIONS AND NONE OF THEM
INTENDS TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES
EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE
EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE
PROJECTIONS ARE SHOWN TO BE IN ERROR.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information
as of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information are available for inspection at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Seven
World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such information
are obtainable by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website at
http://www.sec.gov that contains reports, proxy statements and other
information. Such material are also available for inspection at the offices of
the NASDAQ, located at 20 Broad Street, New York, New York 10005.
9. CERTAIN INFORMATION CONCERNING AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND
II, L.P., PARENT AND THE PURCHASER.
American Industrial Partners Capital Fund II, L.P. and Affiliates. AIP
Capital Fund, and its affiliated entities, is a private investment fund
headquartered in San Francisco with committed capital of approximately $574
million. The sole general partner of AIP Capital Fund is American Industrial
Partners II, L.P., a Delaware limited partnership ("AIP II LP"). The sole
general partner of AIP II LP is American Industrial Partners Corporation, a
Delaware corporation ("AIP Corp."). AIP Capital Fund, AIP II LP and AIP Corp.
are collectively referred to herein as the "AIP Entities." AIP Capital Fund is
a party to the Guarantee; it is not a party to either the Merger Agreement or
the Stockholder Agreement. None of the other AIP Entities is a party to any of
the Merger Agreement, the Stockholder Agreement or the Guarantee. The offices
of each of the AIP Entities are located at One Maritime Plaza, Suite 2525, San
Francisco, California 94111.
13
<PAGE>
Parent and the Purchaser. Each of Parent and the Purchaser is a Delaware
entity, newly formed at the direction of AIP Capital Fund for the purpose of
effecting the Offer and the Merger. Parent owns all of the outstanding capital
stock of the Purchaser. AIP Capital Fund as the sole member of Parent, has
sole voting and investment power over Parent. It is not anticipated that,
prior to the consummation of the Offer, the Purchaser or Parent will have any
significant assets or liabilities or will engage in any activities other than
those incident to the Offer and the Merger and the financing thereof. The
offices of Parent and the Purchaser are located at One Maritime Plaza, Suite
2525, San Francisco, California 94111.
For certain information concerning the sole member, general partners or
executive officers and directors, as the case may be, of the Purchaser, Parent
and the AIP Entities, see Schedule I. Each of the AIP Entities disclaims that
it is a "bidder" for purposes of this Offer.
Pursuant to the Stockholder Agreement, Parent may be deemed to beneficially
own 4,228,382 shares of Common Stock constituting approximately 40.14% of the
total currently outstanding shares of Common Stock. Each of the Purchaser,
Parent and the AIP Entities disclaims beneficial ownership of such shares.
Except as set forth in this Offer to Purchase, none of the Purchaser, Parent
or any of the AIP Entities, nor, to the best knowledge of the Purchaser,
Parent or AIP Capital Fund, any of the persons listed on Schedule I, nor any
associate or majority-owned subsidiary of any of the foregoing, beneficially
owns or has a right to acquire any Shares, and none of the Purchaser, Parent
or any of the AIP Entities nor, to the best of knowledge of the Purchaser,
Parent or AIP Capital Fund any of the persons or entities referred to above,
nor any of the respective executive officers, directors or subsidiaries of any
of the foregoing, has effected any transaction in Shares during the past 60
days.
Upon consummation of the Merger, AIP Capital Fund will be paid a fee of $4
million and reimbursed for out-of-pocket expenses in connection with the
negotiation of the Merger Agreement and for providing certain investment
banking services to the Company including the arrangement and negotiation of
the terms of the Notes and for other financial advisory and management
consulting services.
AIP Capital Fund expects to provide substantial ongoing financial and
management services to the Company utilizing the extensive operating and
financial experience of AIP Capital Fund's principals. AIP Capital Fund will
receive an annual fee of $1.45 million for providing general management,
financial and other corporate advisory services to the Company, payable
semiannually 45 days after the scheduled interest payment date for the Notes
(as defined herein), and will be reimbursed for out-of-pocket expenses. The
fees will be paid to AIP Capital Fund pursuant to a management services
agreement among AIP Capital Fund, the Company and certain Company affiliates
and will be subordinated in right of payment to the Notes.
AIP Capital Fund has discussed with the Company in broad terms AIP Capital
Fund's general policy that stock in the companies acquired by AIP Capital
Fund, or its affiliates, be made available to executive officers of such
acquired companies, typically in the form of stock options. However, there is
currently no agreement, arrangement or understanding specifically implementing
this policy in respect of the Company or management of the Company, nor is
there expected to be any such agreement, arrangement or understanding until
following consummation of the Merger. Following consummation of the Merger,
AIP Capital Fund expects to cause the Surviving Corporation to issue and sell
additional shares of its common stock to certain members of management of the
Company and to adopt a performance-based stock option plan for such management
which, in the aggregate, would comprise approximately 10% of the common stock
of the Surviving Corporation.
Except as set forth in this Offer to Purchase, none of the Purchaser, Parent
or any of the AIP Entities, nor, to the best knowledge of the Purchaser,
Parent or AIP Capital Fund, any of the persons listed on Schedule I, has any
contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any securities of the Company, joint ventures, loan
or option arrangements, puts or calls, guarantees of loans, guarantees against
loss, or the giving or withholding of proxies. Except as set forth in this
Offer to Purchase, none of the Purchaser, Parent or any of the AIP Entities,
or any of their respective affiliates,
14
<PAGE>
nor, to the best knowledge of the Purchaser, Parent or AIP Capital Fund, any
of the persons listed on Schedule I, has had, since January 1, 1994, any
business relationships or transactions with the Company or any of its
executive officers, directors or affiliates that would require reporting under
the rules of the Commission. Except as set forth in this Offer to Purchase,
since January 1, 1994, there have been no contacts, negotiations or
transactions between the Purchaser, Parent or any of the AIP Entities, any of
their respective affiliates or, to the best knowledge of the Purchaser, Parent
or AIP Capital Fund, any of the persons listed on Schedule I, and the Company
or its affiliates concerning a merger, consolidation or acquisition, tender
offer or other acquisition of securities, election of directors or a sale or
other transfer of a material amount of assets.
10. SOURCE AND AMOUNT OF FUNDS.
Parent and the Purchaser estimate that the total amount of funds required by
the Purchaser to (i) purchase all of the Shares pursuant to the Offer and
finance the Merger Consideration, (ii) refinance certain existing indebtedness
and accrued liabilities of the Company, and (iii) pay fees and expenses
incurred in connection with the Offer and the Merger will be approximately
$321.3 million. Of these funds, it is anticipated that (i) approximately $5.0
million will be obtained from cash on hand of the Company, (ii) approximately
$143.0 million will be obtained from an equity contribution from AIP Capital
Fund (the "Equity Contribution"), (iii) approximately $150 million will be
obtained from the proceeds of an offering (the "Notes Offering") of Senior
Notes Due 2007 of the Company, and (iv) $23.3 million will be financed through
a revolving credit facility (the "Revolving Credit Facility"), the principal
terms of which are described below. The Revolving Credit Facility and the
Notes Offering are referred to collectively as the "Debt Financing." Should
additional financing be necessary, Parent believes that the Purchaser would
have additional funds available to it in view of the currently contemplated
capital structure of the Company. The net proceeds from the Notes Offering
will be used to fund, in part, the purchase of Shares in the Offer in the
event that at least 90% of the outstanding Shares are tendered in the Offer
and not withdrawn and the Merger becomes effective without a meeting of
stockholders of the Company in accordance with the DGCL. In the event that
fewer than 90% of the outstanding Shares are tendered in the Offer and not
withdrawn, AIP Capital Fund, or an affiliate, will loan the Purchaser an
amount that, together with AIP Capital Fund's equity contribution of $143.0
million, will be sufficient to complete the acquisition of Shares in the Offer
and Merger, such loan to be repaid upon consummation of the Merger with a
portion of the proceeds of the Notes Offering.
The following table has been prepared by the Purchaser after discussions
with management of the Company and sets forth the approximate amounts,
proposed sources and uses of funds necessary to consummate the proposed Offer,
Merger and related refinancings:
<TABLE>
<CAPTION>
$ IN MILLIONS
-------------
<S> <C>
SOURCES:
Cash of the Company........................................ $ 5.0
Equity Contribution from Parent............................ 143.0
Borrowings under Revolving Credit Facility................. 23.3
Proceeds from the Notes Offering........................... 150.0
------
Total.................................................... $321.3
======
USES:
Purchase Equity............................................ $196.6
Repay Existing Debt of Company............................. 65.8
Repay Marion Acquisition Bridge Loan....................... 45.0
Repay Existing Credit Facility............................. 0.4
Fees and Expenses.......................................... 13.5
------
Total.................................................... $321.3
======
</TABLE>
15
<PAGE>
The Notes Offering. In connection with the Offer and the Merger, the Company
will issue and sell at least $150 million aggregate principal amount of debt
securities of the Company through the Notes Offering. The Company has received
a letter from a nationally recognized investment banking firm that, subject to
the conditions set forth in such letter, it is highly confident that it could
raise approximately $150 million of senior notes of the Company in a private
placement under Rule 144A under the Securities Act (with subsequent
registration rights), concurrent with (x) the initial borrowing under the
Revolving Credit Facility as contemplated below and (y) the Equity
Contribution.
It is currently anticipated that the debt securities to be issued in the
Notes Offering will (i) mature in 10 years, (ii) bear interest at a rate to be
determined based on market conditions existing at the time of the offering,
(iii) have semiannual interest payment dates beginning in 1998, (iv) be
redeemable at the option of the Company beginning on the fifth anniversary of
the issue date redemption prices to be determined and (v) have such other
terms as the Company and the Purchaser of the debt securities agree.
Revolving Credit Facility. In connection with the Offering, the Company has
obtained a commitment from Bank One, Wisconsin ("Bank One") to enter into a
new senior bank credit agreement, the Revolving Credit Facility. Bank One has
provided working capital and other financing, including a letter of credit
facility, to the Company since 1988. Pursuant to the Revolving Credit
Facility, the Company will replace its current $15 million letter of credit
and revolving loan facility with the $75 million Revolving Credit Facility.
The Revolving Credit Facility is expected to be used in the future for general
working capital purposes and capital expenditures. As of June 30, 1997, on a
pro forma basis after giving effect to the Marion Acquisition, approximately
$23.3 million would have been outstanding under the Revolving Credit Facility.
Borrowings under the Revolving Credit Facility bear interest at variable rates
and are subject to a borrowing base formula, which at June 30, 1997, would
have permitted borrowings and letters of credit totaling $68.7 million,
including a six month reserve for interest payments on the Revolving Credit
Facility.
The $75 million Revolving Credit Facility will include a $25 million
sublimit for standby letters of credit. The issuance of standby letters of
credit will reduce the amount available for direct borrowings under the
Revolving Credit Facility. Availability under the Revolving Credit Facility
will be limited to a borrowing base which will be defined as (A) the sum of
(i) 80% of North American accounts receivable, (ii) 50% of domestic finished
goods and raw materials, (iii) a declining percentage (initially 30%) of
domestic work-in-progress, and (iv) 80% of the estimated orderly liquidation
value (as determined by a formula) of the Company and domestic subsidiaries
machinery and equipment minus (B) the sum of (i) outstanding principal balance
of other permitted debt and (ii) a reserve equal to one semi-annual interest
payment on the Notes. The obligations of the Company under the Revolving
Credit Facility will be guaranteed by certain subsidiaries, and the Revolving
Credit Facility will be secured by substantially all of the assets of the
Company, other than real property and assets of foreign subsidiaries. Pricing
on the Revolving Credit Facility is, at the option of the Company, (i) Prime
Rate or Federal Funds Rate plus 1/2 percent per annum plus an applicable
margin ranging from 0% to 0.5% dependent on the ratio of funded debt to
earnings before interest, taxes, depreciation and amortization ("EBITDA"), or
(ii) LIBOR plus an applicable margin ranging from 1.5% to 2.75% depending on
the ratio of funded debt to EBITDA. Letters of credit will be priced at 50% of
the applicable LIBOR interest rate margin for non-financial letters of credit
and 100% of the applicable LIBOR interest rate margin in the case of financial
letters of credit.
The Revolving Credit Facility will contain certain restrictive covenants
that impose limitations upon, among other things, the ability of the Company
and the guarantors to incur liens; merge, consolidate or dispose of assets;
make loans and investments; incur indebtedness; engage in certain transactions
with affiliates; incur contingent obligations; enter into joint ventures;
enter into lease agreements; pay dividends and make other distributions;
change its business; redeem the Notes; and make capital expenditures.
The Revolving Credit Facility also will contain covenants requiring the
Company to maintain certain financial ratios to be determined with respect to:
adjusted funded debt to EBITDA ratio; fixed charge coverage ratio; interest
coverage ratio; and, minimum net worth.
16
<PAGE>
All extensions of credit under the Revolving Credit Facility will be subject
to customary documentation and the continued accuracy of all representations
and warranties as well as the absence of any material adverse effect of the
Company or defaults or event of default with respect to the Company's
indebtedness. The Revolving Credit Facility may be refinanced or increased
from time to time.
Marion Acquisition Bridge Loan. The Company financed the Marion Acquisition
utilizing an unsecured bridge loan (the "Bridge Loan") provided by PPM Fund,
an affiliate of the Stockholder. The Bridge Loan was funded on August 26, 1997
(immediately prior to the consummation of the Marion Acquisition) in the
amount of $45.0 million. A portion of the Proceeds of the Notes Offering are
intended to be used to repay the Bridge Loan.
The Company obtained a commitment dated April 14, 1997 from the PPM Fund to
provide the Bridge Loan ("Bridge Loan Commitment"). Upon execution of the
Bridge Loan Commitment, the Company paid a $550,000 Proposal and Commitment
Fee to the PPM Fund. The Bridge Loan Commitment provided for a fee of $450,000
(the "Facility Fee") to be paid upon execution of the definitive purchase
agreement for the Marion Acquisition. The Bridge Loan Commitment provided for
a closing date of the Marion Acquisition of not later than July 14, 1997. On
June 30, 1997, the Company and the PPM Fund agreed to extend the deadline for
the closing date until August 30, 1997 (the "Extension Agreement"). As a
condition to the Extension Agreement, however, the PPM Fund required the
Company to pay a $337,500 Extension Fee and to pay the $450,000 Facility Fee
at the time the Extension Agreement was signed.
On August 26, 1997, upon consummation of the Marion Acquisition and the
funding of the Bridge Loan, the Company paid a $800,000 Financing Fee to the
PPM Fund and a Bridge Loan funding fee of $1,125,000. Additional compensation
under the Bridge Loan is due as follows: (i) if the Bridge Loan is outstanding
thirty days after funding (on September 25, 1997), the Company will pay a
"Maintenance Fee" of $800,000; (ii) if the Bridge Loan is outstanding ninety
days after funding (on November 24, 1997), the Company will pay a Maintenance
Fee of $3,200,000; and (v) if the Bridge Loan is outstanding at Maturity
(February 23, 1998), the Company will pay $3,200,000. The Company presently
anticipates that the Notes Offering will be completed prior to September 25,
1997, and the proceeds thereof used, in part, to refinance the Bridge Loan,
and, accordingly, that none of the Maintenance Fee or other fees described in
this paragraph will be paid.
The Bridge Loan matures on February 23, 1998 (181 days from funding). The
Bridge Loan bears interest at 5% over the Adjusted Eurodollar Rate, as defined
in the Bridge Loan.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE
MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS.
The following description was prepared by Parent and the Company.
Information about the Company was provided by the Company and neither the
Purchaser nor Parent takes any responsibility for the accuracy or completeness
of any information regarding meetings or discussions in which Parent or its
representatives did not participate.
BACKGROUND OF THE OFFER.
In the fall of 1993, a representative of AIP Capital Fund was informed by a
representative of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ")
of the Company's difficult financial condition and an introduction was
arranged with the then existing management of the Company. Following this
contact, American Industrial Partners Capital Fund, L.P. initiated a review of
certain publicly-available information concerning the Company with a view
toward a possible investment by American Industrial Partners Capital Fund,
L.P. in the Company.
On November 12, 1993, American Industrial Partners Capital Fund, L.P.
entered into a confidentiality agreement with the Company pursuant to which
American Industrial Partners Capital Fund, L.P. agreed to treat as
confidential certain information provided to it by and on behalf of the
Company. Following the execution of
17
<PAGE>
the confidentiality agreement, American Industrial Partners Capital Fund, L.P.
was provided with certain confidential information. Discussions between
certain representatives of American Industrial Partners Capital Fund, L.P.,
and representatives of the Company continued over the next several months. In
early 1994, American Industrial Partners Capital Fund, L.P. and the Company
mutually determined not to pursue an investment by American Industrial
Partners Capital Fund, L.P. in the Company at that time.
During 1994 as the Company was attempting to negotiate a prepackaged plan of
reorganization with the Company's creditors (the "Chapter 11 Reorganization"),
additional discussions between American Industrial Partners Capital Fund, L.P.
and the Company occurred to explore any role that an investment by American
Industrial Partners Capital Fund, L.P. might play in the Chapter 11
Reorganization. Additionally, during the period of those discussions,
representatives of American Industrial Partners Capital Fund, L.P. met with a
representative of the Stockholder to discuss a possible sale of the
Stockholder's shares of Common Stock to American Industrial Partners Capital
Fund, L.P. Again, American Industrial Partners Capital Fund, L.P., the Company
and the Stockholder mutually determined not to pursue an investment by
American Industrial Partners Capital Fund, L.P. in the Company at that time.
Since the completion of the Chapter 11 Reorganization in December 1994,
representatives of AIP Capital Fund have remained in casual contact with the
Company, principally through Joseph J. Radecki, Jr., Executive Vice President
of Jefferies & Company, Inc. ("Jefferies"), the Company's financial advisor,
and a director of the Company, and with the Stockholder, principally through
F. John Stark, III, Senior Vice President, General Counsel and portfolio
manager for the Special Investments Portfolio of PPM America, Inc. ("PPM"), an
affiliate of the Stockholder, and a Director of the Company. The Stockholder
has repeatedly advised the Company (as reported in the Company's periodic
reports and other filings with the Commission) that the Stockholder has from
time to time had discussions relating to disposition of all or a substantial
portion of its equity interest in the Company.
Early in April 1997, the Company announced that it had reached an agreement
in principle to acquire Marion. On that date, Mr. Lawrence W. Ward, Jr., a
principal of AIP Capital Fund, a successor fund to American Industrial
Partners Capital Fund, L.P., contacted Mr. Stark and requested the opportunity
to speak with management to obtain additional information concerning the
Company and its prospects in light of the Marion Acquisition. During that
conversation, they also discussed a possible investment by AIP Capital Fund in
the Company for the purpose of assisting with the financing of the Marion
Acquisition. Although the Company informed AIP Capital Fund that no additional
equity investment would be necessary to complete the Marion Acquisition,
discussions among AIP Capital Fund, the Company and the Stockholder continued
over the next several weeks.
Following a series of internal meetings over the next several months among
the members of AIP Capital Fund's management, AIP Capital Fund determined to
explore another possible investment in the Company. On July 1, 1997, Mr. Stark
and Mr. Willard R. Hildebrand, President, Chief Executive Officer and a
Director of the Company, met with Mr. Ward and Mr. Robert L. Purdum, a partner
of AIP Capital Fund. As a result of this meeting, the Company entered into a
new confidentiality agreement (the "Confidentiality Agreement") which
superseded the confidentiality agreement executed on November 12, 1993.
Pursuant to the terms of the Confidentiality Agreement, AIP Capital Fund
agreed for a period of three (3) years not to effect or propose, or assist a
third party to do the same, any business combination with restructuring or
recapitalization of, acquisition of any securities or assets of,
representation on the Board of Directors or otherwise seek to influence
control of the Company without the consent of the Board of Directors of the
Company. At the July 1 meeting, Mr. Stark requested that further negotiations,
if any, between AIP Capital Fund and the Company be held through Mr. Radecki
in his firm's role as financial advisor to the Company.
Between July 1, 1997 and July 25, 1997, Mr. Radecki held several
conversations with representatives of AIP Capital Fund, including Messrs.
Ward, Rogers, also a partner of AIP Capital Fund, and Purdum. Topics discussed
included: how the Company might respond should AIP Capital Fund make an offer
for a portion or all of the Shares, AIP Capital Fund's history and manner of
acting with respect to other transactions it had completed, how a proposal
from AIP Capital Fund to purchase a portion or all of the Shares would affect
the pending Marion Acquisition and the then contemplated senior notes offering
and other matters.
18
<PAGE>
At subsequent meetings between representatives of AIP Capital Fund and
Company executives, held on July 24 and 25, 1997 at the Company's offices, the
discussions chiefly involved due diligence matters under the Confidentiality
Agreement. Additionally, Mr. Theodore C. Rogers was involved in these
discussions. AIP Capital Fund conducted its business due diligence
investigation of the Company with a view to submitting a proposal involving a
control transaction with the Company.
On July 24, 1997, Mr. Ward telephoned Mr. Radecki to explore a possible
acquisition of the Stockholder's shares of the Company's Common Stock for a
price of $15.00 per Share. Mr. Radecki advised Mr. Ward that, although he did
not speak for the Stockholder (being the Company's financial advisor), it was
Mr. Radecki's understanding that, in light of the Marion Acquisition and a
then-contemplated senior notes offering, the Stockholder would not be
interested in selling its Shares for less than $18.00 per Share and that, in
any event, it was Mr. Radecki's further understanding that the Stockholder
would only endorse an offer which provided that the Stockholder would receive
the same consideration per Share as would all other holders of Shares.
Thereafter, AIP Capital Fund requested an opportunity to conduct additional
due diligence with a view toward improving the value of its proposal for a
control transaction involving the Company. Following additional due diligence,
on the morning of July 27, 1997, Mr. Ward contacted Mr. Radecki to indicate
that AIP Capital Fund was prepared to submit a non-binding expression of
interest to acquire all of the issued and outstanding Common Stock of the
Company at a price equal to $17.00 per Share. In response, Mr. Radecki advised
Mr. Ward that a proposed offer at $17.00 per Share would not be acceptable to
either the Company or to the Stockholder.
Subsequently, AIP Capital Fund considered a revised capital structure for
the Company which could be implemented in connection with a merger proposal.
Jefferies, after consulting with the other proposed placement agents of the
Senior notes offering that the Company was then considering in connection with
the Marion Acquisition, informed representatives of AIP Capital Fund that it
believed that $150 million of ten year senior subordinated securities could be
sold in connection with the acquisition of the Company by AIP Capital Fund or
an affiliate. Additionally, AIP Capital Fund was informed by the Company that
the previously negotiated $75 million secured revolving credit agreement could
be put in place in connection with a merger transaction.
On the afternoon of July 28, 1997, Mr. Ward telephoned Mr. Radecki and made
the following proposal (the "Initial AIP Proposal"): AIP Capital Fund was
prepared to submit a letter of intent to acquire the Company at a price equal
to $18.00 per Share (the "Transaction Price"). The Initial AIP Proposal
provided that, concurrently with the execution of the merger agreement, the
Stockholder would execute and deliver to the Purchaser an agreement pursuant
to which the Stockholder would agree to tender all of the Shares held by it to
the Purchaser in the tender offer (if made) and to vote all such Shares in
favor of the merger, and granting to the Purchaser an option, exercisable in
certain circumstances and for a period to be negotiated, to purchase all of
such Shares at an exercise price equal to the Transaction Price. With respect
to the option, the Initial AIP Proposal also provided that in the event that
an entity other than the Purchaser acquired a majority of the outstanding
Shares at a price higher than the Transaction Price pursuant to an agreement
signed within such period, the Purchaser and the Stockholder would share 50/50
in the amount by which the price in such other acquisition exceeded the
Transaction Price. In addition, the Initial AIP Proposal provided that the
transaction would be subject to certain conditions, including, among others,
that the debt financing necessary to finance the transaction would be
available to the Purchaser on the terms previously disclosed to the Company
and that the acquisition of Marion by the Company would have been consummated.
The Initial AIP Proposal stated that the definitive merger agreement would
provide that in the event that the merger agreement were terminated due to
certain circumstances to be negotiated, the Purchaser would be entitled to a
termination fee of $7.0 million. The Initial AIP Proposal also provided that,
for a period of three weeks following acceptance of the Initial AIP Proposal
by the Company, the Company would negotiate with AIP Capital Fund on an
exclusive basis with respect to an acquisition transaction. AIP Capital Fund
also indicated that it was prepared to commit at least $140.0 million of its
own equity capital to finance the transaction, including the purchase of all
outstanding equity interests in the Company and the repayment of certain
existing Company indebtedness.
19
<PAGE>
On the morning of July 29, 1997, Mr. Radecki stated to Mr. Ward that the
Company had instructed Jefferies to seek certain additional favorable terms
from AIP Capital Fund. As a result of this conversation, and although not all
of the Company's proposed terms were accepted, AIP Capital Fund did agree to
increase its equity investment in the Merger.
On the afternoon of July 29, 1997, AIP Capital Fund submitted a revised
proposal with certain additional terms (the "Revised AIP Proposal"),
including, among others, a provision which automatically terminated the
Revised AIP Proposal if the Company disclosed the existence of the Revised AIP
Proposal or its contents. The Revised AIP Proposal also included certain
material terms of a proposed Stockholder Agreement between AIP Capital Fund
and the Stockholder. The Company concluded that the confidentiality provision
in the Revised AIP Proposal was unacceptable. Mr. Radecki communicated this
position to Mr. Ward.
Late in the afternoon of July 29, 1997, Mr. Ward contacted Mr. Radecki to
indicate that AIP Capital Fund was prepared to remove the confidentiality
provision from the Revised AIP Proposal, but insisted that the parties agree
that if within six months after the date of the proposed letter of intent, the
Company were to sign an agreement pursuant to which control of the Company or
a substantial part of its assets were acquired by a third party, then the
Company would reimburse AIP Capital Fund and its affiliates for their expenses
not exceeding $500,000 and would pay to AIP Capital Fund a fee of $1.0
million. On the evening of July 29, 1997, AIP Capital Fund submitted to the
Company a further revision to the Revised AIP Proposal (the "Final AIP
Proposal") embodying these terms.
On July 30, 1997 Mr. Radecki communicated to Mr. Ward the Board of
Director's decision to accept the Final AIP Proposal and to formalize the
Company's acceptance of the Final AIP Proposal through execution of a letter
of intent (the "Letter of Intent"). Following additional negotiations
throughout the day on July 30 between representatives of AIP Capital Fund, the
Stockholder and the Company to finalize the Letter of Intent, attached to this
Schedule 14D-1 and incorporated herein by reference, the Company issued a
press release early on the morning of July 31, 1997 and filed the full text of
the Letter of Intent as an exhibit to the Company's Current Report on Form 8-K
dated August 1, 1997 (with a filing date of August 4, 1997). A copy of the
press release is attached to this Schedule 14D-1 and incorporated herein by
reference.
Following the execution of the Letter of Intent, AIP Capital Fund, together
with its legal and other professional advisors, intensified its due diligence
investigation of the Company and its business. In addition, AIP Capital Fund
and its legal counsel held a number of discussions over the telephone with the
Company and the Stockholder and their respective legal counsel to negotiate
the various terms of the definitive agreements, including the Merger
Agreement, the Stockholder Agreement and the Guarantee. The parties also
simultaneously negotiated the terms of the settlement agreement entered into
between the Company and the Stockholder concurrently with the execution of the
Merger Agreement. See the Company's Schedule 14D-9 -- Joint Prosecution
Agreement.
At a meeting of the Board of Directors of the Company held on August 19,
1997, the Board of Directors unanimously approved the Merger Agreement and the
transaction contemplated thereby including the Offer and the Merger and
determined that the terms of the Offer and the Merger are fair to, and in the
best interests of, the holders of the Common Stock, and unanimously recommend
that stockholders of the Company accept the Offer and tender their Shares. On
August 19, 1997, Jefferies delivered to the Company's Board of Directors its
opinion to the effect that the consideration to be received by the holders of
Common Stock pursuant to the Offer and under the terms of the Merger
Agreement, is fair to such holders, from a financial point of view. The
written opinion of Jefferies is set forth in full as an exhibit to the
Company's Schedule 14D-9 which is being mailed to stockholders of the Company.
Stockholders of the Company are urged to read that opinion in its entirety.
Following the approval of the Board of Directors, on August 21, 1997,
Parent, the respective parties executed and delivered the Merger Agreement,
Guarantee and the Stockholder Agreement and issued a joint press release,
attached to this Schedule 14D-1 and incorporated herein by reference.
On August 26, 1997, the Purchaser and Parent commenced the Offer.
20
<PAGE>
PURPOSE OF THE OFFER AND THE MERGER
The purpose of the Offer, the Merger and the Merger Agreement is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
The Offer is being made pursuant to the Merger Agreement and is intended to
increase the likelihood that the Merger will be effected. The purpose of the
Merger is to acquire all outstanding Shares not purchased pursuant to the
Offer. The transaction is structured as a merger in order to ensure the
acquisition by Parent of all the outstanding Shares.
If the Merger is consummated, Parent's common equity interest in the Company
would increase to 100% and Parent would be entitled to all benefits resulting
from that interest. These benefits include complete management with regard to
the future conduct of the Company's business and any increase in its value.
Similarly, Parent will also bear the risk of any losses incurred in the
operation of the Company and any decrease in the value of the Company.
Stockholders of the Company who sell their Shares in the Offer will cease to
have any equity interest in the Company and to participate in its earnings and
any future growth. If the Merger is consummated, the stockholders will no
longer have an equity interest in the Company and instead will have only the
right to receive cash consideration pursuant to the Merger Agreement or to
exercise statutory appraisal rights under Delaware law. See Section 12.
Similarly, the stockholders of the Company will not bear the risk of any
decrease in the value of the Company after selling their Shares in the Offer
or the subsequent Merger.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell
all of their Shares for cash at a price which represents a premium of
approximately 43% over the closing market price of the Common Stock on the
last full trading day prior to the initial public announcement that the
Company and AIP Capital Fund had executed a letter of intent regarding a
possible sale of the Company, and a more substantial premium over recent
historical trading prices.
THE MERGER AGREEMENT
As of August, 21, 1997, Parent, the Purchaser and the Company entered into
the Merger Agreement, pursuant to which the Purchaser agreed to make the
Offer. The following description of the Merger Agreement does not purport to
be complete and is qualified by reference to the text of the Merger Agreement,
a copy of which is filed as Exhibit (c) (1) hereto and incorporated herein by
reference. Capitalized terms not otherwise defined herein have the meanings
set forth in the Merger Agreement. The Merger Agreement may be examined and
copies may be obtained at the places and in the manner set forth in Section 8
of this Offer to Purchase.
The Offer. The Merger Agreement provides for the making of the Offer by the
Purchaser. The obligation of the Purchaser to accept for payment and pay for
Shares tendered is subject to there being tendered, and not withdrawn prior to
the expiration of the Offer, that number of Shares which represents at least
51% of the Shares then outstanding on a fully diluted basis (after giving
effect to the conversion or exercise of all outstanding options, warrants and
other rights and securities exercisable or convertible in Shares) (the
"Minimum Condition"), and to the satisfaction of the other conditions
described in Annex I to the Merger Agreement. The Merger Agreement provides
that the Purchaser may not amend or waive the Minimum Condition, decrease the
Offer Price or decrease the number of Shares sought or otherwise amend any
other condition of the Offer in any manner adverse to the holders of the
Shares without the prior written consent of the Company; provided, that the
Purchaser may, in its sole discretion, extend the expiration date of Offer so
long as the Purchaser expressly irrevocably waives any condition (other than
the Minimum Condition) that subsequently may not be satisfied during such
extension of the Offer.
Designation of Directors. The Merger Agreement provides that, promptly after
the purchase of Shares pursuant to the Offer, Parent shall be entitled to
designate directors on the Board of Directors of the Company as will give
Parent representation proportionate to its ownership interest. To this end,
the Company has agreed to expand the size of the Board of Directors of the
Company or to seek the resignation of one or more of the current
21
<PAGE>
directors, as requested by Parent. However, in the event that Parent's
designees are elected to the Board of Directors of the Company, and until the
Effective Time, the Board of Directors of the Company must include at least
one director who is a director as of the date of execution of the Merger
Agreement and who is neither an officer of the Company nor a designee,
stockholder, affiliate or associate of Parent (one or more of such directors
being the "Independent Directors"). If no Independent Directors remain, the
other directors shall designate one person to fill a vacancy created by
resignation of one or more directors, who is neither an officer of the Company
nor a designee, stockholder, affiliate or associate of the Purchaser, such
person so designated being deemed an Independent Director. The Company's
obligation to appoint Parent's designees to the Board of Directors of the
Company is subject to compliance with Section 14(f) of the Exchange Act and
Rule 14f-l promulgated thereunder. Following the election of Parent's
designees, any action to amend or terminate the Merger Agreement on behalf of
the Company, to exercise or waive any of the Company's rights, benefits or
remedies thereunder, to extend the time for the performance of the Purchaser's
obligations thereunder or to take other action by the Company under the Merger
Agreement shall be effected only by the action of a majority of the directors
of the Company then in office who are Independent Directors.
The Merger. The Merger Agreement provides that, at the Effective Time and
until the Effective Time the Purchaser will be merged with and into the
Company, and the Company will continue as the Surviving Corporation. The
Merger will become effective at the time of filing with the Secretary of State
of the State of Delaware of a Certificate of Merger, or at such later time as
may be specified in the Certificate of Merger (the "Effective Time"). The
parties expect to file the Certificate of Merger as soon as practicable
following the closing of the Merger, which will take place on the second
business day after the conditions to the parties' obligation to effect the
Merger have been satisfied or waived, unless another date is otherwise agreed.
Each Share issued and outstanding immediately prior to the Effective Time
(other than Shares with respect to which appraisal rights have been properly
exercised, and Canceled Shares (as defined below) shall be converted into the
right to receive the Offer Price . Each Share issued and outstanding
immediately prior to the Effective Time owned by Parent or the Purchaser, or
any subsidiary of the Company, Parent or the Purchaser, and each Share held in
the treasury of the Company (collectively, the "Canceled Share") immediately
prior to the Effective Time will be canceled and cease to exist. Each share of
Common Stock of the Purchaser issued and outstanding immediately prior to the
Effective Time will automatically be converted into one share of Common Stock
of the Surviving Corporation.
The Merger Agreement provides that the Certificate of Incorporation and By-
laws of the Purchaser shall be the Certificate of Incorporation and By-laws of
the Surviving Corporation unless otherwise determined by the Purchaser prior
to the Effective Time. The Merger Agreement also provides that the directors
of the Purchaser at the Effective Time will be the directors of the Surviving
Corporation and that the officers of the Company at the Effective Time will be
the officers of the Surviving Corporation.
The respective obligations of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, to effect the Merger are subject to the
satisfaction on or prior to the Closing Date (as defined in the Merger
Agreement) of each of the following conditions: (i) Parent or the Purchaser or
their affiliates shall have made or cause to be made, the Offer and shall have
purchased Shares pursuant to the Offer, unless such failure to purchase is a
result of a breach of Parent's and the Purchaser's obligations under the
Merger Agreement, (ii) the Merger Agreement shall have been approved and
adopted by the requisite vote of the holders of Shares, if required by
applicable law, in order to consummate the Merger; (iii) no statute, rule or
regulation shall have been enacted or promulgated by any governmental
authority which prohibits the consummation of the Merger, and there shall be
no order or injunction of a court of competent jurisdiction in effect
precluding the consummation of the Merger and (iv) the applicable waiting
period under the HSR Act shall have expired or been terminated.
Recommendation. The Company represents in the Merger Agreement that the
Board of Directors of the Company has (i) determined that each of the Merger
and the Offer is fair to the stockholders of the Company, and (ii) resolved to
recommend acceptance of the Offer and approval and adoption of the Merger
Agreement by
22
<PAGE>
the Company's stockholders. The recommendation of the Board of Directors of
the Company may be withdrawn, modified or amended if the Board of Directors of
the Company determines in good faith, after receipt of a written opinion of
outside legal counsel to the Company, that the exercise of the director's
fiduciary duties requires such withdrawal, amendment or modification. The
Company has agreed to use its best efforts to file a
Solicitation/Recommendation Statement of Schedule 14D-9 containing such
recommendations with the Commission and to mail such Schedule 14D-9 to the
stockholders of the Company contemporaneous with the commencement of the
Offer.
Stock Options and Stock Appreciation Rights. At or immediately prior to the
Effective Time, each outstanding option to purchase Shares (the "Options") and
each outstanding Stock Appreciation Right (the "SARs") granted under the
Company's Non-Employee Directors' Stock Option Plan and the 1996 Employees'
Stock Incentive Plan and any other stock-based incentive plan or arrangement
of the Company (collectively, the "Stock Plans") shall be canceled and, in
consideration of such cancellation, the holder of such Options and SARs shall
receive for each Share subject to such Option or SAR an amount (subject to
withholding taxes) equal to the product of (i) the excess, if any, of the
Offering Price over the exercise price of such Option or the per Share base
price of such SAR, as applicable, and (ii) the number of Shares subject to
such Option or SAR. The Company will obtain all necessary consents or releases
from holders of the Options or SAR to effect the foregoing. Upon receipt of
the Option Price, the Option will be cancelled. The surrender of an Option or
SAR to the Company will be deemed a release of any and all rights a holder had
or may have had in respect of such Option or SAR. Except as may be otherwise
agreed to by Parent or the Purchaser and the Company, the Company (i) shall
cause the Stock Plans to terminate as of the Effective Time, and (ii)
following the Effective Time, shall take all actions necessary to ensure that
no holder of Options or SARs or any participant in the Stock Plans shall have
any right thereunder to acquire any equity securities of the Company, the
Surviving Corporation or any subsidiary thereof.
