<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------
GLEASON CORPORATION
(NAME OF SUBJECT COMPANY)
GLEASON CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
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COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
377339 10 6
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
EDWARD J. PELTA, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
GLEASON CORPORATION
1000 UNIVERSITY AVENUE
ROCHESTER, NEW YORK 14692-2970
(716) 473-1000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING THIS STATEMENT)
WITH A COPY TO:
DAVID L. FINKELMAN, ESQ.
STROOCK & STROOCK & LAVAN LLP
180 MAIDEN LANE
NEW YORK, NEW YORK 10038-4982
(212) 806-5400
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<PAGE>
This Amendment No. 4 to the Solicitation and Recommendation Statement on
Schedule 14D-9 amends and supplements the Solicitation and Recommendation
Statement on Schedule 14D-9 originally filed on December 15, 1999 (the
"Schedule 14D-9") by Gleason Corporation, a Delaware corporation (the
"Company"), relating to the joint tender offer by Torque Acquisition Co., L.L.C.
("Acquisition Company"), a Delaware limited liability company and a wholly owned
subsidiary of Vestar Capital Partners IV, L.P. ("Vestar"), and the Company (and
together with Acquisition Company, the "Purchasers") to purchase all of the
outstanding shares of common stock, par value $1.00 per share, of the Company
(the "Common Stock"), together with the associated preferred share purchase
rights (the "Rights" and, together with the Common Stock, the "Shares"), at a
purchase price of $23.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated December 15, 1999, the supplement thereto, dated February 4,
2000 (the "Supplement") and the related Letter of Transmittal. Capitalized terms
used but not defined herein shall have the meanings assigned to them in the
Schedule 14D-9.
The Company hereby amends and supplements the Schedule 14D-9 as follows:
ITEM 8. ADDITIONAL INFORMATION.
Item 8 is hereby amended and supplemented by the addition of the following:
Acquisition Company and the Company have amended the Merger Agreement to
reduce the minimum number of Shares required to be tendered in the Offer (the
"Minimum Condition") to 4,862,749 Shares. The Purchasers have also extended the
Offer until 12:00 midnight, New York City time, on February 17, 2000. The Offer
had previously been scheduled to expire at 12:00 midnight, New York City time,
on February 10, 2000.
Pursuant to the amended Merger Agreement, Acquisition Company has agreed to
purchase the first 4,862,749 Shares tendered pursuant to the Offer, and the
Company has agreed to purchase all Shares tendered in excess of 4,862,749
Shares. However, if 6,135,061 or more Shares are tendered pursuant to the Offer,
Acquisition Company will purchase the first 2,318,126 Shares tendered, and the
Company will purchase all Shares tendered in excess of 2,318,126 Shares. The
amended Merger Agreement also provides that if the Merger Agreement is
terminated under circumstances which entitle Acquisition Company to be
reimbursed for its expenses, the aggregate amount that the Company will be
required to pay in respect of such expenses will be increased from $2.5 million
to $4.0 million (or $2.0 million (increased from $1.25 million) if the Merger
Agreement is terminated by reason of the termination of the Offer as a result of
the occurrence of any of the events set forth in clause (g) of Annex A to the
Merger Agreement). The Purchasers have received a revised bank commitment letter
from Bankers Trust Company to provide the debt financing necessary to complete
the Offer and the Merger. A form of the revised bank committment letter is filed
herewith as Exhibit (c)(39) and is incorporated herein by reference.
The amendment to the Merger Agreement was unanimously approved by the Board
of Directors of the Company (the "Board") following the unanimous recommendation
of the independent Special Committee of the Board. The Board, based on the
unanimous recommendation of the Special Committee, continues to recommend that
the Company's shareholders accept the Offer and tender their Shares. For a
description of the factors considered by the Special Committee in making its
unanimous recommendation to the Board to approve the amendment to the Merger
Agreement, see "SPECIAL FACTORS--Reasons for the Special Committee Approving
Amendment No. 1" of the Supplement. The amendment to the Merger Agreement is
attached hereto as Exhibit (c)(40) and is incorporated herein by reference.
According to ChaseMellon Shareholder Services, L.L.C., the depositary for
the Offer, as of 12:00 midnight, New York City time, on February 3, 2000,
4,897,987 Shares had been validly tendered and not withdrawn pursuant to the
Offer.
<PAGE>
On February 4, 2000, Acquisition Company and the Company commenced
dissemination of the Supplement to the Stockholders of the Company. The
Supplement is attached hereto as Exhibit (a)(11) and is incorporated herein by
reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby amended and supplemented by the addition of the following
exhibits hereto:
<TABLE>
<S> <C>
(a)(11) Supplement, dated February 4, 2000, to the Offer to
Purchase, dated December 15, 1999.(*)
(a)(12) Letter of Transmittal dated February 4, 2000 (incorporated
by reference to Exhibit (a)(12) to Amendment 7 to the
Schedule 13E-4 filed on February 4, 2000).
(a)(13) Notice of Guaranteed Delivery (incorporated by reference to
Exhibit (a)(13) to Amendment 7 to the Schedule 13E-4 filed
on February 4, 2000).
(a)(14) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees (incorporated by reference to
Exhibit (a)(14) to Amendment 7 to the Schedule 13E-4 filed
on February 4, 2000).
(a)(15) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (incorporated by
reference to Exhibit (a)(15) to Amendment 7 to the Schedule
13E-4 filed on February 4, 2000).
(a)(16) Press Release, dated February 4, 2000 (incorporated by
reference to Exhibit (g)(13) to Amendment 7 to the Schedule
14D-1 filed on February 4, 2000).
(a)(17) Letter to the stockholders of the Company, dated
February 4, 2000 from James S. Gleason, Chairman and Chief
Executive Officer of the Company (incorporated by reference
to Exhibit (a)(16) to Amendment 7 to the Schedule 14D-1).