Interim Operations; Covenants. Pursuant to the Merger Agreement, the
Company has agreed that except (i) as expressly contemplated by the Merger
Agreement, (ii) as set forth in Section 5.2 of the Company Disclosure
Schedule, (iii) as set forth in the term sheet describing the terms of the
Bridge Loan, (iv) for the consummation of the Marion Acquisition pursuant to
and in accordance with the terms of the Marion Agreement or (v) as agreed in
writing by Parent, after the date of the Merger Agreement, and prior to the
time the designees of Parent have been elected to, and shall constitute a
majority of, the Board of Directors of the Company pursuant to Section 1.3 of
the Merger Agreement (the "Appointment Date"): (a) the business of the Company
and its Subsidiaries shall be conducted only in the ordinary and usual course
and, to the extend consistent therewith, each of the Company and its
Subsidiaries shall use its best efforts to preserve its business organization
intact and maintain its existing relations with customers, suppliers,
employees, creditors and business partners; (b) the Company will not, directly
or indirectly, (i) except upon exercise of the Options or SARs or other rights
to purchase Shares pursuant to the Stock Plans outstanding on the date of the
Merger Agreement, issue, sell, transfer or pledge or agree to sell, transfer
or pledge any treasury stock of the Company or any capital stock of any of its
Subsidiaries beneficially owned by it, (ii) amend its Certificate of the
Incorporation or By-laws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding Shares or any outstanding capital stock
of any of the Subsidiaries of the Company; (c) neither the Company nor any of
its Subsidiaries shall: (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock; (ii) issue, sell, pledge dispose of or encumber any additional shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire (or stock appreciate
rights with respect to SARs outstanding on the date of the Merger Agreement
pursuant to the exercise of Options or with respect to SARs outstanding on the
date of the Merger Agreement, any shares of capital stock of any class of the
Company or its Subsidiaries; (iii) transfer, lease, license, sell, mortgage,
pledge, dispose of, or encumber any assets, other than in the ordinary and
usual course of business and consistent with past practice, or incur or modify
any indebtedness or other liability, other than in the ordinary and usual
course of business and consistent with past practice; or (iv) redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock; (d)
the Company shall not make any change in the compensation payable or to become
payable to any of its officers, directors, employees, agents or consultants
(other than general increases in wages to
23
<PAGE>
employees who are not officers or directors or affiliates in the ordinary
course consistent with past practice), or to Persons providing management
service, enter into or amend any employment, severance, consulting,
termination or other agreement or employee benefit plan or make any loans to
any of its officers, directors, employees, affiliates, agents or consultants
or make any change in its existing borrowing or lending arrangements for or on
behalf of any of such Persons pursuant to any employee benefit plan or
otherwise; (e) the Company shall not pay or make any accrual or arrangement
for payment of any pension, retirement, allowance or other employee benefit
pursuant to any existing plan, agreement or arrangement to any officer,
director, employees or affiliate or pay or agree to pay or make any accrual or
arrangement for payment to any officers, directors, employees or affiliates of
the Company of any amount relating to unused vacation days, except payments
and accruals made in the ordinary course consistent with past practice or as
required under the terms of the Plans; adopt or pay, grant, issue, accelerate
or accrue salary or other payments or benefits pursuant to any pension,
profit-sharing, bonus, extra compensation, incentive, deferred compensation,
stock retirement or other employee benefit plan, agreement or arrangement, or
any employment or consulting agreement with or for the benefit of any
director, officer, employee, agent or consultant, whether past or present or
as required under the terms of the plans; or amend in any material respect any
such existing plan, agreement or arrangement in a manner inconsistent with the
foregoing; (f) the Company shall not modify, amend or terminate any of the
material Company Agreements or waive, release or assign any material rights on
claims, except in the ordinary course of business and consistent with practice
or as required under the terms of the Plans; (g) neither the Company nor any
of its Subsidiaries shall permit any insurance policy naming it as a
beneficiary or a loss payee to be canceled or terminated without notice to
Parent except in the ordinary course of business and consistent with past
practice; (h) neither the Company nor any of its Subsidiaries shall (i) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with
past practice; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of any other person, except in the ordinary course of business and consistent
with past practice; (iii) make any loans, advances or capital contributions
to, or investments in, any other person except in the ordinary course of
business and consistent with past practice; or (iv) enter into any material
commitment or transaction (including, but not limited to, any borrowing,
capital expenditure or purchase, sale or lease of assets or real estate)
except in the ordinary course of business and consistent with past practice;
(i) neither the Company nor any of its Subsidiaries shall (i) change any of
the accounting methods used by it unless required by GAAP or (ii) make any
material Tax election, change any material Tax election already made, adopt
any material Tax accounting method or change any material Tax accounting
method unless required by applicable law, enter into any material closing
agreement, settle any material Tax claim or assessment or consent to any
material Tax claim or assessment or any waiver of the statute of limitations
for any such claim or assessment; (j) neither the Company nor any of its
Subsidiaries shall pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations, in the ordinary course of business and
consistent with past practice, of claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company; (k) neither the Company nor
any of its Subsidiaries shall adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger); (l) neither the Company nor any of its Subsidiaries shall take, or
agree to commit to take, any action that would or is reasonably likely to
result in any of the conditions to the Merger set forth in Article VII of the
Merger Agreement or any of the conditions to the Offer set forth in Annex I of
the Merger Agreement not being satisfied, or would make many representation or
warranty of the Company contained therein inaccurate in any respect at, or as
of any time prior to, the Effective Time, or that would materially impair the
ability of the Company to consummate the Merger in accordance with the terms
of the Merger Agreement or materially delay such consummation; and (m) the
Company shall not enter into an agreement, contract, commitment or arrangement
to do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
No Solicitation. In the Merger Agreement, the Company has agreed to notify
the Purchaser immediately if any proposals are received by, any information is
requested from, or any negotiations or discussions are sought
24
<PAGE>
to be initiated or continued with the Company or its officers, directors,
employees, investment bankers, attorneys, accountants or other agents, in each
case in connection with any Takeover Proposal (as defined below) or the
possibility or consideration of making a Takeover Proposal ("Takeover Proposal
Interest") indicating, in connection with such notice, the name of the Person
indicating such Takeover Proposal Interest and the terms and conditions of any
proposals or offers. The Company has agreed that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations,
if any, with any parties conducted heretofore with respect to any Takeover
Proposal Interest. The Company has agreed that it shall keep the Parent
informed, on a current basis, of the status and terms of any Takeover Proposal
Interest. As used in the Merger Agreement, "Takeover Proposal" means any
tender or exchange offer involving the Company, any proposal for a merger,
consolidation or other business combination involving the Company, any
proposal or offer to acquire in any manner a substantial equity interest in,
or a substantial portion of the business or assets of, the Company (other than
immaterial or insubstantial assets or inventory in the ordinary course of
business or assets held for sale), any proposal or offer with respect to any
recapitalization or restructuring with respect to the Company or any proposal
or offer with respect to any other transaction similar to any of the foregoing
with respect to the Company other than the Marion Acquisition or pursuant to
the transactions to be effected pursuant to the Merger Agreement.
In the Merger Agreement the Company agrees that it will not, and that it
will use its best efforts to ensure that its officers, directors, employees,
investment bankers, attorneys, accountants and other agents do not, directly
or indirectly: (i) initiate, solicit or encourage, or take any action to
facilitate the making of, any offer or proposal which constitutes or is
reasonably likely to lead to any Takeover Proposal, (ii) enter into any
agreement with respect to any Takeover Proposal, or (iii) in the event of an
unsolicited written Takeover Proposal for the Company, engage in negotiations
or discussions with, or provide any information or data to, any Person (other
than Parent, any of its affiliates or representatives and except for
information which has been previously publicly disseminated by the Company)
relating to any Takeover Proposal; provided however, that nothing contained in
the Merger Agreement shall prohibit the Company or the Board of Directors of
the Company from (i) taking and disclosing to the Company's stockholders a
position with respect to a tender or exchange offer by a third party pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) taking
such action and disclosing to the Company's stockholders as the Board of
Directors of the Company may determine in good faith is required under
applicable law, after receipt of a written opinion from outside legal counsel,
to the Company that such disclosure is required under applicable law and the
failure to make such disclosure would likely cause the Board of Directors of
the Company to violate its fiduciary duties to the Company's stockholders
under applicable law. Notwithstanding the foregoing, prior to the acceptance
of Shares pursuant to the Offer, the Company may furnish information
concerning its business, properties or assets to any Person (as defined in the
Merger Agreement)
pursuant to terms substantially similar to those contained in the
Confidentiality Agreement, dated July 1, 1997, entered into between AIP
Capital Fund and the Company (the "Confidentiality Agreement") and may
negotiate and participate in discussions and negotiations with such Person
concerning a Takeover Proposal if (x) such person has on an unsolicited basis
submitted a bona fide written proposal to the Company relating to any such
transaction which the Company Board determines in good faith, after receiving
advice from Jefferies or another nationally recognized investment banking
firm, represents a superior transaction to the offer and the merger and (y) in
the opinion of the Board of Directors of the Company, only after receipt of a
written opinion from outside legal counsel to the Company to such effect, the
failure to provide such information or access or to engage in such discussions
or negotiations would likely cause the Board of Directors of the Company to
violate its fiduciary duties to the Company's stockholders under applicable
law (a Takeover proposal which satisfies clauses (x) and (y) being referred to
herein as a "Superior Proposal"). The Company shall promptly and in any event
within one business day following any determination by the Board of Directors
that a Takeover Proposal is a Superior Proposal, notify Parent of such
determination of the same and prior to providing any such party with any
material non-public information. The Company shall promptly provide to Parent
any material non-public information regarding the Company provided to any
other party which was not previously provided to Parent. At any time after two
business days following notification to Parent of the Company's intent to do
so (which notification shall include the identity of the bidder and the
material terms and conditions of the proposal) and if the Company has
otherwise complied with the terms referred to in the Merger Agreement, the
Board of Directors may
25
<PAGE>
terminate the Merger Agreement and enter into an agreement with respect to a
Superior Proposal, provided that the Company shall, concurrently with entering
into such agreement, pay or cause to be paid to Parent the Termination Fee (as
hereinafter defined), plus any amount payable at the time for reimbursement of
expenses. Except as set forth above, neither the Board of Directors nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or the Purchaser, the approval or
recommendation by such Board of Directors or any such committee of the Offer,
the Merger Agreement or the Merger, (ii) approve or recommend or propose to
approve or recommend, any Takeover Proposal or (iii) enter into any agreement
with respect to any Takeover Proposal.
Pursuant to the Merger Agreement, the Company has agreed to give Parent
reasonable access to its facilities, books and records, to permit Parent to
make such inspections as it may reasonably require and to cause its officers
to furnish Parent with such information as Parent may from time to time
reasonably request.
Each of the Company, Parent and the Purchaser has agreed in the Merger
Agreement to use its best efforts to take, or cause to be taken, all things
necessary, proper or advisable to consummate the transactions contemplated by
the Merger Agreement. Each such party also has agreed to cooperate and use its
best efforts to make all filings and obtain all licenses, permits, consents,
approvals and other authorizations of third parties, including governmental
authorities, necessary to consummate such transactions, including the filings
required of the Parent or the Purchaser or any of their affiliates under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act").
Pursuant to the Merger Agreement, each of the Company, Parent and the
Purchaser has agreed not to make any public statement with respect to the
Merger Agreement of the transactions contemplated thereby without the prior
consent of the other parties. The parties thereto have also agreed that the
provisions of the Confidentiality Agreement would remain binding and in full
force and effect.
Company Stockholder Meeting. If required by applicable law, the company has
agreed to: (i) hold a special meeting of its stockholders (the "Special
Meeting") as soon as practicable following acceptance for payment of Shares
pursuant to the Offer for the purpose of taking action upon the Merger
Agreement; (ii) prepare and file with the Commission a preliminary proxy
statement or information statement relating to the Merger Agreement and use
its best efforts to (a ) cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its stockholders following acceptance for payment
of Shares pursuant to the Offer and (b) obtain the necessary approvals of the
Merger Agreement by its stockholders. Parent and the Purchaser have agreed to
vote all Shares owned by them in favor of approval of the Merger Agreement at
any such meeting. However, in the event that Parent or the Purchaser shall
acquire at least 90 percent of the outstanding Shares, the parties will, at
the request of Parent, take action to cause the Merger to become effective as
soon as practicable after such acquisition without a meeting of stockholders
of the Company in accordance with the Delaware General Corporation Law
("DGCL").
Indemnification of Company Officers and Directors; Liability Insurance. In
the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation by or in
the right of the Company or any of its Subsidiaries, in which any of the
present or former officers or directors (the "Indemnified Parties") of the
Company or any of its Subsidiaries is, or is threatened to be, made a party by
reason of the fact that he or she is or was, prior to the Effective Time, a
director or officer of the Company or any of its Subsidiaries or is or was,
prior to the Effective Time, the Surviving Corporation shall indemnify and
hold harmless, as and to the full extent permitted by applicable law, each
such Indemnified Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorneys' fees and expenses), judgments
fines and amounts paid in settlement in connection with any such claim,
action, suit, proceeding or investigation. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Indemnified Parties may retain counsel satisfactory
to them (which counsel shall be reasonably satisfactory to the Company or the
Surviving Corporation), and the Company, or the Surviving Corporation after
the Effective Time, shall pay all reasonable fees and expenses of such counsel
for the Indemnified parties promptly as
26
<PAGE>
statements therefor are received and (ii) the Company and the Surviving
Corporation will use their respective reasonable efforts to assist in the
vigorous defense of any such matter; provided, that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its prior written consent (which consent shall not be unreasonably withheld);
and provided further that the Surviving Corporation shall have no obligation
thereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Indemnified
Party in the manner contemplated thereby is prohibited by applicable law. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards
of professional conduct, a conflict of interest on any significant issue
between the positions of any two or more Indemnified parties, or any similar
impediment to the joint representation of multiple Indemnified parties by a
single law firm.
The Merger Agreement provides that until the Effective Time the Company
shall keep in effect Section 7.7 of its By-Laws, and thereafter, for a period
of six years, the Surviving Corporation shall keep in effect in its By-Laws a
provision which provides for indemnification of the Indemnified Parties to the
extent permitted by the DGCL.
The Merger Agreement also provides that Parent or the Surviving Corporation
shall maintain the Company's existing officers' and directors' liability
insurance ("D&O Insurance") for a period of not less than six years after the
Effective Time; provided, that Parent may substitute therefor policies of
substantially equivalent coverage and amounts containing terms no less
favorable to such former directors or officers; provided, further, if the
existing D&O Insurance expires, is terminated or canceled during such period,
Parent or the Surviving Corporation will use all reasonable efforts to obtain
substantially similar D&O Insurance; provided, further, however, that in no
event shall Parent be required to pay aggregate premiums for insurance in
excess of 150% of the average of the aggregate premiums paid by the Company in
1995, 1996 and 1997 (through the date of the Merger Agreement) on an
annualized basis for such purpose (the "Average Premium"); and provided,
further, that if Parent or the Surviving Corporation is unable to obtain the
amount of insurance required by the Merger Agreement for such aggregate
premium, Parent or the Surviving Corporation shall obtain as much insurance as
can be obtained for an annual premium not in excess of 150% of the Average
Premium.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including
representations by the Company as to, among other things, corporate existence
and good standing, capitalization, corporate authorization, financial
statements, public filings, conduct of business, consents and approvals,
reports, undisclosed liabilities, certain changes or events concerning its
businesses, compliance with applicable law, employee benefit plans,
litigation, real property, intellectual property, employment matters, computer
software, material contracts, potential conflicts of interest, taxes,
environmental matters, brokers, insurance, accounts receivable and inventory,
vote required to approve the Merger Agreement, undisclosed liabilities,
information in the Proxy Statement and the absence of any material adverse
effect on the Company since December 31, 1996. The Company also has
represented that, subject to certain exceptions, no material licensor, vendor,
supplier, licensee or customer of the Company has cancelled or otherwise
modified its relationship with the Company. In addition, Parent and the
Purchaser represented as to, among other things, corporate existence and good
standing, corporate authorization, consents and approvals, and the financing
commitments referred to in Section 4.5 of the Merger Agreement.
Conditions to the Merger. The obligations of each of Parent, the Purchaser
and the Company to effect the Merger are subject to the satisfaction or waiver
of certain conditions, including (i) if required by the DGCL, the Merger
Agreement and the Merger shall have been approved by the stockholders of the
Company, (ii) no statute, rule, regulation, order, decree, or injunction shall
have been promulgated by any governmental entity which prohibits the
consummation of the Merger, (iii) the Offer shall not have expired or been
terminated prior to the purchase of any Shares, and (iv) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated. Further, the obligations of Parent and
the Purchaser are subject to the satisfaction or waiver at or prior to the
Effective Time of certain additional conditions set forth
27
<PAGE>
in Annex I to the Merger Agreement, including (i) the representations and
warranties of the Company being true as of the Effective Time, (ii) the
Company having performed in all material respects its obligations under the
Merger Agreement, and (iii) receipt of a certificate of an officer of the
Company as to the satisfaction of certain of such conditions.
Termination. The Merger Agreement may be terminated and the transactions
contemplated therein may be abandoned at any time before the Effective time,
whether before or after stockholder approval: (i) by mutual written consent of
Parent and the Company; (ii) by Parent if the Offer shall have expired or been
terminated without any Shares being purchased thereunder by Purchaser as a
result of the occurrence of any of the events set forth in Annex I to the
Merger Agreement; (iii) by either Parent or the Company if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties thereto shall use their best
efforts to lift), in each case permanently restraining, enjoining, or
otherwise prohibiting the transactions contemplated by the Merger Agreement;
(iv) by Parent if, without any material breach by Parent or the Purchaser of
its obligations under the Merger Agreement, the purchase of Shares pursuant to
the Offer shall not have occurred on or before February 20, 1998; (v) by the
Company if, without any material breach by the Company of its obligations
under the Merger Agreement, the purchase of Shares pursuant to the Offer shall
not have occurred on or before February 20, 1998; (vi) by the Company (A) if
there shall be a material breach of any of Parent's of the Purchaser's
representations, warranties or covenants thereunder, which breach cannot be or
has not been cured within thirty days of the receipt of written notice thereof
or (B) to allow the Company to enter into an agreement in accordance with
Section 5.3(b) of the Merger Agreement provided that it has complied with all
provisions thereof, including the notice provisions therein, and that it makes
simultaneous payment of the Termination Fee, plus any amounts then due as a
reimbursement of expenses; (vii) by Parent, if prior to the purchase of Shares
pursuant to the Offer, the Company shall have breached in any material respect
(without reference to any materially qualification contained therein) any
representation, warranty or covenant or other agreement contained in the
Merger Agreement, which breach (A) would give rise to the failure of a
condition set forth in paragraph (e) or (f) of Annex I to the Merger Agreement
and (B) cannot be or has not been cured within thirty days of the receipt of
written notice thereof; (viii) by Parent, at any time prior to the purchase of
the Shares pursuant to the Offer, if (A) the Board of Directors of the Company
shall withdraw, modify, or change its recommendation or approval in respect of
the Merger Agreement of the Offer in a manner adverse to the Purchaser, (B)
the Board of Directors of the Company shall have recommended any proposal
other than by Parent or the Purchaser in respect of a Takeover Proposal, (C)
the Company shall have exercised a right with respect to a Takeover Proposal
referenced in Section 5.3(b) of the Merger Agreement and shall, directly or
through its representatives, continue discussions with any third party
concerning a Takeover Proposal for more than ten business days after the date
or receipt of such Takeover Proposal, (D) a Takeover Proposal that is publicly
disclosed shall have been commenced, publicly proposed or communicated to the
Company which contains a proposal as to price (without regard to whether such
proposal specifies a specific price or a range of potential prices) and the
Company shall not have rejected such proposal within ten business days of its
receipt or, if sooner, the date its existence first becomes publicly
disclosed, or (E) any Person or group (as defined in Section 13(d) (3) of the
Exchange Act) other than Parent or the Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner of more than
15% of the outstanding Shares (either on a primary or a fully diluted basis);
provided, however, that this provision shall not apply to any Person that owns
more than 15% of the outstanding Shares on the date of the Merger Agreement;
provided, further, that such Person does not further increase its beneficial
ownership beyond the number of Shares such Person beneficially owns on the
date of the Merger Agreement.
Termination Fee and Expenses. In the event of termination of the Merger
Agreement as provided for in Section 8.1 of the Merger Agreement, written
notice thereof shall forthwith be given to the other party or parties
specifying the provision of the Merger Agreement pursuant to which such
terminations is made, and the Merger Agreement shall forthwith become null and
void and there shall be no liability on the part of Parent, the Purchaser or
the Company, except (i) as set forth in Sections 6.5(a) and 9.3 of the Merger
Agreement and (ii) nothing in the Merger Agreement shall relieve any party
from liability for any breach of the Merger Agreement;
28
<PAGE>
provided, however, that, in the event that subsequent to the date of the
Merger Agreement the Company adopts a stockholders rights plan, its obligation
to provide exceptions therefrom with respect to Shares acquired pursuant to
the exercise of the JNL Option (as hereinafter defined) and the Subsequent
Disposition thereof, to a third party, shall survive the termination of the
Merger Agreement for the first Subsequent Disposition.
If (i) Parent shall have terminated the Merger Agreement pursuant to Section
8.1 (h) of the Merger Agreement, (ii) Parent shall have terminated the Merger
Agreement pursuant to Section 8.1 (g) of the Merger Agreement and following
the date of the Merger Agreement but prior to such termination there shall
have been a Takeover Proposal Interest or (iii) the Company shall have
terminated the Merger Agreement pursuant to Section 8.1 (f) (ii) of the Merger
Agreement, then in either such case the Company shall pay simultaneously with
such termination, if pursuant to Section 8.1 (f) (ii) of the Merger Agreement,
and promptly, but in no event later than two business days after the date of
such termination or event if pursuant to Section 8.1 (h) or 8.1 (g) to Parent,
a termination fee (the "Termination Fee") of $7 million plus an amount, not in
excess of $1.5 million equal to the Purchaser's actual and reasonably
documented out-of-pocket expenses incurred by Parent and the Purchaser in
connection with the Offer, the Merger, the Merger Agreement and the
consummation of the transactions contemplated thereby.
Fees and Expenses. Except as set forth in Section 8.2(b) of the Merger
Agreement, the Merger Agreement provides that all fees, costs and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
fees, costs and expenses.
Amendments and Modifications. Subject to applicable law, the Merger
Agreement may be amended, modified or supplemented by a written agreement of
Parent, the Purchaser and the Company, provided, that after the approval of
the Merger Agreement by the stockholders of the Company, no such amendment,
modification or supplement shall reduce or change the consideration to be
received by the Company's stockholders in the Merger.
STOCKHOLDER AGREEMENT
The following is a summary of certain provisions of the Stockholder
Agreement. The summary is qualified in its entirety by reference to the
Stockholder Agreement which is incorporated herein by reference and a copy of
which has been filed with the Commission as Exhibit(C)(2) to the Schedule 14D-
1. The Stockholder Agreement may be examined and copies may be obtained at the
places and in the manner set forth in Section 8 of this Offer to Purchase.
As a condition and inducement to Parent's and the Purchaser's entering into
the Merger Agreement and incurring the liabilities therein, concurrently with
the execution and delivery of the Merger Agreement, Jackson National Life
Insurance Company, a Michigan corporation (the "Stockholder"), which together
with PPM America, Inc., a Delaware corporation shares voting power and
dispositive power with respect to approximately 40% of the Shares, is entering
into a Stockholder Agreement (the "Stockholder Agreement"), dated as of August
21, 1997, with Parent and the Purchaser. In the Stockholder Agreement, the
Stockholder represented that it owns, in the aggregate, 4,228,382 Shares and
$63,963,000 in principal amount of the Company's 10.5% Secured Notes due
September 14, 1999 (the "Secured Notes"). The Stockholder has agreed that it
will not withdraw any Shares tendered into the Offer.
In the Stockholder Agreement, the Stockholder agrees that it will tender its
Shares promptly into the Offer and that it will not withdraw any Shares so
tendered. The Purchaser agrees to purchase all of the Shares so tendered at
$18.00 per Share, or such higher price per Share as may be offered by the
Purchaser in the Offer, provided that the Purchaser's obligation to accept for
payment and pay for the Shares in the Offer is subject to all the terms and
conditions of the Offer set forth in the Merger Agreement and Annex I thereto.
Pursuant to the Stockholder Agreement, the Stockholder has granted to the
Parent during the term of the Merger Agreement an irrevocable proxy to vote
its shares, or grant a consent or approval in respect of such Shares, in
connection with any meeting of the stockholders of the Company (i) in favor of
the Merger and (ii) against any action or agreement which would impede,
interfere with or prevent the Merger, including any other extraordinary
corporate transaction such as a merger, reorganization or liquidation
involving the Company and a third party or any other proposal by a third party
to acquire the Company.
29
<PAGE>
During the term of the Stockholder Agreement, the Stockholder has agreed
that it will not (subject to certain exceptions) (i) transfer, or enter into
any contract, option, agreement or other understanding with respect to the
transfer of, its Shares or the Secured Notes held by it or any interest
therein, (ii) except as provided in the Stockholder Agreement, grant any
proxy, power of attorney or other authorization or consent in or with respect
to its Shares or Secured Notes, (iii) deposit its Shares or Secured Notes in
any voting trust or enter into any voting agreement or arrangement with
respect to such Shares or Secured Notes, or (iv) take any other action with
respect to its Shares or Secured Notes that would in any way restrict, limit
or interfere with the performance of its obligations pursuant to the
Stockholder Agreement; provided, however, that the Stockholder may transfer
all or a portion of its Shares or Secured Notes to a person or entity who, by
written instrument reasonably acceptable in form and substance to the Parent,
agrees to be bound by each of the terms of the Merger Agreement. In addition,
the Stockholder, Parent and the Purchaser have agreed that (i) the Stockholder
will notify the Purchaser of any inquiry the Stockholder receives which might
lead to an acquisition of the Company by a third party; and (ii) the
Stockholder will waive, if requested, the provisions of the Indenture (as
defined in the Stockholder Agreement) relating to the prior notice of
redemption of the Secured Notes, or will, immediately following consummation
of the Senior Notes Offering (as hereinafter defined) and subject to being
indemnified by Parent and Purchaser, sell its Secured Notes to the Company at
face value plus accrued interest from June 30, 1997 through the date of
purchase.
Termination of the Stockholder Agreement. The Stockholder Agreement shall
terminate upon the earlier of (a) the date (the "Termination Date") that is
six months following the date upon which the Merger Agreement is terminated in
accordance with its terms, or (b) the Effective Time, provided that certain
provisions specified in the Stockholder Agreement will survive such
termination. Neither party has any other unilateral right to terminate the
Stockholder Agreement.
Purchase Option. In the Stockholder Agreement, the Stockholder grants to
Parent an irrevocable option (the "JNL Option") to purchase the Shares at a
purchase price of $18.00 per Share (the "Exercise Price"). At any time or from
time to time prior to the Termination Date, Parent (or its designee) may
exercise the JNL Option, in whole or in part, if on or after the date thereof
any Third Party (as defined therein) shall have taken certain defined steps
that could evidence, lead to or result in the acquisition of or exercise of
control over the Company. Notwithstanding any other provision of the
Stockholder Agreement, in the event that the Merger Agreement is terminated
and at any time prior to the Termination Date a person other than Parent or
any of its affiliates acquires a majority of the outstanding Shares at a price
higher than the Exercise Price (an "Alternative Transaction"), then Parent
shall promptly either reduce the number of Shares subject to the JNL Option,
pay cash to the Stockholder or do both such that the actual Total Profit
realized or to be realized by Parent upon the consummation of an Alternative
Transaction does not exceed 50% of the Total Profit that Parent would
otherwise realize had it not taken the foregoing actions; provided, that in
the event that the Parent elects to reduce the number of Shares subject to the
JNL Option, there shall be pending, at the time the Parent makes such
election, a transaction involving the Company that, if consummated, would
allow the Stockholder to dispose of any remaining Shares that would not
otherwise be purchased by Parent upon the exercise of the JNL Option. As used
in the Stockholder Agreement, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the net cash amounts and the fair market value (as
reasonably determined by Parent) of all other forms of consideration received
or to be received by the Parent pursuant to the sale of the aggregate number
of Shares subject to the JNL Option (or any other securities into which such
Shares are converted or exchanged) in any Alternative Transaction, less the
aggregate Exercise Price of all of such Shares. In the event that Parent or
the Purchaser pays a price higher than $18.00 per Share for shares tendered
into the Offer, the Exercise Price shall be increased to equal such higher
price.
GUARANTEE
The following is a summary of certain provisions of the Guarantee. The
summary is qualified in its entirety by reference to the Guarantee which is
incorporated herein by reference and a copy of which has been filed with the
Commission as Exhibit (c)(3) to the Schedule 14D-1. The Guarantee may be
examined and copies may be obtained at the places and in the manner set forth
in Section 8 of this Offer to Purchase.
30
<PAGE>
As an inducement to the Company's entering into the Merger Agreement,
concurrently with the execution and delivery of the Merger Agreement, American
Industrial Partners Capital Fund II, L.P. ("AIP Capital Fund") and the Company
have entered into a Guarantee, dated as of August 21, 1997 (the "Guarantee").
Pursuant to the Guarantee, among other things, AIP Capital Fund has agreed
unconditionally and irrevocably, for the benefit of the Company the
performance of all obligations of Parent and the Purchaser pursuant to the
Merger Agreement; provided that the aggregate liability to which AIP Capital
Fund may become subject pursuant to the Guarantee or otherwise in connection
with the transactions contemplated by the Merger Agreement will not in any
event exceed $7 million. The Guarantee terminates upon the earliest of (i) the
consummation of the Merger, (ii) October 7, 2004 or (iii) the performance of
all obligations of Parent and the Purchaser pursuant to the Merger Agreement.
CONFIDENTIALITY AGREEMENT
The following is a summary of certain provisions of the Confidentiality
Agreement, dated July 1, 1997 between the Company and AIP Capital Fund. The
following summary of the Confidentiality Agreement does not purport to be
complete and is qualified by reference to the text of the Confidentiality
Agreement, a copy of which is filed as Exhibit (c) (4) hereto and incorporated
herein by reference.
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, AIP Capital Fund has agreed to keep confidential
all nonpublic, confidential or proprietary information furnished to it by the
Company relating to the Company subject to certain exceptions (the
"Confidential Information"), and to use the Confidential Information solely in
connection with the certain future business agreements relating to the
Company.
12. PLANS FOR THE COMPANY; OTHER MATTERS.
Plans for the Company. Parent is conducting a detailed review of the Company
and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and will consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances which exist upon completion of the
Offer. Such changes could include changes in the Company's business, corporate
structure, certificate of incorporation, by-laws, capitalization, Board of
Directors, management or dividend policy, although, except as disclosed in
this Offer to Purchase, Parent has no current plans with respect to any of
such matters. The Merger Agreement provides that, promptly after the purchase
by the Purchaser of any Shares pursuant to the Offer, Parent has the right to
designate such number of directors, rounded up to the next whole number, on
the Company's Board of Directors as is equal to the product of the total
number of directors on the Company's Board of Directors (giving effect to the
directors designated by Parent) multiplied by the percentage that the number
of Shares beneficially owned by the Purchaser or any affiliate of the
Purchaser (including such Shares as are accepted for payment pursuant to the
Offer) bears to the total number of Shares then outstanding. See Section 11.
The Merger Agreement provides that the directors of the Purchaser and the
officers of the Company at the Effective Time of the Merger will, from and
after the Effective Time, be the initial directors and officers, respectively,
of the Surviving Corporation.
Except as disclosed in this Offer to Purchase, neither Parent nor the
Purchaser has any present plans or proposals that would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets,
involving the Company or any of its subsidiaries, or any material changes in
the Company's corporate structure, business or composition of its management
or personnel.
OTHER MATTERS
Stockholder Approval. Under the DGCL, the approval of the Board of Directors
of the Company and the affirmative vote of the holders of a majority of the
outstanding Shares are required to adopt and approve the Merger Agreement and
the transactions contemplated thereby. The Company has represented in the
Merger
31
<PAGE>
Agreement that the execution and delivery of the Merger Agreement by the
Company and the consummation by the Company of the transactions contemplated
by the Merger Agreement have been duly authorized by all necessary corporate
action on the part of the Company, subject to the approval of the Merger by
the Company's stockholders in accordance with the DGCL. In addition, the
Company has represented that the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock is the only vote of the holders of
any class or series of the Company's capital stock which is necessary to
approve the Merger Agreement and the transactions contemplated thereby,
including the Merger. Therefore, unless the Merger is consummated pursuant to
the short-form merger provisions under the DGCL described below (in which case
no further corporate action by the stockholders of the Company will be
required to complete the Merger), the only remaining required corporate action
of the Company will be the approval of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the shares of Common Stock. The Merger Agreement provides that
Parent will vote, or cause to be voted, all of the Shares then owned by
Parent, the Purchaser or any of Parent's other subsidiaries and affiliates in
favor of the approval of the Merger and the adoption of the Merger Agreement.
In the event that Parent, the Purchaser and Parent's other subsidiaries
acquire in the aggregate at least a majority of the shares of Common Stock,
the vote of no other stockholder of the Company will be required to approve
the Merger and the Merger Agreement.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge such other
corporation into itself without any action or vote on the part of the board of
directors or the stockholders of such other corporation (a "short-form
merger"). In the event that Parent, the Purchaser and any other subsidiaries
of Parent acquire in the aggregate at least 90% of the outstanding shares of
Common Stock, pursuant to the Offer or otherwise, then, at the election of
Parent, a short-form merger could be effected without any approval of the
Board of Directors or the stockholders of the Company, subject to compliance
with the provisions of Section 253 of the DGCL. Even if Parent and the
Purchaser do not own 90% of the outstanding shares of Common Stock following
consummation of the Offer, Parent and the Purchaser could seek to purchase
additional shares in the open market or otherwise in order to reach the 90%
threshold and employ a short-form merger. The per share consideration paid for
any Shares so acquired may be greater or less than that paid in the Offer.
Parent presently intends to effect a short-form merger if permitted to do so
under the DGCL.
DELAWARE BUSINESS COMBINATION STATUTE.
Section 203. Section 203, in general, prohibits a Delaware corporation such
as the Company, from engaging in a "Business Combination" (defined as a
variety of transactions, including mergers, as set forth below) with an
"Interested Stockholder" (defined generally as a person that is the beneficial
owner of 15% or more of a corporation's outstanding voting stock) for a period
of three years following the date that such person became an Interested
Stockholder unless (a) prior to the date such person became an Interested
Stockholder, the board of directors of the corporation approved either the
Business Combination or the transaction that resulted in the stockholder
becoming an Interested Stockholder, (b) upon consummation of the transaction
that resulted in the 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 employee stock
ownership plans that do not provide employees with the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer or (c) on or subsequent to the date 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, and not by written consent, by the affirmative vote of the
holders of a least 66 2/3% of the outstanding voting stock of the corporation
not owned by the Interested Stockholder.
Under Section 203, the restrictions described above do not apply if, among
other things (a) the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203; (b)
the corporation, by action of its stockholders, adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed
by Section 203, provided that, in addition to any other vote required by law,
such amendment of the certificate of incorporation or by-laws must be approved
by the affirmative vote
32
<PAGE>
of a majority of the shares entitled to vote, which amendment would not be
effective until 12 months after the adoption of such amendment and would not
apply to any Business Combination between the corporation and any person who
became an Interested Stockholder of the corporation on or prior to the date of
such adoption; (c) the corporation does not have a class of voting stock that
is (1) listed on a national securities exchange, (2) authorized for quotation
on an inter-dealer quotation system of a registered national securities
association or (3) held of record by more than 2,000 stockholders, unless any
of the foregoing results from action taken, directly or indirectly, by an
Interested Stockholder or from a transaction in which a person became an
Interested Stockholder; or (d) a stockholder become an Interested Stockholder
"inadvertently" and thereafter divests itself of a sufficient number of shares
so that such stockholder ceases to be an Interested Stockholder. Under Section
203, the restrictions described above also do not apply to certain Business
Combinations proposed by an Interested Stockholder following the announcement
or notification or one of certain extraordinary transactions involving the
corporation and a person who had not been an Interested Stockholder during the
previous three years or who became an Interested Stockholder with the approval
of a majority of the corporation's directors.
Section 203 provides that, during such three-year period, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate
or associate thereof, and also may not engage in certain other transactions
with an Interested Stockholder or any affiliate or associate thereof,
including, without limitation, (a) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets (except proportionately as a
stockholder of the corporation) having an aggregate market value equal to 10%
or more of the aggregate market value of all assets of the corporation
determined on a consolidated basis or the aggregate market value of all the
outstanding stock of a corporation; (b) any transaction which results in the
issuance or transfer by the corporation or by certain subsidiaries thereof of
any stock of the corporation or such subsidiaries to the Interested
Stockholder, except pursuant to a transaction which effects a pro rata
distribution to all stockholders of the corporation; (c) any transaction
involving the corporation or certain subsidiaries thereof which has the effect
of increasing the proportionate share of the stock of any class or series, or
securities convertible into the stock of any class or series, of the
corporation or any such subsidiary which is owned directly or indirectly by
the Interested Stockholder (except as a result of immaterial changes due to
fractional share adjustments); or (d) any receipt of the Interested
Stockholder of the benefit (except proportionately as a stockholder of such
corporation) of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation.
The Company has represented in the Merger Agreement that the provisions of
Section 203 of the DGCL are not applicable to any of the transactions
contemplated by the Merger Agreement, including the Merger and the purchase of
Shares in the Offer.
Appraisal Rights. Holders of the Shares do not have appraisal rights as a
result of the Offer. However, if the Merger is consummated, holders of the
Shares at the effective time of the Merger will have certain rights pursuant
to the provisions of Section 262 of the DGCL. Dissenting stockholders of the
Company who comply with the applicable 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 thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors
other than, or in addition to, the price per share of Common Stock, as the
case may be, to be paid in the Merger or the market value of the Shares. The
value so determined could be more or less than the price per Share to be paid
in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO
THE APPLICABLE PROVISIONS OF THE DGCL.
The foregoing description of the DGCL, including the descriptions of
Sections 203 and 262, is not necessarily complete and is qualified in its
entirety by reference to the DGCL.
33
<PAGE>
Rule 13e-3. The Merger would have to comply with any applicable federal law
operative at the time. Rule 13e-3 under the Exchange Act is applicable to
certain "going private" transactions; however, the Purchaser believes that
Rule 13e-3 will not be applicable to the Merger. If Rule 13e-3 were applicable
to the Merger, it would require, among other things, that certain financial
information concerning the Company, and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such a transaction, be filed with the Commission and disclosed
to minority stockholders prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that neither the Company nor any of its
Subsidiaries shall: (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock; (ii) issue, sell, pledge, dispose of or encumber any additional shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire (or stock appreciation
rights with respect to), any shares of capital stock of any class of the
Company or its Subsidiaries, other than Shares reserved for issuance on the
date hereof pursuant to the exercise of Options or with respect to SARs
outstanding on the date hereof; or (iii) redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock.
14. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-l(c) under the Exchange Act (relating to the Purchaser's obligation
to pay for or return tendered Shares promptly after termination or withdrawal
of the Offer), pay for, and may delay the acceptance for payment of or,
subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid
for, if (i) the Debt Financing shall not have been received and be immediately
available in the full amounts and on the terms and in accordance with the
conditions set forth in the "highly confident" letter from a nationally-
recognized investment banking firm with respect to the Notes Offering and a
commitment letter from Bank One, Wisconsin, National Association (the
"Financing Condition"), (ii) any applicable waiting period under the HSR Act
has not expired or terminated, (iii) the Minimum Condition has not been
satisfied, or (iv) at any time on or after the date of the Merger Agreement
and before the time of acceptance for payment for any such Shares (whether or
not any Shares have theretofore been accepted for payment or paid for pursuant
to the Offer), any of the following events shall have occurred:
(a) there shall be threatened or pending any suit, action or proceeding
by any Governmental Entity against the Purchaser, Parent, the Company or
any Subsidiary of the Company (i) seeking to prohibit or impose any
material limitations on Parent's or the Purchaser's ownership or operation
(or that of any of their respective Subsidiaries or affiliates) of all or a
material portion of their or the Company's businesses or assets, or to
compel Parent or the Purchaser or their respective Subsidiaries and
affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or Parent and their respective
Subsidiaries, in each case taken as a whole, (ii) challenging the
acquisition by Parent or the Purchaser of any Shares under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other transactions contemplated
by the Merger Agreement, or seeking to obtain from the Company, Parent or
the Purchaser any damages that are material in relation to the Company and
its Subsidiaries taken as a whole, (iii) seeking to impose material
limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the
Shares pursuant to the Offer and the Merger, (iv) seeking to impose
material limitations on the ability of Purchaser or Parent effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's shareholders, or (v) which otherwise is
reasonably likely to have a Company Material Adverse Effect (as defined in
the Merger Agreement);
34
<PAGE>
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by
any Governmental Entity, other than the application to the Offer or the
Merger of applicable waiting periods under HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ Stock Market for a period in excess
of 24 hours (excluding suspensions or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States (whether or not
mandatory), (iii) a commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any United
States governmental authority on the extension of credit generally by banks
or other financial institutions, or (v) a change in general financial, bank
or capital market conditions which materially and adversely affects the
ability of financial institutions in the United States to extend credit or
syndicate loans or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof;
(d) since December 31, 1996, there shall have occurred any change (or any
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any change) that constitutes a Company Material Adverse
Effect;
(e) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Takeover Proposal or (ii) the
Company shall have entered into any agreement with respect to any Superior
Proposal in accordance with Section 5.3(b) of the Merger Agreement;
(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct, in any material respect
(without reference to any material qualification contained therein) in each
case (i) as of the date referred to in any representation or warranty which
addresses matters as of a particular date, or (ii) as to all other
representations and warranties, as of the date of the Merger Agreement and
as of the scheduled expiration of the Offer (provided that for purposes of
this paragraph (f), other than the representation and warranty of the
Company set forth in Section 3.26 of the Merger Agreement, the
representations and warranties of the Company set forth in the Merger
Agreement shall not be deemed to have been made with respect to the
Business of the Marion Sellers (as the term "Business" is defined in the
Marion Agreement) or any of the assets acquired or liabilities assumed
thereunder;
(g) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it under
the Merger Agreement;
(h) the Purchaser shall have failed to receive a certificate executed by
the President or a Vice President of the Company, dated as of the scheduled
expiration of the Offer, to the effect that the conditions set forth in
paragraphs (f) and (g) of this Annex I of the Merger Agreement have not
occurred;
(i) all consents, permits and approvals of Governmental Authorities and
other Persons listed in Section 3.4 of the Company Disclosure Schedule and
identified with an asterisk shall not have been obtained with no material
adverse conditions attached and no material expense imposed on the Company
or any of its Subsidiaries;
(j) the transactions contemplated under the Marion Agreement shall not
have been consummated pursuant to and substantially in accordance with the
terms set forth in the Marion Agreement;
35
<PAGE>
(k) there shall have occurred any change (or any development that,
insofar as reasonably can be foreseen, is or could reasonably be expected
to result in any change) that is materially adverse to the business,
operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets, liabilities or
prospects of the Business (as the term "Business" is defined in the Marion
Agreement) of the Marion Sellers (as defined in the Marion Agreement);
(l) the Secured Notes Indenture (as defined in the Merger Agreement)
shall not have been fully satisfied and discharged pursuant to the terms
thereof, and all collateral securing the Secured Notes shall not have been
released (unless the Secured Notes Indenture Trustee has delivered to the
Company a written agreement providing for the release of such collateral),
subject only to the receipt by the Secured Notes Indenture Trustee of funds
(pursuant to the Debt Financing) sufficient to effect the redemption of the
Secured Notes;
(m) JNL shall not have waived the right to at least 30 days prior notice
of redemption provided by Section 1105 of the Secured Notes Indenture,
pursuant to Section 106 of the Secured Notes Indenture (unless JNL shall
have entered into a binding agreement with the Company to sell all of the
Secured Notes held by JNL to the Company, at no more than par, at a time
designated by the Company and acceptable to the Purchaser);
(n) any Person or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Parent or the Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of more than 15%
of the outstanding Shares (either on a primary or a fully diluted basis);
provided, however, that this provision shall not apply to any Person that
beneficially owns more than 15% of the outstanding Shares on the date
hereof; provided, further, that such Person does not further increase its
beneficial ownership beyond the number of Shares such Person beneficially
owns on the date hereof; or
(o) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction
by Parent or the Purchaser) and may be waived by Parent or the Purchaser in
whole or in part at any time and from time to time in the sole discretion of
Parent or the Purchaser, subject in each case to the terms of the Merger
Agreement. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on information provided by the
Company, none of the Company, Purchaser or Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company
that might be adversely affected by the Purchaser's acquisition of Shares as
contemplated herein or of any approval or other action by a domestic or
foreign governmental, administrative or regulatory agency or authority that
would be required for the acquisition and ownership of the Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required, the Purchaser and Parent presently contemplate that such approval or
other action will be sought, except as described below under "State Takeover
Laws." While, except as otherwise described in this Offer to Purchase, the
Purchaser does not presently intend to delay the acceptance for payment of or
payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial
conditions or that failure to obtain any such approval or other action might
not result in consequences adverse to the Company's business or that certain
parts of the Company's business might not have to be disposed of or other
substantial conditions complied with in the event that such approvals were not
obtained or such other actions were not taken or in order to obtain any such
36
<PAGE>
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer, including conditions with respect to governmental
actions.
State Takeover Laws. The Company conducts business in a number of other
states throughout the United States, some of which have enacted takeover laws
and regulations. Neither Parent nor the Purchaser knows whether any or all of
these takeover laws and regulations will by their terms apply to the Offer,
and, except as set forth above with respect to Section 203 of the DGCL and
below with respect to Chapter 552 of the Wisconsin Statutes, neither Parent
nor the Purchaser has currently complied with any other state takeover statute
or regulation. The Purchaser reserves the right to challenge the applicability
or validity of any state law purportedly applicable to the Offer and nothing
in this Offer to Purchase or any action taken in connection with the Offer,
including compliance with certain provisions of Chapter 552 of the Wisconsin
Statutes, is intended as a waiver of such right. If it is asserted that any
state takeover statute is applicable to the Offer and an appropriate court
does not determine that it is inapplicable or invalid as applied to the Offer,
the Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and the Purchaser
might be unable to accept for payment or pay for Shares tendered pursuant to
the Offer, or may be delayed in consummating the Offer. In such case, the
Purchaser may not be obligated to accept for payment or pay for any Shares
tendered pursuant to the Offer. See Section 14.
Wisconsin Corporate Take-Over Law. Although the Company is organized under
the laws of the state of Delaware, the Wisconsin Corporate Take-Over Law,
Chapter 552 of the Wisconsin Statutes (the "Corporate Take-Over Law") may be
applicable to the Company if the Company satisfies all of the elements of the
definition of a "target company" thereunder. The Offer may constitute a "Take-
Over Offer" within the meaning of the Corporate Take-Over Law.
The provisions of the Corporate Take-Over Law that may be applicable to the
Offer include the following: (i) a requirement that the Purchaser file
solicitation materials with the Wisconsin Department of Financial
Institutions -- Division of Securities (the "Division") at the same time they
are first used in the Offer; (ii) a prohibition against the dissemination of
false and misleading solicitation materials (with the Division having the
authority to prohibit the use of any such materials); (iii) a general
prohibition against fraudulent and deceptive practices in connection with the
Offer; (iv) a prohibition against the sale of the Shares to the Purchaser by a
controlling person of the Company for consideration higher than that paid to
other offerees; (v) a prohibition against the refusal by the Company to fail
to cooperate with the Purchaser in certain respects; and (vi) a prohibition
against the acquisition by a broker-dealer of any Shares on behalf of the
Purchaser or the Company unless certain prior filings are made with the
Division.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated only following the
expiration or early termination of the applicable waiting period under the HSR
Act.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, such purchase may not be made until the expiration of a
15-calendar day waiting period following the required filing of a Notification
Report Form under the HSR Act by AIP Capital Fund, which AIP Capital Fund
expects to submit on or before September 2, 1997. Accordingly, if the
Notification and Report Form is filed on or before September 3, 1997, the
waiting period under the HSR Act would expire at 11:59 P.M., New York City
time, on the fifteenth day after such filing, unless early termination of the
waiting period is granted by the FTC and the Department of Justice, Antitrust
Division (the "Antitrust Division") or AIP Capital Fund receives a request for
additional information or documentary material prior thereto. If either the
FTC or the Antitrust Division issues a request for additional information or
documentary material from AIP Capital Fund prior to the expiration of the 15-
day waiting period, the waiting period will be extended and will expire at
11:59 P.M., New York City time, on the tenth calendar day after the date of
substantial compliance by AIP Capital Fund with such request unless terminated
earlier by the FTC and the Antitrust Division. If such a request is issued,
the purchase of and payment
37
<PAGE>
for Shares pursuant to the Offer will be deferred until the additional waiting
period expires or is terminated. Only one extension of such waiting period
pursuant to a request for additional information or documentary material is
authorized by the rules promulgated under the HSR Act. Thereafter, the waiting
period can be extended only by court order. Although the Company is required
to file certain information and documentary material with the Antitrust
Division and the FTC in connection with the Offer, neither the Company's
failure to make such filings nor a request to the Company from the Antitrust
Division or the FTC for additional information or documentary material will
extend the waiting period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as either deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company or its subsidiaries or AIP Capital Fund or
its subsidiaries. Private parties and states attorneys general 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 result thereof. See Section 15.
If the Antitrust Division, the FTC, a state or a private party raises
antitrust concerns in connection with a proposed transaction, the Purchaser
may engage in negotiations with the relevant governmental agency or party
concerning possible means of addressing these issues and may delay
consummation of the Offer or the Merger while such discussions are ongoing.
Both AIP Capital Fund and the Company have agreed to use their respective best
efforts to resolve any antitrust issues.
Other Foreign Laws. The Company and some of its subsidiaries conduct
business in foreign jurisdictions, where regulatory filings or approvals may
be required or desirable in connection with the consummation of the Offer.
Certain of such filings or approvals, if required or desirable, may not be
made or obtained prior to the expiration of the Offer. After commencement of
the Offer, the Purchaser will seek further information regarding the
applicability of any such laws and intends to take such action as may be
required or desirable. See Section 14 for certain conditions to the Offer,
including conditions with respect to litigation and certain governmental
actions.
Federal Reserve Board Regulations. Regulations G, U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or
maintenance of credit for the purpose of buying or carrying margin stock,
including the Shares, if the credit is secured directly or indirectly by
margin stock. Such secured credit may not be extended or maintained in an
amount that exceeds the maximum loan value of all the direct and indirect
collateral securing the credit, including margin stock and other collateral.
All financing for the Offer will be structured so as to be in full compliance
with the Margin Regulations.
16. FEES AND EXPENSES.
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and American Stock Transfer & Trust Company to act as the
Depositary in connection with the Offer. Such firms each will receive
reasonable and customary compensation for their services. The Purchaser has
also agreed to reimburse each such firm for certain reasonable out-of-pocket
expenses and to indemnify each such firm against certain liabilities in
connection with their services, including certain liabilities under federal
securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Information Agent) for making solicitations or
recommendations in connection with the Offer. Brokers, dealers, banks and
trust companies will be reimbursed by the Purchaser for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
38
<PAGE>
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares other than the Company. The
Purchaser is not aware of any jurisdiction in which the making of the Offer or
the tender of Shares in connection therewith would not be in compliance with
the laws of such jurisdiction. If the Purchaser becomes aware of any
jurisdiction in which the making of the Offer would not be in compliance with
applicable law, the Purchaser will make a good faith effort to comply with any
such law. If, after such good faith effort, the Purchaser cannot comply with
any such law, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of the Purchaser or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of Parent or the Purchaser not contained herein or in
the Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
The Purchaser, Parent and AIP Capital Fund have filed with the Commission
the Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act furnishing
certain additional information with respect to the Offer. The Schedule 14D-1
and any amendments thereto, including exhibits, may be examined and copies may
be obtained from the offices of the Commission and the NASDAQ in the manner
set forth in Section 8 of this Offer to Purchase (except that they will not be
available at the regional offices of the Commission).
Bucyrus Acquisition Corp.
August 26, 1997
39
<PAGE>
SCHEDULE I
THE SOLE MEMBER, GENERAL PARTNERS,
DIRECTORS AND EXECUTIVE OFFICERS
OF
BUCYRUS ACQUISITION CORP.,
AMERICAN INDUSTRIAL PARTNERS ACQUISITION COMPANY, LLC,
AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND II, L.P.,
AMERICAN INDUSTRIAL PARTNERS II, L.P. AND
AMERICAN INDUSTRIAL PARTNERS CORPORATION
1. BUCYRUS ACQUISITION CORP. Set forth below is the name, business address
and present principal occupation or employment, and material occupations,
positions, offices or employments for the past five years, of each director
and executive officer of Bucyrus Acquisition Corp. Each such person is a
citizen of the United States of America and, unless otherwise indicated, the
business address of each such person is c/o American Industrial Partners
Capital Fund II, L.P., One Maritime Plaza, Suite 2525, San Francisco,
California 94111.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
Lawrence W. Ward, Jr. Mr. Ward is a Director and the President of both
Bucyrus Acquisition Corp. and American Industrial
Partners Acquisition Company, LLC. Mr. Ward was an
employee of AIP Management Co. from 1992 to 1995 and
has been an employee of American Industrial Partners,
an affiliate of American Industrial Partners Capital
Fund II, L.P., since 1995. From 1989 to 1992, he was
Vice President and Chief Financial Officer of
Plantronics, Inc., a telecommunications equipment
company. Mr. Ward is currently a director of Easco
Corporation, Day International Group, Inc. and RBX
Corporation.
Kim A. Marvin Mr. Marvin is a Director, the Secretary and a Vice
President of both Bucyrus Acquisition Corp. and
American Industrial Partners Acquisition Company, LLC.
Mr. Marvin joined the San Francisco office of American
Industrial Partners in 1997 from the Mergers &
Acquisitions Department of Goldman, Sachs & Co. where
he was employed since 1994.
Kenneth A. Pereira Mr. Pereira is a Director and a Vice President of both
Bucyrus Acquisition Corp. and American Industrial
Partners Acquisition Company, LLC. Mr. Pereira joined
the San Francisco office of AIP Management Co. in 1989
and was an employee of AIP Management Co. from 1992 to
1995. Since 1995 he has been an employee of American
Industrial Partners where he specializes in the tax and
accounting aspects of acquisitions. He also serves as
the Controller of American Industrial Partners
Corporation.
</TABLE>
I-1
<PAGE>
2. AMERICAN INDUSTRIAL PARTNERS ACQUISITION COMPANY, LLC. Set forth below is
the name, business address and present principal occupation or employment, and
material occupations, positions, offices or employments for the past five
years, of the sole member and executive officers of American Industrial
Partners Acquisition Company, LLC. Each such person is a citizen of the United
States of America and, unless otherwise indicated, the business address of
each such person is c/o American Industrial Partners Capital Fund II, L.P.,
One Maritime Plaza, Suite 2525, San Francisco, California 94111.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
American Industrial Partners
Capital Fund II, L.P. Not Applicable
Lawrence W. Ward, Jr. See Part 1 of this Schedule I.
Kim A. Marvin See Part 1 of this Schedule I.
Kenneth A. Pereira See Part 1 of this Schedule I.
</TABLE>
3. AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND II, L.P. Set forth below is the
name, business address and present principal occupation or employment, and
material occupations, positions, offices or employments for the past five
years, of the sole general partner of American Industrial Partners Capital
Fund II, L.P. Such person is a citizen of the United States of America and the
business address of such person is American Industrial Partners Capital Fund
II, L.P., One Maritime Plaza, Suite 2525, San Francisco, California 94111.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
American Industrial Partners
II, L.P. Not Applicable.
</TABLE>
4. AMERICAN INDUSTRIAL PARTNERS II, L.P. Set forth below is the name,
business address and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of the
sole general partner of American Industrial Partners II, L.P. Such person is a
citizen of the United States of America and the business address of such
person is American Industrial Partners II, L.P., One Maritime Plaza, Suite
2525, San Francisco, California 94111.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
American Industrial Partners
Corporation Not Applicable.
</TABLE>
I-2
<PAGE>
5. AMERICAN INDUSTRIAL PARTNERS CORPORATION. Set forth below is the name,
business address and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of
each the executive officers and directors of American Industrial Partners
Corporation. Each such person is a citizen of the United States of America
and, unless otherwise indicated, the business address of each such person is
American Industrial Partners Corporation, One Maritime Plaza, Suite 2525, San
Francisco, California 94111.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
Tom H. Barrett Mr. Barrett is a member of the Board of Directors (a
"Director") and a Managing Director of American
Industrial Partners Corporation. Mr. Barrett was
employed by AIP Management Co. from 1992 to 1995 and
has been employed by American Industrial Partners, an
affiliate of American Industrial Partners Capital Fund
II, L.P., since 1995. Mr. Barrett is a director of A.O.
Smith Corporation, AIP Management Co., Rubbermaid,
Inc., Fieldcrest Cannon, Inc. and Air Products &
Chemicals, Inc. He is also a trustee of Mutual Life
Insurance Company of New York.
W. Richard Bingham Mr. Bingham is a Director, the President, Treasurer,
and Assistant Secretary of American Industrial Partners
Corporation. He co-founded AIP Management Co. and has
been a director and officer of AIP Management Co. since
1989. Mr. Bingham is also a director of Sweetheart
Holdings, Inc., Day International Group, Inc. and Easco
Corporation. He formerly served on the boards of Avis,
Inc., ITT Life Insurance Corporation and Valero Energy
Corporation.
Robert Cizik Mr. Cizik is a Director and a Managing Director of
American Industrial Partners Corporation and has been
employed by American Industrial Partners since 1996.
Mr. Cizik is former Chairman of the Board of Cooper
Industries, Inc. After joining Cooper Industries, Inc.
in 1961, he served in various positions before being
named Executive Vice President and a Director in 1971,
President and Chief Operating Officer in 1973,
President and Chief Executive Officer in 1975, and
Chairman in 1983. Mr. Cizik currently serves as a
Director of Air Products and Chemicals, Inc., Harris
Corporation, PanEnergy Corp, and Temple-Inland, Inc. He
also serves as the Advisory Director of Wingate
Partners. He is a Director and Former Chairman of the
National Association of Manufacturers and Vice Chairman
of the Board of Trustees of the Committee for Economic
Development. Mr. Cizik is a Director of The University
of Texas-Houston Health Science Center Development
Board. In addition, he is a member and former President
of the Electrical Manufacturers Club. Mr. Cizik is a
Director of the Houston Forum and a member of the
National Advisory Council of the Texas Heart Institute.
Robert L. Purdum Mr. Purdum is a Director and a Managing Director of
American Industrial Partners Corporation. Mr. Purdum
retired as Chairman of Armco in 1994. From November
1990 to 1993, Mr. Purdum was Chairman and Chief
Executive Officer of Armoc. Mr. Purdum has been a
director of AIP Management Co. since joining American
Industrial Partners in 1994. Mr. Purdum is also a
director of Holephane Corporation, Berlitz
International, Inc., AIP Management Co., Day
International Group, Inc. and GMI Engineering &
Management Institute, Inc.
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS
NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS
---------------- -------------------------------
<C> <S>
Burnell R. Roberts Mr. Roberts is a Director and a Managing Director of
American Industrial Partners Corporation and is the
former Chairman and Chief Executive Officer of The Mead
Corporation ("Mead"), a paper products and electronic
publishing company. He was named President of Mead in
1981 and served as Chairman and Chief Executive Officer
from 1982 until 1992. From 1992 until 1993, Mr. Roberts
served as a director of Mead. Mr. Roberts joined AIP
Management Co. in 1993. Mr. Roberts is also a director
of Armco, Inc., Perkin-Elmer Corp., Sweetheart Holdings
Inc., DPL Inc., AIP Management Co., Universal
Protective Packaging, Inc., Day International Group,
Inc., Armes Corp., Dayton Power and Light, Granum Value
Fund and Rayonier, Inc.
Theodore C. Rogers Mr. Rogers is a Director, the Chairman of the Board and
the Secretary of American Industrial Partners
Corporation. He co-founded AIP Management Co. and has
been a director and officer of the firm since 1989. He
is currently a director of Easco Corporation,
Sweetheart Holdings, Inc. and Derby International.
Kenneth A. Pereira See Part 1 of this Schedule I.
</TABLE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at one of the addresses set forth
below:
I-4
<PAGE>
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
BY MAIL, HAND OR OVERNIGHT BY FACSIMILE TRANSMISSION
DELIVERY: (FOR ELIGIBLE INSTRUCTORS ONLY)
40 Wall Street 46th Floor (718) 234-5001
New York, New York 10005
CONFIRM RECEIPT OF FACSIMILE BY
TELEPHONE:
(718) 921-8200
Questions and requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the
Guidelines for Certification of Taxpayer Identification on Substitute Form W-9
may be directed to the Information Agent at the locations and telephone
numbers set forth below. Stockholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC. APPEARS HERE]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE (800) 322-2885
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
Bucyrus International, Inc.
Pursuant to the Offer to Purchase
Dated August 26, 1997
by
Bucyrus Acquisition Corp.
a corporation formed at the direction of
American Industrial Partners Capital Fund II, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY SEPTEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
American Stock Transfer & Trust Company
By Mail, Hand or Overnight By Facsimile Transmission:
Delivery: (For Eligible Institutions Only)
40 Wall Street
46th Floor (718) 234-5001
New York, New York 10005 Confirm Receipt of Facsimile
by Telephone:
(718) 921-8200
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFORE
AND COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- -------------------------------------------------------------------------------
DESCRIPTION OF COMMON STOCK SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY
AS NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S) AND SHARES TENDERED
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
SHARE CERTIFICATE SHARES EVIDENCED BY NUMBER OF SHARES
NUMBER(S)* SHARE CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
TOTAL SHARES:
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by Book-Entry
Transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced
by each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
<PAGE>
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made
by book-entry transfer to an account maintained by the Depositary at The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC," and together with DTC each a "Book-Entry Transfer Facility" and
collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures
set forth in Section 3 of the Offer to Purchase (as defined below). Delivery
of documents to a Book-Entry Transfer Facility does not constitute delivery to
the Depository. Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders are
referred to herein as "Certificate Stockholders."
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary or complete the
procedures for book-entry transfer prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
See Instruction 2.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: ________________________________________________
Check Box of Applicable Book-Entry Transfer Facility
(check one) [_] DTC [_] PDTC
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s): ______________________________________________
Window Ticket No. (if any): ___________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________________
Name of Institution which Guaranteed Delivery: ________________________________
If Delivered by Book-Entry Transfer, Check Box of Applicable Book-Entry
Transfer Facility:
[_] DTC
[_] PDTC
Account Number (if delivered by Book-Entry Transfer): _________________________
Transaction Code Number: ______________________________________________________
[_]CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE ASSISTANCE
IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS LETTER OF
TRANSMITTAL, THE COMPANY'S STOCK TRANSFER AGENT WILL CONTACT YOU DIRECTLY
WITH REPLACEMENT INSTRUCTIONS.
BOXES ABOVE FOR USE BY ELIGIBLE INSTITUTIONS ONLY
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Bucyrus Acquisition Corp., a Delaware
corporation (the "Offeror") and a wholly owned subsidiary of American
Industrial Partners Acquisition Company, LLC, a Delaware limited liability
company ("Parent"), the above-described shares of Common Stock of Bucyrus
International, Inc. (the "Company"), par value $.01 per share (the "Shares"),
pursuant to the Offeror's offer to purchase all outstanding Shares at a price
of $18.00 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated August 26, 1997 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Offer to Purchase and any
amendments or supplements hereto or thereto, constitute the "Offer"). The
undersigned understands that the Offeror reserves the right to transfer or
assign, in whole or in part from time to time, to any affiliate of Parent the
right to purchase Shares tendered pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers
to, or upon the order of the Offeror, all right, title and interest in and to
all the Shares that are being tendered hereby (and any and all other Shares or
other securities issued or issuable in respect thereof (collectively,
"Distributions")) and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (a) deliver certificates for such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
the Offeror, upon receipt by the Depositary, as the undersigned's agent, of
the purchase price (adjusted, if appropriate, as provided in the Offer to
Purchase), (b) present such Shares and all Distributions for cancellation and
transfer on the Company's books and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
and all Distributions and that, when the same are accepted for payment by the
Offeror, the Offeror will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, claims, charges and
encumbrances, and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute any signature guarantees or additional
documents deemed by the Depositary or the Offeror to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares and all
Distributions. In addition, the undersigned shall promptly remit and transfer
to the Depositary for the account of the Offeror any such Distributions issued
to the undersigned, in respect of the tendered Shares, accompanied by
documentation of transfer, and pending such remittance or appropriate
assurance thereof, the Offeror shall be entitled to all rights and privileges
as owner of any such Distributions and, subject to the terms of the Agreement
and Plan of Merger, dated as of August 21, 1997, by and among Parent, the
Offeror and the Company, may withhold the entire purchase price or deduct from
the purchase price the amount or value thereof, as determined by the Offeror,
in its sole discretion.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby irrevocably appoints Lawrence W. Ward, Jr. or Kim A.
Marvin and each of them, and any other designees of the Offeror, the attorneys
and proxies of the undersigned, each with full power of substitution, to vote
at any annual, special or adjourned meeting of the Company's stockholders or
otherwise act (including pursuant to written consent) in such manner as each
such attorney and proxy or his or her substitute shall in his or her sole
discretion deem proper, to execute any written consent concerning any matter
as each such attorney and proxy or his or her substitute shall in his or her
sole discretion deem proper with respect to, and to otherwise act with respect
to, all the Shares tendered hereby which have been accepted for payment by the
Offeror prior to the time any such vote or action is taken (and any and all
Distributions issued or issuable in respect thereof) and with respect to which
the undersigned is entitled to vote. This
<PAGE>
appointment is effective when, and only to the extent that, the Offeror
accepts for payment such Shares as provided in the Offer to Purchase. This
power of attorney and proxy is coupled with an interest in the tendered
Shares, is irrevocable and is granted in consideration of the acceptance for
payment of such Shares in accordance with the terms of the Offer. Such
acceptance for payment shall revoke all prior powers of attorney and proxies
given by the undersigned at any time with respect to such Shares and no
subsequent powers of attorney or proxies may be given by the undersigned (and,
if given, will not be deemed effective). The Offeror reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Offeror's acceptance for payment of such Shares, the Offeror must be
able to exercise full voting and other rights with respect to such Shares,
including voting at any stockholders meeting then scheduled.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase to
Offeror and in the instructions hereto will constitute a binding agreement
between the undersigned and the Offeror upon the terms and subject to the
conditions of the Offer. The undersigned recognizes that under certain
circumstances set forth in the Offer to Purchase, the Offeror may not be
required to accept for payment any of the tendered Shares. The Offeror's
acceptance for payment of Shares pursuant to the Offer will constitute a
binding agreement between the undersigned and the Offeror upon the terms and
subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price of any Shares purchased, and/or
return any certificates for Shares not tendered or accepted for payment, in
the name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of any Shares
purchased, and/or any certificates for Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under "Description of Shares Tendered." In the
event that both the Special Delivery Instructions and the Special Payment
Instructions are completed, please issue the check for the purchase price of
any Shares purchased, and/or return any certificates for Shares not tendered
or accepted for payment in the name(s) of, and mail said check and/or any
certificates to, the person or persons so indicated. In the case of a book-
entry delivery of Shares, please credit the account maintained at a Book-Entry
Transfer Facility indicated above with any Shares not accepted for payment.
The undersigned recognizes that the Offeror has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder(s) thereof if the Offeror does not accept for payment any of
the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check To be completed ONLY if the check
for the purchase price of Shares or for the purchase of Shares
Share Certificates evidencing purchased or Share Certificates
Shares not tendered or not evidencing Shares not tendered or
purchased are to be issued in the not purchased are to be mailed to
name of someone other than the someone other than the undersigned,
undersigned. or to the undersigned at an address
other than that shown under
"Description of Shares Tendered."
Issue check and/or certificate(s)
to:
Mail check and/or certificate(s) to:
Name: ______________________________
(PLEASE PRINT) Name: ______________________________
Address: ___________________________ (PLEASE PRINT)
_____________________________________ Address: ___________________________
(INCLUDE ZIP CODE)
____________________________________
(INCLUDE ZIP CODE)
_____________________________________
Taxpayer Identification or Social
Security Number ____________________________________
(See Substitute Form W-9 on reverse
side)
<PAGE>
IMPORTANT
STOCKHOLDER(S): SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
________________________________________
________________________________________
SIGNATURE(S) OF HOLDER(S)
Dated: ________________________________________________________________ , 199
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing or by a person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s): _____________________________________________________________________
_______________________________________________________________________________
PLEASE PRINT
Capacity: ____________________________________________________________________
PLEASE PROVIDE FULL TITLE
Address: _____________________________________________________________________
INCLUDE ZIP CODE
Telephone No.: _______________________________________________________________
INCLUDE AREA CODE
Taxpayer Identification or
Social Security Number: ______________________________________________________
SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY. FINANCIAL
INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE PROVIDED BELOW.
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations
and brokerage houses) that is a participant in the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each an "Eligible
Institution," and collectively, "Eligible Institutions"). No signature
guarantee is required on this Letter of Transmittal (i) if this Letter of
Transmittal is signed by the registered holder(s) (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares) of
Shares tendered herewith, unless such holder(s) has completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" in this Letter of Transmittal or (ii) if such Shares are
tendered for the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders
either if Share Certificates are to be forwarded herewith or if a tender of
Shares is to be made pursuant to the procedures for delivery by book-entry
transfer set forth in Section 3 of the Offer to Purchase. For Shares to be
validly tendered pursuant to the Offer, either (i) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees, or in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase), and any other required
documents, must be received by the Depositary at one of the Depositary's
addresses set forth herein prior to the Expiration Date (as defined in the
Offer to Purchase) and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or such Shares must be
delivered pursuant to the procedures for book-entry transfer (and a Book Entry
Confirmation received by the Depositary), in each case, prior to the
Expiration Date, or (ii) the tendering stockholder must comply with the
guaranteed delivery procedure set forth below.
Stockholders whose Share Certificates are not immediately available or who
cannot complete the procedures for book-entry transfer on a timely basis or
time will not permit all required documents to reach the Depositary prior to
the Expiration Date, may tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant
to such procedures, (i) such tender must be made by or through an Eligible
Institution, (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Offeror (or facsimile
thereof), must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for (or a Book-Entry Confirmation with respect to) such
Shares, together with this properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase. A "trading day" is any day on
which the National Association of Securities Dealers Automated Quotation
System, Inc. is open for business. The Notice of Guaranteed Delivery may be
delivered by hand to the Depositary or transmitted by telegram, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARE
CERTIFICATES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
6
<PAGE>
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers and/or the
number of Shares evidenced by such Share Certificates and the number of Shares
tendered should be listed on a separate schedule attached hereto.
4. PARTIAL TENDERS. If fewer than all the Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered, fill in
the number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such case, new Share Certificate(s) for the remainder of
the Shares that were evidenced by the Share Certificate(s) delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the
expiration or termination of the Offer. All Shares represented by Share
Certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the Share Certificate(s) evidencing such shares without any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
such Shares.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Offeror of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and tendered hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment or Share Certificates
evidencing Shares not tendered or not accepted for payment are to be issued in
the name of a person other than the registered holder(s), in which case the
Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) or such Share Certificate(s).
Signatures on such Share Certificate(s) or stock powers must be guaranteed by
an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the shares tendered hereby, the certificates
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificates. Signatures on such
Share Certificate(s) or stock powers must be guaranteed by an Eligible
Institution. See Instruction 1.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Offeror will pay, or cause to be paid, any stock transfer taxes with respect
to the transfer and sale of Shares to it or its assignee pursuant to the
Offer. If, however, payment of the purchase price of any Shares is to be made
to, or if Share Certificates evidencing Shares not tendered or accepted for
payment are to be issued in the name of, a person other than the registered
holder(s), or if tendered Shares Certificates are registered in the name of a
person other than the person(s) signing this Letter of Transmittal, the amount
of any stock transfer taxes (whether imposed on the registered holder(s) or
such person or otherwise payable on the account of the transfer to such other
person will be deducted from the purchase price of such Shares purchased,
unless evidence satisfactory to the Offeror of the payment of such taxes, or
exemption therefrom, is submitted. Except as provided in this Instruction 6,
it will not be necessary for transfer tax stamps to be affixed to the Share
Certificates evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of and/or Shares Certificates not accepted for payment are to be
returned to a person other than the signer of this Letter of Transmittal or if
a check is to be sent and/or such Share Certificates are to be returned to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown in the box entitled "Description of Shares Tendered" on
the reverse hereof, the appropriate
7
<PAGE>
boxes on the reverse side of this Letter of Transmittal should be completed.
Any stockholder tendering Shares by book-entry transfer will have any Shares
not accepted for payment returned by crediting the account maintained by such
stockholder at a Book-Entry Transfer Facility from which such transfer was
made.
8. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase, the Offeror reserves the absolute right, in its sole discretion, to
waive any of the conditions of the Offer or any defect or irregularity in the
tender of any Shares of any particular stockholder, whether or not similar
defects or irregularities are waived in the case of other stockholders.
9. SUBSTITUTE FORM W-9. The tendering stockholder (or other payee) is
required, unless an exemption applies, to provide the Depositary with a
correct Taxpayer Identification Number ("TIN"), generally the stockholder's
social security or federal employer identification number, and with certain
other information, on Substitute Form W-9, which is provided under "Important
Tax Information" below, and to certify under penalties of perjury, that such
number is correct and that the stockholder (or other payee) is not subject to
backup withholding. If a tendering stockholder is subject to backup
withholding, he or she must cross out item (2) of the Certification Box on
Substitute Form W-9 before signing such Form. Failure to furnish the correct
TIN on the Substitute Form W-9 may subject the tendering stockholder (or other
payee) to a $50 penalty imposed by the Internal Revenue Service and payments
of cash to the tendering stockholder (or other payee) pursuant to the Offer
may be subject to backup withholding of 31%. If the tendering stockholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write "Applied For" in the space
provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign
and date the Certificate of Awaiting Taxpayer Identification Number. If
"Applied For" is written in Part I and the Depositary is not provided with a
TIN by the time of payment, the Depositary will withhold 31% of all such
payments for surrendered Shares thereafter until a TIN is provided to the
Depositary.
10. LOST OR DESTROYED CERTIFICATES. If any Share Certificate(s) has (have)
been lost or destroyed, the stockholder should check the appropriate box on
the reverse side of the Letter of Transmittal. The Company's stock transfer
agent will then instruct such stockholder as to the procedure to be followed
in order to replace the Share Certificate(s). The stockholder will have to
post a surety bond of approximately 2% of the current market value of the
stock. This Letter of Transmittal and related documents cannot be processed
until procedures for replacing lost or destroyed Share Certificates have been
followed.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at the locations and telephone numbers set
forth below.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF),
TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR IN THE CASE OF A BOOK-
ENTRY TRANSFER, AN AGENT'S MESSAGE, AND SHARE CERTIFICATES, OR A BOOK-ENTRY
CONFIRMATION, FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY (OR A FACSIMILE COPY
THEREOF) MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION
DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder surrendering Shares must, unless
an exemption applies, provide the Depositary (as payor) with his correct TIN
on Substitute Form W-9 included in this Letter of Transmittal. If the
stockholder is an individual, his TIN is such stockholder's social security
number. If the correct TIN is not provided, the stockholder may be subject to
a $50 penalty imposed by the Internal Revenue Service and payments of cash to
the tendering stockholder (or other payee) pursuant to the Offer may be
subject to backup withholding of 31% of all payments of the purchase price.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. In
order for an exempt foreign stockholder to avoid backup withholding, such
person should complete, sign and submit a Form W-8, Certificate of Foreign
Status, signed under penalties of perjury, attesting to his
8
<PAGE>
exempt status. A Form W-8 can be obtained from the Depositary. Exempt
stockholders, other than foreign stockholders, should furnish their TIN, write
"Exempt" on the face of the Substitute Form W-9 and sign, date and return the
Substitute Form W-9 to the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payment made to payee. Backup withholding is not an additional tax.
Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his correct TIN (or the TIN of any other
payee) by completing the Substitute Form W-9 included in this Letter of
Transmittal certifying (1) that the TIN provided on the Substitute Form W-9 is
correct (or that such stockholder is awaiting a TIN), and that (2) the
stockholder is not subject to backup withholding because (i) the stockholder
has not been notified by the Internal Revenue Service that the stockholder is
subject to backup withholding as a result of a failure to report all interest
and dividends or (ii) the Internal Revenue Service has notified the
stockholder that the stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN, generally the
social security number or employer identification number, of the record holder
of the Shares tendered hereby. If the Shares are in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for
a number in the near future, he or she should write "Applied For" in the space
provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign
and date the Certificate of Awaiting Taxpayer Identification Number, which
appears in a separate box below the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN by the time of
payment, the Depositary will withhold 31% of all payments of the purchase
price until a TIN is provided to the Depositary.
9
<PAGE>
PAYER'S NAME: BANK BOSTON, N.A.
- -------------------------------------------------------------------------------
PART I--Taxpayer
SUBSTITUTE Identification Number--For ________________________
all accounts, enter your Social Security Number
TIN in the box at right.
(For most individuals, this
is your social security
number. If you do not have
a TIN, see Obtaining a
Number in the enclosed
Guidelines.) Certify by
signing and dating below.
Note: If the account is in
more than one name, see the
chart in the enclosed
Guidelines to determine
which number to give the
payer.
FORM W-9 OR _____________________
DEPARTMENT OF THE TREASURY Employer Identification
INTERNAL REVENUE SERVICE Number
PAYER'S REQUEST FOR TAXPAYER (If awaiting TIN write
IDENTIFICATION NUMBER (TIN) "Applied For")
_______________________________________________________________________________
PART II--For Payees Exempt from backup Withholding,
see the enclosed Guidelines and complete as instructed
therein.
_______________________________________________________________________________
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of
failure to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--Certificate Instructions--You must cross out item
(2) above if you have been notified by the IRS that you are subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that you
are not longer subject to backup withholding, do not cross out item (2).
(Also see instructions in the enclosed Guidelines.)
_______________________________________________________________________________
SIGNATURE _________________________________________________________ DATE , 199
_______________________________________________________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
WROTE "APPLIED FOR" IN PART I OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER THE PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION
NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (a) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR
(b) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I
UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER BY THE
TIME OF PAYMENT, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE
WITHHELD UNTIL I PROVIDE A NUMBER.
__________________________________ DATE ____________________________________
10
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be
directed to the Information Agent at the locations and telephone numbers set
forth below:
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC]
156 Fifth Avenue
New York, NY 10010
Banks and Brokers call collect (212) 929-5500
All Others Call Toll Free: 1 (800) 322-2885
11
<PAGE>
EXHIBIT (a)(3)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Bucyrus International, Inc.
at
$18.00 Net Per Share
by
Bucyrus Acquisition Corp.
a corporation formed at the direction of
American Industrial Partners Capital Fund II, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY, SEPTEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
August 26, 1997
To Brokers, Dealers, Commercial Banks,Trust Companies and Other Nominees:
We have been appointed by Bucyrus Acquisition Corp., a Delaware corporation
(the "Offeror") and a wholly owned subsidiary of American Industrial Partners
Acquisition Company, LLC, a Delaware limited liability company ("Parent"), to
act as Information Agent in connection with the Offeror's offer to purchase
all outstanding shares (the "Shares") of common stock, par value $.01 per
share, (the "Common Stock") of Bucyrus International, Inc., a Delaware
corporation (the "Company"), at a price of $18.00 per Share, net to the seller
in cash, without interest, upon the terms and subject to the conditions set
forth in the Offeror's Offer to Purchase, dated August 26, 1997 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer") enclosed
herewith. The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of August 21, 1997, by and among Parent, the Offeror and the
Company. Please furnish copies of the enclosed materials to those of your
clients for whose accounts you hold Shares registered in your name or in the
name of your nominee.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee we are enclosing
copies of the following documents:
1.Offer to Purchase;
2.Letter of Transmittal to tender Shares for your use and for the
information of your clients;
3.Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not
permit all required documents to reach the Depositary by the Expiration
Date (as defined in the Offer to Purchase) or if the procedure for book-
entry transfer cannot be completed on a timely basis;
4.A Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company;
5.A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
6.Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7.Return envelope addressed to the Depositary.
<PAGE>
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, SEPTEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
the certificates evidencing such Shares or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities (as defined in the Offer to Purchase), (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined in the
Offer to Purchase) in connection with a book-entry delivery, and (iii) and any
other documents required by the Letter of Transmittal.