(c)(39) Revised Bank Commitment Letter, dated February 3, 2000
(incorporated by reference to Exhibit (b)(4) to Amendment 7
to the Schedule 14D-1 filed on February 4, 2000).
(c)(40) Amendment No. 1 to the Agreement and Plan of Merger, dated
as of February 3, 2000, attached as Exhibit I to the
Supplement to the Offer to Purchase attached hereto as
Exhibit (a)(11).
</TABLE>
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* Filed herewith
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 4, 2000
<TABLE>
<S> <C> <C>
GLEASON CORPORATION
By: /s/ EDWARD J. PELTA
-----------------------------------------
Name: Edward J. Pelta
Title: VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
<S> <C>
(a)(11) Supplement, dated February 4, 2000, to the Offer to
Purchase, dated December 15, 1999.*
(a)(12) Letter of Transmittal dated February 4, 2000 (incorporated
by reference to Exhibit (a)(12) to Amendment 7 to the
Schedule 13E-4 filed on February 4, 2000).
(a)(13) Notice of Guaranteed Delivery (incorporated by reference to
Exhibit (a)(13) to Amendment 7 to the Schedule 13E-4 filed
on February 4, 2000).
(a)(14) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees (incorporated by reference to
Exhibit (a)(14) to Amendment 7 to the Schedule 13E-4 filed
on February 4, 2000).
(a)(15) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (incorporated by
reference to Exhibit (a)(15) to Amendment 7 to the Schedule
13E-4 filed on February 4, 2000).
(a)(16) Press Release, dated February 4, 2000 (incorporated by
reference to Exhibit (g)(13) to Amendment 7 to the Schedule
14D-1 filed on February 4, 2000).
(a)(17) Letter to the stockholders of the Company, dated
February 4, 2000 from James S. Gleason, Chairman and Chief
Executive Officer of the Company (incorporated by reference
to Exhibit (a)(16) to Amendment 7 to the Schedule 14D-1).
(c)(39) Revised Bank Commitment Letter, dated February 3, 2000
(incorporated by reference to Exhibit (b)(4) to Amendment 7
to the Schedule 14D-1 filed on February 4, 2000).
(c)(40) Amendment No. 1 to the Agreement and Plan of Merger, dated
as of February 3, 2000, attached as Exhibit I to the
Supplement to the Offer to Purchase attached hereto as
Exhibit (a)(2).
</TABLE>
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* Filed herewith.
<PAGE>
SUPPLEMENT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK,
TOGETHER WITH THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS,
OF
GLEASON CORPORATION
AT
$23.00 NET PER SHARE
BY
TORQUE ACQUISITION CO., L.L.C.,
A WHOLLY OWNED SUBSIDIARY OF
VESTAR CAPITAL PARTNERS IV, L.P.,
AND BY
GLEASON CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL NOW EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, FEBRUARY 17, 2000, UNLESS THE OFFER IS FURTHER EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A MINIMUM OF
4,862,749 SHARES (AS DEFINED HEREIN), AND (II) THE COMPANY AND, IF NECESSARY,
TORQUE MERGER SUB, INC. ("MERGER SUBSIDIARY") RECEIVING THE FINANCING FOR THE
OFFER AS CONTEMPLATED BY A REVISED BANK COMMITMENT LETTER ENTERED INTO BY TORQUE
ACQUISITION CO., L.L.C. ("ACQUISITION COMPANY"), THE COMPANY AND CERTAIN
SUBSIDIARIES OF THE COMPANY WHICH, TOGETHER WITH AN EQUITY CONTRIBUTION TO BE
RECEIVED BY ACQUISITION COMPANY, IS SUFFICIENT TO PURCHASE THE SHARES PURSUANT
TO THE OFFER, TO PAY FOR THE MERGER CONSIDERATION (AS DEFINED HEREIN) AND TO PAY
ALL RELATED FEES AND EXPENSES REQUIRED TO BE PAID BY THE COMPANY IN CONNECTION
WITH THE OFFER AND THE MERGER. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS.
THE BOARD OF DIRECTORS OF THE COMPANY, AFTER RECEIVING THE UNANIMOUS
RECOMMENDATION OF A SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS, HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT (AS DEFINED HEREIN), AMENDMENT NO. 1 TO THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER; HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT (AS AMENDED) AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE
ADVISABLE, FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS
(OTHER THAN ACQUISITION COMPANY AND MERGER SUBSIDIARY AND THEIR AFFILIATES, THE
GLEASON FOUNDATION AND THE OTHER STOCKHOLDERS OF THE COMPANY WHO WILL BE
RETAINING SHARES FOLLOWING THE MERGER); AND UNANIMOUSLY RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
------------------------------
IMPORTANT
STOCKHOLDERS WHO HAVE PREVIOUSLY TENDERED SHARES PURSUANT TO THE OFFER TO
PURCHASE AND NOT VALIDLY WITHDRAWN THE TENDERED SHARES AND WHO WISH TO HAVE
THOSE SHARES PURCHASED PURSUANT TO THE OFFER NEED NOT TAKE ANY FURTHER ACTION IN
ORDER TO ACCEPT THE OFFER.