If holders of Shares wish to tender Shares, but cannot deliver such holders'
certificates or other required documents, or cannot comply with the procedure
for book-entry transfer, prior to the expiration of the Offer, a tender may be
effected by following the guaranteed delivery procedure described in Section 3
of the Offer to Purchase.
Neither the Offeror or the Parent will pay any fees or commissions to any
broker, dealer or other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. However, upon request, the
Offeror will reimburse you for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
The Offeror will pay or cause to be paid any stock transfer taxes payable with
respect to the transfer of Shares to it, except as otherwise provided in the
Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
MacKenzie Partners, Inc., the Information Agent, at the addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
MacKenzie Partners, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU OR
ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF THE PARENT, THE
OFFEROR, THE COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE>
EXHIBIT (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Bucyrus International, Inc.
at
$18.00 Net Per Share
by
Bucyrus Acquisition Corp.
a corporation formed at the direction of
American Industrial Partners Capital Fund II, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, SEPTEMBER 23, 1997, UNLESS THE
OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated August 26,
1997 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer")
relating to the offer by Bucyrus Acquisition Corp., a Delaware corporation
(the "Offeror") and a wholly owned subsidiary of American Industrial Partners
Acquisition Company, LLC, a Delaware limited liability company ("Parent"), to
purchase all outstanding shares (the "Shares") of common stock, par value
$0.01 per share (the "Common Stock"), of Bucyrus International, Inc., a
Delaware corporation (the "Company"), at a price of $18.00 per Share, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer. The Offer is being made in connection with
the Agreement and Plan of Merger, dated as of August 21, 1997, by and among
Parent, the Offeror and the Company (the "Merger Agreement"). Also enclosed is
a Solicitation/Recommendation Statement on Schedule 14D-9.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
<PAGE>
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us (or our nominee) for
your account, upon the terms and subject to the condition set forth in the
Offer.
Your attention is invited to the following:
1. The tender price is $18.00 per share of Common Stock, net to the
seller in cash, without interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement and the transactions contemplated thereby, has determined
that each of the Merger Agreement and the transactions contemplated thereby
are fair to, and in the best interests of, the Company and the holders of
the Common Stock and recommends that the Company's holders tender their
Shares in the Offer.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Tuesday, September 23, 1997, unless the Offer is
extended.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in the Letter of Transmittal,
stock transfer taxes with respect to the purchase of Shares by the Offeror
pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form contained in this letter. An envelope in which to return your
instructions to us is enclosed. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise specified in your
instructions. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto, and is being made to
all holders of Shares. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Offeror by one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
<PAGE>
Instructions with Respect to the Offer to Purchase for Cash All
Outstanding Shares of Common Stock
of
Bucyrus International, Inc.
by
Bucyrus Acquisition Corp.
a corporation formed at the direction of
American Industrial Partners Capital Fund II, L.P.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated August 26, 1997, and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer") in connection with the offer by Bucyrus Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of American Industrial Partners
Acquisition Company, LLC, a Delaware limited liability company, to purchase
all outstanding shares (the "Shares") of common stock, par value $0.01 per
share (the "Common Stock"), of Bucyrus International, Inc., a Delaware
corporation, (the "Company").
<PAGE>
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Dated: , 1997 SIGN HERE
Number of Shares to be Tendered: ---------------------------------------
---------------------------------------
shares of Common Stock* Signature(s) of Holder(s)
Name(s) of Holder(s)
---------------------------------------
---------------------------------------
Please Type or Print
---------------------------------------
Address
---------------------------------------
Zip Code
---------------------------------------
Area Code and Telephone Number
---------------------------------------
Taxpayer Identification or Social
Security Number
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
EXHIBIT (a)(5)
NOTICE OF GUARANTEED DELIVERY
for
Tender of Shares of Common Stock
of
Bucyrus International, Inc.
to
Bucyrus Acquisition Corp.
a corporation formed at the direction of
American Industrial Partners Capital Fund II, L.P.
(Not to be Used for Signature Guarantees)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if certificates evidencing
shares (the "Shares") of common stock, par value $0.01 per share (the "Common
Stock") of Bucyrus International, Inc., a Delaware corporation (the
"Company"), are not immediately available or time will not permit all required
documents to reach American Stock Transfer & Trust Company as Depositary (the
"Depositary"), prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase (as defined below)) or the procedure for delivery by book-
entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or transmitted by telegram,
facsimile transmission or mail to the Depositary. See Section 3 of the Offer
to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or By Facsimile Confirm Receipt of
Overnight Delivery: Transmission: Facsimile by Telephone:
(For Eligible
Institutions Only)
40 Wall Street (718) 234-5001 (718) 921-8200
46th Floor
New York, New York 10005
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, AND TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Bucyrus Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of American Industrial Partners
Acquisition Company, LLC, a Delaware limited liability company, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated August
26, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of
Shares specified below pursuant to the guaranteed delivery procedure described
in Section 3 of the Offer to Purchase.
PLEASE CHECK RELEVANT BOX BELOW
Series and Certificate Nos. of Shares (if available):
Common Stock, par value $.01
Name(s) of Record Holder(s)
_____________________________________
Certificate Nos._____________________
Number of Shares Tendered____________ _____________________________________
PLEASE TYPE OR PRINT
_____________________________________
Address(es):_________________________
_____________________________________
ZIP CODE
Area Code and Tel. No.: _____________
Signature(s): _______________________
Dated: ______________________________
Check one box if Shares
will be delivered by
book-entry transfer:
[_] The Depositary Trust Company
[_] Philadelphia Depositary Trust Company
Account No.: __________________________
<PAGE>
GUARANTEE
(NOT TO BE USED FOR THE SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Offer to
Purchase), hereby guarantees delivery to the Depositary, at one of its
addresses set forth above, certificates ("Share Certificates") evidencing the
Shares tendered hereby, in proper form for transfer, or confirmation of book-
entry transfer of such Shares into the Depositary's account at The Depositary
Trust Company or the Philadelphia Depositary Trust Company, in each case with
delivery of a Letter of Transmittal (or facsimile thereof) properly completed
and duly executed, or an Agent's Message (as defined in the Offer to Purchase)
in the case of a book-entry delivery, and any other required documents, all
within three days on which the New York Stock Exchange is open for business
after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
Share Certificates to the Depositary within the time period shown here herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
_____________________________________ _____________________________________
NAME OF FIRM
AUTHORIZED SIGNATURE
_____________________________________ TITLE: ______________________________
ADDRESS
NAME: _______________________________
_____________________________________ PLEASE TYPE OR PRINT
ZIP CODE
DATED: , 199
_____________________________________
AREA CODE AND TELEPHONE NO.
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE
SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens,
e.g., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen, e.g., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------- ------------------------------------------------
GIVE THE GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------- ------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 8. Sole proprietorship The owner(4)
account
2. Two or more individuals The actual owner
(joint account) of the account 9. A valid trust, estate, The legal entity
or, if combined or pension trust (do not furnish
funds, the first the identifying
individual on number of the
the account(1) personal
representative
3. Husband wife (joint The actual owner or trustee
account) of the account unless the legal
or, if joint entity itself is
funds, either not designated
person(1) in the account
title)(5)
4. Custodian account of a The minor(2)
minor (Uniform Gift to 10. Corporate account The corporation
Minors Act)
11. Religious, charitable, The organization
5. Adult and minor (joint The adult or, if or educational
account) the minor is the organization account
only contributor,
the minor(1) 12. Partnership account The partnership
held in the name of
the business
6. Account in the name of The ward, minor,
guardian or committee or incompetent 13. Association, club, or The organization
for a designated ward, person(3) other tax-exempt
minor, or incompetent organization
person
14. A broker or registered The broker or nominee
7.a. A revocable savings The grantor- nominee
trust account (in trustee(1)
which grantor is also 15. Account with the The public entity
trustee) Department of
Agriculture in the name
b. Any "trust" account The actual owner(1) of a public entity
that is not a legal or (such as a State or
valid trust under State local government,
law school district, or
prison) that receives
agricultural program
payments
- --------------------------------------------- ------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE:If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification
Number (for businesses and all other entitites), for Form W-7 for
International Taxpayer Identification Number (for alien individuals required
to file U.S. tax returns), at an office of the Social Security Administration
or the Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification
number in Part I, sign and date the Form, and give it to the requester.
Generally, you will then have 60 days to obtain a taxpayer identification
number and furnish it to the requester. If the requester does not receive your
taxpayer identification number within 60 days, backup withholding, if
applicable, will begin and will continue until you furnish your taxpayer
identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING PENALTIES
Payees specifically exempted from backup withholding on ALL payments include
the following:*
. corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any politial subdivision or instrumentality thereof.
. A foreign government or a political subdivision, agency or instrumentality
thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
- --------
* Unless otherwise noted herein, all references below to section numbers or
to regulations are references to the Internal Revenue Code and the
regulation promulgated thereunder.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if (i) this interest is $600 or more,
(ii) the interest is paid in the course of the payer's trade or business
and (iii) you have not provided your correct taxpayer identification
number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify
certifications or affirmations, you are subject to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICES. Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to
file tax returns. Payers must generally withhold 31% of taxable interest,
dividends, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
2
<PAGE>
Exhibit (a)(7)
PRESS RELEASE
BUCYRUS INTERNATIONAL, INC.
(NASDAQ: BCYR)
FOR IMMEDIATE RELEASE
BUCYRUS INTERNATIONAL, INC.
SIGNS DEFINITIVE MERGER AGREEMENT WITH
AMERICAN INDUSTRIAL PARTNERS
SOUTH MILWAUKEE, WISCONSIN, August 21, 1997 . . . Bucyrus International,
Inc. (NASDAQ: BCYR) and American Industrial Partners Acquisition Company, LLC
("American Industrial Partners"), jointly announced that they have signed a
definitive merger agreement for American Industrial Partners to acquire all of
the outstanding shares of common stock of Bucyrus. Pursuant to the merger
agreement, American Industrial Partners will pay $18.00 per each outstanding
share of Bucyrus common stock. Bucyrus currently has 10,534,574 shares of
common stock outstanding.
The transaction will be a cash tender offer followed by a cash merger to
acquire any shares not previously tendered. The transaction has been recom
mended by the Board of Directors of Bucyrus and approved by American Industrial
Partners.
In connection with the execution of the merger agreement, American
Industrial Partners entered into a stockholder agreement with Jackson National
Life Insurance Company ("Jackson"), which is the holder of approximately 40% of
the outstanding shares of common stock of Bucyrus. The stockholder agreement
provides for, among other things, Jackson's commitment to tender its shares into
the tender offer and the granting of an option to American Industrial Partners
to purchase Jackson's shares for $18.00 per share.
American Industrial Partners expects to commence its cash tender offer on
or before August 27, 1997. The cash tender offer is subject to, among other
things, American Industrial Partners receiving at least 51% of the fully diluted
shares of common stock of Bucyrus. The closing of the transaction is subject to
the satisfaction of various conditions, including, but not limited to,
expiration of the waiting period under the Hart-Scott-Rodino Act.
<PAGE>
Bucyrus is one of the world's leading manufacturers of large scale surface
mining equipment and a provider of aftermarket parts and services.
American Industrial Partners was formed at the direction of American
Industrial Partners Capital Fund II, L.P., a private investment limited
partnership which makes equity investments in public and privately held
companies located principally in the United States.
2
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated August 26, 1997 ("Offer to Purchase") and
the related Letter of Transmittal and is being made to all holders of Shares.
The Offer is not being made to (nor will tenders be accepted from or on behalf
of) holders of Shares in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws of such
jurisdiction or any administrative or judicial action pursuant thereto. In any
jurisdiction where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Bucyrus Acquisition Corp. by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
BUCYRUS INTERNATIONAL, INC.
AT
$18.00 NET PER SHARE
BY
BUCYRUS ACQUISITION CORP.
A CORPORATION FORMED AT THE DIRECTION OF
AMERICAN INDUSTRIAL PARTNERS, CAPITAL FUND II, L.P.
Bucyrus Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of American Industrial Partners Acquisition Company,
LLC, a Delaware limited liability company ("AIP"), is offering to purchase all
of the issued and outstanding shares (the "Shares") of common stock, par value
$.01 per share (the "Common Stock"), of Bucyrus International, Inc., a
Delaware corporation (the "Company") for $18.00 per Share (the "Offer Price"),
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY, SEPTEMBER 23, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 21, 1997 (the "Merger Agreement"), by and among AIP, the
Purchaser and the Company pursuant to which, as soon as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions to the Merger (as defined below), the Purchaser will be merged with
and into the Company and the separate corporate existence of the Purchaser
will thereupon cease. The merger, as effected pursuant to the immediately
preceding sentence, is referred to herein as the "Merger," and the Company as
the surviving corporation of the Merger is sometimes herein referred to as the
"Surviving Corporation." At the effective time of the Merger (the "Effective
Time"), each share of Common Stock then outstanding (other than Shares held by
AIP or the Purchaser and Shares held by stockholders who perfect their
dissenters' rights under Delaware law) will be cancelled and extinguished and
converted into the right to receive the Offer Price or any higher price per
Share paid in the Offer, in cash payable to the holder thereof without
interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE COMMON STOCK, AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER, THAT NUMBER
OF SHARES OF COMMON STOCK WHICH REPRESENTS AT LEAST FIFTY-ONE PERCENT (51%) OF
THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION") AND
(II) THE RECEIPT AND IMMEDIATE AVAILABILITY OF FINANCING SUFFICIENT IN AMOUNT
TO ENABLE THE PURCHASER TO CONSUMMATE THE OFFER AND THE MERGER AND TO
REFINANCE CERTAIN INDEBTEDNESS FOR BORROWED MONEY OF THE COMPANY AND TO PAY
RELATED FEES AND EXPENSES. As used herein "fully diluted basis" takes into
account the conversion or exercise of all outstanding options and other rights
and securities exercisable or convertible into shares of Common Stock.
As a condition and inducement to AIP's and the Purchaser's entering into the
Merger Agreement and incurring the liabilities therein, Jackson National Life
Insurance Company, a Michigan corporation (the "Stockholder"), which together
with PPM America, Inc., a Delaware corporation shares voting power and
dispositive power with respect to 4,228,382 Shares, concurrently with the
execution and delivery of the Merger Agreement are entering into a Stockholder
Agreement (the "Stockholder Agreement"), dated as of August 21, 1997, with AIP
and the Purchaser. Pursuant to the Stockholder Agreement, the Stockholder has
agreed, among other things, to tender the Shares held by it in the Offer, and
to grant AIP a proxy with respect to the voting of such Shares in favor of the
Merger and to grant Parent an option (the "JNL Option") with respect to such
Shares upon the terms and subject to the conditions set forth therein. The JNL
Option can only be exercised in certain circumstances as described in Section
11 of the Offer to Purchase.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
American Stock Transfer & Trust Company (the "Depositary") of the Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Purchaser and transmitting payment to tendering
stockholders. In all cases, payment for Shares accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or a timely Book-Entry Confirmation (as defined
in the Offer to Purchase) with respect thereto), (ii) a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any
required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message (as defined in the Offer to Purchase) and (iii) any other
documents required by the Letter of Transmittal. The per Share consideration
paid to any holder of Common Stock pursuant to the Offer will be the highest
per Share consideration paid to any other holder of such Shares pursuant to
the Offer. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
TO BE PAID BY THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date (as
defined in the Offer to Purchase) and, unless theretofore accepted for payment
and paid for by the Purchaser pursuant to the Offer, may also be withdrawn at
any time after September 23, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase and
must specify the name of the person having tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of the Shares to be withdrawn, if different from the name of the person
who tendered the Shares. If certificates for Shares have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in Section 3 of the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by
2
<PAGE>
an Eligible Institution. If Shares have been delivered pursuant to the
procedures for book-entry transfer as set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of
the account at the appropriate Book-Entry Transfer Facility (as defined in the
Offer to Purchase) to be credited with the withdrawn Shares and otherwise
comply with such Book-Entry Transfer Facility's procedures. Withdrawals of
tenders of Shares may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by again following one of the procedures
described in Section 3 of the Offer to Purchase any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the
Purchaser, AIP, the Depositary, the Information Agent, or any other person
will be under any duty to give notification of any defects or irregularities
in any notice of withdrawal, or incur any liability for failure to give any
such notification.
Subject to the terms of the Merger Agreement, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time,
to extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended, is contained in
the Offer to Purchase and is incorporated herein by reference.
The Company has provided the Purchaser with the Company's stockholder lists
and security position list-ings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant documents will be mailed by the Purchaser to record holders
of Shares, and will be furnished by the Purchaser to brokers, dealers, banks,
trust companies and similar person whose names, or the names of whose
nominees, appear on the stockholder lists, or, if applicable, who are listed
as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be
directed to the Information Agent, at the address and telephone numbers set
forth below, and copies will be furnished at the Purchaser's expense. The
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Information Agent) for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
August 26, 1997
3
<PAGE>
EXHIBIT (a)(9)
[LETTERHEAD OF JEFFERIES & COMPANY, INC.]
August 19, 1997
Board of Directors
BUCYRUS INTERNATIONAL, INC.
1100 Milwaukee Avenue
P.O. Box 500
South Milwaukee, WI 53172-0500
Dear Ladies and Gentlemen,
We understand that American Industrial Partners Acquisition Company,
LLC, a Delaware limited liability company ("Parent") and Bucyrus Acquisition
Corp., a Delaware corporation (the "Purchaser") which is a wholly-owned
subsidiary of Parent, have offered to enter into an Agreement and Plan of Merger
(the "Merger Agreement") with Bucyrus International, Inc. ("Bucyrus" or the
"Company") pursuant to which, subject to the terms and conditions therein set
forth, (i) the Purchaser will make a cash tender offer (the "Tender Offer") to
acquire any and all shares of the issued and outstanding stock, $.01 par value,
of the Company (the "Common Shares") for $18.00 per share (the "Offer Price")
and (ii) the Purchaser will be merged with and into the Company and the issued
and outstanding Common Shares (except Dissenting Shares, as defined in the
Merger Agreement, and Common Shares held in the treasury of the Company or owned
by the Purchaser of any direct or indirect wholly owned subsidiary of the
Purchaser) will be canceled and extinguished and converted into the right to
receive the Offer Price in cash (the "Merger" and, with the Tender Offer, the
"Transaction").
You asked us to render our opinion as to whether the Offer Price is
fair, from a financial point of view, to the holders of Common Shares.
It is understood that we are not opining as to the fairness of the
transactions contemplated by the Stockholder Agreement referred to in the Merger
Agreement or any consideration under such Stockholder Agreement or any rights or
obligations of the persons identified as the Major Stockholders therein. Our
opinion is directed only to the fairness of the Offer Price to be received by
the holders of Common Shares in the Transaction.
Jefferies & Company, Inc. ("Jefferies"), as part of its investment
banking business, is regularly engaged in the evaluation of capital structures
and the rendering of advice in financial restructurings and recapitalizations.
In addition, Jefferies performs valuations of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements, financial restructurings and other financial services. Jefferies has
received a retainer and a fee for providing this opinion in connection with its
engagement as financial advisor to the
<PAGE>
Board of Directors
BUCYRUS INTERNATIONAL, INC.
August 19, 1997
Page 2
Company and will receive a success fee upon consummation of the Transaction. In
addition, Jefferies will be compensated for services relating to the Company's
acquisition of assets of The Marion Power Shovel Company and the placement of
senior notes. In addition to delivering its opinion, Jefferies has actively
assisted the Companying in obtaining and negotiating the terms of the
Transaction. Joseph J. Radecki, Jr., an Executive Vice President of Jefferies,
is currently a member of the Board of Directors of Bucyrus. Mr. Radecki has
abstained from voting on any matters pertaining to the approval of the
Transaction by the Board of Directors, and intends to abstain from voting on
such matters in the future.
In the connection with our opinion, we have reviewed a draft copy of the
Agreement dated August 15, 1997 and related exhibits thereto and certain
financial and other information that was publicly available or furnished to us
by Bucyrus, including certain internal financial analyses, financial forecasts,
pro forma financial information reports and other information prepared by
management of Bucyrus. We have also discussed with representatives of management
of Bucyrus the business, properties and prospects of Bucyrus and undertaken
other reviews, analyses and inquiries relating to Bucyrus as we have deemed
appropriate.
In our review and analysis and in rendering this opinion, we have relied
upon, and have not independently verified, the accuracy, completeness and fair
presentation of all financial and other information (including financial
projections, pro forma financial information, and estimates) that were provided
to us by or on behalf of Bucyrus, or which were publicly available, and this
opinion is conditioned upon such information (whether written or oral) being
complete, accurate and fair in all material respects. With regard to the
historical financial information, we have relied upon the opinion, issued by
the Company's independent public accountants, in connection with the Company's
audited financial statements. With respect to the above noted projected and pro
forma financial information, we have assumed, with your permission and without
independent verification, that such information has been reasonably prepared
on bases reasonably reflecting management's best currently available estimates
and good faith judgments as to the future performance of Bucyrus and that
Bucyrus will perform in accordance with such projections for all periods
specified therein. We have not made an independent evaluation or appraisal or
conducted a physical inspection of any of the assets of Bucyrus, nor have we
been furnished with any such appraisals. Our opinion is based on economic,
monetary, political, market, and other conditions existing and which can be
evaluated as of the date of this opinion; however, such conditions are subject
to rapid and unpredictable change. We have assumed, with your permission, that
all consents, authorizations and agreements of other parties necessary to
consummate the Transaction have been, or will be, obtained without material
expense. Our opinion is addressed solely to the fairness of the Offer Price,
from a financial point of view, in the Transaction to the holders of the Common
Shares on the assumption that the Company and its Board of Directors have
determined that, from the standpoint of its business and prospects, it is
appropriate and desirable to consummate the Transaction and the other
transactions and agreements contemplated by the Agreement. Our opinion does not
address the relative merits of the Transaction as compared to any alternative
business transactions that might be available to the Company.
<PAGE>
Board of Directors
BUCYRUS INTERNATIONAL, INC.
August 19, 1997
Page 3
In conducting our analysis and arriving at our opinion as expressed
herein, we have considered such financial and other factors as we have deemed
appropriate under the circumstances, including, among others: (i) the terms and
business and financial aspects of the Transaction; (ii) the historical and
current markets for the Company's common stock and for other securities of
certain companies believed by Jefferies to be comparable to the Company; (iii)
certain of the Company's operating and financial information, including
projections and pro forma financial statements provided by management relating
to the Company's business and prospects; (iv) publicly available financial data
and stock market performance data of Bucyrus and other public companies which
Jefferies deemed generally comparable to the Company; (v) publicly available
financial data on certain merger and acquisition transactions; (vi) the
Agreement and related exhibits and schedules (which we have assumed, with your
permission, were delivered to us in substantially final form); and (vii) the
Company's Annual Reports to Shareholders and Annual Reports on Form 10-K for the
fiscal years ended on December 31, 1995 and 1996, and its Quarterly Report on
Form 10-Q for the period ended June 30, 1997.
Our advisory services and the opinion set forth in this letter are
provided for the information and assistance of the Board of Directors of the
Company in connection with its consideration of the Transaction, and such
opinion does not constitute a recommendation as to whether any holder of Common
Shares should tender Common Shares pursuant to the Tender Offer or as to how any
such holder should vote with respect to the Merger.
Based upon and subject to the foregoing, and based upon such other
matters as we consider relevant, it is our opinion as investment bankers that,
as of the date hereof, the Offer Price to be paid in the Transaction is fair,
from a financial point of view, to the holders of Common Shares.
Sincerely,
/s/ JEFFERIES & COMPANY, INC.
JEFFERIES & COMPANY, INC.
<PAGE>
Exhibit (b)(1)
[LETTERHEAD OF BANK ONE]
August 13, 1997
Bucyrus International, Inc.
1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
Attention: Daniel J. Smoke
Vice President & Chief Financial Officer
Re: Senior Secured Revolving Credit Facility
Dear Sirs:
You have advised Bank One, Wisconsin ("Bank One") that Bucyrus International,
Inc., a Delaware corporation (the "Borrower") intends: (i) to refinance certain
outstanding indebtedness and (ii) to obtain financing for working capital and
general corporate purposes (together, the Transaction).
In connection with the Transaction, you have requested that Bank One commit to
provide to the Borrower a Senior Secured Revolving Credit Facility in an
Aggregate principal amount of $75,000,000 (the "Revolving Credit Facility"), of
which up to $25,000,000 will be available as a letter of credit facility. We
understand that simultaneous with this financing, American Industrial partners
will be raising $150,000,000 of new unsecured high yield debt and investing
$143,000,000 in equity to obtain 100% ownership of the Borrower.
Accordingly, subject to the terms and conditions set forth below, Bank One
hereby agrees with you as follows:
1. Commitment. Bank One hereby commits to provide to the Borrower the
entire Aggregate Revolving Loan Commitment for the Revolving Credit
Facility upon the terms and subject to the conditions set forth or
referred to herein (this letter being sometimes referred to as the
"Commitment Letter"), in the fee letter (the "Fee Letter") dated the
date hereof and delivered to the Borrower, and in the Summary of Terms
and Conditions attached hereto as Exhibit A (the "Term Sheet"). Except
as otherwise defined herein, terms which are defined in the Term Sheet
(including "Aggregate Revolving Loan Commitment" and "Revolving Credit
Facility") shall have the Same meanings when used in this letter as
are ascribed to them in the Term Sheet.
<PAGE>
2. Syndication. Bank One Capital Markets ("BOCM"), a division of Banc One
-----------
Corporation, shall have the exclusive right and intends, prior to or
after the execution of definitive documentation of the Revolving Credit
Facility, to syndicate a portion of the Aggregate Revolving Loan
commitment to one or more financial institutions (Bank One and such
financial institutions being referred to herein as the "Lenders") that
will become parties to the definitive credit documentation for the
Revolving Credit Facility. In that connection, promptly following your
acceptance of this commitment, BOCM will commence the syndication of the
Revolving Credit Facility to such Lenders. The Borrower agrees that no
Lender will receive compensation outside the terms contained herein and
in the Fee Letter referred to below in order to obtain its commitment to
participate in the Revolving Credit Facility. It is understood and
agreed that the amount and distribution of the fees referred to herein
among the Lenders and to the Agent will be as described in the Fee
Letter. It is understood and agreed that BOCM will manage all aspects of
the syndication, including, without limitation, decisions as to the
selection of potential Lenders to be approached and when they will be
approached, when their commitments will be accepted, which Lenders will
participate (which decisions will be made after consultation with the
Borrower), any naming rights (including the naming of co-agents, subject
to your reasonable approval) and the final allocations of the Aggregate
Revolving Loan Commitment among the Lenders (which are likely not to be
equal among all lenders).
You agree actively to assist BOCM in achieving a timely syndication that
is satisfactory to BOCM. The syndication efforts will be accomplished by
a variety of means, including direct contact during the syndication
between senior management (including, but not limited to, the chief
executive officer, chief financial officer and treasurer of the
Borrower) and advisors and affiliates of the Borrower on the one hand
and the proposed syndicate Lenders on the other hand. To assist BOCM in
its syndication efforts, you agree that you will, promptly, upon BOCM's
request, (a) provide, and cause your affiliates and advisors to provide,
to BOCM all information reasonably deemed necessary by BOCM to complete
successfully the syndication, including but not limited to, information
and projections (including, without limitation, any updated projections
requested by BOCM) prepared by you or on your behalf relating to the
Transaction and (b) assist, and to cause your affiliates and advisors to
assist, BOCM in the preparation of a confidential information memorandum
and other marketing material to be used in connection with the
syndication, including making available representatives of the Borrower
and its subsidiaries.
<PAGE>
3. Fees. As consideration for Bank One's commitment hereunder and BOCM's
----
agreement to arrange, manage, structure and syndicate the Revolving Credit
Facility you agree to pay to Bank One the Fees as set forth in the Term
Sheet and in the Fee Letter. You agree that, once paid, such fees and any
part thereof shall be nonrefundable under any and all circumstances and
regardless of whether the Transaction or borrowings contemplated hereby are
consummated.
4. Conditions. Bank One's commitment hereunder is subject to the negotiation,
----------
execution and delivery of definitive documentation with respect to the
Revolving Credit Facility satisfactory in respects to Bank One and its
counsel. Such definitive documentation shall reflect the terms and
conditions set forth herein and in the Term Sheet and contain such other
indemnities, covenants, representations and warranties, events of default,
conditions precedent, security arrangements and other terms and conditions
as are satisfactory to Bank One and the Borrower. Those matters that are
not covered by or made clear under the provisions hereof or of the Term
Sheet are subject to the approval and agreement of Bank One and Borrower
(it being understood that the terms and conditions of the definitive
documentation with respect to the Revolving Credit Facility shall not be
inconsistent with the terms and conditions set forth herein or in the Term
Sheet).
The commitments of Bank One and BOCM hereunder is also subject to (a) there
not having occurred or becoming known any material adverse change or
prospective material adverse change in the business, assets, liabilities
(contingent or otherwise), operations, condition (financial or otherwise),
solvency, prospects or material agreements of the Borrower and its
subsidiaries or The Marion Power and Shovel Company and its subsidiaries,
taken as a whole, since June 30, 1997, (b) there not having occurred and
continuing a material disruption of or material adverse change in
financial, banking or capital market conditions generally since the date
hereof that, individually or in the aggregate, in the judgement of BOCM,
would have a material adverse effect on the successful syndication of the
Revolving Credit Facility and (c) the satisfaction of the other terms and
conditions set forth or referred to herein (including, without limitation,
those set forth in paragraphs 2 and 5) and in the Term Sheet.
The commitments of Bank One and BOCM hereunder is based upon the accuracy
and completeness of the financial and other information provided to us by
or on behalf of the Borrower and is subject to Bank One and BOCM being
afforded the opportunity to complete the remainder of its customary due
diligence investigations. If the ongoing due diligence investigation
discloses information, or Bank One or BOCM otherwise discovers information
not
<PAGE>
previously disclosed to it, that Bank One or BOCM believes has had or could
have, individually or in the Aggregate, a materially adverse impact on the
business, assets, liabilities (contingent or otherwise) operations,
condition (financial or otherwise), solvency, prospects or material
agreements of the Borrower and its subsidiaries, taken as a whole, then (a)
Bank One shall be entitled to decline to participate in the financing
contemplated herein or (b) BOCM may, in its sole discretion, suggest
alternative financing amounts or structures that ensure adequate protection
for Bank One and the other Lenders.
5. Information and Investigations. You hereby represent and covenant the (a)
------------------------------
all information and data (excluding financial projections) concerning the
Borrower, its subsidiaries, the Transaction and the credit transactions
contemplated hereby (the "information") that have been made or will be
prepared by or on behalf of you or any of your affiliates or authorized
representatives or advisors and that have been or will be made available to
Bank One and BOCM by you or on your behalf in connection with the
transactions contemplated hereby is and will be complete and correct in all
material respects and does not and will not, taken as a whole, contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein not misleading
in light of the circumstances under which such statements are made and (b)
all financial projections concerning the Borrower, its subsidiaries, the
acquisition of the Marion Power and Shovel Company, and the credit
transactions contemplated hereby (the "Projections") that have been
prepared by or on behalf of you or any of your affiliates or authorized
representatives and that have been or will be made available to Bank One
and BOCM by you or on behalf of you or any of your affiliates or authorized
representatives or advisors in connection with the transactions
contemplated hereby have been and will be prepared in good faith based upon
assumptions believed by you to be reasonable. You agree to supplement the
information and the Projections from time to time until the closing of the
Revolving Credit Facility and, if requested by BOCM, for a reasonable
period thereafter necessary to complete the syndication of the Revolving
Credit Facility so that the representation and covenant in the preceding
sentence remains correct. In arranging the Revolving Credit Facility,
including the syndication of the Revolving Credit Facility, Bank One and
BOCM will be using and relying primarily on the Information and the
Projections without independent check or verification thereof.
6. Indemnification. By executing this Commitment Letter, you agree to
---------------
indemnify and hold harmless Bank One, BOCM, and each of the other Lenders
and their respective officers, directors, employees, affiliates, agents and
controlling persons (each such person being an Indemnified Party") from and
<PAGE>
against any and all losses, claims, damages and liabilities, joint or
several, to which any such Indemnified Party may become subject arising
out of or in connection with or relating to this Commitment Letter, the
Fee Letter, the Term Sheet, the Revolving Credit Facility, the use of
proceeds of any such loan, the Transaction or any related transaction
and the performance by Bank One and BOCM of the services contemplated by
this Commitment Letter and will reimburse any Indemnified Party for any
and all expenses (including Counsel fees and expenses) as they are
incurred in connection with the investigation of or preparation for or
defense of any pending or threatened claim or any action or proceeding
arising therefrom, whether or not such indemnified Party is a party and
whether or not such claim, action or proceeding is initiated or brought
by or on behalf of the Borrower. The Borrower will not be liable under
the foregoing indemnification provision to an Indemnified Party to the
extent that any loss, claim, damage, liability or expense is found in a
final judgment by a court of competent jurisdiction to have resulted
solely from such Indemnified Party's bad faith or gross negligence.
In the event that an Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf or against the
Borrower or any affiliate of the borrower in which such Indemnified
Party is not named as a defendant, the Borrower agrees to reimburse Bank
One and BOCM for all expenses incurred by it in connection with such
Indemnified Party's appearing and preparing to appear as such a witness,
including, without limitation, the fees and disbursements of its legal
counsel.
7. Costs and Expenses. By executing this Commitment Letter, you agree to
------------------
reimburse Bank One and BOCM from time to time, upon demand for all
reasonable out-of-pocket expenses (including, without limitation,
expenses of due diligence investigation, syndication expenses, appraisal
expenses, Field examination expenses, audit expenses, travel expenses,
and the reasonable fees, disbursements and other charges of counsel)
incurred in connection with the Revolving Credit Facility and the
preparation of this Commitment Letter, the Term Sheet, the Fee Letter,
and the negotiation and preparation of the Definitive documentation for
the Revolving Credit Facility and the security arrangements in
connection therewith.
8. Termination. This Commitment shall expire automatically on October 30,
-----------
1997 unless closing has occurred on or prior to that date. Not
withstanding the foregoing, the compensation, reimbursement,
indemnification and confidentiality provisions hereof and of the Term
Sheet and the Fee Letter shall survive any termination of this
Commitment Letter of Bank One and BOCM's commitment hereunder.
<PAGE>
9. Governing Law. This Commitment Letter shall be governed by, and
-------------
construed in accordance with, the laws of the State of Wisconsin
(without regard to principles of conflicts of law).
10. Waiver of Jury Trial. The borrower, Bank One, and BOCM waive all
--------------------
right to trial by jury in any action, proceeding or counterclaim
(whether based upon contract, tort or otherwise) related to or
arising out of any of the transactions contemplated by this
Commitment Letter, or the performance by Bank One and BOCM of the
services contemplated by, this Commitment Letter.
Please indicate your acceptance of the terms hereof and of the Fee Letter by
signing in the appropriate space below and in the Fee Letter and returning to
Bank One the enclosed duplicate original of the Commitment Letter and the Fee
Letter not later than the close of business on August 22, 1997 at which time the
commitments of Bank One and BOCM hereunder will expire in the event Bank One has
not received such executed duplicate originals.
Very truly yours,
BANK ONE, WISCONSIN
By: /s/William E. Shaw
------------------------------
Name: William E. Shaw
Title: Vice President
BANK ONE CAPITAL MARKETS
By:
------------------------------
Name:
Title:
BUCYRUS INTERNATIONAL, INC.
By: /s/D. J. Smoke
------------------------------
Name: D. J. Smoke
Title: VP & CFO
<PAGE>
EXHIBIT A
SUMMARY TERMS AND CONDITIONS
----------------------------
Terms defined in the Commitment Letter to which this Summary of Terms and
Conditions is attached shall have the same meanings herein as ascribed to such
terms in the Commitment Letter.
<TABLE>
<C> <S>
BORROWER: Bucyrus International, Inc. (the "Borrower").
GUARANTORS: All direct and indirect domestic subsidiaries of the
Borrower./1/
ADMINISTRATIVE AGENT: Bank One, Wisconsin ("Bank One" or the "Agent").
SYNDICATION AGENT: Banc One Capital Markets, a division of Banc One
Corporation, will manage the syndication including
invitations and the timing of offers to potential
Lenders (after consultation with the Borrower), the
amounts offered to potential lenders and the
acceptance of commitments and final allocation
amounts.
LENDERS: Bank One and a syndicate of banks (the "Lenders").
FACILITY STRUCTURE: A Senior Secured Revolving Credit Facility (the
"Revolving Credit Facility").
MATURITY DATE: Three years from closing (the "Revolver Termination
Date"); provided that the Borrower may request, at
least 60 days before each annual anniversary of the
closing, that the Revolver Termination Date be
extended by 12 months and the Lenders, in their sole
discretion, may agree to the requested extension of
the Revolver Termination Date.
AGGREGATE AMOUNT
OF FACILITY: Up to $75,000,000 ("Aggregate Revolving Loan
Commitment") with a $25,000,000 sublimit for Standby
Letters of Credit.
BANK ONE'S COMMITMENT: Up to $75,000,000.
USE OF PROCEEDS: Initial Funding: To the extent necessary, (i) to
refinance certain outstanding indebtedness and
letters of credit; and (iii) for general corporate
purposes.
Subsequent Advances: The Borrower may reborrow for
general corporate purposes any principal amounts
which have been borrowed and repaid.
</TABLE>
- --------------------------------------------------------------------------------
/1/ The Borrower's obligations to the Lenders shall be unconditionally
guaranteed by all material (as determined by Agent) domestic subsidiaries of
Borrower.
<PAGE>
Page 2
AVAILABILITY: Advances under the Revolving Credit Facility
and issuance of Letters of Credit (as defined
herein) shall be limited by a Borrowing Base
which shall be:
1) 80% of "Qual. N. American Accounts
Receivable"/2/, plus
2) 50% of "Qual. Domestic Finished Goods and
Raw Materials Inventory"/3/, plus
3) 30% of "Qual. Domestic WIP Inventory"/3/
reducing to 25% at the end of the first
year, 20% at the end of the second year and
15% at the end of the third year, plus
4) 80% of the Orderly Liquidation Value/4/ of
the Borrower's Machinery and Equipment
(with such amount reducing quarterly on the
basis of a seven year straight line
amortization). On a quarterly basis,
Borrower shall be permitted to add Fixed
Asset purchases during the prior 3-month
period to the borrowing base with such
additions subject to an 80% advance rate
and amortized over seven years; minus
5) A reserve for interest under Borrower's
Senior Notes equal to one semi-annual
interest payment at all times.
LETTER OF CREDIT SUB-
FACILITY AVAILABILITY: All Letters of Credit to support trade credit,
liabilities for borrowed money (including
leases), or worker's compensation claims
("Financial Letters of Credit"), and Letters
of Credit for bid, performance or to support
advance payments from customers ("Nonfinancial
Letters of Credit") shall be subject to the
borrowing base formula covering Advances
described above, subject to the aggregate
sublimit for Letters of Credit of $25,000,000.
INTEREST RATES: The Borrower will have the option to elect the
interest rate applicable to advances under the
Revolving Credit Facility in accordance with
the following:
1) Base Rate, (defined as the higher of
Agent's Reference Rate as announced
publicly from time to time changing when,
and if, such rate changes or Fed Funds plus
1/2% p.a.) plus the Applicable Margin
(initially 0.50%); or
2) Adj. LIBOR plus the Applicable Margin
(initially 2.75%). Interest shall be
computed for the actual number of days
principal is unpaid, on a 360-day year
basis. The Applicable Margins are based on
the Borrower's Total Funded Debt/EBITDA
ratio, adjusted on (a) the first business
day of the month after receipt by the Agent
of the Borrower's March 31, 1998 financial
statements financial statements and (b)
annually thereafter each March 31
(hereafter referred to as "Margin
Adjustment Dates") as follows:
- --------------------------------------------------------------------------------
2 Trade accounts receivable owed to the Borrower in which the Agent has a
perfected, first priority security interest. The Credit Agreement will define
which of those accounts receivable are qualified and will exclude, without
limitation, Progress Billings, accounts classified as "Claim" status by Borrower
and accounts more than 61 days past due.
3 Inventory located in the United States owned by the Borrower in which the
Agent has a perfected, first priority security interest. The Credit Agreement
will define which inventory is qualified and will exclude obsolete or returned
inventory.
4 As determined by the machinery and equipment appraisal previously provided
to the Agent. Fixed assets will be eligible for inclusion in the borrowing
base only if the Agent has a perfected, first priority interest therein.
<PAGE>
Page 3
INTEREST RATES (cont'd):
<TABLE>
<CAPTION>
Adjusted Base Rate LIBOR
Funded Debt/EBITDA/5/ Margin Margin
--------------------- --------- ------
<S> <C> <C>
0.00 - 2.74 0.00% 1.50%
2.75 - 3.24 0.00% 1.75%
3.25 - 3.49 0.00% 2.00%
3.50 - 3.99 0.50% 2.25%
4.00 - 4.49 0.50% 2.50%
greater than or equal to 4.50 0.50% 2.75%
</TABLE>
Interest rate shall commence at the highest Applicable
Margin for a period commencing on the closing date
through the first business day of the month after
receipt by the Agent of the Borrower's March 31, 1998
financial statements after which the Interest rates may
change. After default (whether by acceleration or
otherwise), the unpaid balance shall bear interest at
2.50% in excess of the Base Rate.
INTEREST PERIODS: Interest periods for LIBOR Rate loans shall be 1, 2, 3,
or 6 months.
INTEREST PAYMENTS: Interest shall be payable on the last day of each
interest period for LIBOR Rate Loans. If the interest
period is 6 months, interest shall be payable at the end
of three months and on the last day of the interest
period. Interest on Base Rate Loans shall be payable on
the last business day of the month.
STANDBY LETTERS OF
CREDIT: The issuance of Standby Letters of Credit will reduce
the Revolver Credit Facility availability and will be
priced at 50% of the applicable LIBOR interest rate
spread in the case of Non-financial Letters of Credit
and 100% of the applicable LIBOR spread in the case of
Financial Letters of Credit.
LETTER OF CREDIT
PAYMENT DATES: The accrued fees on the daily average amount available
for drawing under all outstanding Letters of Credit
shall be payable on the last business day of the month
in arrears.
CONTRACTUAL FEES:
Commitment Fee: 1/2 of 1% per annum of the unused portion for the period
commencing upon the closing date. The Commitment Fee
shall be non-refundable and will be payable quarterly in
arrears, calculated the basis of actual number of days
elapsed in a year of 360 days.
Legal Fees: For the account of the Borrowers.
Audit Fees: For the account of the Borrowers.
Other Fees: As set forth in the Fee Letter.
_______________________________________________________________________________
/5/ The ratio of Adjusted Funded Debt to EBITDA shall be determined based
upon the audited consolidated financial statements of the Borrower for the
fiscal year immediately preceding the Margin Adjustment Date; provided, however,
that the Adjusted Funded Debt to EBITDA ratio for the initial Margin Adjustment
Date (March 31, 1998) shall be based upon Borrower's consolidated financial
results for the period from October 1, 1997 through March 31, 1998, annualized.
<PAGE>
Page 4
MINIMUM DRAWDOWN: Drawdowns shall be in minimum amounts of $500,000 for
Base Rate draws (increments of $100,000 thereafter);
and $1,000,000 for LIBOR Rate draws (increments of
$500,000 thereafter).
OPTIONAL PREPAYMENT: LIBOR loans may not be prepaid prior to the end of an
interest period. Base Rate loans may be prepaid at
any time upon one business days notice to the Agent.
REDUCTION OF
COMMITMENT: The Commitment may be reduced in increments of at
least $2,000,000 at any time on three (3) business
days' notice.
MANDATORY
PREPAYMENTS: 75% of the net proceeds received from the events
listed below shall be applied to prepay the principal
of Revolving Loans and the Aggregate Revolving Loan
Commitment shall be reduced by the same amount.
a. The sale of material assets (excluding (i)
proceeds received from the sale of surplus assets
resulting from the acquisition of the Marion Power
Shovel Company ("Marion"), (ii) proceeds received
from the sale of surplus or obsolete assets relating
to the Company's plant modernization program, (iii)
proceeds reinvested in replacement fixed assets
within 270 days of receipt and (iv) proceeds of up to
$1,500,000 received during any 12-month period);
b. Issuance of equity securities; provided, however,
(excluding (i)) equity provided to Borrower by
American Industrial Partners ("AIP") to support an
acquisition or internal expansion and (ii) the
issuance of equity securities to employees in
connection with employee incentive compensation
plans).
SECURITY: The Revolving Credit Facility will be secured by a
1st priority perfected security interest on all
receivables, inventory, equipment, furniture,
fixtures and all other tangible and intangible
personal property of the Borrower and its domestic
subsidiaries, subject to customary permitted liens.
All real property of the Borrower will be subject to
a negative pledge.
The Facility will be secured by a first priority
perfected pledge of the capital stock of all domestic
subsidiaries and a first priority perfected pledge of
65% of the capital stock of all foreign subsidiaries.
There will be a negative pledge on all assets
(subject to liens securing Permitted Senior
Liabilities for borrowed money) and non-pledged stock
of the foreign subsidiaries.
Advances by the Borrower to its Domestic
Subsidiaries shall be evidenced by notes and secured
by a junior security interest in the assets of the
Subsidiaries. Such notes shall be pledged to the
Agent and such security interests shall be assigned
to the Agent.
REPRESENTATIONS AND
WARRANTIES: Customary for transactions of this type, including
but not limited to each of the following with respect
to the Borrower and each of its Material
Subsidiaries:
a. Corporate Existence and Authority;
b. Binding Effect;
c. Financial Information;
d. No Material Adverse Change;
e. Compliance with Laws, including environmental
and ERISA;
f. Payment of Taxes;
g. Absence of Litigation;
h. Absence of Default;
i. Title to Assets.
<PAGE>
Page 5
CONDITIONS PRECEDENT: Customary for a senior secured Revolving
Credit Facility of this nature, including but
not limited to:
First Advance: a. Completion of Asset Based Lending (ABL)
field exam performed by the ABL unit of Arthur
Andersen together with a representative from
Bank One's ABL group (the "ABL Field Exam");
b. Accuracy of Representations and Warranties;
c. Absence of an Event of Default;
d. Negotiation and execution of documentation
for the Revolving Credit Facility
satisfactory to the Agent and Lenders,
including modifications (if any) to the
Borrowing Base described herein resulting
from the ABL Field Exam and provisions
relating to a violation of an ABL Trigger
Covenant (including, but not limited to:
periodic ABL field exams, dominion over
cash, and other customary ABL controls);
e. No material adverse change in the financial
condition, assets, nature of the assets,
operations or prospects of the Borrower,
Marion and other material Subsidiaries.
f. Issuance of the proposed Senior Notes
financing in the amount of $150,000,000
with terms and conditions reasonably
satisfactory to the Agent and Lenders,
including without limitation the following:
i) Minimum seven year term (bullet
amortization);
ii) Semi-annual interest payments;
iii) No limitation on liens securing the
Revolving Credit Facility or
interest swaps and foreign exchange
contracts provided to Borrower (or a
subsidiary of Borrower) by the
Lenders (or any affiliate of a
Lender);
iv) No financial covenants;
v) Minimum 30 day grace period for
interest payment defaults;
vi) No cross-default with the Revolving
Credit Facility other than a default
caused by a payment default under
the Revolving Credit Facility; and
vii) Borrower shall be permitted to
borrow up to and incur up to the
greater of (1) $75,000,000 or (2)
85% of the net book value of
accounts receivables and 60% of the
net book value of total inventory of
senior secured indebtedness at any
time without the prior approval of
the holders of the Senior Notes;
g. An equity infusion (after giving effect to
the cash merger and any related
proceedings) provided by a fund managed by
American Industrial Partners (AIP) in an
amount at least equal to $143,000,000.
h. Consummation of the acquisition of Marion
for no more than $42,000,000; and the
acquisition of at least 51% of the shares
of the Borrower under the AIP tender
offer. All fees incurred in connection
with the acquisition of Marion and the AIP
tender offer shall not exceed $18,000,000.
i. Repayment of certain existing
Indebtedness, including indebtedness held
by Jackson National Life Insurance Co. and
PPM America Special Investments Fund, L.P.
Subsequent Advances: a. Absence of Default;
b. No Material Adverse Change; and
c. Notice of Borrowing.
<PAGE>
Page 6
COVENANTS: This commitment is subject to negotiation of
covenants satisfactory to the Agent and
Lenders. These shall be customary for a
senior secured Revolving Credit Facility of
this type, including but not limited to:
AFFIRMATIVE COVENANTS: a. Financial Reporting;
b. Payment of Taxes;
c. Corporate Existence;
d. Maintenance of Properties;
e. Compliance with laws, including
environmental, ERISA and CERCLA;
f. Maintenance of ownership;
g. Payment of debt;
h. Compliance Certificates;
i. Monthly Borrowing Base Certificates
together with an accounts receivable aging
report, inventory recap, and accounts
payable report, all in form satisfactory
to Agent;
j. SEC Reports and Filings;
k. Maintenance of Insurance;
l. Use of Proceeds;
m. Maintenance of existing lockbox accounts
at Bank One, Wisconsin and Bank One,
Texas.
FINANCIAL COVENANTS: a. Maximum Total Funded Debt/EBITDA (to be
used for pricing matrix under "Interest
Rates" above);
b. Minimum Fixed Charge Coverage;
c. Minimum EBITDA to Interest Coverage;
d. Minimum Net Worth.
The Financial Covenants reflected in clauses
a. through c. above shall include ABL Trigger
levels in addition to the "Default" levels.
The "Default" and "ABL Trigger" levels shall
be set at levels to be negotiated, and the
definitions are contained in the July 25, 1997
draft of the Credit Agreement among Borrower,
Bank One, as Agent and Letter of Credit
Issuing Bank, The Bank of Nova Scotia, as
Documentation Agent and the other financial
Institutions party thereto/6/.
NEGATIVE COVENANTS: a. Restriction on Additional Indebtedness;
Guaranties;
b. Restricted Payments;
c. Negative Pledge;
d. Limitation on Investments;
e. Limitation on Mergers, Acquisitions,
Divestitures;
f. Judgments; and
g. Sale of Assets.
- --------------------------------------------------------------------------------
6 Provided however, that direct loans and L/Cs issued under the Revolving
Credit Facility shall be calculated on an average basis for determining Adjusted
Funded Debt.
<PAGE>
Page 7
EVENTS OF DEFAULT: Customary for a senior secured Revolving Credit
Facility, including but not limited to:
a. Failure to pay principal, interest, or fees
when due;
b. Noncompliance with covenants;
c. Any representation or warranty shall prove to
be incorrect, false or misleading in a
material respect when made;
d. Insolvency; Bankruptcy;
e. Cross default to other indebtedness;
f. Judgments; and
g. Change in Control.
INCREASED COST/CHANGE
OF CIRCUMSTANCES: The Credit Agreement will contain customary
provisions protecting the Lenders in the event
of unavailability of funding, illegality,
capital adequacy requirements, increased costs,
and funding losses.
INDEMNIFICATIONS: The Borrower will indemnify the Agent and the
Lenders against all losses, liabilities, claims,
damages, or expenses relative to their loans,
the Borrower's use of loan proceeds, or the
commitments, including but not limited to legal
fees and settlement costs whether or not the
transaction contemplated hereby is consummated.
TRANSFERS: Banks may sell assignments of up to a To Be
Determined % of their Commitments and Loans. Any
assignment (other than during the existence of
an Event of Default) is subject to Borrower's
approval. Participations may be granted in any
amount with voting rights limited to changes in
interest rate, maturity of the Loans, and amount
of Commitments.
EXPENSES: The Borrower will pay all reasonable legal and
other out-of-pocket expenses of the Agent
(including the allocated costs of internal ABL
field exams) related to this transaction,
expenses associated with the ABL Field Exam, any
subsequent ABL field exams performed by the
Agent, waivers and amendments.
GOVERNING LAW: State of Wisconsin
ANTICIPATED CLOSING DATE: No later than October 31, 1997
<PAGE>
Exhibit (b)(2)
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
212-789-1725
----------------
Chad A. Leat SALOMON BROTHERS
Managing Director ----------------
August 19, 1997
Mr. Willard R. Hildebrand
President and Chief Executive Officer
Bucyrus International, Inc.
1100 Milwaukee Avenue, P.O. Box 300
South Milwaukee, WI 53172-0500
Dear Bill:
Salomon Brothers Inc ("Salomon Brothers" or "Salomon") has been asked by Bucyrus
International, Inc. ("Bucyrus" or the "Company") to review the feasibility of
raising permanent financing for the proposed acquisition (the "Marion
Acquisition") of certain assets and liabilities of The Marion Power Shovel
Company ("Marion"), a wholly-owned subsidiary of Global Technologies, Inc.
("Global"), as well as the acquisition of 100% of the capital stock of Bucyrus
(the"AIP Acquisition") by an entity or entities formed by American Industrial
Partners Capital Fund II, L.P. ("AIP") (The Marion Acquisition, together with
the AIP Acquisition, the "Transactions"). Furthermore, it is our understanding
that a proposed $150 million Senior Notes offering, along with a draw of
approximately $28 million on a new $75 million Revolver provided by Bank One,
Milwaukee, and the contribution of approximately $143 million in common equity
by AIP will allow you to complete the Transactions, as well as to refinance
certain debt, including bridge debt associated with the Marion Acquisition, and
pay fees and expenses related to the Transactions.
In evaluating the Transactions, pursuant to your request, we have reviewed
certain information you have provided to us with respect to the Company and
Marion, including the Confidential Offering Memorandum dated January 1997
relating to Marion, Bucyrus management's and AIP's projections for the Company,
Marion and Bucyrus financial statements pro forma for the Marion Acquisition, a
draft Offering Memorandum prepared in connection with a proposed financing of
the Marion Acquisition, as well as other due diligence materials. In addition,
we have met with or spoken to certain officers and employees of the Company,
Marion and AIP. We have also reviewed publicly available information with
regard to financings undertaken for companies we believe to be comparable to
the Company, as well as certain other information we considered relevant in our
analysis. We have assumed and relied, without assuming any responsibility for
independent verification, upon the accuracy and completeness of all the
financial and other information reviewed by us for the purpose of this letter.
With respect to financial forecasts and projections, we have assumed that such
financial forecasts and projections have been reasonably prepared on a basis
reflecting the best currently available estimates and judgments of the Company.
We are pleased to inform you, based on and subject to the items discussed in
this letter, that Salomon Brothers is highly confident that it could raise
approximately $150 million of Senior Notes (the "Public Financing"), concurrent
with the other financing described below, through a
<PAGE>
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
----------------
SALOMON BROTHERS
----------------
Mr. William R. Hildebrand
August 19, 1997
Page 2
144A offering with subsequent registration rights subject to the conditions set
forth below and satisfactory resolution of the following items: (i) the
Company's receipt of the other components of the financing, including the bank
facility and the equity contributions from AIP either prior to or concurrent
with the closing of the Public Financing; (ii) obtaining ratings from Moody's
and Standard & Poor's for the issue of at least single "B"; (iii) the
consummation of the Marion Acquisition by the Company on terms and conditions
and pursuant to documentation satisfactory to us; (iv) the receipt of any
necessary regulatory or contractual consents or approvals in connection with the
Transactions and the related financings (including Hart-Scott-Rodino for the
Marion Acquisition and AIP Acquisition); (v) the satisfactory completion of due
diligence on the Transactions by Salomon Brother; (vi) the negotiation and
documentation of the Public Financing, including the terms and conditions of the
Public Financing, in form and substance satisfactory to us; and (vii) the
execution of purchase and registration agreements for the Public Financing in
form and substance satisfactory to us.
It should be noted that Salomon Brothers' expression of its confidence in its
ability to arrange the Public Financing as set forth above is further contingent
upon there being no material adverse change in: (i) the business, assets,
condition (financial or otherwise), results of operations or prospects of the
Company or Marion; (ii) the legal or regulatory environment for the Company or
Marion; (iii) the financial markets or events affecting the financial markets
that would, in the case of these clauses (i), (ii) and (iii), in Salomon
Brothers' sole judgment, make it inadvisable or impractical to proceed with the
Transactions or any portion of the financing thereof, including the Public
Financing.
This letter is not intended to be, and shall not constitute, a commitment or
undertaking by Salomon Brothers to place or purchase any securities on a
principal or agency basis or to provide any portion of the financing for the
Transactions, including the Public Financing. This letter is confidential and is
intended solely for use by the Company and its representatives in connection
with the Transactions. Neither the Company nor its representatives shall quote
from, excerpt or summarize this letter or purport to describe, characterize
or summarize the views of Salomon Brothers expressed herein without the prior
consent of Salomon Brothers unless it is required to be disclosed by the
Company by judicial or administrative process in connection with any action,
suit, proceeding or claim or otherwise by applicable law.
Very truly yours,
Salomon Brothers Inc
By: /s/ Chad A. Leat
-----------------
Managing Director
<PAGE>
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
AMERICAN INDUSTRIAL PARTNERS
ACQUISITION COMPANY, LLC
BUCYRUS ACQUISITION CORP.
and
BUCYRUS INTERNATIONAL, INC.
dated as of
August 21, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
THE OFFER AND MERGER
<TABLE>
<CAPTION>
<S> <C>
Section 1.1 The Offer................................... 2
Section 1.2 Company Actions............................. 5
Section 1.3 Directors................................... 7
Section 1.4 The Merger.................................. 9
Section 1.5 Effective Time.............................. 9
Section 1.6 Closing..................................... 9
Section 1.7 Directors and Officers of the
Surviving Corporation. 9
Section 1.8 Effect of the Merger........................ 10
Section 1.9 Subsequent Actions.......................... 10
Section 1.10 Certificate of Incorporation; By-Laws....... 10
Section 1.11 Stockholders' Meeting....................... 11
Section 1.12 Merger Without Meeting of Stockholders...... 12
<CAPTION>
ARTICLE II
CONVERSION OF SECURITIES
<S> <C>
Section 2.1 Conversion of Securities.................... 12
Section 2.2 Dissenting Shares........................... 13
Section 2.3 Surrender of Shares; Stock Transfer Books... 14
Section 2.4 Stock Plans................................. 16
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
<CAPTION>
<S> <C>
Section 3.1 Organization................................ 16
Section 3.2 Capitalization.............................. 17
Section 3.3 Authorization; Validity of Agreement;
Company Action............................ 20
Section 3.4 Consents and Approvals; No Violations....... 20
Section 3.5 SEC Reports and Financial Statements........ 21
Section 3.6 Absence of Certain Changes.................. 22
Section 3.7 No Undisclosed Liabilities.................. 23
Section 3.8 Litigation.................................. 23
Section 3.9 Employee Benefits; ERISA.................... 23
Section 3.10 Taxes....................................... 29
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
Section 3.11 Contracts................................... 32
Section 3.12 Real Property............................... 33
Section 3.14 Labor Matters............................... 36
Section 3.15 Compliance with Laws........................ 38
Section 3.16 Environmental Matters....................... 38
Section 3.17 Product Liability........................... 40
Section 3.18 Information in Disclosure Documents......... 40
Section 3.19 Information in Proxy Statement.............. 41
Section 3.20 Potential Conflict of Interest.............. 41
Section 3.21 Opinion of Financial Advisor................ 42
Section 3.22 Insurance................................... 42
Section 3.23 Suppliers and Customers..................... 42
Section 3.24 Accounts Receivable; Inventory.............. 43
Section 3.25 Title and Condition of Properties........... 43
Section 3.26 Marion Acquisition.......................... 44
Section 3.27 Full Disclosure............................. 44
<CAPTION>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
<S> <C>
Section 4.1 Organization................................ 45
Section 4.2 Authorization; Validity of Agreement;
Necessary Action.......................... 45
Section 4.3 Consents and Approvals; No Violations....... 45
Section 4.4 Information in Proxy Statement.............. 46
Section 4.5 Financing................................... 46
<CAPTION>
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
<S> <C>
Section 5.1 Acquisition Proposals....................... 47
Section 5.2 Interim Operations of the Company........... 48
Section 5.3 No Solicitation............................. 52
<CAPTION>
ARTICLE VI
<S> <C>
ADDITIONAL AGREEMENTS................... 54
Section 6.1 Proxy Statement............................. 54
Section 6.2 Meeting of Stockholders of the Company...... 54
Section 6.3 Additional Agreements....................... 54
Section 6.4 Notification of Certain Matters............. 55
Section 6.5 Access; Confidentiality..................... 55
Section 6.6 Consents and Approvals...................... 56
Section 6.7 Company's Brokers or Finders................ 57
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Section 6.8 Purchaser's Brokers or Finders.............. 57
Section 6.9 Publicity................................... 57
Section 6.10 Directors' and Officers' Insurance
and Indemnification....................... 58
Section 6.11 Purchaser Compliance........................ 60
Section 6.12 Reasonable Best Efforts..................... 60
Section 6.13 Rights Plan................................. 61
<CAPTION>
ARTICLE VII
CONDITIONS
<S> <C>
Section 7.1 Conditions to Each Party's Obligation to
Effect the Merger......................... 62
<CAPTION>
ARTICLE VIII
TERMINATION
<S> <C>
Section 8.1 Termination................................. 63
Section 8.2 Effect of Termination....................... 65
<CAPTION>
ARTICLE IX
MISCELLANEOUS
<S> <C>
Section 9.1 Amendment and Modification.................. 66
Section 9.2 Non-survival of Representations
and Warranties............................ 66
Section 9.3 Expenses.................................... 66
Section 9.4 Notices..................................... 66
Section 9.5 Interpretation.............................. 67
Section 9.6 Counterparts................................ 68
Section 9.7 Entire Agreement; No Third Party
Beneficiaries............................. 68
Section 9.8 Severability................................ 68
Section 9.9 Governing Law............................... 68
Section 9.10 Assignment.................................. 68
</TABLE>
3
<PAGE>
Index of Defined Terms
----------------------
<TABLE>
<CAPTION>
Defined Term Section No.
- ------------ -----------
<S> <C>
Appointment Date.......................... 5.2
Average Premium........................... 6.9(b)
Board of Directors........................ Recitals
Certificates.............................. 2.3(b)
Closing................................... 1.6
Closing Date.............................. 1.6
Commitment Letters........................ 4.5
Common Stock.............................. 3.2(a)
Company................................... Recitals
Company Agreements........................ 3.4
Company Balance Sheet..................... 3.24
Company Disclosure Schedule............... 3.1(a)
Company Material Adverse Effect........... 3.1(a)
Company SEC Documents..................... 3.5
Computer Software......................... 3.13(a)
Confidentiality Agreement................. 5.3(b)
D&O Insurance............................. 6.9(b)
Debt Financing............................ 4.5
Disclosure Documents...................... 3.18
Dissenting Shares......................... 2.2(a)
Effective Time............................ 1.5
Encumbrances.............................. 3.2(b)
Environmental Claim....................... 3.16(c)
Environmental Laws........................ 3.16(a)
Equity Commitments........................ 4.5
ERISA Affiliate........................... 3.9(a)
ERISA Plans............................... 3.9(a)
Exchange Act.............................. 1.1(a)
Exchange Agent............................ 2.3(a)
Financial Statements...................... 3.5
Foreign Plans............................. 3.9(a)
GAAP...................................... 3.5
Governmental Entity....................... 3.4
HSR Act................................... 3.4
Indebtedness.............................. 3.2(c)
Indemnified Party......................... 6.9(a)
Independent Directors..................... 1.3(c)
Intellectual Property..................... 3.13(d)
JNL Option................................ Recitals
Major Stockholders........................ Recitals
Marion Acquisition........................ 3.26
Marion Agreement.......................... 3.26
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Marion Parent............................. 3.26
Marion Sellers............................ 3.26
Materials of Environmental Concern........ 3.16(a)
Merger.................................... 1.4
Merger Consideration...................... 2.1(a)
Minimum Condition......................... 1.1(a)
Notes..................................... 4.5
Offer..................................... Recitals
Offer Documents........................... 1.1(b)
Offer Price............................... Recitals
Offer to Purchase......................... 1.1(a)
Options................................... 2.4(a)
Parent.................................... Recitals
PBGC...................................... 3.9(c)
Person.................................... 9.5
Plans..................................... 3.9(a)
Proxy Statement........................... 1.11(a)(ii)
Purchaser................................. Recitals
Real Property............................. 3.12
SARs...................................... 2.4(a)
Schedule 14D-9............................ 1.2(b)
Schedule 14D-l............................ 1.1(b)
SEC....................................... 1.1(b)
Secured Notes............................. 6.12(d)
Secured Notes Indenture................... 6.12(d)
Secured Notes Indenture Trustee........... 6.12(d)
Securities Act............................ 3.5
Shares.................................... Recitals
SPD....................................... 3.9(b)(iv)
Special Meeting........................... 1.11(a)(i)
Stock Plans............................... 2.4(a)
Stockholder Agreement..................... Recitals
Subsequent Disposition.................... 6.13
Subsidiary................................ 3.1(a)
Superior Proposal......................... 5.3(b)
Surviving Corporation..................... 1.4
Takeover Proposal......................... 5.1
Takeover Proposal Interest................ 5.1
Tax Return................................ 3.10(d)
Taxes..................................... 3.10(d)
Termination Fee........................... 8.2(b)
Transactions.............................. 1.2(a)
Treasury Regulations...................... 3.10(b)
WARN Act.................................. 3.14(b)
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of August 21, 1997, by and among American Industrial
Partners Acquisition Company, LLC, a Delaware limited liability company
("Parent"), Bucyrus Acquisition Corp., a Delaware corporation and a wholly
- --------
owned subsidiary of Parent (the "Purchaser"), and Bucyrus International, Inc., a
---------
Delaware corporation (the "Company").
-------
WHEREAS, the Board of Directors of each of Parent, the Purchaser and
the Company has approved, and deems it advisable and in the best interests of
its respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that the Purchaser
will make a cash tender offer (the "Offer") to acquire any and all shares (the
-----
"Shares") of the issued and outstanding common stock, $.01 par value, of the
- -------
Company for $18 per share, net to the seller in cash (such price, or any such
higher price per Share as may be paid in the Offer, being referred to herein as
the "Offer Price"); and
-----------
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of the Company, Parent and the Purchaser have each approved the Merger
(as defined hereinafter) following the Offer in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law") and upon the terms
------------
and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company (the "Board of
--------
Directors") has determined that the consideration to be paid for each Share in
- ---------
the Offer and the Merger is fair to the holders of such Shares and has resolved
to recommend that the holders of such Shares accept the Offer and approve this
Agreement and each of the transactions contemplated hereby upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as a condition and inducement to Parent's and the Purchaser's
entering into this Agreement
<PAGE>
and incurring the obligations set forth herein, Jackson National Life Insurance
Company, a Michigan corporation (the "Stockholder"), which together with PPM
-----------
America, Inc., a Delaware corporation, shares voting power and dispositive power
with respect to 4,228,382 Shares, concurrently herewith, the Stockholder is
entering into a Stockholder Agreement (the "Stockholder Agreement"), dated as of
---------------------
the date hereof, with Parent and Purchaser, in the form attached hereto as
Exhibit A, pursuant to which the Stockholder has agreed, among other things, to
tender the Shares held by it in the Offer, and to grant Parent a proxy with
respect to the voting of such Shares in favor of the Merger and to grant Parent
an option (the "JNL Option") with respect to such Shares upon the terms and
----------
subject to the conditions set forth therein; and
WHEREAS, the Company, Parent and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
---------
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
shall have occurred and be existing, as promptly as practicable (but in no event
later than five business days after the public announcement of the execution of
this Agreement), the Purchaser shall commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the
------------
Offer at the Offer Price, subject to there being validly tendered and not
withdrawn prior to the expiration of the Offer, that number of Shares which
represents at least 51% of the Shares then outstanding on a fully diluted basis
(after
2
<PAGE>
giving effect to the conversion or exercise of all outstanding options,
warrants and other rights and securities exercisable or convertible into
Shares) the "Minimum Condition") and to the other conditions set forth in Annex
-----------------
I hereto, and shall consummate the Offer in accordance with its terms. The
obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other conditions set
forth in Annex I hereto. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing the terms set forth in this
-----------------
Agreement, the Minimum Condition and the other conditions set forth in Annex I
hereto. The Purchaser shall not amend or waive the Minimum Condition and shall
not decrease the Offer Price or decrease the number of Shares sought, or amend
any other condition of the Offer in any manner adverse to the holders of the
Shares without the written consent of the Company; provided, however, that if
-------- -------
on the initial scheduled expiration date of the Offer, which shall be twenty
(20) business days after the date the Offer is commenced, all conditions to the
Offer shall not have been satisfied or waived, the Purchaser may, from time to
time, in its sole discretion, extend the expiration date. The Purchaser shall,
on the terms and subject to the prior satisfaction or waiver of the conditions
of the Offer, accept for payment and pay for Shares tendered as soon as it is
legally permitted to do so under applicable law; provided, however, that if,
-------- -------
immediately prior to the initial expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer equal
less than 90% of the outstanding Shares, the Purchaser may extend the Offer for
a period not to exceed ten (10) business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer.
(b) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
---
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-l"). The Schedule 14D-1 will include,
--------------
as exhibits, the Offer to Purchase and a form of letter of transmittal and
summary advertisement (which
3
<PAGE>
documents, together with any amendments and supplements thereto, and any other
SEC schedule or form which is filed in connection with the Offer and related
transactions, are referred to collectively herein as the "Offer Documents").
---------------
The Offer Documents will comply in all material respects with the provisions of
applicable federal securities laws and Section 552.07 of the Wisconsin
Statutes, if applicable, and, on the date filed with the SEC and on the date
first published, mailed or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Parent or Purchaser
with respect to information furnished by the Company to the Parent or Purchaser,
in writing, expressly for inclusion in the Offer Documents. The information
supplied by the Company to the Parent or Purchaser, in writing, expressly for
inclusion in the Offer Documents and by the Parent or Purchaser to the Company,
in writing, expressly for inclusion in the Schedule 14D-9 (as hereinafter
defined) will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(c) Parent and the Purchaser will take all steps necessary to cause
the Offer Documents to be filed with the SEC and to be disseminated to holders
of the Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and the Purchaser and the Company agrees to
promptly (i) correct any information provided by it for use in the Schedule 14D-
1 or the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect and (ii) to supplement the
information provided by it specifically for use in the Schedule 14D-1 or the
Offer Documents to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Parent and the Purchaser further agree to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the
SEC and to be disseminated to holders of the
4
<PAGE>
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the reasonable
opportunity to review the Schedule 14D-1 before it is filed with the SEC. In
addition, Parent and the Purchaser will provide the Company and its counsel, in
writing, with any comments, whether written or oral, Parent, the Purchaser or
their counsel may receive from time to time from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
Section 1.2 Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board of Directors, at a meeting duly called
and held on August 19, 1997 at which a majority of the Directors was present, by
unanimous action of the Board of Directors: (i) duly approved this Agreement,
the Stockholder Agreement and the transactions contemplated hereby and thereby,
including the Offer, the Merger, the JNL Option and the purchase of Shares
by the Purchaser or its designee pursuant to the exercise of the JNL Option
(collectively, the "Transactions"), (ii) resolved to recommend that the
------------
stockholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and approve this Agreement and the transactions contemplated hereby,
including the Merger; and (iii) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interests of the stockholders of the Company.
(b) As soon as practicable on the date the Offer is commenced, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any and all amendments or supplements thereto and
including the exhibits thereto, the "Schedule 14D-9"). The Schedule 14D-9 will
--------------
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, mailed or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
5
<PAGE>
except that no representation is made by the Company with respect to information
furnished by Parent or the Purchaser, in writing, expressly for inclusion in
the Schedule 14D-9. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. The Company shall mail, or cause to be mailed, such
Schedule 14D-9 to the stockholders of the Company at the same time the Offer
Documents are first mailed to the stockholders of the Company together with such
Offer Documents. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors described in Section 1.2(a) hereof,
subject to the terms of this Agreement. The Company agrees promptly to correct
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect (and each of Parent and the Purchaser, with
respect to written information supplied by it specifically for use in the
Schedule 14D-9, shall promptly notify the Company of any required corrections of
such information and cooperate with the Company with respect to correcting such
information) and to supplement the information contained in the Schedule 14D-9
to include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. The Purchaser and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide the Purchaser and its
counsel, in writing, with any comments, whether written or oral, that the
Company or its counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments
or other communications.
(c) In connection with the Offer, the Company will promptly furnish
or cause to be furnished to the Purchaser mailing labels containing the names
and addresses of all record holders of Shares and security position listings of
Shares held in stock depositories, each as of a recent date, and shall promptly
furnish the
6
<PAGE>
Purchaser with such additional information (including, but not limited to,
updated lists of stockholders and their addresses, mailing labels and security
position listing) and such other information and assistance as the Purchaser or
its agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares.
Section 1.3 Directors.
---------
(a) Promptly upon the purchase of any Shares by the Purchaser
pursuant to the Offer, and from time to time thereafter as Shares are acquired
by the Purchaser, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares beneficially
owned by the Purchaser or any affiliate of the Purchaser bears to the total
number of Shares then outstanding. In furtherance thereof, the Board of
Directors has resolved as part of its approval of this Agreement to promptly
increase the size of the Board of Directors upon the request of Parent, and upon
the request of Parent, the Company shall promptly increase the size of the Board
of Directors or use its best efforts to secure the resignations of such number
of its incumbent directors as is necessary to enable Parent's designees to be
elected to the Board of Directors in accordance with the terms of this Section
1.3, and shall take all actions available to the Company to cause Parent's
designees to be so elected. At such time, the Company shall, if requested by
Parent, take all actions available to it to cause persons designated by Parent
to constitute at least the same percentage (rounded up to the next whole number)
as is on the Board of Directors of (i) each committee of the Board of Directors,
(ii) each board of directors (or similar body) of each Subsidiary (as defined in
Section 3.1 hereof) of the Company and (iii) each committee (or similar body) of
each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder in order
to fulfill its obligations under Section 1.3(a) hereof, and
7
<PAGE>
shall include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f-1 if the Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under Section 1.3(a). Parent or the Purchaser shall supply the
Company and be solely responsible for any information with respect to either of
them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1. The provisions of this Section 1.3(b) are in
addition to and shall not limit any rights which the Purchaser, Parent or any of
their affiliates may have as a holder or beneficial owner of Shares as a matter
of law with respect to the election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Board of
Directors, subject to the other terms of this Agreement, until the Effective
Time (as defined in Section 1.5 hereof), the Board of Directors shall have at
least one director who is a director on the date hereof and who is neither an
officer of the Company nor a designee, stockholder, affiliate or associate
(within the meaning of the federal securities laws) of Parent (one or more of
such directors, the "Independent Directors"), provided that, if no Independent
--------------------- --------
Directors remain, the other directors shall designate one person to fill one of
the vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of the Purchaser and such person shall be
deemed to be an Independent Director for purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, in the event that
Parent's designees are elected to the Company's Board of Directors, after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time (as hereinafter defined), the affirmative vote of a majority of
the Independent Directors shall be required to (i) amend or terminate this
Agreement on behalf of the Company, (ii) exercise or waive any of the Company's
rights, benefits or remedies hereunder, (iii) extend the time for performance
of the Purchaser's obligations hereunder or (iv) take any other action by the
Company under or in connection with this Agreement required to be taken by the
Board of Directors.
8
<PAGE>
Section 1.4 The Merger. Upon the terms and subject to the conditions
----------
of this Agreement and Delaware Law, at the Effective Time, the Purchaser shall
be merged with and into the Company (the "Merger"), the separate corporate
------
existence of the Purchaser shall cease, and the Company shall continue as the
surviving corporation. The Company as the surviving corporation after the
Merger hereinafter sometimes is referred to as the "Surviving Corporation."
---------------------
Section 1.5 Effective Time. The parties hereto shall cause a
--------------
Certificate of Merger to be executed and filed on the Closing Date (as defined
in Section 1.6 hereof) (or on such other date as Parent and the Company may
agree) with the Secretary of State of Delaware in such form as required by, and
executed in accordance with the relevant provisions of the Delaware Law. The
Merger shall become effective on the date on which the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware or such time as
is agreed upon by the parties and specified in the Certificate of Merger, and
such time is hereinafter referred to as the "Effective Time."
--------------
Section 1.6 Closing. The closing of the Merger (the "Closing") shall
------- -------
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of all of
the conditions set forth in Article VII hereof (the "Closing Date"), at the
------------
offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Embarcadero Center,
Suite 3800, San Francisco, California, unless another date or place is agreed to
in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving Corporation.
---------------------------------------------------
The directors of the Purchaser immediately before the Effective Time shall, be
the initial directors of the Surviving Corporation, and the officers of the
Company immediately before the Effective Time will be the initial officers of
the Surviving Corporation in each case until their successors are duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Certificate of Incorporation and the By-laws of the
Surviving Corporation. If, at the Effective Time, a vacancy shall exist on the
Board of Directors or in any office of
9
<PAGE>
the Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by law.
Section 1.8 Effect of the Merger. At the Effective Time, the effect
--------------------
of the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and the Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and the Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.9 Subsequent Actions. If, at any time after the Effective
------------------
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or the Purchaser acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or the Purchaser, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.10 Certificate of Incorporation; By-Laws.
-------------------------------------
(a) Unless otherwise determined by the Purchaser before the
Effective Time, at the Effective Time the Certificate of Incorporation of the
Purchaser, as in effect immediately before the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation.
10
<PAGE>
(b) The By-Laws of the Purchaser, as in effect immediately before the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
Section 1.11 Stockholders' Meeting.
---------------------
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Special Meeting") as promptly as practicable
---------------
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use its
best efforts, subject to the terms of this Agreement, including Section
5.3(b) (x) to obtain and furnish the information required to be included by
the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment
or supplement thereto (the "Proxy Statement") to be mailed to its
---------------
stockholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent and
its counsel and (y) to obtain the necessary approvals of the Merger and
this Agreement by its stockholders; and
(iii) subject to the terms of this Agreement including Section
5.3(b), include in the Proxy Statement the recommendation of the Board of
Directors that stockholders of the Company vote in favor of the approval
of the Merger and the adoption of this Agreement.
11
<PAGE>
(b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other Subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of this
Agreement.
Section 1.12 Merger Without Meeting of Stock holders.
---------------------------------------
Notwithstanding Section 1.11 hereof, in the event that Parent, the Purchaser and
any other Subsidiary of Parent shall acquire in the aggregate at least 90% of
the outstanding Shares, pursuant to the Offer or otherwise, the parties hereto
shall, at the request of Parent and subject to Article VII hereof, take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of stockholders of
the Company, in accordance with Section 253 of Delaware Law.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Securities. At the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of Parent, the
Purchaser, the Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be cancelled pursuant to Section 2.1(b)
and any Dissenting Shares (as defined in Section 2.2(a)) shall be cancelled
and extinguished and be converted into the right to receive the Offer Price in
cash payable to the holder thereof, without interest (the "Merger
------
Consideration"), upon surrender of the certificate formerly representing such
Share in the manner provided in Section 2.3 hereof. All such Shares, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.3 hereof, without
interest.
12
<PAGE>
(b) Each Share held in the treasury of the Company and each Share
owned by the Purchaser or any direct or indirect wholly owned subsidiary of the
Purchaser immediately before the Effective Time shall be cancelled and
extinguished and no payment or other consideration shall be made with respect
thereto.