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $1.00 per share, of the Company (the "Shares"
or the "Common Stock") should either (i) complete and sign the enclosed Letter
of Transmittal (or a facsimile thereof) in accordance with the instructions in
the Letter of Transmittal, have such stockholder's signature thereon guaranteed
(if required by Instruction 1 to the Letter of Transmittal), mail or deliver the
Letter of Transmittal (or a facsimile thereof) and any other required documents
to the Depositary (as defined herein) and either deliver the certificates for
such Shares to the Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedure for book-entry transfer set forth in "THE
OFFER--Procedures for Tendering Shares" of this Supplement or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such stockholder. Stockholders also may continue to
use the Letter of Transmittal included with the Offer to Purchase, dated
December 15, 1999. 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
EVIDENCING SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY WITH
THE PROCEDURES FOR BOOK-ENTRY TRANSFER DESCRIBED IN THIS SUPPLEMENT ON A TIMELY
BASIS, OR WHO CANNOT DELIVER ALL REQUIRED DOCUMENTS TO THE DEPOSITARY PRIOR TO
THE EXPIRATION OF THE OFFER, MAY TENDER SUCH SHARES BY FOLLOWING THE PROCEDURES
FOR GUARANTEED DELIVERY SET FORTH IN "THE OFFER--PROCEDURES FOR TENDERING
SHARES" OF THIS SUPPLEMENT.
Questions and requests for assistance or for additional copies of this
Supplement, the Offer to Purchase and the related Letter of Transmittal, or
other tender offer materials, may be directed to Georgeson Shareholder
Communications Inc. (the "Information Agent") at its address and telephone
number set forth on the back cover of this Supplement. Stockholders may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
[LOGO]
February 4, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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INTRODUCTION................................................ 3
SPECIAL FACTORS............................................. 6
Background of the Transactions.......................... 6
Reasons for the Special Committee Approving Amendment
No. 1.................................................. 7
Amendment No. 1 to the Merger Agreement................. 8
Financing of the Transactions........................... 9
THE OFFER................................................... 12
Acceptance for Payment and Payment for Shares........... 12
Procedures for Tendering Shares......................... 13
Withdrawal Rights....................................... 15
Conditions to the Offer................................. 16
Certain Legal Matters................................... 16
Recapitalization Accounting............................. 16
</TABLE>
<TABLE>
<S> <C> <C>
Exhibit I Amendment No. 1, dated as of February 3, 2000, to Agreement
and Plan of Merger, dated as of December 8, 1999, by and
among the Company, Acquisition Company and Merger
Subsidiary.................................................. I-1
</TABLE>
2
<PAGE>
To the Holders of Common Stock of
GLEASON CORPORATION:
INTRODUCTION
The following information amends and supplements the Offer to Purchase,
dated December 15, 1999 (the "Offer to Purchase"), of Torque Acquisition Co.,
L.L.C. ("Acquisition Company"), a newly formed Delaware limited liability
company and a wholly owned subsidiary of Vestar Capital Partners IV, L.P.
("Vestar"), and Gleason Corporation, a Delaware corporation (the "Company" and
together with Acquisition Company, the "Purchasers"), pursuant to which the
Purchasers are offering to purchase all of the outstanding shares of common
stock, par value $1.00 per share, of the Company (the "Common Stock"), together
with the associated preferred share purchase rights issued pursuant to a Rights
Agreement, dated as of May 4, 1999, as amended (the "Rights Agreement"), between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the
"Rights" and, together with the Common Stock, the "Shares"), at a purchase price
of $23.00 per Share, net to the seller in cash (such amount, or any greater
amount per Share paid pursuant to the Offer, being referred to herein as the
"Offer Price"), without interest thereon.
Pursuant to Amendment No. 1 to the Merger Agreement (as defined herein)
entered into on February 3, 2000 ("Amendment No. 1"), the Minimum Condition has
been reduced and the Offer is now conditioned upon, among other things, a
minimum of 4,862,749 Shares being validly tendered and not withdrawn prior to
the expiration of the Offer. Amendment No. 1 also provides that Acquisition
Company will pay for and purchase (i) if more than 4,862,749 Shares but less
than 6,135,061 Shares are validly tendered and not withdrawn pursuant to the
Offer, the first 4,862,749 Shares tendered pursuant to the Offer and the Company
will pay for and purchase all Shares tendered in excess of the 4,862,749 Shares
paid for and purchased by Acquisition Company, or (ii) if 6,135,061 or more
Shares are validly tendered and not withdrawn pursuant to the Offer, the first
2,318,126 Shares tendered pursuant to the Offer and the Company will pay for and
purchase all Shares tendered in excess of the 2,318,126 Shares paid for and
purchased by Acquisition Company, in each case, upon the terms and subject to
the conditions set forth in the Offer to Purchase, in this Supplement and in the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer").
According to ChaseMellon Shareholder Services, L.L.C., the Depositary for
the Offer, as of midnight on January 27, 2000, the original expiration date of
the Offer, 5,186,109 Shares (including 160,620 Shares tendered pursuant to
notices of guaranteed delivery), or approximately 64.4% of the public Shares
available to be tendered, had been validly tendered and not withdrawn pursuant
to the Offer. According to the Depositary, as of midnight on February 3, 2000,
4,897,987 Shares had been validly tendered and not withdrawn pursuant to the
Offer.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares pursuant to the Offer. The
Company will pay all fees and expenses of ChaseMellon Shareholder Services,
L.L.C., which is acting as the Depositary (the "Depositary"), and Georgeson
Shareholder Communications Inc., which is acting as the Information Agent (the
"Information Agent"), incurred in connection with the Offer. See "THE
OFFER--Fees and Expenses" of the Offer to Purchase.
This Supplement should be read in conjunction with the Offer to Purchase.
This Supplement, among other things, sets forth certain additional information
and amends and supplements the following sections of the Offer to Purchase:
"INTRODUCTION," "SPECIAL FACTORS--Background of the Transactions," "SPECIAL
FACTORS--The Merger Agreement," "SPECIAL FACTORS--Financing of the
Transactions," "THE OFFER--Acceptance for Payment and Payment for Shares," "THE
OFFER--Procedures for Tendering Shares," "THE OFFER--Withdrawal Rights," "THE
OFFER--Conditions to the Offer," "THE OFFER--Certain Legal Matters" and "THE
OFFER--Recapitalization Accounting."
3
<PAGE>
Except as set forth in this Supplement, the terms and conditions previously set
forth in the Offer to Purchase and the Letter of Transmittal remain applicable
to the Offer in all respects. Capitalized terms used but not defined in this
Supplement have the meanings assigned to them in the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 8, 1999 (the "Merger Agreement"), by and among the Company,
Acquisition Company and Torque Merger Sub, Inc., a Delaware corporation and a
wholly owned subsidiary of Acquisition Company ("Merger Subsidiary"), as amended
by Amendment No. 1 thereto. Pursuant to the Merger Agreement, following the
completion of the Offer and the satisfaction or waiver of certain other
conditions, Merger Subsidiary will be merged with and into the Company (the
"Merger") with the Company being the surviving corporation (the "Surviving
Corporation"). In the Merger, each outstanding Share (other than (i) Shares held
by the Company or its subsidiaries, (ii) Shares held by Acquisition Company or
Merger Subsidiary or their affiliates, (iii) certain Shares held by the Gleason
Foundation (the "Foundation"), (iv) certain Shares held by James S. Gleason,
Chairman and Chief Executive Officer of the Company, (v) Shares held by the
other Continuing Stockholders and (vi) Dissenting Shares (as defined in the
Merger Agreement)) will be converted into the right to receive the Offer Price,
without interest thereon (the "Merger Consideration").
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
and the Merger by the requisite vote of stockholders of the Company. See
"SPECIAL FACTORS--The Merger Agreement" of the Offer to Purchase. Under the
Company's certificate of incorporation, the affirmative vote of the holders of
two-thirds of the outstanding Shares is required to approve and adopt the Merger
Agreement and the Merger. Pursuant to the Merger Agreement, Acquisition Company
has agreed to vote, or cause to be voted, all Shares owned by it, Merger
Subsidiary or any of its other subsidiaries or affiliates in favor of the
adoption of the Merger Agreement and approval of the Merger. In addition, the
Foundation has agreed to vote, and the Continuing Stockholders have agreed to
vote or to cause to be voted, all Shares owned by them in favor of the adoption
of the Merger Agreement and approval of the Merger. ACCORDINGLY, IF THE MINIMUM
CONDITION (AS DEFINED HEREIN) IS SATISFIED AND SHARES ARE PURCHASED PURSUANT TO
THE OFFER, THE FAVORABLE VOTE TO APPROVE THE MERGER WILL BE ASSURED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A MINIMUM OF
4,862,749 SHARES (THE "MINIMUM CONDITION"), AND (2) THE COMPANY AND, IF
NECESSARY, MERGER SUBSIDIARY RECEIVING THE FINANCING (THE "FINANCING") FOR THE
OFFER CONTEMPLATED BY A REVISED BANK COMMITMENT LETTER (THE "REVISED COMMITMENT
LETTER") ENTERED INTO BY ACQUISITION COMPANY, THE COMPANY AND CERTAIN
SUBSIDIARIES OF THE COMPANY, WHICH, TOGETHER WITH AN EQUITY CONTRIBUTION TO BE
RECEIVED BY ACQUISITION COMPANY, IS SUFFICIENT TO PURCHASE THE SHARES PURSUANT
TO THE OFFER, TO PAY FOR THE MERGER CONSIDERATION AND TO PAY ALL RELATED FEES
AND EXPENSES REQUIRED TO BE PAID BY THE COMPANY IN CONNECTION WITH THE OFFER AND
THE MERGER (THE "FINANCING CONDITION"). The Offer is also subject to the other
terms and conditions set forth in the Offer to Purchase and this Supplement. See
"SPECIAL FACTORS--Financing of the Transactions" of the Offer to Purchase and
this Supplement for a discussion of the Financing and "THE OFFER--Conditions to
the Offer" of the Offer to Purchase and this Supplement which sets forth in full
the conditions of the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD"), AFTER RECEIVING THE
UNANIMOUS RECOMMENDATION OF THE SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS (THE
"SPECIAL COMMITTEE"), (1) HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
AMENDMENT NO. 1 THERETO AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, (2) HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT
(AS AMENDED) AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, ARE ADVISABLE, FAIR TO AND IN THE
4
<PAGE>
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS (OTHER THAN THE ACQUISITION
PARTIES, THEIR AFFILIATES AND THE FOUNDATION), AND (3) UNANIMOUSLY RECOMMENDS
THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
Acquisition Company, the Company and certain subsidiaries of the Company
have entered into the Revised Commitment Letter with Bankers Trust Company
("BTCo"), pursuant to which BTCo has committed, subject to certain conditions,
to provide to the Company and, if necessary, Merger Subsidiary, the debt
financing needed to consummate the Offer and the Merger. In accordance with the
Revised Commitment Letter and Amendment No. 1, in the event that more than
4,862,749 Shares but less than 6,135,061 Shares are tendered, Acquisition
Company will assign its right to purchase Shares to Merger Subsidiary and Merger
Subsidiary will purchase 2,318,126 Shares with the proceeds of the Unit Purchase
Agreement (which proceeds will be contributed to Merger Subsidiary by
Acquisition Company), and will purchase the additional Shares with the proceeds
of a term loan facility of up to $61.5 million to be arranged by BTCo. In the
event that more than 6,135,061 Shares are tendered, Merger Subsidiary will not
borrow any amount from BTCo and the other lenders (the "Banks"), and Acquisition
Company will purchase the first 2,318,126 Shares tendered in the Offer with the
proceeds of the Unit Purchase Agreement. In each case, the Company will purchase
Shares with funds obtained from available cash on hand and proceeds of
borrowings from the Banks. See "SPECIAL FACTORS--Financing of the Transactions"
of this Supplement and "THE OFFER--Conditions to the Offer" of this Supplement.