(c) Each share of common stock, par value $.01 per share, of the
Purchaser issued and outstanding immediately before the Effective Time shall
thereafter represent one validly issued, fully paid and nonassessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
Section 2.2 Dissenting Shares.
-----------------
(a) Notwithstanding any provision of this Agreement to the contrary,
any Shares held by a holder who has demanded and perfected his demand for
appraisal of his Shares in accordance with Delaware Law (including but not
limited to Section 262 thereof) and as of the Effective Time has neither
effectively withdrawn nor lost his right to such appraisal ("Dissenting
----------
Shares"), shall not be converted into or represent a right to receive cash
pursuant to Section 2.1, but the holder thereof shall be entitled to only such
rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of Section 2.2(a), if any holder
of Shares who demands appraisal of his Shares under Delaware Law shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall automatically be converted
into and represent only the right to receive the Merger Consideration as
provided in Section 2.1(a), without interest thereon, upon surrender of the
certificate or certificates representing such Shares pursuant to Section 2.3
hereof.
(c) The Company shall give the Purchaser (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with
13
<PAGE>
respect to demands for appraisal under Delaware Law. The Company shall not
voluntarily make any payment with respect to any demands for appraisal and shall
not, except with the prior written consent of the Purchaser, settle or offer to
settle any such demands.
Section 2.3 Surrender of Shares; Stock Transfer Books.
-----------------------------------------
(a) Before the Effective Time, the Purchaser shall designate a bank
or trust company reasonably acceptable to the Company to act as agent for the
holders of Shares in connection with the Merger (the "Exchange Agent") to
--------------
receive the funds necessary to make the payments contemplated by Section
2.1(a). At the Effective Time, the Purchaser shall deposit, or cause to be
deposited, in trust with the Exchange Agent for the benefit of holders of
Shares the aggregate consideration to which such holders shall be entitled at
the Effective Time pursuant to Section 2.1(a).
(b) Each holder of a certificate or certificates representing any
Shares cancelled upon the Merger, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose Shares were converted
------------
pursuant to Section 2.1(a) may thereafter surrender such Certificate or
Certificates to the Exchange Agent, as agent for such holder, to effect the
surrender of such Certificate or Certificates on such holder's behalf for a
period ending six months after the Effective Time. The Purchaser agrees that
promptly after the Effective Time it shall cause the distribution to holders of
record of Shares as of the Effective Time of appropriate materials to facilitate
such surrender. Upon the surrender of Certificates, the Purchaser shall cause
the Exchange Agent to pay the holder of such certificates in exchange therefor
cash in an amount equal to the Merger Consideration multiplied by the number of
Shares represented by such Certificate. Until so surrendered, each Certificate
(other than Certificates representing Dissenting Shares and Certificates
representing Shares held by the Purchaser or in the treasury of the Company)
shall represent solely the right to receive the aggregate Merger Consideration,
relating thereto.
(c) If payment of the Merger Consideration in respect of cancelled
Shares is to be made to a Person
14
<PAGE>
other than the Person in whose name a surrendered Certificate or instrument is
registered, it shall be a condition to such payment that the Certificate or
instrument so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such payment shall have
paid any transfer and other taxes required by reason of such payment in a name
other than that of the registered holder of the Certificate or instrument
surrendered or shall have established to the satisfaction of the Purchaser or
the Exchange Agent that such tax either has been paid or is not applicable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
shares of any shares of capital stock thereafter on the records of the Company.
From and after the Effective Time, the holders of certificates evidencing
ownership of the Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged for cash as provided in this Article II. No interest shall accrue
or be paid on any cash payable upon the surrender of a Certificate or
Certificates which immediately before the Effective Time represented outstanding
Shares.
(e) Promptly following the date which is six months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any cash (including any interest received with
respect thereto), Certificates and other documents in its possession relating to
the transactions contemplated hereby, which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing neither the Surviving Corporation nor the Exchange Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
15
<PAGE>
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) The Merger Consideration paid in the Merger shall be net to the
holder of Shares in cash, subject to reduction only for any applicable federal
back-up withholding or, as set forth in Section 2.3(c), stock transfer taxes
payable by such holder.
Section 2.4 Stock Plans. (a) At or immediately prior to the
-----------
Effective Time, (i) each then outstanding option to purchase Shares (the
"Options") and each outstanding Stock Appreciation Right (the "SARs") granted
------- ----
under the Company's Non-Employee Directors' Stock Option Plan, the 1996
Employees' Stock Incentive Plan and any other stock-based incentive plan or
arrangement of the Company (collectively, the "Stock Plans"), whether or not
-----------
then exercisable or vested, shall be cancelled and (ii) in consideration of such
cancellation, the holders of such Options and SARs shall receive for each Share
subject to such Option or SAR an amount (subject to any applicable withholding
tax) in cash equal to the product of (A) the excess, if any, of the Offer Price
over the per Share exercise price of such Option or the per Share base price of
such SAR, as applicable, and (B) the number of Shares subject to such Option or
SAR.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser
follows:
Section 3.1 Organization. (a) Each of the Company and its
------------
Subsidiaries (as defined below) is a corporation, partnership or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate power or other and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power, authority, and governmental approvals would
not,
16
<PAGE>
individually or in the aggregate, have a Company Material Adverse Effect (as
defined below). As used in this Agreement, the term "Subsidiary" shall mean,
----------
with respect to any party, any foreign or domestic corporation or other
organization, whether incorporated or unincorporated, of which (i) such party
or any other Subsidiary of such party is a general partner (excluding such
partnerships where such party or any Subsidiary of such party do not have a
majority of the voting interest in such partnership) or (ii) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries. As
used in this Agreement, "Company Material Adverse Effect" means any change in or
-------------------------------
effect on the business of the Company or its Subsidiaries, taken as a whole,
that is or could reasonably be expected to be materially adverse to (i) the
business, operations, properties (including intangible properties), condition
(financial or otherwise), results of operations, assets, liabilities or
prospects of the Company or its subsidiaries, taken as a whole, or (ii) the
ability of the Company to consummate any of the transactions or to perform its
obligations under this Agreement. The Disclosure Schedule delivered to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule"),
---------------------------
sets forth a complete list of the Company's domestic and foreign Subsidiaries.
(b) The Company and each of its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not individually
or in the aggregate have a Company Material Adverse Effect. Except as disclosed
in Section 3.1 of the Company Disclosure Schedule, the Company does not own any
equity interest in any corporation or other entity.
Section 3.2 Capitalization. (a) The authorized capital stock of
--------------
the Company consists of 20,000,000 shares of common stock, par value $.01 per
share (the
17
<PAGE>
"Common Stock"). As of the date hereof, (i) 10,534,574 Shares are issued and
------------
outstanding, (ii) no Shares are issued and held in the treasury of the Company,
and (iii) a total of 1,060,000 Shares are reserved under the Stock Plans in
respect of outstanding and future awards, of which (A) 34,000 Shares are
reserved for issuance pursuant to outstanding Options and 26,000 Shares are
reserved for issuance pursuant to future awards, in each case under the
Company's Non-Employee Directors' Stock Option Plan, and (B) 542,000 Shares are
reserved for issuance pursuant to outstanding Options, 300,000 Shares have been
issued as Restricted Stock (of which 266,667 such Shares are non-vested as of
the date hereof), 50,000 Shares are reserved in respect of outstanding SARs, no
Shares are reserved for issuance in respect of Performance Shares and 108,000
Shares are reserved for issuance in connection with future awards, in each case
under the Company's 1996 Employees' Stock Incentive Plan. Section 3.2(a) of the
Company Disclosure Schedule discloses the number of shares subject to each
outstanding Option and the exercise price thereof and (ii) the number of Shares
covered by each outstanding SAR and the base price thereof (iii) the number of
shares of non-vested restricted stock and (iv) the number of non-vested
Performance Shares. All the outstanding shares of the Company's capital stock
are, and all Shares which may be issued pursuant to the exercise of outstanding
Options will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and non-assessable. Except as disclosed
in this Section 3.2 or as set forth on Section 3.2(a) of the Company Disclosure
Schedule, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment and (iii)
except as disclosed in Section 3.2(a) of the Compa-
18
<PAGE>
ny Disclosure Schedule, there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Shares, or the capital stock of the Company or of any Subsidiary or
affiliate of the Company or to provide funds to make any investment (in the form
of a loan, capital contribution or otherwise) in any Subsidiary or any other
entity.
(b) Except as disclosed in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding shares of capital stock of each of the
Subsidiaries are beneficially owned by the Company, directly or indirectly, and
all such shares have been validly issued and are fully paid and nonassessable
and are owned by either the Company or one of its Subsidiaries free and clear of
all liens, charges, security interests, options, claims, mortgages, pledges, or
other encumbrances and restrictions of any nature whatsoever ("Encumbrances").
------------
(c) Except as disclosed in Section 3.2(c) of the Company Disclosure
Schedule, there are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the Subsidiaries.
(d) Other than as set forth on Section 3.2(d) of the Company
Disclosure Schedule, there is no outstanding Indebtedness (as hereinafter
defined) of the Company or any of its Subsidiaries. Except as identified in
Section 3.2(d) of the Company Disclosure Schedule, no Indebtedness of the
Company or its Subsidiaries contains any restriction upon (i) the prepayment of
such Indebtedness, (ii) the incurrence of Indebtedness by the Company or its
Subsidiaries, respectively, or (iii) the ability of the Company or its
Subsidiaries to grant any liens on its properties or assets. For purposes of
this Agreement, "Indebtedness" shall include (i) all indebtedness for borrowed
------------
money or for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), (ii) any other indebtedness
which is evidenced by a note, bond, debenture or similar instrument, (iii) all
obligations under financing leases, (iv) all obligations in respect of
acceptances issued or created, (v) all liabilities se-
19
<PAGE>
cured by any lien on any property, and (vi) all guarantee obligations.
Section 3.3 Authorization; Validity of Agreement; Company Action.
----------------------------------------------------
(a) The Company has full corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
Transactions, have been duly and validly authorized by its Board of Directors
and no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the Transactions, except that consummation of the Merger
may require approval of the Company's stockholders as contemplated by Section
1.11 hereof. This Agreement has been duly executed and delivered by the Company
and, assuming due and valid authorization, execution and delivery hereof by
Parent and the Purchaser, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(b) The provisions of Section 203 of Delaware Law are not applicable
to this Agreement, the Stockholder Agreement or the other Transactions,
including the Merger and the purchase of Shares in the Offer or pursuant to the
exercise of the JNL Option. The affirmative vote of the holders of a majority
of the outstanding shares of Common Stock is the only vote of the holders of any
class or series of the Company's capital stock which may be necessary to approve
this Agreement and the other Transactions, including the Merger. As of the
date of this Agreement, the number of holders of record of Common Stock in the
State of Wisconsin is less than 20% of the total number of holders of Common
Stock.
Section 3.4 Consents and Approvals; No Violations. Except as
-------------------------------------
disclosed in Section 3.4 of the Company Disclosure Schedule and for filings,
permits, authoriza-
20
<PAGE>
tions, consents and approvals as may be required under, and other applicable
requirements of, the Exchange Act and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), none of the execution,
-------
delivery or performance of this Agreement by the Company, the consummation by
the Company of the Transactions or compliance by the Company with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation, the By-laws or similar
organizational documents of the Company or any of its Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "Governmental Entity"),
-------------------
(iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound (the "Company Agreements") or (iv) violate any
------------------
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, any of its Subsidiaries or any of their properties or assets, except in
the case of clause (ii), (iii) or (iv) where failure to obtain such permits,
authorizations, consents or approvals or to make such filings, or where such
violations, breaches or defaults which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
Section 3.5 SEC Reports and Financial Statements. The Company has
------------------------------------
filed with the SEC, and has heretofore made available to Parent, true and
complete copies of all forms, reports, schedules, statements and other documents
required to be filed by it since December 14, 1994 under the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act") (as such documents
--------------
have been amended since the time of their filing, collectively, the "Company SEC
-----------
Documents"). As of their respective dates, or if amended, as of the date of the
- ---------
last such amendment, the Company SEC Documents, including, without limitation,
any financial statements or schedules included therein (a) did not contain any
untrue
21
<PAGE>
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (b) except as
disclosed in Section 3.5 of the Company Disclosure Schedule complied in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, and the applicable rules and regulations of
the SEC thereunder. None of the Company's Subsidiaries is required to file any
forms, reports or other documents with the SEC. Each of the consolidated
financial statements included in the Company SEC Documents (the "Financial
---------
Statements") (i) has been prepared from, and is in accordance with, the books
- ----------
and records of the Company and its consolidated Subsidiaries, (ii) complies in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, (iii) has been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
----
(except as may be indicated therein or in the notes thereto) and (iv) fairly
presents the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein.
Section 3.6 Absence of Certain Changes. Except to the extent
--------------------------
disclosed in Section 3.6 of the Company Disclosure Schedule or in the Company
SEC Documents filed prior to the date hereof, since December 31, 1996, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course. From December 31, 1996 through the date of this
Agreement there has not occurred any event, change or effect (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) having, individually or in the aggregate, a Company Material
Adverse Effect, any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
equity interests of the Company or any of its Subsidiaries or any change in
accounting principles or methods, except insofar as may be required by GAAP.
Since December 31, 1996 neither the Company nor any of its Subsidiaries has
22
<PAGE>
taken any of the actions prohibited by Section 5.2 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as disclosed in
--------------------------
the Financial Statements and (b) for liabilities and obligations (i) incurred in
the ordinary course of business and consistent with past practice since December
31, 1996, (ii) pursuant to the terms of this Agreement, (iii) as disclosed in
Section 3.7 of the Company Disclosure Schedule, or (iv) as disclosed in Section
3.8 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, that would have a Company Material
Adverse Effect or would be required to be reflected or reserved against on a
consolidated balance sheet of the Company and its Subsidiaries (including the
notes thereto) prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of the Company and its Subsidiaries as of December
31, 1996. Section 3.7 of the Company Disclosure Schedule sets forth the amount
of principal and unpaid interest outstanding as of July 31, 1997 under each
instrument evidencing indebtedness of the Company and its Subsidiaries which
will accelerate or become due or result in a right of redemption or repurchase
on the part of the holder of such indebtedness (with or without due notice or
lapse of time) as a result of this Agreement, the Merger or the other
transactions contemplated hereby or thereby.
Section 3.8 Litigation. Except as disclosed in Section 3.8 of the
----------
Company Disclosure Schedule or in the Company SEC Documents, there is no suit,
claim, action, proceeding, including, without limitation, arbitration or
grievance proceeding or alternative dispute resolution proceeding, or
investigation pending or, to the knowledge of the Company, threatened against or
affecting, the Company or any of its Subsidiaries before any Governmental Entity
that, either individually or in the aggregate, would have a Company Material
Adverse Effect.
Section 3.9 Employee Benefits; ERISA.
------------------------
(a) Except as disclosed in the Company SEC Documents, Schedule 3.9
contains a true and complete list
23
<PAGE>
of each material employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or other
stock-based incentive, severance, change-in-control, termination or similar pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to by the Company or any of its Subsidiaries, or by
any trade or business, whether or not incorporated (an "ERISA Affiliate"), that
---------------
together with the Company or any of its Subsidiaries would be deemed a "single
employer" within the meaning of Section 4001(b)(1) of ERISA, for the benefit of
any current or former employee or director of the Company, or any of its
Subsidiaries or any ERISA Affiliate (the "Plans"). Schedule 3.9(a) identifies
-----
each of the Plans that is an "employee welfare benefit plan," or "employee
pension benefit plan" as such terms are defined in Sections 3(1) and 3(2) of
ERISA (such plans being hereinafter referred to collectively as the "ERISA
-----
Plans"). Schedule 3.9 (a) also identifies each of the Plans that is maintained
- -----
outside the jurisdiction of the United States (such plans being hereinafter
referred to collectively as the "Foreign Plans"). None of the Company, any of
-------------
its Subsidiaries nor any ERISA Affiliate has any formal plan or commitment,
whether legally binding or not, to create any additional Plan or modify or
change any existing Plan that would affect any current or former employee or
director of the Company, any of its Subsidiaries or any ERISA Affiliate.
(b) With respect to each of the Plans, the Company has heretofore
delivered to the Purchaser true and complete copies of each of the following
documents, as applicable:
(i) a copy of the Plan documents (including all amendments thereto)
for each written Plan or a written description of any Plan that is not
otherwise in writing;
(ii) a copy of the annual report or Internal Revenue Service Form
5500 Series, if required under ERISA, with respect to each ERISA Plan for the
last three
24
<PAGE>
Plan years ending prior to the date of this Agreement for which such a report
was filed;
(iii) a copy of the actuarial report, if required under ERISA, with
respect to each ERISA Plan for the last three Plan years ending prior to the
date of this Agreement;
(iv) a copy of the most recent Summary Plan Description ("SPD"),
---
together with all Summaries of Material Modification issued with respect to
such SPD, if re quired under ERISA, with respect to each ERISA Plan, and all
other material employee communications relating to each ERISA Plan;
(v) if the Plan is funded through a trust or any other funding
vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, if any;
(vi) all contracts relating to the Plans with respect to which the
Company, any of its Subsidiaries or any ERISA Affiliate may have any material
liability, including insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements; and
(vii) the most recent determination letter received from the IRS
with respect to each Plan that is intended to be qualified under Section 401(a)
of the Code.
(c) No liability under Title IV of ERISA has been incurred by the
Company, any of its Subsidiaries or any ERISA Affiliate since the Effective Date
of ERISA that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, or any of its Subsidiaries or any ERISA
Affiliate of incurring any liability under such Title, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC"), which payments
----
have been or will be made when due. To the extent this representation applies
to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only with
respect to the ERISA Plans but also with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which the
Company, any of its Subsidiaries or any ERISA Affiliate
25
<PAGE>
made, or was required to make, contributions during the past six years.
(d) The PBGC has not instituted proceedings pursuant to Section 4042
of ERISA to terminate any of the ERISA Plans subject to Title IV of ERISA, and
no condition exists that presents a material risk that such proceedings will be
instituted by the PBGC.
(e) With respect to each of the ERISA Plans that is subject to Title
IV of ERISA, the present value of accumulated benefit obligations under such
Plan, as determined by the Plan's actuary based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by such
Plan's actuary with respect to such Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such Plan allocable to such
accumulated benefit obligations.
(f) None of the Company, any of its Subsidiaries, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder, nor to the
Company's knowledge, any trustee or administrator thereof has engaged in a
transaction or has taken or failed to take any action in connection with which
the Company, any of its Subsidiaries or any ERISA Affiliate could be subject to
any material liability for either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975(a) or (b), 4976
or 4980B of the Code.
(g) All contributions and premiums which the Company, any of its
Subsidiaries or any ERISA Affiliate is required to pay under the terms of each
of the ERISA Plans and Section 412 of the Code, have, to the extent due, been
paid in full or properly recorded on the financial statements or records of the
Company or its Subsidiaries, and none of the ERISA Plans or any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the ERISA
Plans ended prior to the date of this Agreement. No lien has been imposed under
Section 412(n) of the Code or Section 302(f) of ERISA on the assets of the
Company, any of its Subsidiaries or any ERISA Affiliate, and no event or
circumstance has occurred that is reason-
26
<PAGE>
ably likely to result in the imposition of any such lien on any such assets on
account of any ERISA Plan.
(h) With respect to any ERISA Plan that is a "multiemployer plan," as
such term is defined in Section 3(37) of ERISA, (i) neither the Company, any of
its Subsidiaries nor any ERISA Affiliate has, since September 26, 1980, made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA, (ii) no event has
occurred that presents a material risk of a complete or partial withdrawal,
(iii) neither the Company, each of its Subsidiaries nor any ERISA Affiliate has
any contingent liability under Section 4204 of ERISA, (iv) no circumstances
exist that present a material risk that any such multi-employer plan will go
into reorganization, and (v) the aggregate withdrawal liability of the Company,
each of its Subsidiaries and the ERISA Affiliates, computed as if a complete
withdrawal by the Company, each of its Subsidiaries and all of its ERISA
Affiliates had occurred under each such multiemployer plan on the date hereof,
would be zero.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code and, to the Company's knowledge, the laws of each
jurisdiction in which any of the Foreign Plans are maintained, to the extent
such laws are applicable to the Foreign Plans.
(j) Each of the ERISA Plans that is intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified. The Company has
applied for and received a currently effective determination letter from the IRS
stating that it is so qualified, and no event has occurred which would affect
such qualified status.
(k) Any fund established under an ERISA Plan that is intended to
satisfy the requirements of section 501(c)(9) of the Code has so satisfied such
requirements.
(l) To the Company's knowledge based on the advice of its independent
accountants, except as disclosed in Section 3.9(l) of the Company Disclosure
Schedule, no amounts payable under any of the Plans or any
27
<PAGE>
other contract, agreement or arrangement with respect to which the Company or
any of its Subsidiaries may have any liability could fail to be deductible for
federal income tax purposes by virtue of Section 162(m) or Section 280G of the
Code.
(m) Except as set forth in Section 3.9(m) of the Company Disclosure
Schedule, no Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees of the Company, its Subsidiaries or any ERISA Affiliate after
retirement or other termination of service (other than (i) coverage mandated by
applicable laws, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of the Company, any
of its Subsidiaries or an ERISA Affiliate, or (iv) benefits, the full direct
cost of which is borne by the current or former employee (or beneficiary
thereof)).
(n) Except as set forth in Section 3.9(n) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee, officer, director, agent
or consultant of the Company, any of its Subsidiaries or any ERISA Affiliate to
severance pay, unemployment compensation or any other similar termination
payment, or (ii) accelerate the time of payment or vesting, or increase the
amount of or otherwise enhance any benefit due any such employee, officer,
director agent or consultant.
(o) There are no pending or, to the Company's knowledge, threatened
or anticipated claims by or on behalf of any Plan by any employee or beneficiary
under any such Plan or otherwise involving any such Plan (other than routine
claims for benefits).
(p) With respect to the Foreign Plans to the Company's knowledge,
except as set forth in Schedule 3.9(p):
(i) All contributions to, and payments from, the Foreign Plans which
have been required to be made in accordance with the terms of any such plan,
and,
28
<PAGE>
where applicable, the law of the jurisdiction in which such plan is maintained,
have been timely made. All such contributions to the Foreign Plans, and all
payments under the Foreign Plans, for any period ending before the Closing Date
that have not been made as of the date hereof are properly accrued and reflected
on the financial statements of the Subsidiary maintaining such plan.
(ii) All material reports, returns and similar documents with respect
to any Foreign Plan required to be filed with any government agency or
distributed to any Foreign Plan participant have been duly and timely filed or
distributed.
(iii) Each of the Foreign Plans has obtained from the government or
governments having jurisdiction with respect to such plan any required
determination that such plans are in compliance with the laws and regulations
of such government.
(iv) Each of the Foreign Plans has been administered at all times, in
all material respects, in accordance with its terms.
(v) The assets of each of the Foreign Plans (which is an employee
pension benefit plan as defined in Section 3(2) of ERISA and is funded through a
trust, insurance contract or similar funding medium) are at least equal to the
liabilities of such plans (as determined in accordance with the most recent
actuarial valuation available with resect to such plans).
(vi) Purchaser will incur no material liability with respect to any
Foreign Plan solely as a result of the consummation of the transactions
contemplated by this Agreement.
Section 3.10 Taxes. (a) Except as set forth in Section 3.10 of the
-----
Company Disclosure Schedule:
(i) the Company and its Subsidiaries have (x) duly filed (or there
have been filed on their behalf) with the appropriate governmental authorities
all Tax Returns (as hereinafter defined) required to be filed by them on or
prior to the date hereof, and such Tax Returns are true, correct and complete in
all material respects, and (y) duly paid in full or made provision in accordance
29
<PAGE>
with GAAP (or there has been paid or provision has been made on their behalf)
for the payment of all Taxes (as hereinafter defined) for all periods ending
through the date hereof;
(ii) there are no liens for Taxes upon any property or assets of the
Company or any Subsidiary thereof, except for liens for Taxes not yet due;
(iii) neither the Company nor any of its Subsidiaries has made any
change in accounting methods, received a ruling from any taxing authority or
signed an agreement likely to have a Company Material Adverse Effect;
(iv) the Company and its Subsidiaries have complied in all respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under any
foreign laws) and have, within the time and the manner prescribed by law,
withheld and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under applicable laws;
(v) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company or its Subsidiaries and
neither the Company nor its Subsidiaries has received a written notice of any
pending audits or proceedings;
(vi) the Tax Returns of the Company and its Subsidiaries have been
made available to Parent for all taxable periods in respect of which the
statutory period of limitations for the assessment of Taxes have not expired,
and no material deficiencies either in re spect of such Returns or any other
Returns in respect of which the statutory period of limitations for the
assessment of Taxes has expired has been asserted by any appli cable Taxing
Authority which have not been resolved and fully paid;
(vii) there are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any
30
<PAGE>
Taxes or deficiencies against the Company or any of its Subsidiaries, and no
power of attorney granted by either the Company or any of its Subsidiaries with
respect to any Taxes is currently in force;
(viii) neither the Company nor any of its Subsidiaries is a party to
any agreement providing for the allocation or sharing of Taxes;
(ix) to the Company's knowledge based on the advice of its
independent accountants, neither the Company nor its Subsidiaries is a party to
any agreement, contract or arrangement that could result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code;
(x) neither the Company nor any of its Subsidiaries has, with regard
to any assets or property held, acquired or to be acquired by any of them, filed
a consent to the application of Section 341(f) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or any of its Subsidiaries;
(xi) to the Company's knowledge based on the advice of its
independent accountants, the deductibility of compensation paid by the Company
and/or its Subsidiaries will not be limited by Section 162(m) of the Code; and
(xii) all transactions that could give rise to an understatement of
the federal income tax liability of the Company or any of its Subsidiaries
within the meaning of Section 6662(d) of the Code are adequately disclosed on
Tax Returns in accordance with Section 6662(d)(2)(B) of the Code if there is or
was no substantial authority for the treatment giving rise to such
understatement.
(b) Except as disclosed in Section 3.10(b) of the Company Disclosure
Schedule, no excess loss accounts or deferred intercompany gains as defined in
the consolidated return regulations promulgated under the Code (the "Treasury
--------
Regulations") exist with respect to the Company of the Subsidiaries.
- -----------
31
<PAGE>
(c) The Federal income tax net operating loss carryovers available to
the Company and its Subsidiaries, and their expiration dates, are set forth in
Section 3.10(c) of the Disclosure Schedule. Except as set forth in Section
3.10(c) of the Disclosure Schedule, as of the date of this Agreement, the net
operating loss and credit carryovers are not subject to limitations imposed by
Sections 382, 383 or 384 of the Code (or any predecessor thereto) or otherwise
(including Sections 1.1502-21 and 1502-22 of the Treasury Regulations).
(d) "Taxes" shall mean any and all taxes, charges, fees, levies or
-----
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the Internal Revenue
Service or any taxing authority (whether domestic or foreign including, without
limitation, any state, county, local or foreign government or any subdivision or
taxing agency thereof (including a United States possession)), whether computed
on a separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, fines, penalties or additional amounts attributable
to, or imposed upon, or with respect to, any such amounts. "Tax Return" shall
----------
mean any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (foreign or
domestic) with respect to Taxes, including, without limitation, information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
Section 3.11 Contracts. Each Company Agreement is valid, binding
---------
and enforceable and in full force and effect, except where failure to be valid,
binding and enforceable and in full force and effect would not have a Company
Material Adverse Effect, and there are no defaults thereunder, except those
defaults that would not have a Company Material Adverse Effect. Section 3.11 of
the Company Disclosure Schedule sets forth a true and complete list of (i) all
material Company Agreements entered into by the Company or any of its
Subsidiaries
32
<PAGE>
since December 31, 1996 and all amendments to any Company Agreements included as
an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and (ii) all non-competition agreements imposing restrictions
on the ability of the Company or any of its Subsidiaries to conduct business in
any jurisdiction or territory.
Section 3.12 Real Property. (a) Section 3.12 of the Company
-------------
Disclosure Schedule sets forth a complete list of all real property owned by the
Company or its Subsidiaries (the "Real Property"). Except as set forth in
-------------
Section 3.12 of the Company Disclosure Schedule, the Company or its Subsidiaries
has good and marketable title to the Real Property, free and clear of all
Encumbrances, other than Encumbrances that do not in the aggregate materially
detract from the value or interfere with the use or operation of the Real
Property subject thereto. There are no proceedings, claims, disputes or
conditions affecting any Real Property that might curtail or interfere with in
any material respect the use of such property, nor is an action of eminent
domain pending or to the knowledge of the Company, threatened for all or any
portion of the Real Property. Except as disclosed in Section 3.12 of the
Company Disclosure Schedule, the Company is not a party to any lease, assignment
or similar arrangement under which the Company is a lessor, assignor or
otherwise makes available for use by any third party any portion of the Real
Property.
(b) The Company has not received any notice of or other writing
referring to any requirements or recommendations by any insurance company that
has issued a policy covering any part of the Real Property or by any board of
fire underwriters or other body exercising similar functions, requiring or
recommending any repairs or work to be done one any part of the Real Property.
Except as would not materially detract from the value or interfere with the use
or operation of the Real Property subject thereto, the plumbing, electrical,
heating, air conditioning, ventilating and all other structural or material
mechanical systems in the buildings upon the Real Property are in good working
order and working condition, so as to be adequate for the operation of the
business of the Company as heretofore conducted, and the roof, basement and
foundation walls of all buildings on the Real Property are free of leaks and
other material
33
<PAGE>
defects, except for any matter otherwise covered by this sentence which does not
have, individually or in the aggregate, a Company Material Adverse Effect.
(c) The Company has obtained all appropriate licenses, permits,
easements and rights of way, including proofs of dedication, required to use and
operate the Real Property in the manner in which the Real Property is currently
being used and operated, except for such licenses, permits or rights of way the
failure of which to have obtained does not have, individually or in the
aggregate, a Company Material Adverse Effect.
(d) The Company has not received notification that the Company is in
violation of any applicable building, zoning, anti-pollution, health or other
law, ordinance or regulation in respect of the Real Property or structures or
their operations thereon and no such violation exists, except for such
violations that do not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 3.13 Intellectual Property. (a) Except as disclosed in
---------------------
Section 3.13 of the Company Disclosure Schedule, there are no trademarks, trade
names, service marks, logos, copyrights, or registrations or applications for
registration of any of the foregoing, patents or applications therefor, or
computer software programs which are owned by the Company or any of its
Subsidiaries or used in the operation of the business of the Company or any of
its Subsidiaries as currently conducted (collectively, the "Intellectual
------------
Property") that are material to the conduct of the business of the Company or
- --------
any of its Subsidiaries as currently conducted.
(b) Except as set forth in Section 3.13 of the Company Disclosure
Schedule or as disclosed in the Company SEC Documents, as of the date hereof,
to the Company's knowledge, there are no pending or threatened claims of which
the Company or any of its Subsidiaries have been given written notice, by any
person challenging the ownership or use by the Company or any of its
Subsidiaries of any material Intellectual Property, which, if such claim were
resolved adversely to the Company, would have a Company Material Adverse Effect.
The Company and its Subsidiaries have such ownership of, or such rights by
license, lease or other agreement to, the Intellectual
34
<PAGE>
Property as are necessary for the operation of their respective businesses as
currently conducted, except as set forth in Section 3.13 of the Company
Disclosure Schedule or otherwise where the failure to have such right would not
have a Company Material Adverse Effect.
(c) To the knowledge of the Company, the Company and its Subsidiaries
have such title or such rights by license, lease or other agreement to the
computer software programs which are owned, licensed, leased or otherwise used
by the Company and its Subsidiaries and which are material to the conduct of
their businesses as currently conducted, as are necessary to permit the conduct
of their businesses as currently conducted, except as set forth in Section 3.13
of the Company Disclosure Schedule or otherwise where the failure to have such
right would not have a Company Material Adverse Effect.
(d) All patents, registrations and applications for Intellectual
Property set forth in Section 3.13 of the Company Disclosure Schedule (i) are
valid, subsisting, in proper form and enforceable, and have been duly
maintained, including the submission of all necessary filings and fees in
accordance with the legal and administrative requirements of the appropriate
jurisdictions and (ii) have not lapsed, expired or been abandoned, and no
patent, registration or application therefor is the subject of any opposition,
interference, cancellation proceeding or other legal or governmental proceeding
before any governmental, registration or other authority in any jurisdiction.
(e) Except as set forth on Section 3.13 of the Company Disclosure
Schedule, all consents, filings, and authorizations by or with governmental
authorities or third parties necessary with respect to the consummation of the
transactions contemplated hereby as they may affect the Intellectual Property
have been obtained.
(f) Neither the Company nor any of its Subsidiaries has entered into
any material consent, indemnification, forbearance to sue, settlement agreement
or cross-licensing arrangement with any person relating to the Intellectual
Property or the intellectual property of any third party other than as may be
contained in the
35
<PAGE>
license agreements listed in Section 3.13 of the Disclosure Schedule.
(g) Except as set forth on Section 3.13 of the Company Disclosure
Schedule, the Company and its Subsidiaries is not, nor will it be as a result
of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property.
(h) No former or present employees, officers or directors of the
Company or any of its Subsidiaries hold any right, title or interest directly or
indirectly, in whole or in part, in or to any Intellectual Property.
Section 3.14 Labor Matters. (a) Except as set forth in Section
-------- -------------
3.14 of the Company Disclosure Schedule, (i) there is no labor strike, dispute,
slowdown, stoppage or lockout actually pending, or to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
and during the past five years there has not been any such action (ii) neither
the Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of the Company or any of its Subsidiaries, (iii) none of
the employees of the Company or any of its Subsidiaries is represented by any
labor organization and the Company does not have any knowledge of any union
organizing activities among the employees of the Company or any of its
Subsidiaries within the past five years, nor does any question concerning
representation exist concerning such employees, (iv) there are no material
written personnel policies, rules or procedures applicable to employees of the
Company or any of its Subsidiaries, other than those set forth on Section 3.14
of the Company Disclosure Schedule, true and correct copies of which have
heretofore been delivered to Parent, (v) the Company and each of its
Subsidiaries is in compliance, in all material respects, with all applicable
laws respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and is not
engaged in any unfair labor practices as defined in the National Labor Relations
Act or other similar laws of
36
<PAGE>
any jurisdiction, (vi) there is no unfair labor practice or similar charge or
complaint against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened before the National Labor Relations Board
or any similar state or foreign agency, (vii) there is no grievance arising out
of any collective bargaining or similar agreement or other grievance procedure
relating to any employee of the Company of any of its Subsidiaries, (viii) to
the knowledge of the Company, no charges with respect to or relating to the
Company or any of its Subsidiaries are pending before the Equal Employment
Opportunity Commission or any other federal, state, local or foreign agency
responsible for the prevention of unlawful employment practices, (ix) neither
the Company nor any of its Subsidiaries has received notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws to conduct an investigation with respect to or relating to
the Company or any of its Subsidiaries and no such investigation is in progress,
and (x) there are no complaints, lawsuits or other proceedings pending or, to
the knowledge of the Company, threatened in any forum by or on behalf of any
present or former employee of the Company or any of its Subsidiaries, any
applicant for employment or classes of the foregoing alleging breach of any
express or implied contract or employment, any laws governing employment or the
termination thereof or other discriminatory, wrongful or tortious conduct in
connection with the employment relationship.
(b) Since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), (i) the Company has not effectuated a "plant
--------
closing," (as defined in the WARN Act) affecting any site of employment or one
or more facilities or operating units within any site of employment or facility
of the Company, (ii) there has not occurred a "mass layoff" (as defined in the
WARN Act) affecting any site of employment or facility of the Company or any of
its Subsidiaries; nor has the Company or any of its Subsidiaries been affected
by any transaction or engaged in layoffs or employment terminations sufficient
in number to trigger application of any similar state, local or foreign law or
regulation, and (iii) none of the employees of the Company or any of its
Subsidiaries has suffered an "employment loss" (as defined in the WARN Act)
during the ninety (90) day period prior to the date of this Agreement.
37
<PAGE>
(c) As used in the Section 3.14, the representations made with
respect to the Subsidiaries other than Minserco, Inc. and Boonville Mining
Services, Inc. are made only to the Company's knowledge.
Section 3.15 Compliance with Laws. The Company and its Subsidiaries
--------------------
have complied in a timely manner and in all material respects with all laws,
rules and regulations, ordinances, judgments, decrees, orders, writs and
injunctions of all United States federal, state, local, foreign governments and
agencies thereof which affect the business, properties or assets of the Company
and its Subsidiaries, and no notice, charge, claim, action or assertion has been
received by the Company or any of its Subsidiaries or has been filed, commenced
or, to the Company's knowledge, threatened against the Company or any of its
Subsidiaries alleging any violation of any of the foregoing. All licenses,
permits and approvals required under such laws, rules and regulations are in
full force and effect except where the failure to be in full force and effect
would not have a Company Material Adverse Effect.
Section 3.16 Environmental Matters. (a) Except as set forth in
---------------------
Section 3.16(a) of the Company Disclosure Schedule, each of the Company and its
Subsidiaries is in compliance with all federal, state, local and foreign laws
and regulations relating to pollution or protection of human health or the
environment, including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata, and natural resources (together
"Environmental Laws" and including, without limitation, laws and regulations
- -------------------
relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic or hazardous substances or wastes,
petroleum and petroleum products, polychlorinated biphenyls (PCBs), or asbestos
or asbestos-containing materials ("Materials of Environmental Concern")), or
----------------------------------
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern
except for such noncompliance that would not have a Company Material Adverse
Effect. Such compliance includes, but is not limited to, the possession by the
Company and each of its Subsidiaries of all permits and other governmental
authorizations required under all applicable Environmental Laws, and compliance
with the
38
<PAGE>
terms and conditions thereof. All material permits and other governmental
authorizations currently held by the Company and each of its Subsidiaries
pursuant to the Environmental Laws are identified in Section 3.16(a) of the
Company Disclosure Schedule.
(b) Except as set forth in Section 3.16(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the Company or any of
its Subsidiaries is not in compliance with any Environmental Laws, and there are
no circumstances that may prevent or interfere, to the knowledge of the Company,
with such compliance in the future. The Company has provided to Parent all
information that is in the possession of or reasonably available to the Company
regarding environmental matters pertaining to or the environmental condition of
the business of the Company and its Subsidiaries, or the compliance (or
noncompliance) by the Company and its Subsidiaries with any Environmental Laws.
(c) Except as set forth in Section 3.16(c) of the Company Disclosure
Schedule, there is no claim, action, cause of action, investigation or notice
(written or oral) (together, "Environmental Claim") by any person or entity
-------------------
alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, person injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or any of its Subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending or threatened against the
Company or any of its Subsidiaries, or against any person or entity whose
liability for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law.
(d) Except as set forth in Section 3.16(d) of the Company Disclosure
Schedule, there are no past or present actions, activities, conditions, events,
incidents, or circumstances, to the knowledge of the
39
<PAGE>
Company, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that could form
the basis of any Environmental Claim against the Company or any of its
Subsidiaries or, to Company's knowledge, against any person or entity whose
liability for any Environmental Claim the Company or any of its Subsidiaries has
retained or assumed either contractually or by operation of law, except, in
either case, where the same would not have a Company Material Adverse Effect.