As of February 3, 2000, there were 9,593,595 shares of Common Stock issued
and outstanding, 2,000,545 shares of Common Stock held in the treasury of the
Company and 875,152 shares of Common Stock reserved for issuance pursuant to the
Company's stock option plans, of which 723,182 of such shares are subject to
currently outstanding options. Based on the agreements of the Continuing
Stockholders and the Foundation not to tender their Shares and to vote their
Shares in favor of the Merger and the agreements of holders of an aggregate of
212,100 options to acquire Shares not to exercise such options generally for so
long as the Merger Agreement is in effect, 4,862,749 Shares are required to be
tendered to assure that Acquisition Company, the Foundation and the Continuing
Stockholders own at least two-thirds of the outstanding Shares following
consummation of the Offer.
This Supplement, the Offer to Purchase and the accompanying documents
contain information required to be disclosed by the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"), including financial information regarding the Company, a
description of the terms, conditions and background of the Offer, and the
procedures for tendering Shares.
STOCKHOLDERS ARE URGED TO READ THIS SUPPLEMENT, THE OFFER TO PURCHASE AND
THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER
THEIR SHARES.
5
<PAGE>
SPECIAL FACTORS
BACKGROUND OF THE TRANSACTIONS
CERTAIN DEVELOPMENTS SINCE THE DECEMBER 15, 1999 OFFER TO PURCHASE
On December 23, 1999, Artisan Partners Limited Partnership ("Artisan
Partners"), Artisan Investment Corporation, Andrew A. Ziegler and Carlene Murphy
Ziegler (collectively, the "Artisan Group") filed a Schedule 13D under the
Exchange Act indicating that as of December 22, 1999, the Artisan Group
beneficially owned 1,165,200 Shares, which represented 12.15% of the 9,589,195
Shares outstanding on November 30, 1999. The Artisan Group indicated that it was
their intention not to tender their Shares pursuant to the Offer. On
January 24, 2000, the Artisan Group filed an amendment to their Schedule 13D
stating that, in their opinion, the Offer Price is too low and that they would
not tender any of their Shares in response to the Offer.
On or prior to January 19, 2000, additional members of management of the
Company (the "New Management Investors") entered into management subscription
agreements (the "Management Subscription Agreements"), pursuant to which, among
other things, they generally elected to retain their Shares and existing options
to purchase Shares following the completion of the Merger. In electing to retain
their Shares and existing options, the New Management Investors generally
agreed, among other things, not to tender any Shares pursuant to the Offer, to
vote all Shares held by them in favor of the Merger and the approval and
adoption of the Merger Agreement, and not to sell or transfer any Shares or
existing options. As a result of the decision by the New Management Investors
not to tender their Shares and existing options in the Offer and to roll over
such Shares and existing options in the Merger, the number of Shares required to
be tendered to satisfy the then existing minimum condition was reduced to
approximately 6,375,000 Shares.
On January 26, 2000, the Board held a meeting to discuss, among other
things, the status of the Offer and the position of the Artisan Group regarding
the Offer. At such meeting, Murray, Devine & Co., Inc. ("Murray Devine"),
valuation consultants, presented their valuation opinion to the Board to the
effect that, before giving effect to the Offer and the Merger and the
transactions contemplated thereby, the aggregate value of the Company's net
assets, at fair value and present saleable value, would exceed (i) the Company's
total liabilities (including contingent, subordinated, unmeasured and
unliquidated liabilities) and (ii) the amount required to pay such liabilities
as they become absolute and matured in the normal course of business, by an
amount at least equal to the funds required to effect the Offer and the Merger
and the transactions contemplated thereby, plus the par value of the stated
capital of the Company. Based on such opinion, the Board determined to revalue
the Company's net assets and surplus for purposes of Delaware law, thereby
satisfying as of such date one of the conditions to the Offer.
On January 28, 2000, the Purchasers issued a press release that they had
extended the Offer until 12:00 midnight, New York City time, on Thursday,
February 10, 2000. The Offer had originally been scheduled to expire at 12:00
midnight, New York City time, on January 27, 2000. As of the original expiration
date, 5,186,109 Shares had been tendered (including 160,620 Shares tendered
pursuant to notices of guaranteed delivery). The press release stated that the
Offer was being extended in order to provide stockholders additional time to
tender Shares so that the minimum condition may be satisfied. Acquisition
Company also stated that it was actively reviewing all its alternatives,
including ways to reduce the minimum condition.
During the week of January 31, 2000, the Company entered into letter
agreements with certain holders of an aggregate of 212,100 options to acquire
Shares pursuant to which such holders have generally agreed not to exercise any
of their options previously granted to them so long as the Merger Agreement
remains in effect.
On February 1, 2000, Artisan Partners sent letters to the Company's
directors urging the Board to conduct an open auction of the Company if the
Board believes that the Company should be sold.
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In the evening of February 1, 2000, counsel for Acquisition Company provided
the Special Committee and its legal and financial advisors with a draft of
Amendment No. 1.
In the afternoon of February 2, 2000, the Special Committee met
telephonically with its legal and financial advisors to discuss the terms of
Amendment No. 1. Specifically, the Special Committee raised concerns about
provisions in the draft of Amendment No. 1 relating to an increase from
$2.5 million to $5.5 million in the maximum amount that would be required to be
paid by the Company for reimbursement of Expenses and certain other fees if the
Merger Agreement is terminated for any reason, including the failure to satisfy
the Minimum Condition (subject to certain exceptions). The Special Committee
authorized its legal counsel to inquire as to the basis for the request for such
increase, as well as to negotiate with counsel for Acquisition Company to
resolve the Special Committee's concerns relating to the draft of Amendment
No. 1.
In the evening of February 2, 2000, the Special Committee had further
discussions with its legal and financial advisors and unanimously resolved to
recommend to the Board that it approve Amendment No. 1 provided that the amount
requested to be paid by the Company for reimbursement of Expenses if the Merger
Agreement is terminated for any reason, including the failure to satisfy the
Minimum Condition (subject to certain exceptions), is increased to not more than
$4.0 million.
Thereafter, on February 2, 2000, the Special Committee's legal advisors
negotiated the terms of Amendment No. 1 with counsel for Acquisition Company.
Acquisition Company agreed to reduce the amount to be paid by the Company for
reimbursement of Expenses if the Merger Agreement is terminated for any reason,
including the failure to satisfy the Minimum Condition (subject to certain
exceptions), to $4.0 million.
At a meeting of the full Board held on February 3, 2000, the Board received
the recommendation of the Special Committee and reviewed the revised terms of
the Offer and the Merger and the reasons for the Special Committee's
recommendation. At such meeting, the Board unanimously approved Amendment No. 1
and the transactions contemplated thereby, unanimously determined that the
Merger Agreement (as amended) and the transactions contemplated thereby,
including the Offer and the Merger, are advisable, fair to and in the best
interests of the Company's stockholders (other than the Acquisition Parties,
their affiliates and the Foundation), and unanimously recommended that the
Company's stockholders accept the Offer and tender their Shares pursuant to the
Offer.
On February 3, 2000, Acquisition Company, the Company and certain
subsidiaries of the Company entered into the Revised Commitment Letter with BTCo
pursuant to which BTCo has committed, subject to certain conditions, to provide
the debt financing for the Offer and the Merger.
On February 3, 2000, the Company, Acquisition Company and Merger Subsidiary
entered into Amendment No. 1. On February 4, 2000, the Purchasers issued a joint
press release announcing that they had decreased the Minimum Condition to
4,862,749 Shares and extended the expiration date of the Offer to 12:00
midnight, New York City time, on February 17, 2000 (the "Expiration Date"). In
the press release, Acquisition Company stated that it did not intend to further
extend the Offer if the reduced Minimum Condition was not satisfied.
REASONS FOR THE SPECIAL COMMITTEE APPROVING AMENDMENT NO. 1
In addition to the factors set forth under "SPECIAL FACTORS--Recommendation
of the Special Committee and Board of Directors; Fairness of the Transactions"
of the Offer to Purchase, in determining that the Special Committee would
approve and recommend Amendment No. 1 to the full Board, the
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Special Committee considered the following factors, each of which, in the view
of the Special Committee, supported such determination:
(1) The Special Committee considered the fact that as of the initial
expiration date of the Offer, approximately 64.4% of the Shares available
to be tendered had been validly tendered (approximately 75.3% excluding
the Shares held by Artisan Partners) and not withdrawn pursuant to the
Offer.
(2) The Special Committee also considered the fact that although the Minimum
Condition had been reduced to 4,862,749 Shares, such amount represented
approximately 60.4% of the Shares held by the stockholders of the Company
other than the Foundation and the Continuing Stockholders.
(3) The Special Committee also considered the fact that, since the initial
expiration date of the Offer, Vestar informed Bear Stearns on more than
one occasion that Vestar was unwilling to consider an increase in the
Offer Price.
(4) The Special Committee also considered the fact that no third party had
contacted the Special Committee or Bear Stearns regarding an acquisition
of the Company since the public announcement of the transaction, a time
period of over 55 days, which the Special Committee considered sufficient
for any interested third party to have prepared and presented an
acquisition proposal.
(5) The Special Committee also considered the updated financial information
of the Company relating to the results for the fourth quarter of 1999 and
the outlook for the first quarter of 2000 and full year 2000, as well as
general economic and market conditions.
(6) The Special Committee also recognized that if Merger Subsidiary
purchases Shares pursuant to the Offer, the Merger will fail to qualify
for recapitalization accounting treatment and will instead be accounted
for under the purchase accounting method. See "THE
OFFER--Recapitalization Accounting" of this Supplement.
(7) The Special Committee recognized that Acquisition Company had incurred
and will continue to incur costs and expenses aggregating in excess of
$2.5 million in connection with the transactions contemplated by the
Merger Agreement.
AMENDMENT NO. 1 TO THE MERGER AGREEMENT
Amendment No. 1 amends the Merger Agreement, dated as of December 8, 1999
(the "Merger Agreement"), by and among the Company, Acquisition Company and
Merger Subsidiary. Amendment No. 1 is attached hereto as Exhibit I. Stockholders
are urged to, and should, read Amendment No. 1 carefully and in its entirety and
in connection with the Merger Agreement, a copy of which was included as
Exhibit III to the Offer to Purchase.
Amendment No. 1 provides that a minimum of 4,862,749 Shares must be validly
tendered and not withdrawn prior to the expiration of the Offer, which the
parties agreed to extend to 12:00 midnight, New York City time, on Thursday,
February 17, 2000.
Pursuant to Amendment No. 1, Acquisition Company has agreed to pay for and
purchase the first 4,862,749 Shares tendered pursuant to the Offer and the
Company has agreed to pay for and purchase all Shares tendered in excess of the
4,862,749 Shares paid for and purchased by Acquisition Company in the event that
more than 4,862,749 Shares but less than 6,135,061 Shares are validly tendered
and not withdrawn pursuant to the Offer, and Acquisition Company has agreed to
pay for and purchase the first 2,318,126 Shares tendered pursuant to the Offer
and the Company has agreed to pay for and purchase all Shares tendered in excess
of the 2,318,126 Shares paid for and purchased by Acquisition Company in the
event that 6,135,061 or more Shares are validly tendered and not withdrawn
pursuant to the Offer, in each case upon the terms and subject to the conditions
set forth in the Offer to Purchase, in this Supplement and in the related Letter
of Transmittal.