(e) Without in any way limiting the generality of the foregoing, to
the Company's knowledge: (i) all on-site and off-site locations where the
Company or any of its Subsidiaries has (previously or currently) stored,
disposed or arranged for the disposal of Materials of Environmental Concern are
identified in Section 3.16(e) of the Company Disclosure Schedule, (ii) all
underground storage tanks, and the capacity and contents of such tanks, located
on any property owned, leased, operated or controlled by Seller are identified
in Section 3.16(e) of the Company Disclosure Schedule, (iii) except as set forth
in Section 3.16(e) of the Company Disclosure Schedule and except as to matters
that would not have a Company Material Adverse Effect, there is no asbestos
contained in or forming part of any building, building component, structure or
office space owned, leased, operated or controlled by the Company or any of its
Subsidiaries, and (iv) except as set forth in Section 3.16(e) of the Company
Disclosure Schedule and except as to matters that would not have a Company
Material Adverse Effect, no PCBs or PCB-containing items are used or stored at
any property owned, leased, operated or controlled leased by the Company and its
Subsidiaries.
Section 3.17 Product Liability. Except as described in Section 3.17
-----------------
of the Company Disclosure Schedule, there are not presently pending, or to the
knowledge of the Company, threatened any civil, criminal or administrative
actions, suits, demands, claims, hearings, notices of violation, investigations,
proceedings or demand letters relating to any alleged hazard or alleged defect
in design, manufacture, materials or workmanship, including any failure to warn
or alleged breach of express or implied warranty or representation, relating to
any product manufactured, distributed or sold by or on behalf of the Company and
its Subsidiaries.
40
<PAGE>
Section 3.18 Information in Disclosure Documents. None of the
-----------------------------------
written information supplied or to be supplied by the Company for the purpose of
inclusion or incorporation by reference in any syndication and other materials
to be delivered to potential financing sources in connection with the
Transactions or otherwise in connection with the Debt Financing (as hereinafter
defined) (the "Disclosure Documents") will, at the date delivered, contain any
--------------------
untrue statement of material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
Section 3.19 Information in Proxy Statement. The Proxy Statement, if
------------------------------
any (or any amendment thereof or supplement thereto), will, at the date mailed
to Company stockholders and at the time of the meeting of Company stockholders
to be held in connection with the Merger, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied in writing by Parent or the Purchaser for
inclusion in the Proxy Statement. The Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
Section 3.20 Potential Conflict of Interest. Except as set forth in
------------------------------
Section 3.20 of the Company Disclosure Schedule or in the Company SEC Documents
filed prior to the date hereof, since December 31, 1996, there have been no
transactions, agreements, arrangements or understandings between the Company or
its Subsidiaries, on the one hand, and their respective affiliates, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act. Except as set forth in Section 3.20 of the Company
Disclosure Schedule or in the SEC Reports filed prior to the date hereof, no
officer of the Company or any of its Subsidiaries owns, directly or indirectly,
any interest in (excepting not more than 1% stock holdings for investment
purposes in securities of publicly held and traded companies) or is an officer,
director, employee or consultant of any person which is a competitor, lessor,
41
<PAGE>
lessee, customer or supplier of the Company; and no officer or director of the
Company or any of its Subsidiaries (i) owns, directly or indirectly, in whole
or in part, any Intellectual Property which the Company or any of its
Subsidiaries is using or the use of which is necessary for the business of the
Company or its Subsidiaries; (ii) has any claim, charge, action or cause of
action against the Company or any of its Subsidiaries, except for claims for
accrued vacation pay, accrued benefits under the Plans and similar matters and
agreements existing on the date hereof; (iii) has made, on behalf of the
Company or any of its Subsidiaries, any payment or commitment to pay any
commission, fee or other amount to, or to purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any other Person of
which any officer or director of the Company or any of its Subsidiaries, or, to
the Company's knowledge, a relative of any of the foregoing, is a partner or
stockholder (except stock holdings solely for investment purposes in securities
of publicly held and traded companies); or (iv) owes any money to the Company or
any of its Subsidiaries.
Section 3.21 Opinion of Financial Advisor. The Company has received
----------------------------
the opinion of Jefferies & Company, Inc., dated the date hereof, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders from
a financial point of view, a copy of which opinion has been delivered to Parent
and the Purchaser.
Section 3.22 Insurance. The Company and each of its Subsidiaries
---------
have policies of insurance and bonds of the type and in amounts customarily
carried by persons conducting businesses or owning assets similar to those of
the Company and its Subsidiaries. There is no material claim pending under any
of such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and the Company and its
Subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds. The Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
42
<PAGE>
Section 3.23 Suppliers and Customers. Since December 31, 1996, no
-----------------------
material licensor, vendor, supplier, licensee or customer of the Company or any
of its Subsidiaries has cancelled or otherwise modified its relationship with
the Company or its Subsidiaries and, to the Company's knowledge, (i) no such
person has any intention to do so, and (ii) the consummation of the transactions
contemplated hereby will not adversely affect any of such relationships.
Section 3.24 Accounts Receivable; Inventory. Subject to any reserves
------------------------------
set forth in the consolidated balance sheet of the Company included in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 as
filed with the SEC prior to the date of this Agreement (the "Company Balance
---------------
Sheet"), the accounts receivable shown in the Company Balance Sheet arose in the
- -----
ordinary course of business; were not, as of the date of the Company Balance
Sheet, subject to any material discount, contingency, claim of offset or
recoupment or counterclaim; and represented, as of the date of the Company
Balance Sheet, bona fide claims against debtors for sales, leases, licenses and
other charges. All accounts receivable of the Company and its Subsidiaries
arising after the date of the Company Balance Sheet through the date of this
Agreement arose in the ordinary course of business and, as of the date of this
Agreement, are not subject to any material discount, contingency, claim of
offset or recoupment or counterclaim, except for normal reserves consistent with
past practice. The amount carried for doubtful accounts and allowances
disclosed in the Company Balance Sheet is believed by the Company as of the date
of this Agreement to be sufficient to provide for any losses which may be
sustained or realization of the accounts receivable shown in the Company Balance
Sheet. As of the date of the Company Balance Sheet, the inventories shown on
the Company Balance Sheet consisted in all material respects of items of a
quantity and quality usable or saleable in the ordinary course of business. All
of such inventories were acquired in the ordinary course of business and, as of
the date of this Agreement, have been replenished in all material respects in
the ordinary course of business consistent with past practices. All such
inventories are valued on the Company Balance Sheet in accordance with GAAP
applied on a basis consistent with the Company's past practices, and provision
has been made or reserves
43
<PAGE>
have been established on the Company Balance Sheet, in each case in an amount
believed by the Company as of the date of this Agreement to be adequate, for all
slow-moving, obsolete or unusable inventories.
Section 3.25 Title and Condition of Properties. The Company and its
---------------------------------
Subsidiaries own good and marketable title, free and clear of all Encumbrances,
to all of the personal property and assets shown on the Company Balance Sheet or
acquired after June 30, 1997, except for (A) assets which have been disposed of
to nonaffiliated third parties since June 30, 1997 in the ordinary course of
business, (B) Encumbrances reflected in the Balance Sheet, (C) Encumbrances or
imperfections of title which are not, individually or in the aggregate, material
in character, amount or extent and which do not materially detract from the
value or materially interfere with the present or presently contemplated use of
the assets subject thereto or affected thereby, and (D) Liens for current Taxes
not yet due and payable. All of the machinery, equipment and other tangible
personal property and assets owned or used by the Company or its Subsidiaries
are in good condition and repair, except for ordinary wear and tear not caused
by neglect, and are usable in the ordinary course of business, except for any
matter otherwise covered by this sentence which does not have, individually or
in the aggregate, a Company Material Adverse Effect.
Section 3.26 Marion Acquisition. To the Company's knowledge, The
------------------
representations and warranties of the Marion Power Shovel Company, Marion Power
Shovel Pty. Ltd., INTOOL International B.V., and Global-GIX Canada Inc.
(collectively, the "Marion Sellers") and Global Industrial Technologies, Inc.
--------------
("Marion Parent") as set forth in that certain Asset Purchase Agreement, dated
- ---------------
as of July 21, 1997 by and among the Marion Sellers and Marion Parent and the
Company, Bucyrus (Australia) Proprietary Ltd., Bucyrus (Africa) (Proprietary)
Limited and Bucyrus Canada Limited (the "Marion Agreement") are true and correct
----------------
in all material respects. The purchase by the Company of certain assets of the
Marion Sellers and Marion Parent pursuant to the Marion Agreement shall be
referred to herein as the "Marion Acquisition."
------------------
Section 3.27 Full Disclosure. The Company has not knowingly failed
---------------
to disclose to Parent any facts
44
<PAGE>
material to the Company's business, results of operations, assets, liabilities,
financial condition or prospects. No representation or warranty by the Company
in this Agreement and no statement by the Company in any document referred to
herein (including the Schedules and Exhibits hereto), contains any untrue
statements of a material fact or omits to state any material fact necessary, in
order to make the statement made herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser, jointly and severally, represent and
warrant to the Company as follows:
Section 4.1 Organization. Parent is a limited liability company duly
------------
organized, validly existing and in good standing under the laws of Delaware and
the Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Delaware.
Section 4.2 Authorization; Validity of Agreement; Necessary Action.
------------------------------------------------------
Each of Parent and the Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and the consummation of the Merger and of the Transactions have been
duly and validly authorized by the members of parent and by the Board of
Directors the Purchaser and by Parent as the sole shareholder of the Purchaser
and no other corporate action on the part of Parent or the Purchaser is
necessary to authorize the execution and delivery by Parent and the Purchaser of
this Agreement and the consummation of the Transactions. This Agreement has been
duly executed and delivered by Parent and the Purchaser and, assuming due and
valid authorization, execution and delivery hereof by the Company, is a valid
and binding obligation of each of Parent and the Purchaser enforceable against
each of them in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights
45
<PAGE>
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations. Except for
-------------------------------------
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and the HSR Act,
none of the execution, delivery or performance of this Agreement by Parent or
the Purchaser, the consummation by Parent or the Purchaser of the Transactions
or compliance by Parent or the Purchaser with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the Certificate of
Formation of Parent or the Certificate of Incorporation or By-Laws of the
Purchaser, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity, (iii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Parent, or any of its Subsidiaries or the Purchaser is a
party or by which any of them or any of their respective properties or assets
may be bound, or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Parent, any of its Subsidiaries or any of their
properties or assets, except in the case of clause (ii), (iii) or (iv) such
violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the ability of Parent and Purchaser
to consummate the Transactions.
Section 4.4 Information in Proxy Statement. None of the information
------------------------------
supplied by Parent or the Purchaser in writing specifically for inclusion or
incorporation by reference in the Proxy Statement (or any amendment thereof or
supplement thereto) will, at the date mailed to stockholders and at the time of
the meeting of stockholders to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein
46
<PAGE>
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 4.5 Financing. In order to finance the Transactions, Parent
---------
and the Purchaser have obtained commitments for equity financing in an amount
equal to $143,000,000 (the "Equity Commitments"), with no conditions attached
------------------
to such commitments other than satisfac tion of the conditions to the
obligations of Parent and the Purchaser set forth in this Agreement. The
Company has obtained a "highly confident" letter from Salomon Brothers Inc. as
initial purchaser of $150,000,000 in aggregate principal Senior Subordinated
Notes Due 2007 of the Company (the "Notes") and a commitment letter from Bank
-----
One, Milwaukee, National Association. (The letters referred to in the
immediately preceding sentence are hereinafter referred to collectively, as the
"Commitment Letters" and the financing described therein as the "Debt
------------------ ----
Financing"). The Equity Commitments and the Debt Financing are sufficient to
consummate the Transactions.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Acquisition Proposals. The Company will notify the
---------------------
Purchaser immediately if any proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated or
continued with the Company or its officers, directors, employees, investment
bankers, attorneys, accountants or other agents, in each case in connection with
any Takeover Proposal (as defined below) or the possibility or consideration of
making a Takeover Proposal ("Takeover Proposal Interest") indicating, in
--------------------------
connection with such notice, the name of the Person indicating such Takeover
Proposal Interest and the terms and conditions of any proposals or offers. The
Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations, if any, with any parties
conducted heretofore with respect to any Takeover Proposal Interest. The Company
agrees that it shall keep Parent informed, on a current basis, of the status and
terms of any Takeover Proposal Interest. As used in this Agreement, "Takeover
--------
Proposal"
- --------
47
<PAGE>
shall mean any tender or exchange offer involving the Company, any proposal for
a merger, consolidation or other business combination involving the Company, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, the Company (other than
immaterial or insubstantial assets or inventory in the ordinary course of
business or assets held for sale), any proposal or offer with respect to any
recapitalization or restructuring with respect to the Company or any proposal
or offer with respect to any other transaction similar to any of the foregoing
with respect to the Company other than the Marion Acquisition or pursuant to the
transactions to be effected pursuant to this Agreement.
Section 5.2 Interim Operations of the Company. The Company covenants
---------------------------------
and agrees that, except (i) as expressly contemplated by this Agreement,
including without limitation Section 5.3(b), (ii) as set forth in Section 5.2 of
the Company Disclosure Schedule, (iii) as set forth in the term sheet describing
the terms of the bridge loan by and between the Company and PPM American Special
Investments Fund, L.P., which term sheet is attached as Exhibit A to Section
5.2 of the Company Disclosure Schedule (but subject to Parent's prior written
approval, which approval shall not be unreasonably withheld, of any definitive
documentation with respect thereto), (iv) for the consummation of the Marion
Acquisition pursuant to and in accordance with the terms of the Marion
Agreement, or (v) as agreed in writing by Parent, after the date hereof, and
prior to the time the designees of Parent have been elected to, and shall
constitute a majority of, the Board of Directors of the Company pursuant to
Section 1.3 hereof (the "Appointment Date"):
----------------
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall use its best efforts
to preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees, creditors and business partners;
(b) the Company will not, directly or indirectly, (i) except upon
exercise of the Warrant or Options or other rights to purchase shares of Common
Stock
48
<PAGE>
pursuant to the Option Plans outstanding on the date hereof, issue, sell,
transfer or pledge or agree to sell, transfer or pledge any treasury stock of
the Company or any capital stock of any of its Subsidiaries beneficially owned
by it, (ii) amend its Articles of Incorporation or By-laws or similar
organizational documents; or (iii) split, combine or reclassify the outstanding
Shares or any outstanding capital stock of any of the Subsidiaries of the
Company;
(c) neither the Company nor any of its Subsidiaries shall: (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock; (ii) issue, sell, pledge,
dispose of or encumber any additional shares of, or securities convertible into
or exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire (or stock appreciation rights with respect to), any shares of
capital stock of any class of the Company or its Subsidiaries, other than Shares
reserved for issuance on the date hereof pursuant to the exercise of Options or
with respect to SARs outstanding on the date hereof; (iii) transfer, lease,
license, sell, mortgage, pledge, dispose of, or encumber any assets, other than
in the ordinary and usual course of business and consistent with past practice,
or incur or modify any indebtedness or other liability, other than in the
ordinary and usual course of business and consistent with past practice; or (iv)
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(d) make any change in the compensation payable or to become payable
to any of its officers, directors, employees, agents or consultants (other than
general increases in wages to employees who are not officers or directors or
affiliates in the ordinary course consistent with past practice), or to Persons
providing management services, enter into or amend any employment, severance,
consulting, termination or other agreement or employee benefit plan or make any
loans to any of its officers, directors, employees, affiliates, agents or
consultants or make any change in its existing borrowing or lending arrangements
for or on behalf of any of such Persons pursuant to an employee benefit plan or
otherwise;
49
<PAGE>
(e) pay or make any accrual or arrangement for payment of any
pension, retirement allowance or other employee benefit pursuant to any existing
plan, agreement or arrangement to any officer, director, employee or affiliate
or pay or agree to pay or make any accrual or arrangement for payment to any
officers, directors, employees or affiliates of the Company of any amount
relating to unused vacation days, except payments and accruals made in the
ordinary course consistent with past practice or as required under the terms of
the Plans; adopt or pay, grant, issue, accelerate or accrue salary or other
payments or benefits pursuant to any pension, profit-sharing, bonus, extra
compensation, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right or other stock-based incentive, group insurance,
severance pay, retirement or other employee benefit plan, agreement or
arrangement, or any employment or consulting agreement with or for the benefit
of any director, officer, employee, agent or consultant, whether past or present
except for payments and accruals made in the ordinary course of business and
consistent with past practice or as required under the terms of the Plans; or
amend in any material respect any such existing plan, agreement or arrangement
in a manner inconsistent with the foregoing;
(f) the Company shall not modify, amend or terminate any of the
material Company Agreements or waive, release or assign any material rights on
claims, except in the ordinary course of business and consistent with past
practice or as required under the terms of the Plans;
(g) neither the Company nor any of its Subsidiaries shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent except in the ordinary course
of business and consistent with past practice;
(h) neither the Company nor any of its Subsidiaries shall (i) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with past
practice; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of
50
<PAGE>
any other person, except in the ordinary course of business and consistent with
past practice; (iii) make any loans, advances or capital contributions to, or
investments in, any other person except in the ordinary course of business and
consistent with past practice; or (iv) enter into any material commitment or
transaction (including, but not limited to, any borrowing, capital expenditure
or purchase, sale or lease of assets or real estate) except in the ordinary
course of business and consistent with past practice;
(i) neither the Company nor any of its Subsidiaries shall (i) change
any of the accounting methods used by it unless required by GAAP or (ii) make
any material Tax election or change any material Tax election already made,
adopt any material Tax accounting method, change any material Tax accounting
method unless required by applicable law, enter into any material closing
agreement, settle any material Tax claim or assessment or consent to any
material Tax claim or assessment or any waiver of the statute of limitations for
any such claim or assessment; and
(j) neither the Company nor any of its Subsidiaries shall pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of any such claims, liabilities or obligations, in the
ordinary course of business and consistent with past practice, of claims,
liabilities or obligations reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto) of the Company;
(k) neither the Company nor any of its Subsidiaries shall adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Merger);
(l) neither the Company nor any of its Subsidiaries shall take, or
agree to commit to take, any action that would or is reasonably likely to result
in any of the conditions to the Merger set forth in Article VII or any of the
conditions to the Offer set forth in Annex I not being satisfied, or would make
many representation or warranty of the Company contained herein inaccurate in
51
<PAGE>
any respect at, or as of any time prior to, the Effective Time, or that would
materially impair the ability of the Company to consummate the Merger in
accordance with the terms hereof or materially delay such consummation; and
(m) the Company shall not enter into an agreement, contract,
commitment or arrangement to do any of the foregoing, or to authorize,
recommend, propose or announce an intention to do any of the foregoing.
Section 5.3 No Solicitation. (a) The Company will not, and will use
---------------
its best efforts to ensure that its officers, directors, employees, investment
bankers, attorneys, accountants and other agents do not, directly or indirectly:
(i) initiate, solicit or encourage, or take any action to facilitate the making
of, any offer or proposal which constitutes or is reasonably likely to lead to
any Takeover Proposal, (ii) enter into any agreement with respect to any
Takeover Proposal, or (iii) in the event of an unsolicited written Takeover
Proposal for the Company engage in negotiations or discussions with, or provide
any information or data to, any Person (other than Parent, any of its affiliates
or representatives and except for information which has been previously publicly
disseminated by the Company) relating to any Takeover Proposal; provided
--------
however, that nothing contained in this Section 5.3 or any other provision
- -------
hereof shall prohibit the Company or the Company's Board of Directors from (i)
taking and disclosing to the Company's stockholders a position with respect to
a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act or (ii) making such disclosure to the
Company's stockholders as, the Board of Directors may determine in good faith is
required under applicable law after receipt of a written opinion from outside
legal counsel to the Company that such disclosure is required under applicable
law and that the failure to make such disclosure would likely cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning its
business, properties or assets to any Person pursuant to terms substantially
similar to those contained in the Confidentiality Agreement, dated July 1, 1997
entered into be-
52
<PAGE>
tween American Industrial Partners and the Company (the "Confidentiality
---------------
Agreement") and may negotiate and participate in discussions and negotiations
- ---------
with such Person concerning a Takeover Proposal if (x) such entity or group has
on an unsolicited basis submitted a bona fide written proposal to the Company
relating to any such transaction which the Board of Directors determines in good
faith, after receiving advice from Jefferies & Co. or another nationally
recognized investment banking firm, represents a superior transaction to the
Offer and the Merger and (y) in the opinion of the Board of Directors of the
Company, only after receipt of a written opinion from outside legal counsel to
the Company to such effect, the failure to provide such information or access or
to engage in such discussions or negotiations would likely cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders under,
or otherwise violate or subject the Board of Directors to liability under
applicable law (a Takeover Proposal which satisfies clauses (x) and (y) being
referred to herein as a "Superior Proposal"). The Company shall promptly, and
-----------------
in any event within one business day following any determination by the Board of
Directors that a Takeover Proposal is a Superior Proposal, notify Parent of such
determination of the same and prior to providing any such party with any
material non-public information. The Company shall promptly provide to Parent
any material non-public information regarding the Company provided to any other
party which was not previously provided to Parent. At any time after two
business days following notification to Parent of the Company's intent to do so
(which notification shall include the identity of the bidder and the material
terms and conditions of the proposal) and if the Company has otherwise complied
with the terms of this Section 5.3(b), the Board of Directors may terminate this
Agreement pursuant to clause (ii) of Section 8.1(f) and enter into an agreement
with respect to a Superior Proposal, provided that the Company shall,
--------
concurrently with entering into such agreement, pay or cause to be paid to
Parent the Termination Fee (as defined in Section 8.2(b) hereof), plus any
amount payable at the time for reimbursement of expenses pursuant to Section
8.2(b) hereof.
(c) Except as set forth in Sections 5.3(b) and 6.1, 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
53
<PAGE>
Parent or the Purchaser, the approval or recommendation by such Board of
Directors or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend or propose to approve or recommend, any Takeover Proposal
or (iii) enter into any agreement with respect to any Takeover Proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Proxy Statement. As promptly as practicable after the
---------------
consummation of the Offer and if required by the Exchange Act, the Company shall
prepare and file with the SEC, and shall use all reasonable efforts to have
cleared by the SEC, and promptly thereafter shall mail to stockholders, the
Proxy Statement. The Proxy Statement shall contain the recommendation of the
Board of Directors in favor of the Merger, unless the Board of Directors
determines in good faith, after receipt of a written opinion from outside legal
counsel to the Company to such effect, that inclusion of such recommendation in
the Proxy Statement would likely cause the Board of Directors to violate its
fiduciary duties to the Company's stockholders under, or otherwise violate or
subject the Board of Directors to liability under applicable law.
Section 6.2 Meeting of Stockholders of the Company. At the Special
--------------------------------------
Meeting, if any, the Company shall use its best efforts to solicit from
stockholders of the Company proxies in favor of the Merger and shall take all
other action necessary or, in the reasonable opinion of the Purchaser, advisable
to secure any vote or consent of stockholders required by Delaware Law to effect
the Merger. The Purchaser agrees that it shall vote, or cause to be voted, in
favor of the Merger all Shares directly or indirectly beneficially owned by it.
Section 6.3 Additional Agreements. Subject to the terms and
---------------------
conditions as herein provided, the Company, Parent and Purchaser will each
comply in all material respects with all applicable laws and with all
applicable rules and regulations of any governmental authority to achieve the
satisfaction of the Minimum Condition and all conditions set forth in Annex I
attached hereto and Arti-
54
<PAGE>
cle VII hereof, and to consummate and make effective the Merger and the other
transactions contemplated hereby. Each of the parties hereto agrees to use all
reasonable efforts to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings, and to use
all reasonable efforts to take, or cause to be taken, all other actions and to
do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of the Company, Parent and the
Purchaser shall use all reasonable efforts to take, or cause to be taken, all
such necessary actions.
Section 6.4 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to the Purchaser and the Purchaser shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence of any event whose occurrence,
or non-occurrence would be likely to cause either (A) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (B) any
condition set forth in Annex I to be unsatisfied in any material respect at any
time from the date hereof to the date the Purchaser purchases Shares pursuant to
the Offer and (ii) any material failure of the Company, the Purchaser, or
Parent, as the case may be, or any officer, director, employee or agent thereof,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
-------- -------
notice pursuant to this Section 6.4 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 6.5 Access; Confidentiality. (a) From the date hereof to
-----------------------
the Effective Time, upon reasonable notice, the Company shall (and shall cause
each of its Subsidiaries to) afford to the officers, employees, accountants,
counsel, financing sources and other representatives of Parent, access, during
normal business hours during the period prior to the Appointment Date, to all
its properties, books, contracts, commitments and records and, during such
period, the Company shall (and
55
<PAGE>
shall cause each of its Subsidiaries to) furnish promptly to the Parent (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Access shall include
the right to conduct such environmental studies and tests as Parent, in its
reasonable discretion, shall deem appropriate. After the Appointment Date, the
Company shall provide Parent and such persons as Parent shall designate with all
such information, at such time as Parent shall request. Unless otherwise
required by law and until the Appointment Date, Parent and Purchaser will hold
any such information which is non-public in confidence in accordance with, and
will otherwise abide by, the provisions of the Confidentiality Agreement. No
investigation pursuant to this Section 6.5(a) shall affect any representation
or warranty made by the Company hereunder.
(b) Prior to the Closing, the Company and its accountants, counsel,
agents and other representatives shall cooperate with the Purchaser by providing
information about the Company which is necessary for the Purchaser and its
accountants, agents, counsel and other representatives to prepare the Disclosure
Documents and such other documents and other reasonable requests with respect to
such documents. Notwithstanding the penultimate sentence of Section 6.5(a),
the Purchaser may disclose, or cause its representatives to disclose, and at
the request of the Purchaser, the Company shall and shall cause its Subsidiaries
to, disclose information concerning the Company and its Subsidiaries, and their
respective businesses, assets and properties, and the transactions
contemplated by this Agreement in the Disclosure Documents and to prospective
financing sources in connection with the Transactions.
Section 6.6 Consents and Approvals. (a) Each of the Company, Parent
----------------------
and the Purchaser will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on it with respect to this
Agreement and the Transactions (which actions shall include, without
limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
will promptly cooperate with and furnish
56
<PAGE>
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with this Agreement and
the Transactions. Each of the Company, Parent and the Purchaser will, and will
cause its Subsidiaries to, take all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, the Purchaser,
the Company or any of their Subsidiaries in connection with the Transactions or
the taking of any action contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
Section 6.7 Company's Brokers or Finders. The Company represents, as
----------------------------
to itself and its Subsidiaries and affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee from the Company
or any of its Subsidiaries in connection with any of the transactions
contemplated by this Agreement except for Jefferies & Company, Inc., whose fees
are set forth in the engagement letter attached as Section 6.7 of the Company
Disclosure Schedule.
Section 6.8 Purchaser's Brokers or Finders. Each of the Purchaser
------------------------------
and Parent represents, as to itself and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finder's fee or any other commission or similar fee
from either Purchaser or Parent in connection with any of the transactions
contemplated by this Agreement.
57
<PAGE>
Section 6.9 Publicity. The initial press release with respect to
---------
the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other Transactions without the prior
consultation of the other party, except as such party believes, after receiving
the advice of outside counsel and after informing all other parties thereto, may
be required by law or by any listing agreement with a national securities
exchange or trading market. Information included in Disclosure Documents shall
not be deemed to constitute public disclosure for purposes of this Agreement.
Section 6.10 Directors' and Officers' Insurance and Indemnification.
------------------------------------------------------
(a) In the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, addition, suit, proceeding or investigation by or in
the right of the Company or any of its Subsidiaries, in which any of the present
or former officers or directors (the "Indemnified Parties") of the Company or
-------------------
any of its Subsidiaries is, or is threatened to be, made a party by reason of
the fact that he or she is or was, prior to the Effective Time, a director or
officer of the Company or any of its subsidiaries or is or was, prior to the
Effective Time, serving as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise at the
request of the Company or any of its Subsidiaries, whether such claim arises
before or after the Effective Time, the Company shall indemnify and hold
harmless, and after the Effective Time the Surviving Corporation, jointly and
severally, shall indemnify and hold harmless, as and to the full extent
permitted by applicable law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorneys'
fees and expenses), judgments, fines and amounts paid in settlement in
connection with any such claim, action, suit proceeding or investigation. In
the event of any such claim, action, suit proceeding or investigation (whether
arising before or after the Effective Time), (i) the Indemnified Parties may
retain counsel satisfactory to them (which counsel
58
<PAGE>
shall be reasonably satisfactory to the Company or the Surviving Corporation),
and the Company, or the Surviving Corporation after the Effective Time, shall
pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received and (ii) the Company and
the Surviving Corporation will use their respective reasonable efforts to assist
in the vigorous defense of any such matter; provided, that neither the Company
nor the Surviving Corporation shall be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided further that the Surviving Corporation shall have no
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards of
professional conduct, a conflict of interest on any significant issue between
the positions of any two or more Indemnified Parties, or any similar impediment
to the joint representation of multiple Indemnified Parties by a single law
firm.
(b) Until the Effective Time the Company shall keep in effect Section
7.7 of its By-Laws, and thereafter for a period of six years the Surviving
Corporation shall keep in effect in its By-Laws a provision which provides or
indemnification of the Indemnified Parties to the extent permitted by Delaware
Law.
(c) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance ("D&O Insurance") for a
-------------
period of not less than six years after the Effective Time; provided, that the
--------
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or
officers; provided, further, if the existing D&O Insurance expires, is
-------- -------
terminated or cancelled during such period, Parent or the Surviving Corporation
will use all reason able efforts to obtain substantially similar D&O Insurance;
provided, further, however, that in no event shall Parent be required to pay
aggregate premiums for insurance under this Section 6.10(c) in excess of 150%
of the
59
<PAGE>
average of the aggregate premiums paid by the Company in 1995, 1996 and 1997
(through the date hereof) on an annualized basis for such purpose (the "Average
-------
Premium"), which true and correct amounts are set forth in Section 6.10(c) of
- -------
the Company Disclosure Schedule; and provided, further, that if the Parent or
the Surviving Corporation is unable to obtain the amount of insurance required
by this Section 6.10(c) for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium not in excess of 150% of the Average Premium.
Section 6.11 Purchaser Compliance. Parent shall cause the Purchaser
--------------------
to comply with all of its obligations under or related to this Agreement.
Section 6.12 Reasonable Best Efforts. (a) Prior to the Closing, upon
-----------------------
the terms and subject to the conditions of this Agreement, the Purchaser and the
Company, agree to use their respective reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under any applicable laws to consummate and make effective
the transactions contemplated by this Agreement as promptly as practicable
including, but not limited to (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the taking of such actions as are necessary
to obtain any requisite approvals, consents, orders, exemptions or waivers by
any third party or Governmental Entity, (ii) the preparation of any Disclosure
Documents requested by the Purchaser and (iii) the satisfaction of the other
parties' conditions to Closing. In addition, no party hereto shall take any
action after the date hereof that would reasonably be expected to materially
delay the obtaining of, or result in not obtaining, any permission, approval or
consent from any Governmental Entity necessary to be obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly consult with the
other parties hereto with respect to, provide any necessary information with
respect to and provide the other (or its counsel) copies of, all filings made by
such party with any Governmental Authority or any other information supplied by
such party to a Governmental Entity in connection with this Agree-
60
<PAGE>
ment and the transactions contemplated by this Agreement. Each party hereto
shall promptly inform the other of any communication from any Governmental
Entity regarding any of the transactions contemplated by this Agreement. If any
party hereto or affiliate thereof receives a request for additional information
or documentary material from any such Government Entity with respect to the
transactions contemplated by this Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. To the extent that transfers of permits or Environmental
Permits are required as a result of execution of this Agreement or consummation
of the transactions contemplated hereby, the Company shall use its best efforts
to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require the Purchaser to defend against any litigation brought by any
Governmental Entity seeking to prevent the consummation of the transactions
contemplated hereby.
(d) The Company agrees to use its reasonable best efforts to assist
the Purchaser in connection with obtaining any financing in connection with the
consummation of the Transactions, including the Debt Financing. Without
limiting the generality of the foregoing, the Company shall (i) promptly prepare
all reasonably requested financial statements required to be included in the
Disclosure Documents and (ii) take all action reasonably requested by Parent
that is necessary or appropriate to effect the satisfaction and discharge of the
indenture, dated December 14, 1994 (the "Secured Notes Indenture"), between
-----------------------
Bucyrus-Erie Company (predecessor to the Company) and Harris Trust and Savings
Bank, as Trustee (the "Secured Notes Indenture Trustee"), relating to the
-------------------------------
Company's 10.5% Secured Notes due December 14, 1999 (the "Secured Notes")
-------------
pursuant to Sections 401(1)(B)(iii), 401(2) and 401(3) of the Secured Notes
Indenture and to cause the filing of UCC-3 termination statements covering the
collateral securing the Secured Notes, in each case, effective upon the purchase
of any Shares pursuant to the Offer.
Section 6.13 Rights Plan. In the event that at anytime following the
-----------
date hereof, the Company adopts
61
<PAGE>
a stockholder rights plan, the Company shall provide an exception with respect
to definitions of "acquiring person" and/or "triggering event" and terms of
similar import contained within such plan with respect to any shares of Common
Stock that may be acquired pursuant to the exercise of the JNL Option, and the
subsequent disposition of any such shares to a third party (a "Subsequent
----------
Disposition"), such that any rights that may be issued under such plan are not
- -----------
modified or changed as a result of any such acquisition or disposition of shares
of Common Stock.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger shall be
- ------
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
(a) Stockholder Approval. The Merger and this Agreement shall have
--------------------
been approved and adopted by the requisite vote of the holders of the Shares, if
required by Delaware Law;
(b) Statutes; Court Orders. No statute, rule or regulation shall
----------------------
have been enacted or promulgated by any governmental authority which prohibits
the consummation of the Merger; and there shall be no order or in junction of a
court of competent jurisdiction in effect precluding consummation of the Merger;
and
(c) Purchase of Shares in Offer. The Purchaser shall have made, or
---------------------------
caused to be made, the Offer and shall have purchased, or caused to be
purchased, the Shares pursuant to the Offer; provided, that this condition
--------
shall be deemed to have been satisfied with respect to the obligation of Parent
and the Purchaser to effect the Merger if the Purchaser fails to accept for
payment or pay for Shares pursuant to the Offer in violation of the terms of the
Offer or of this Agreement; and
62
<PAGE>
(d) HSR Approval. The applicable waiting period under the HSR Act
------------
shall have expired or been terminated.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
-----------
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval:
(a) By mutual written consent of the Parent and the Board of
Directors of the Company; or
(b) By Parent if the Offer shall have expired or been terminated
without any Shares being purchased thereunder by the Purchaser as a result of
the occurrence of any of the events set forth in Annex I; or
(c) By either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other action (which
order, decree or ruling the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement; or
(d) By Parent if, without any material breach by Parent or the
Purchaser of its obligations under this Agreement, the purchase of Shares
pursuant to the Offer shall not have occurred on or before February 20, 1998; or
(e) By the Company if, without any material breach by the Company of
its obligations under this Agreement, the purchase of Shares pursuant to the
Offer shall not have occurred on or before February 20, 1998; or
(f) By the Company (i) if there shall be a material breach of any of
Parent or the Purchaser's representations, warranties or covenants hereunder,
which breach cannot be or has not been cured within thirty days
63
<PAGE>
of the receipt of written notice thereof or (ii) to allow the Company to enter
into an agreement in accordance with Section 5.3(b) with respect to a Superior
Proposal; provided that it has complied with all provisions thereof, including
--------
the notice provision therein, and that it makes simultaneous payment of the
Termination Fee, plus any amounts then due as a reimbursement of expenses; or
(g) By Parent, if prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached in any material respect (without
reference to any materiality qualification contained therein) any
representation, warranty or covenant or other agreement contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in paragraph (e) or (f) of Annex I hereto and (ii) cannot be or has not
been cured within thirty days of the receipt of written notice thereof; or
(h) By Parent, at any time prior to the purchase of the Shares
pursuant to the Offer, if (i) the Board of Directors of the Company shall
withdraw, modify, or change its recommendation or approval in respect of this
Agreement or the Offer in a manner adverse to the Purchaser, (ii) the Board of
Directors of the Company shall have recommended any proposal other than by
Parent or the Purchaser in respect of a Takeover Proposal, (iii) the Company
shall have exercised a right with respect to Takeover Proposal referenced in
Section 5.3(b) and shall, directly or through its representatives, continue
discussions with any third party concerning a Takeover Proposal for more than
ten business days after the date of receipt of such Takeover Proposal, (iv) a
Takeover Proposal that is publicly disclosed shall have been commenced, publicly
proposed or communicated to the Company which contains a proposal as to price
(without regard to whether such proposal specifies a specific price or a range
of potential prices) and the Company shall not have rejected such proposal
within ten business days of its receipt or, if sooner, the date its existence
first becomes publicly disclosed, or (v) any Person or group (as defined in
Section 13(d)(3) of the Exchange Act) other than Parent or the Purchaser or
any of their respective subsidiaries or affiliates shall have become the
beneficial owner of more than 15% of the outstanding Shares (either on a primary
or a fully diluted basis); provided, however, that this provision shall not
-------- -------
apply to any Person that owns more
64
<PAGE>
than 15% of the outstanding Shares on the date hereof; provided, further, that
-------- -------
such Person does not further increase its beneficial Ownership beyond the number
of Shares such Person beneficially owns on the date hereof.
Section 8.2 Effect of Termination.
---------------------
(a) In the event of termination of this Agreement as provided in
Section 8.1 hereof, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forth with become null and void
and there shall be no liability on the part of Parent, the Purchaser or the
Company, except (i) as set forth in Sections 6.5(a) and 9.3 hereof and (ii)
nothing herein shall relieve any party from liability for any breach of this
Agreement; provided, however, the obligation of the Company under Section 6.13
-------- -------
shall survive the termination of this Agreement but only until immediately after
the occurrence of one (1) Subsequent Disposition.
(b) If (i) Parent shall have terminated this Agreement pursuant to
Section 8.1(h), (ii) Parent shall have terminated this Agreement pursuant to
Section 8.1(g) and following the date hereof but prior to such termination
there shall have been a Takeover Proposal Interest or (iii) the Company shall
have terminated this Agreement pursuant to Section 8.1(f)(ii), then in any such
case the Company shall pay simultaneously with such termination if pursuant to
Section 8.1(f)(ii) and promptly, but in no event later than two business days
after the date of such termination or event if pursuant to Section 8.1(h) or
8.1(g), to Parent a termination fee (the "Termination Fee") of $7,000,000 plus
---------------
an amount, not in excess of $1,500,000, equal to the Purchaser's actual and
reasonably documented out-of-pocket expenses incurred by Parent and the
Purchaser in connection with the Offer, the Merger, this Agreement and the
consummation of the transactions contemplated hereby, which amount shall be pay
able by wire transfer to such account as Parent may designate in writing to the
Company. Upon payment of the Termination Fee the Company shall have no further
obligation to Parent or the Purchaser, under this Agreement or otherwise, by
reason of the termination of this Agreement or, if this Agreement is terminated
by Parent pursuant to Section 8.1, by reason of any breach of this Agreement or
65
<PAGE>
any representation, warranty or covenant herein by the Company.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification. Subject to applicable law,
--------------------------
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors or equivalent governing bodies, at any
time prior to the Effective Time with respect to any of the terms contained
herein; provided however, that after the approval of this Agreement by the
-------- -------
shareholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration.
Section 9.2 Non-survival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 9.3 Expenses. Except as expressly set forth in Section
--------
8.2(b), all fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fees, costs and expenses.
Section 9.4 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by a nationally recognized overnight
courier service, such as Federal Express, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
66
<PAGE>
(a) if to Parent or the Purchaser, to:
c/o American Industrial Partners
One Maritime Plaza
Suite 2525
San Francisco, California 94111
Attention: Lawrence W. Ward, Jr.
Telephone No.: (415) 788-7354
Telecopy No.: (415) 788-5302
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Peter A. Atkins, Esq.