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Amendment No. 1 also provides that if more than 4,862,749 Shares but less
than 6,135,061 Shares are validly tendered and not withdrawn pursuant to the
Offer, Acquisition Company will assign to Merger Subsidiary its right to
purchase all Shares it is obligated to purchase, and Merger Subsidiary will
purchase such Shares. Such assignment will not relieve Acquisition Company or
Merger Subsidiary of any obligations under the Merger Agreement. Pursuant to
Amendment No. 1, if Acquisition Company assigns its right to purchase Shares in
the Offer to Merger Subsidiary, (i) the capital stock of Merger Subsidiary owned
by Acquisition Company will be converted in the Merger into (A) 484,334 shares
of Common Stock of the Surviving Corporation, (B) subject to Section 6.11 of the
Merger Agreement, 1,833,792 shares of Series A Preferred, and (C) Warrants to
acquire 1,833,792 shares of Surviving Corporation Common Stock, and (ii) all
shares of Common Stock purchased by Merger Subsidiary in the Offer will
automatically be cancelled and will cease to exist and no consideration will be
delivered in exchange therefor.
Pursuant to Amendment No. 1, if the Merger Agreement is terminated under
circumstances which entitle Acquisition Company to be reimbursed for its
Expenses, the aggregate amount that the Company will be required to pay in
respect of such Expenses has been increased from $2.5 million to $4.0 million
(or $2.0 million (increased from $1.25 million) if the Merger Agreement is
terminated by reason of the termination of the Offer as a result of the
occurrence of any of the events set forth in clause (g) of Annex A to the Merger
Agreement). Amendment No. 1 also clarified that the Company would be responsible
for the fees and expenses of the Banks pursuant to the Revised Commitment
Letter.
FINANCING OF THE TRANSACTIONS
BANK FINANCING. Pursuant to the Revised Commitment Letter, BTCo has
committed to provide (i) the Company and certain of its subsidiaries with the
Senior Credit Facility in the amount of $250 million from a syndicate of banks
and other lenders on, except as set forth below, generally the same terms and
conditions as previously described in the Offer to Purchase and (ii) Merger
Subsidiary with a senior secured credit facility (the "Merger Sub Credit
Facility") in the amount of up to $61.5 million from a syndicate of banks and
other lenders arranged and managed by BTCo, as administrative agent (the "Merger
Sub Agent"), sole lead arranger and book manager. The Merger Sub Credit Facility
will be comprised solely of term loans (the "Merger Sub Loans") and will only be
utilized to the extent that fewer than 6,135,061 shares of Common Stock are
tendered pursuant to the Offer.
DESCRIPTION OF THE MERGER SUB CREDIT FACILITY
AVAILABILITY AND USE OF PROCEEDS. The Merger Sub Loans may only be incurred
on the Closing Date (as defined below) and on any date following the Closing
Date on which interest in respect of the Merger Sub Loans is then due and
payable, and may only be used to purchase shares of Common Stock tendered
pursuant to the Offer and to finance the costs, fees and expenses associated
therewith. The Merger Sub Loans will have a maturity date that is the earlier of
(i) the date of the consummation of the Merger and (ii) the 180(th)day following
the date of the initial borrowing under the Merger Sub Credit Facility (the
"Closing Date"). The proceeds of loans incurred after the Closing Date shall
only be used to pay interest on previously outstanding Merger Sub Loans and
commitment fees. To the extent repaid, the Merger Sub Loans may not be
reborrowed.
INTEREST RATES AND FEES. Merger Sub Loans will bear interest at a
fluctuating rate PER ANNUM equal to the sum of (a) the applicable LIBOR rate or,
at Merger Subsidiary's election, BTCo's base rate, plus (b) a margin of
(i) 3.00% in the case of LIBOR loans and (ii) 2.00% in the case of base rate
loans.
In addition, Merger Subsidiary has agreed to pay commitment fees that will
accrue on the unutilized total commitments under the Merger Sub Credit Facility
at a PER ANNUM rate of 0.50%.
VOLUNTARY PREPAYMENTS. Voluntary prepayments may be made at any time,
without premium or penalty, subject to requirements as to prior notice and
minimum amounts and certain other conditions.
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CONDITIONS PRECEDENT TO CLOSING OF THE MERGER SUB CREDIT FACILITY. The
availability of the Merger Sub Credit Facility will be subject to the
satisfaction or waiver by the majority lenders of conditions precedent typical
for this type of facility, including, without limitation, the following:
(i) all of the conditions precedent to the initial borrowings under the Senior
Credit Facility shall have been satisfied, and not waived in any material
respect except with the consent of the Merger Sub Agent, to the satisfaction of
the Merger Sub Agent, and the initial borrowing thereunder shall have occurred;
(ii) the lenders shall have received customary legal opinions from counsel, and
covering matters, reasonably acceptable to the Merger Sub Agent and the majority
lenders; (iii) the corporate and capital structure (and all material agreements
related thereto) of Acquisition Company and Merger Subsidiary, and all
organizational documents of such entities shall be reasonably satisfactory to
the Merger Sub Agent and the majority lenders; (iv) all Merger Sub Loans and
other financings to Merger Subsidiary shall be in full compliance with all
applicable requirements of the margin regulations; (v) all reasonable costs,
fees, expenses (including, without limitation, reasonable legal fees and
expenses) and other compensation payable to the lenders or the Merger Sub Agent
shall have been paid to the extent due; (vi) the lenders shall have received an
officer's certificate with respect to the solvency of Acquisition Company and
Merger Subsidiary (on a consolidated basis) and Merger Subsidiary (on a
stand-alone basis) reasonably acceptable to the Merger Sub Agent and the
majority lenders; (vii) the Guaranty (as defined below) shall have been executed
and delivered; (viii) the Lenders shall have a perfected first priority security
interest in all of the capital stock of Merger Subsidiary; (ix) absence of
material adverse change; and (x) absence of material litigation.
GUARANTY. All obligations under the Merger Sub Credit Facility will be
unconditionally guaranteed by Acquisition Company (the "Guaranty").