Telephone No.: (212) 735-3700
Telecopy No.: (212) 735-2000
and
(b) if to the Company, to:
Bucyrus International Inc.
1100 Milwaukee Avenue
P.O. Box 500
South Milwaukee, Wisconsin 53172
Attention: W.R. Hildebrand
Telephone No.: (414) 768-4000
Telecopy No.: (414) 768-5060
with a copy to:
Whyte Hirschboeck Dudek S.C.
111 E. Wisconsin Avenue
Suite 2100
Milwaukee, Wisconsin 53202
Attention: Daryl L. Diesing
Telephone No.: (414) 273-2100
Telecopy No.: (414) 223-5000
Section 9.5 Interpretation. When a reference is made in this
--------------
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation."
67
<PAGE>
As used in this Agreement, the term "affiliates" shall have the meaning set
forth in Rule 12b-2 of the Exchange Act. As used in this Agreement, the term
"Person" shall mean a natural person, partnership, corporation, limited
- -------
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or
organization.
Section 9.6 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 9.7 Entire Agreement; No Third Party Beneficiaries. This
----------------------------------------------
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof (including the
letter of intent, dated July 30, 1997, between American Industrial Partners
Capital Fund II, L.P.), and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
Section 9.8 Severability. Any term or provision of this Agreement
------------
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court asking such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
68
<PAGE>
Section 9.9 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 9.10 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written content of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
69
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
AMERICAN INDUSTRIAL PARTNERS
ACQUISITION COMPANY,
LLC
By__________________________
Name:
Title:
BUCYRUS ACQUISITION CORP.
By______________________________
Name:
Title:
BUCYRUS INTERNATIONAL, INC.
By______________________________
Name:
Title:
70
<PAGE>
ANNEX I
Certain Conditions of the Offer. Notwithstanding any other
-------------------------------
provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as to
any Shares not then paid for, if (i) Parent shall have failed to receive, and
have immediately available to it, the Debt Financing in the full amounts and on
the terms and in accordance with the conditions set forth in the Commitment
Letters (the "Financing Condition"), (ii) any applicable waiting period under
-------------------
the HSR Act has not expired or terminated, (iii) the Minimum Condition has not
been satisfied, or (iv) at any time on or after the date of this Agreement and
before the time of acceptance for payment for any such Shares, any of the
following events shall have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity against the Purchaser, Parent, the Company
or any Subsidiary of the Company (i) seeking to prohibit or impose any material
limitations on Parent's or the Purchaser's ownership or operation (or that of
any of their respective Subsidiaries or affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent or
the Purchaser or their respective Subsidiaries and affiliates to dispose of or
hold separate any material portion of the business or assets of the Company or
Parent and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the Purchaser of any Shares under the
Offer, seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other transactions contemplated
by the Merger Agreement, or seeking to obtain from the
A-1
<PAGE>
Company, Parent or the Purchaser any damages that are material in relation to
the Company and its Subsidiaries taken as a whole, (iii) seeking to impose
material limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer and the Merger, (iv) seeking to impose material
limitations on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's shareholders, or (v) which otherwise is reasonably likely to have a
Company Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under HSR Act, that is reason ably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ Stock Market for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any limitation
(whether or not mandatory) by any United States governmental authority on the
extension of credit generally by banks or other financial institutions, or (v)
a change in general financial, bank or capital market conditions which
materially and adversely affects the ability of financial institutions in the
United States to extend credit or syndicate loans or (vi) in the case of any of
the foregoing existing at the time
A-2
<PAGE>
of the commencement of the Offer, a material acceleration or worsening thereof;
(d) since December 31, 1996, there shall have occurred any change (or
any development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any change) that constitutes a Company Material Adverse
Effect;
(e) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Takeover Proposal or (ii) the Company
shall have entered into any agreement with respect to any Superior Proposal in
accordance with Section 5.3(b) of this Agreement;
(f) the representations and warranties of the Company set forth in
this Agreement shall not be true and correct, in any material respect (without
reference to any material qualification contained therein) in each case (i) as
of the date referred to in any representation or warranty which addresses
matters as of a particular date, or (ii) as to all other representations and
warranties, as of the date of this Agreement and as of the scheduled expiration
of the Offer (provided that for purposes of this paragraph (f), other than the
representation and warranty of the Company set forth in Section 3.26 of this
Agreement, the representations and warranties of the Company set forth in this
Agreement shall not be deemed to have been made with respect to the Business of
the Marion Sellers (as the term "Business" is defined in the Marion Agreement)
or any of the assets acquired or liabilities assumed thereunder;
(g) the Company shall have failed to perform any obligation or to
comply with any agreement or covenant to be performed or complied with by it
under this Agreement;
(h) the Purchaser shall have failed to receive a certificate executed
by the President or a Vice President of the Company, dated as of the scheduled
expiration of the Offer, to the effect that the conditions set forth in
paragraphs (f) and (g) of this Annex I have not occurred;
A-3
<PAGE>
(i) all consents, permits and approvals of Governmental Authorities
and other Persons listed in Section 3.4 of the Company Disclosure Schedule and
identified with an asterisk shall not have been obtained with no material
adverse conditions attached and no material expense imposed on the Company or
any of its Subsidiaries;
(j) the transactions contemplated under the Marion Agreement shall
not have been consummated pursuant to and substantially in accordance with the
terms set forth in the Marion Agreement;
(k) there shall have occurred any change (or any development that,
insofar as reasonably can be foreseen, is or could reasonably be expected to
result in any change) that is materially adverse to the business, operations,
properties (including intangible properties), condition (financial or
otherwise), results of operations, assets, liabilities or prospects of the
Business of the Marion Sellers (as the term "Business" is defined in the Marion
Agreement);
(l) the Secured Notes Indenture shall not have been fully satisfied
and discharged pursuant to the terms thereof, and all collateral securing the
Secured Notes shall not have been released (unless the Secured Notes Indenture
Trustee has delivered to the Company a written agreement providing for the
release of such collateral), subject only to the receipt by the Secured Notes
Indenture Trustee of funds (pursuant to the Debt Financing) sufficient to
effect the redemption of the Secured Notes;
(m) JNL shall not have waived the right to at least 30 days prior
notice of redemption provided by Section 1105 of the Secured Notes Indenture,
pursuant to Section 106 of the Secured Notes Indenture (unless JNL shall have
entered into a binding agreement with the Company to sell all of the Secured
Notes held by JNL to the Company, at no more than par, at a time designated by
the Company and acceptable to the Purchaser);
(n) any Person or group (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent or the Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act)
A-4
<PAGE>
of more than 15% of the outstanding Shares (either on a primary or a fully
diluted basis); provided, however, that this provision shall not apply to any
Person that beneficially owns more than 15% of the outstanding Shares on the
date hereof; provided, further, that such Person does not further increase its
beneficial ownership beyond the number of Shares such Person beneficially owns
on the date hereof; or
(o) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or the Purchaser) and may be waived by Parent or the Purchaser in whole
or in part at any time and from time to time in the sole discretion of Parent or
the Purchaser, subject in each case to the terms of this Agreement. The failure
by Parent or the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
A-5
<PAGE>
EXHIBIT (c)(2)
--------------
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "Agreement"), dated as of August 21, 1997,
---------
by and among American Industrial Partners Acquisition Company, LLC, a Delaware
limited liability company ("Parent"), Bucyrus Acquisition Corp., a Delaware
------
corporation and a wholly owned subsidiary of Parent ("the Purchaser") and
---------
Jackson National Life Insurance Company, a Michigan corporation (the
"Stockholder").
- ------------
WHEREAS, the Stockholder is, as of the date hereof, the record and
beneficial owner of 4,228,382 shares of common stock, par value $0.01 per share
(the "Common Stock") of Bucyrus International, Inc., a Delaware corporation
------------
(the "Company") and, together with PPM America, Inc., a Delaware Corporation,
-------
shares voting power and dispositive power with respect to such shares; and
WHEREAS, the Stockholder is, as of the date hereof, the record and
beneficial owner of $63,963,000 in principal amount of the Company's 10.5%
Secured Notes due December 14, 1999 (the "Secured Notes"), which Secured Notes
-------------
are governed by that certain Indenture, dated December 14, 1994, between
Bucyrus-Erie Company, predecessor to the Company, and Harris Trust and Savings
Bank, as Trustee (the "Indenture") and by that certain Security Agreement, dated
---------
December 14, 1994, between Bucyrus-Erie Company and Harris Trust and Savings
Bank, as Collateral Agent (the "Security Agreement"); and
------------------
WHEREAS, Parent, the Purchaser and the Company concurrently herewith
are entering into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), which provides, among other things, for the
----------------
acquisition of the Company by Parent by means of a cash tender offer (the
"Offer") for any and all of the outstanding shares of Common Stock and for the
-----
subsequent merger (the "Merger") of the Purchaser with and into the Company upon
------
the terms and subject to the conditions set forth in the Merger Agreement; and
<PAGE>
WHEREAS, the Company and the Stockholder concurrently herewith are
entering into a Settlement Agreement, dated as of the date hereof, (the
"Settlement Agreement"), which provides, among other things, for the settlement
- ---------------------
and release of certain claims that the Stockholder has asserted against the
Company and for the allocation, as between the Company and the Stockholder, of
amounts that the Company may recover in respect of certain claims against third
parties; and
WHEREAS, as a condition to the willingness of Parent and the Purchaser
to enter into the Merger Agreement, and in order to induce Parent and the
Purchaser to enter into the Merger Agreement, the Stockholder has agreed to
enter into this Agreement and the Settlement Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
Parent and the Purchaser of the Merger Agreement and the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein
and therein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Representations and Warranties of the Stockholder. The
-------------------------------------------------
Stockholder hereby represents and warrants, to Parent and the Purchaser as
follows:
(a) The Stockholder is the record and beneficial owner of 4,228,382
shares of Common Stock (as may be adjusted from time to time pursuant to Section
6 hereof, the "Shares"), and the Stockholder is the record and beneficial owner
------
of $63,963,000 in principal amount of the Secured Notes (as may be adjusted from
time to time pursuant to Section 6 hereof, the "Stockholder's Secured Notes").
---------------------------
(b) The Stockholder is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction, has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement.
2
<PAGE>
(c) This Agreement has been duly authorized, executed and delivered
by the Stockholder and constitutes the legal, valid and binding obligation of
the Stockholder, enforceable against the Stockholder in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefor may be brought.
(d) Neither the execution and delivery of this Agreement nor the
consummation by the Stockholder of the transactions contemplated hereby will
result in a violation of, or a default under, or conflict with, any contract,
trust, commitment, agreement, understanding, arrangement or restriction of any
kind to which the Stockholder is a party or bound or to which the Shares or the
Secured Notes are subject. Consummation by the Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval, or
notice under, any provision of any judgment, order, decree, statute, law, rule
or regulation applicable to the Stockholder, the Shares or the Stockholder's
Secured Notes, except for any necessary filing under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or the Hart-Scott-Rodino Antitrust
------------
Improvements Act of 1976, as amended (the "HSR Act"), or state takeover laws.
-------
(e) The Shares and the certificates representing the Shares and the
Stockholder's Secured Notes are now and at all times during the term hereof will
be held by the Stockholder, or by a nominee or custodian for the benefit of the
Stockholder, free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies arising
hereunder; provided, however, that the Stockholder may transfer all or a portion
-------- -------
of the Shares or the Secured Notes to be a person or entity who, by written
instrument reasonably acceptable in form and substance to Parent, agrees to be
bound by each of the terms of this Agreement.
3
<PAGE>
(f) To the best knowledge of the Stockholder, without independent
investigation, the representations of the Company set forth in Section 3.6
(with respect to such matters as have been disclosed to the Stockholder or any
of its affiliates in writing prior to the date hereof), 3.7 (with respect to
liabilities or indebtedness owed to the Stockholder or any of its affiliates),
3.8 (with respect to such matters in which the Stockholder or any of its
affiliates is a party) 3.15 (with respect to such matters as to which the
Stockholder or any of its affiliates have received written notice), and 3.20
(with respect to such matters involving the Stockholder or any of its
affiliates) of the Merger Agreement, as modified by the Company Disclosure
Schedule (as defined in the Merger Agreement), are true and correct in all
material respects as of the date of this Agreement. The representations and
warranties of the Stockholder set forth in this paragraph (f) shall terminate
upon the earlier to occur of the Effective Time (as defined in the Merger
Agreement) and the Termination Date.
SECTION 2. Representations and Warranties of Parent and the
------------------------------------------------
Purchaser. Each of Parent and the Purchaser hereby, jointly and severally,
- ---------
represents and warrants to the Stockholder as follows:
(a) Parent is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered
by each of Parent and the Purchaser and constitutes the legal, valid and binding
obligation of each of Parent and the Purchaser, enforce-
4
<PAGE>
able against each of them in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.
(c) Neither the execution and delivery of this Agreement nor the
consummation by each of Parent and the Purchaser of the transactions
contemplated hereby will result in a violation of, or a default under, or
conflict with, any contract, trust, commitment, agreement, understanding,
arrangement or restriction of any kind to which each of Parent and the Purchaser
is a party or bound. The consummation by each of Parent and the Purchaser of
the transactions contemplated hereby will not violate, or require any consent,
approval, or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to either Parent or the Purchaser,
except for any necessary filing under the HSR Act or state takeover laws.
SECTION 3. Purchase and Sale of the Shares. The Stockholder hereby
-------------------------------
agrees that it shall tender the Shares into the Offer promptly, and in any event
no later than the fifth business day following the commencement of the Offer,
or, if the Stockholder has not received the offering materials by such time,
within two business days following receipt of such materials, and that it shall
not withdraw any Shares so tendered. The Purchaser hereby agrees to purchase
all the Shares so tendered at a price per Share equal to $18.00 per Share, or
such higher price per Share as may be offered by the Purchaser in the Offer;
provided that the Purchaser's obligation to accept for payment and pay for the
- --------
Shares in the Offer is subject to all the terms and conditions of the Offer set
forth in the Merger Agreement and Annex I thereto.
SECTION 4. Transfer of the Shares and the Stockholder's Secured
----------------------------------------------------
Notes. Prior to the termination of this Agreement, except as otherwise provided
- -----
herein, the Stockholder shall not: (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition),
5
<PAGE>
or consent to any transfer of, any or all of the Shares or the Stockholder's
Secured Notes or any interest therein; (ii) enter into any contract, option or
other agreement or understanding with respect to any transfer of any or all of
the Shares or the Stockholder's Secured Notes or any interest therein; (iii)
except as provided in Section 8(b) hereto, grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares or the
Stockholder's Secured Notes; (iv) deposit the Shares or the Stockholder's
Secured Notes into a voting trust or enter into a voting agreement or
arrangement with respect to the Shares or the Stockholder's Secured Notes; or
(v) take any other action with respect to the Shares or the Secured Notes that
would in any way restrict, limit or interfere with the performance of their
obligations hereunder or the transactions contemplated hereby; provided,
--------
however, that the Stockholder may transfer all or a portion of the Shares or the
- -------
Secured Notes to a person or entity who, by written instrument reasonably
acceptable in form and substance to Parent, agrees to be bound by each of the
terms of this Agreement.
SECTION 5. Voting of Shares; Grant of Irrevocable Proxy; Appointment
---------------------------------------------------------
of Proxy.
- --------
(a) The Stockholder hereby agrees that, during the term of this
Agreement, at any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Common Stock, however called,
or in connection with any written consent of the holders of Common Stock, the
Stockholder will appear at the meeting or otherwise cause the Shares to be
counted as present thereat for purposes of establishing a quorum and vote or
consent (or cause to be voted or consented) the Shares (i) in favor of the
Merger, (ii) against any action or agreement which would impede, interfere with
or prevent the Merger, including any other extraordinary corporate transaction,
such as a merger, reorganization or liquidation involving the Company and a
third party or any other proposal of a third party to acquire the Company, and
(iii) if requested by Parent, in favor of a shareholder resolution proposed by
Parent pursuant to Section 180.1150(4) of the Wisconsin Business Corporation
Law.
6
<PAGE>
(b) The Stockholder hereby irrevocably grants to, and appoints,
Parent and any nominee thereof, its proxy and attorney-in-fact (with full power
of substitution) during the term of this Agreement, for and in the name, place
and stead of the Stockholder, to vote the Shares, or grant a consent or approval
in respect of the Shares, in connection with any meeting of the stockholders of
the Company (i) in favor of the Merger, and (ii) against any action or agreement
which would impede, interfere with or prevent the Merger, including any other
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company and a third party or any other proposal of a
third party to acquire the Company.
(c) The Stockholder represents that any proxies heretofore given in
respect of the Shares, if any, are not irrevocable, and that such proxies are
hereby revoked.
(d) The Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and,
except as set forth in Section 8 hereof, is intended to be irrevocable in
accordance with the provisions of Section 212(e) of the Delaware General
Corporation Law (the "DGCL").
----
SECTION 6. Certain Events. In the event of any stock split, stock
--------------
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock, the Secured Notes
or the acquisition of additional shares of Common Stock, additional Secured
Notes or other securities or rights of the Company by the Stockholder, the
number of Shares and the aggregate principal amount of the Stockholder's Secured
Notes shall be adjusted appropriately, and this Agreement and the obligations
hereunder shall attach to any additional shares of Common Stock, additional
Secured Notes or other securities or rights of the Company issued to or acquired
by the Stockholder.
SECTION 7. Grant of Option.
---------------
7
<PAGE>
(a) The Stockholder hereby grants to Parent an irrevocable option
(the "Option") to purchase the Shares at a purchase price per share of $18.00
per Share (the "Exercise Price"), in the manner set forth in this Section.
--------------
(b) At any time or from time to time prior to the termination of the
Option granted hereunder in accordance with the terms of this Agreement, Parent
(or its designee) may exercise the Option, in whole but not in part (except as
expressly permitted by Section 7(d)), if on or after the date hereof:
(i) any corporation, partnership, individual, trust,
unincorporated association, or other entity or "person" (as defined in
Section 13(d)(3) of the Exchange Act) other than Parent or any of its
"affiliates" (as defined in the Exchange Act) (a "Third Party"), shall
-----------
have:
(A) commenced or announced an intention to commence a bona fide
---- ----
tender offer or exchange offer for any shares of Common Stock, the
consummation of which would result in "beneficial ownership" (as defined
under the Exchange Act) by such Third Party (together with all such Third
Party's affiliates and "associates" (as such term is defined in the
Exchange Act)) of 50% or more of the then outstanding voting equity of the
Company (either on a primary or a fully diluted basis);
(B) acquired beneficial ownership of shares of Common Stock
which, when aggregated with any shares of Common Stock already owned by
such Third Party, its affiliates and associates, would result in the
aggregate beneficial ownership by such Third Party, its affiliates and
associates of 15% or more of the then outstanding voting equity of the
Company (either on a primary or a fully diluted basis), provided, however,
-------- -------
that "Third Party" for purposes of this clause (ii) shall not include any
corporation, partnership, person, other entity or group which beneficially
owns more than 15% of the outstanding voting equity of the Company (either
on a primary or a fully diluted basis) as of the date hereof and that does
not, after the date hereof, increase such ownership percentage by more
8
<PAGE>
than an additional 1% of the outstanding voting equity of the Company
(either on a primary or a fully diluted basis);
(C) filed a Notification and Report Form under the HSR Act,
reflecting an intent to acquire the Company or any assets or securities of
the Company;
(D) acquired assets constituting 15% or more of the total
assets or earning power of the Company taken as a whole;
(E) entered into an agreement with the Company which
contemplates the acquisition of (x) assets constituting 15% or more of the
total assets or earning power of the Company taken as a whole or (y)
beneficial ownership of 15% or more of the outstanding voting equity of the
Company;
(F) solicited "proxies" in a "solicitation" subject to the proxy
rules under the Exchange Act, executed any written consent or become a
"participant" in any "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act), in each case with respect to the
Common Stock; or
(ii) any of the events described in Section 8.1(g) or (h) of the
Merger Agreement that would allow Parent to terminate the Merger Agreement
has occurred (but without the necessity of Parent having terminated the
Merger Agreement).
In the event that Parent wishes to exercise all or any part of the
Option, Parent shall give written notice (the "Option Notice", with the date of
-------------
the Option Notice being hereinafter called the "Notice Date") to the Stockholder
-----------
specifying the number of Shares it will purchase and a place and date (not
earlier than three (3) nor later than twenty (20) business days from the Notice
Date) for closing such purchase (a "Closing"). Parent's obligation to purchase
-------
Shares upon any exercise of the Option, and the Stockholder's obligation to sell
Shares upon any exercise of the Option, is subject (at the election of each of
Parent or the Stockholder) to the conditions that (i) no preliminary or
permanent injunction or
9
<PAGE>
other order against the purchase, issuance or delivery of the Shares issued by
any federal, state or foreign court of competent jurisdiction shall be in effect
(and no action or proceeding shall have been commenced or threatened for
purposes of obtaining such an injunction or order) and (ii) any applicable
waiting period under the HSR Act shall have expired. The Parent's obligation to
purchase Shares upon any exercise of the Option is further subject (at its
election) to the condition that there shall have been no material breach of the
representations, warranties, covenants or agreements of the Stockholder
contained in this Agreement or of the Company contained in the Merger Agreement.
Notwithstanding the foregoing, any failure by Parent to purchase Shares upon
exercise of the Option at any Closing as a result of the non-satisfaction of any
of the foregoing conditions shall not affect or prejudice Parent's right to
purchase such Shares upon the subsequent satisfaction of such conditions. The
Stockholder's obligation to sell Shares upon any exercise of the Option (and the
Stockholder's obligations under Section 5 of this Agreement) is subject (at its
election) to the further conditions that there shall have been no material
breach of the representations, warranties, covenants or agreements of the
Purchaser or the Parent contained in this Agreement or contained in the Merger
Agreement, which breach has not been cured within thirty days of the receipt of
written notice thereof from the Stockholder.
(c) At any Closing, (i) the Stockholder will deliver to Parent the
certificate or certificates representing the number of Shares being purchased in
proper form for transfer upon exercise of the Option in the denominations
designated by Parent in the Option Notice, and, if the Option has been exercised
in part, a new Option evidencing the rights of Parent to purchase the balance of
the Shares subject thereto, and (ii) Parent shall pay the aggregate purchase
price for the Shares to be purchased by wire transfer of immediately available
funds to an account, which account shall be designated in writing to Parent
within five days after execution of this Agreement in the amount of the Exercise
Price times the number of Shares to be purchased.
(d) Notwithstanding any other provision of this Agreement, in the
event that the Merger Agreement is terminated and at any time prior to the
Termination
10
<PAGE>
Date (as hereinafter defined) a person other than Parent or any of its
affiliates acquires a majority of the outstanding shares of Common Stock at a
price higher than the Exercise Price (an "Alternative Transaction"), then Parent
-----------------------
shall promptly either reduce the number of Shares subject to the Option, pay
cash to the Stockholder or do both such that the actual Total Profit (as
hereinafter defined) realized or to be realized by Parent upon the consummation
of an Alternative Transaction does not exceed 50% of the Total Profit that
Parent would otherwise realize had it not taken the foregoing actions; provided
--------
that, in the event that Parent elects to reduce the number of Shares subject to
the Option, there shall be pending, at the time Parent makes such election, a
transaction involving the Company that, if consummated, would allow the
Stockholder to dispose of any remaining Shares that would not otherwise be
purchased by Parent upon the exercise of the Option; provided, further, that in
the event such transaction is not consummated within three months following the
time Parent makes such election, Parent shall, at the option of the
Stockholder, purchase any remaining Shares held by the Stockholder such that
Parent and the Stockholder each retain 50% of the Total Profit following such
purchase. As used herein, the term "Total Profit" shall mean the aggregate
------------
amount (before taxes) of the net cash amounts and the fair market value (as
reasonably determined by a nationally recognized investment banking firm
acceptable to each of Parent and the Stockholder or, if one cannot be agreed
upon, by Salomon Brothers, Inc.) of all other forms of consideration received or
to be received by Parent pursuant to the sale of the aggregate number of Shares
subject to the Option (or any other securities into which such Shares are
converted or exchanged) in any Alternative Transaction, less the aggregate
Exercise Price of all of such Shares.
(e) In the event that Parent or the Purchaser pays a price higher
than $18.00 per share for Shares tendered into the Offer, the Exercise Price
shall be increased to equal such higher price.
(f) The Stockholder has granted the Option to the Parent in order to
induce Parent to enter into and consummate the transactions contemplated by the
Merger Agreement. Parent covenants and agrees that it will perform its
obligations under the Merger Agreement.
11
<PAGE>
The provisions of this Section 7(f) are intended both for the benefit of the
Stockholder and for the benefit of the Company and the other stockholders of the
Company, and may not be modified, waived or amended without the consent of the
Company.
SECTION 8. Certain Other Agreements.
------------------------
(a) The Stockholder will notify the Purchaser immediately if any
proposals are received by, any information is requested from, or any
negotiations or discussions are sought to be initiated or continued with the
Stockholder or its officers, directors, employees, investment bankers,
attorneys, accountants or other agents, in each case in connection with any
Takeover Proposal or Takeover Proposal Interest (as such terms are defined in
the Merger Agreement) indicating, in connection with such notice, the name of
the person indicating such Takeover Proposal Interest and the terms and
conditions of any proposals or offers. The Stockholder agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Takeover Proposal Interest. The Stockholder agrees that it shall keep
Parent informed, on a current basis, of the status and terms of any Takeover
Proposal Interest. The Stockholder agrees that it will not, and will use its
best efforts to ensure that its officers, directors, employees, investment
bankers, attorneys, accountants and other agents do not, directly or indirectly:
(i) initiate, solicit or encourage, or take any action to facilitate the
making of, any offer or proposal which constitutes or is reasonably likely to
lead to any Takeover Proposal, (ii) enter into any agreement with respect to any
Takeover Proposal, or (iii) in the event of an unsolicited written Takeover
Proposal engage in negotiations or discussions with, or provide any information
or data to, any person (other than Parent, any of its affiliates or
representatives and except for information which has been previously publicly
disseminated by the Company) relating to any Takeover Proposal. The obligations
provided for in this Section 8(a) shall become effective immediately following
the execution and delivery of this Agreement by the parties hereto.
(b) The Stockholder hereby agrees, if requested by Parent, to take
all action necessary to waive
12
<PAGE>
compliance by the Company with the provisions of Section 1105 of the Indenture
relating to the timely issuance of a notice of redemption prior to the
Redemption Date (as defined in the Indenture) in connection with the Company's
redemption of the Secured Notes, pursuant to Section 106 of the Indenture;
provided, however, that Parent shall indemnify and hold the Stockholder harmless
- -------- -------
in connection with the foregoing; provided, further that Parent's maximum
-------- -------
liability in connection therewith shall be $14,500.
SECTION 9. Further Assurances; Stockholder Capacity. (a) Each of
----------------------------------------
the Stockholder shall, upon request of Parent or the Purchaser, execute and
deliver any additional documents and take such further actions as may reasonably
be deemed by Parent or the Purchaser to be necessary or desirable to carry out
the provisions hereof and to vest the power to vote the Shares as contemplated
by Section 5 hereof in Parent.
(b) Nothing in this Agreement shall be construed to prohibit any
affiliate of the Stockholder who is a member of the Board of Directors of the
Company from taking any action solely in his capacity as a member of the Board
of Directors of the Company to the extent specifically permitted by the Merger
Agreement.
SECTION 10. Termination. This Agreement, and all rights and
-----------
obligations of the parties hereunder, shall terminate immediately upon the
earlier of (a) the date (the "Termination Date") that is six months following
----------------
the date upon which the Merger Agreement is terminated in accordance with its
terms or (b) the Effective Time (as defined in the Merger Agreement); provided,
--------
however, that (i) in the event that an Option Notice is delivered prior to the
- -------
Termination Date, the provisions set forth in Section 7 shall survive any
termination of this Agreement, (ii) in the event that the Merger is
consummated, the provisions set forth in Section 11 shall survive any
termination of this Agreement.
SECTION 11. Expenses. Except as provided in Section 7 hereof, all
--------
fees and expenses incurred by any one party hereto shall be borne by the party
incurring such fees and expenses.
13
<PAGE>
SECTION 12. Public Announcements. Each of Parent, the Purchaser and
--------------------
the Stockholder agrees that it will not issue any press release or otherwise
make any public statement with respect to this Agreement or the transactions
contemplated hereby without the prior consent of the other party, which consent
shall not be unreasonably withheld or delayed; provided, however, that such
-------- -------
disclosure can be made without obtaining such prior consent if (i) the
disclosure is required by law or by obligations imposed pursuant to any listing
agreement with the Nasdaq National Market and (ii) the party making such
disclosure has first used its best efforts to consult with the other party
about the form and substance of such disclosure.
SECTION 13. Miscellaneous.
-------------
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
(b) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand or (iii) the expiration of five
business days after the day when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice):
(A) if to the Parent or Purchaser, to:
c/o American Industrial Partners
One Maritime Plaza, Suite 2525
San Francisco, CA 94111
Telephone: (415) 788-7354
Facsimile: (415) 788-5302
Attention: Lawrence W. Ward, Jr.
14
<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3700
Facsimile: (212) 735-2000
Attention: Peter A. Atkins
and
(B) if to the Stockholder, to:
PPM America, Inc.
225 West Wacker Drive, Suite 1100
Chicago, Illinois 60606
Telephone: (312) 634-2500
Facsimile: (312) 634-0053
Attention: F. John Stark, III
with a copy to:
Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, New York 10020
Telephone: (212) 278-1000
Facsimile: (212) 278-1733
Attention: J. Andrew Rahl, Jr.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall be considered one
and the same agreement.
(e) This Agreement (including the Merger Agreement and any other
documents and instruments referred to herein) constitutes the entire agreement,
and supersedes all prior agreements and understandings, whether written and
oral, among the parties hereto with respect to the subject matter hereof.
15
<PAGE>
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware without giving effect to the principles
of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by, the parties and their
respective successors and assigns, and the provisions of this Agreement are not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
(h) If any term, provision, covenant or restriction herein is held by
a court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (i) will waive, in
any action for specific performance, the defense of adequacy of a remedy at law
and (ii) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in Wilmington,
Delaware. The parties hereto consent to personal jurisdiction in any such
action brought in any state or federal court sitting in Wilmington, Delaware and
to service of process upon it in the manner set forth in Section 13(b) hereof.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
16
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder has
caused this Agreement to be duly executed and delivered as of the date first
written above.
AMERICAN INDUSTRIAL PARTNERS
ACQUISITION COMPANY, LLC
By________________________________
Name:
Title:
BUCYRUS ACQUISITION CORP.
By________________________________
Name:
Title:
JACKSON NATIONAL LIFE INSURANCE
COMPANY
By: PPM AMERICA, INC.
As Attorney-In-Fact
By________________________________
Name:
Title:
17
<PAGE>
Exhibit (c)(3)
GUARANTEE
---------
Guarantee, dated as of August 21, 1997, by and between Bucyrus
International, Inc., a Delaware corporation (the "Company") and American
Industrial Partners Capital Fund II, L.P., a Delaware limited partnership
("Guarantor").
WHEREAS, each of American Industrial Partners Acquisition Company,
LLC, a Delaware limited liability company ("Parent"), and Bucyrus Acquisition
Corporation, a Delaware corporation (the "Purchaser"), is a direct or indirect,
wholly-owned subsidiary of Guarantor; and
WHEREAS, the Company, Parent, and the Purchaser have entered into an
Agreement and Plan of Merger (the "Merger Agreement") of even date herewith; and
WHEREAS, upon the terms and subject to the conditions set forth in the
Merger Agreement, the Purchaser will make a cash tender offer (the "Offer") to
acquire all shares of the issued and outstanding common stock, $.01 par value,
of the Company (the "Shares"), for $18.00 per share net to the seller in cash;
and
WHEREAS, as an inducement to the Company to enter into the Merger
Agreement, the Guarantor has agreed to enter into this agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company and Guarantor hereby agree as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees, as
primary obligor and not merely as surety, for the benefit of the Company the
performance of all obligations of Parent or the Purchaser pursuant to the Merger
Agreement; provided, however, that the aggregate liability to which the
-------- -------
Guarantor may become subject pursuant to this Guarantee or otherwise in
connection with the transactions contemplated by the Merger Agreement shall not
in any event exceed $7,000,000.
2. Guarantor covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in this Guarantee.
This Guarantee shall not be affected by, and shall remain in full
<PAGE>
force and effect notwithstanding, any bankruptcy, insolvency, liquidation, or
reorganization of Parent or the Purchaser or Guarantor.
3. Guarantor agrees to pay, on demand, and to save the Company
harmless against liability for, any and all costs and expenses (including
reasonable fees and disbursements of counsel) incurred or expended by the
Company in connection with the enforcement of or preservation of any rights
under this Guarantee.
4. Guarantor hereby represents, warrants and covenants to the
Company as follows:
a. Guarantor is a limited partnership duly organized and
validly existing under the laws of the State of Delaware. Guarantor has the
necessary power and authority to own and operate its properties and assets and
to carry on its business as currently conducted.
b. Guarantor has all requisite legal power and authority to
enter into this Guarantee. The Guarantor has all requisite legal power and
authority to carry out and perform its obligations under the terms of this
Guarantee. The Guarantee constitutes the valid and binding obligation of
Guarantor, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws or equitable principles relating to or affecting
creditors' rights generally.
c. All partnership action on the part of Guarantor and its
general partner and limited partners necessary to authorize the execution,
delivery and performance of this Guarantee has been taken.
5. This Guarantee shall be deemed to be a contract under the laws of
the State of Delaware and shall for all purposes be governed by and construed in
accordance with the laws of such State.
6. This Guarantee shall terminate and be of no further force or
effect upon the earliest of (i) the consummation of the Merger (as defined in
the Merger Agreement), (ii) October 7, 2004, or (iii) the performance of all
obligations of Parent and the Purchaser pursuant to the Merger Agreement.
2
<PAGE>
IN WITNESS WHEREOF, each of the Company and Guarantor have caused this
Guarantee to be executed on its behalf by its officers thereunto duly
authorized, all as on the date first above written.
BUCYRUS INTERNATIONAL, INC.
By:___________________________
Name:
Title:
AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND II, L.P.
By:___________________________
Name:
Title:
<PAGE>
Exhibit (c)(4)
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT, dated as of July 1, 1997, is made by and
between Bucyrus International, Inc., a Delaware corporation ("Bucyrus") and
American Industrial Partners ("Advisor").
WHEREAS, Bucyrus has requested that Advisor provide certain information to
Bucyrus and participate in discussions with Bucyrus regarding certain future
business agreements relating to Bucyrus, and
WHEREAS, in order to further such discussions, Advisor has requested access
to certain information concerning Bucyrus and its business, and Bucyrus has
consented to provide such information subject to restrictions on its use and
further disclosure, and
WHEREAS, Advisor recognizes that the information requested and/or provided by
Bucyrus is non-public, confidential and/or proprietary and, in consideration of
its disclosure hereunder, is willing to abide by the restrictions required by
Bucyrus.
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants
contained herein, and other good and valuable information, the receipt of which
is hereby mutually acknowledged, the parties hereby agree as follows:
1. Advisor agrees to treat all information and materials about Bucyrus
disclosed by Bucyrus during the course of these discussions as confidential, and
to hold all such information and materials ("Confidential Information") in trust
and confidence, exercising no less care in maintaining the security thereof as
Advisor does or would with respect to its own confidential and proprietary
information.
2. Advisor agrees to use Confidential Information only for the purpose of
considering, analyzing and providing information to Bucyrus regarding the
business agreements referenced above.
3. Advisor will limit the disclosure, distribution and discussion of
Confidential Information to those directors, officers, employees and consultants
of Advisor who are (a) directly involved in Advisor's consideration of the
proposed transaction and (b) aware of and subject to Advisor's obligations of
confidentiality hereunder. In the event Advisor or any person to whom Advisor
has disclosed Confidential Information becomes legally compelled to disclose any
Confidential Information, such person will provide Bucyrus with prompt notice of
such requirement so that Bucyrus may seek a protective order or other
appropriate remedy and/or waive compliance with the terms of this agreement. In
the event a protective order or other remedy is
<PAGE>
not obtained, or compliance is waived, Advisor agrees that there will be
furnished to the authorities compelling disclosure only such portion of the
Confidential Information as Advisor's counsel shall advise in writing must be
disclosed. Prior to such disclosure, Advisor and Bucyrus will consult and use
all reasonable efforts to agree on the nature, form, timing and content of such
disclosure.
4. Upon the request of Bucyrus, Advisor shall return to Bucyrus all written
Confidential Information, and shall promptly destroy all copies of any analyses,
summaries or extracts prepared by Advisor or for its use containing or
reflecting any Confidential Information. Advisor shall provide a written
affidavit, signed by an officer of Advisor, that all such Confidential
Information has been returned or destroyed.
5. Neither Advisor nor any affiliate of Advisor shall, prior to the third
anniversary date of this agreement, without the prior written consent of
Bucyrus' Board of Directors:
a. effect or propose or make any statement publicly or to the Board of
Directors of Bucyrus with respect to (i) any form of business
combination with, or restructuring or recapitalization of Bucyrus,
(ii) any purchase of securities or assets of Bucyrus, or (iii) any
proposal to seek representation on the Board of Directors of Bucyrus
or otherwise to seek to influence or control the management, Board
of Directors or policies of Bucyrus, or
b. instigate, encourage, join, act in concert with or assist any third
party in doing any of the foregoing, other than as a participant in
a transaction when the Advisor is not the lead participant, not in
control and is not the agent.
6. Advisor acknowledges that it is aware, and that it will advise all
persons who are informed as to the matters which are the subject of this
agreement, that applicable securities laws may prohibit any person who has
received material, non-public information about Bucyrus from purchasing or
selling securities of Bucyrus or from communicating such information to any
other person under circumstances in which it is reasonably forseeable that such
person is likely to purchase or sell such securities.
7. Advisor acknowledges that the disclosure of Confidential Information in
violation of this agreement could cause irreparable injury to Bucyrus, and that
the remedy at law for such breach would be inadequate. Therefore, if Advisor
engages in any act in violation hereof, Bucyrus shall be entitled, in addition
to such other remedies and damages as may be available to it by law or
hereunder, to injunctive or other equitable relief.
8. The parties mutually agree not to disclose the discussions contemplated
by this agreement to any third parties except as and in a form mutually agreed
between the parties, or as explicitly required by law.
<PAGE>
9. The term "Confidential Information" does not include:
a. information which was known to Advisor prior to receipt from Bucyrus:
b. information which is now generally available in the public domain, or
which in the future enters the public domain through no fault of Advisor,
but only from such date as such information becomes so available;
c. information which is disclosed to Advisor at any time by a third party
without violation by such party of an independent obligation of
confidentiality (but for a period of two years following the date of this
agreement, Advisor shall, before using or further disclosing information
so obtained, take resonable steps to determine the circumstances under
which such information was obtained by such third party);
d. technical information which was or is independently developed by an
employee or Advisor not having access to Confidential Information
supplied by Bucyrus; or
e. information released from its confidential status by the prior written
consent of Bucyrus.
10. Bucyrus makes no representation or warranty as to the accuracy or
completeness of Confidential Information.
11. This agreement shall be governed by and interpreted in accordance with
the internal laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have entered into this Confidentiality
Agreement as of the date first written above.
BUCYRUS INTERNATIONAL, INC. AMERICAN INDUSTRIAL PARTNERS
By: /s/ W.R. Hildebrand By: /s/ Lawrence W. Ward Jr.
----------------------- ------------------------
W.R. Hildebrand Name: Lawrence W. Ward Jr.
President & Chief Executive Officer ------------------------
Title: Principal
------------------------
3