SECURITY. The obligations of Acquisition Company shall be secured by a
first priority perfected security interest in all of the capital stock of Merger
Subsidiary.
OTHER COVENANTS. The Merger Sub Credit Facility will contain covenants
typical for such types of facilities, including, without limitation,
(i) prohibitions on other indebtedness, (ii) restrictions on mergers (other than
the Merger), acquisitions, joint ventures, partnerships and acquisitions and
dispositions of assets (other than acquisitions of shares of the Common Stock
tendered pursuant to the Offer and sales of shares of Common Stock at fair
market value for cash), including sale-leaseback transactions,
(iii) prohibitions on dividends, stock repurchases and material amendments of
organizational, corporate and other documents, (v) restrictions on transactions
with affiliates (other than intercompany transactions) and prohibitions on the
formation of subsidiaries, (vi) prohibitions on investments (other than
investments in the shares of Common Stock tendered pursuant to the Offer),
(vii) maintenance of existence and properties, (viii) restrictions on liens and
other encumbrances (other than liens relating to the Common Stock acquired
pursuant to the Offer), (ix) prohibitions on capital expenditures,
(x) compliance with laws, and (xi) "special purpose corporation" type covenants.
EVENTS OF DEFAULT. The Merger Sub Credit Facility will contain events of
default typical for these types of facilities (subject in each case to mutually
agreeable grace periods and materiality thresholds), including, without
limitation, (i) non-payment of amounts under the Merger Sub Credit Facility,
(ii) material misrepresentations, (iii) covenant defaults, (iv) bankruptcy and
(vii) a change of control of Acquisition Company or Merger Subsidiary.
MATERIAL CHANGES TO THE SENIOR CREDIT FACILITY
Set forth below is a description of certain changes to the Senior Credit
Facilities pursuant to the Revised Commitment Letter.
Prior to the later of June 30, 2000 and the consummation of the Merger,
loans outstanding under the Revolving Credit Facility shall be limited to
$25,000,000 in the aggregate.
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An amount of the Term Loans to be incurred under the Senior Credit Facility
equal to the aggregate amount of the Merger Sub Credit Facility shall be
required to be undrawn on the Closing Date and shall thereafter only be
available to refinance indebtedness under the Merger Sub Credit Facility at the
time of the Merger. In addition, the Borrowers will have the right to defer a
draw on the portion of the Term Loans to be used to finance the Merger until
such time as the Merger occurs.
The Tranche B Term Loans will be divided into three, instead of two,
subtranches. Subject to the occurrence of certain events, the third subtranche
may be converted into a fixed rate Term Loan at a rate to be determined, and if
so converted, may be exempt from scheduled amortization and certain of the
mandatory prepayment provisions and may have a prepayment penalty with respect
to any prepayments.
Annual excess cash flow sweep will be increased to 75% of excess cash flow
if the Leverage Ratio is greater than or equal to 3.25x1.00 (instead of
3.75x1.00).
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THE OFFER
ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, the
terms and conditions of any such extension or amendment to the Offer), the
Purchasers will purchase, by accepting for payment, and will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with "--Withdrawal
Rights" of this Supplement, with Acquisition Company agreeing to pay for and
purchase (i) if more than 4,862,749 Shares but less than 6,135,061 Shares are
validly tendered and not withdrawn pursuant to the Offer, the first 4,862,749
Shares tendered pursuant to the Offer and the Company agreeing to pay for and
purchase all Shares tendered in excess of the 4,862,749 Shares paid for and
purchased by Acquisition Company, or (ii) if 6,135,061 or more Shares are
validly tendered and not withdrawn pursuant to the Offer, the first 2,318,126
Shares tendered pursuant to the Offer and the Company agreeing to pay for and
purchase all Shares tendered in excess of the 2,318,126 Shares paid for and
purchased by Acquisition Company.
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) the certificates
evidencing such Shares or a timely Book Entry Confirmation (as defined herein)
with respect thereto, (ii) the 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
herein), and (iii) any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchasers will be deemed to have accepted
for payment and thereby purchased Shares properly tendered to the Purchasers and
not withdrawn, if, as and when the Purchasers give oral or written notice to the
Depositary of the Purchasers' acceptance of such Shares for payment pursuant to
the Offer. In all cases, payment for Shares accepted 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
payments from the Purchasers and transmitting payments to tendering
stockholders.
If any tendered Shares are not accepted for payment pursuant to the Offer
for any reason, or if certificates submitted represent more Shares than are
tendered, certificates for Shares not purchased or tendered will be returned to
the tendering stockholder without expense to the tendering stockholder, or such
other person as the tendering stockholder shall specify in the Letter of
Transmittal, as promptly as practicable following the expiration, termination or
withdrawal of the Offer. In the case of Shares tendered by book-entry transfer
into the Depositary's account at the Book-Entry Transfer Facility (as defined
herein) pursuant to the procedures set forth in "--Procedures for Tendering
Shares" of this Supplement, such Shares will be credited to such account
maintained at the Book-Entry Transfer Facility as the tendering stockholder
shall specify in the Letter of Transmittal, as promptly as practicable following
the expiration, termination or withdrawal of the Offer. If no such instructions
are given with respect to Shares delivered by book-entry transfer, any such
Shares not tendered or not purchased will be returned by crediting the account
at the Book-Entry Transfer Facility designated in the Letter of Transmittal as
the account from which such Shares were delivered.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration to be paid per Share pursuant to the Offer, the Purchasers shall
pay such increased consideration for all such Shares purchased pursuant to the
Offer, whether or not such Shares were tendered prior to such increase in
consideration.
Subject to the terms of the Merger Agreement, the Purchasers reserve the
right to transfer or assign, in whole at any time or in part from time to time,
to one or more affiliates of either of the Purchasers, the right to purchase all
or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchasers of their 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
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payment pursuant to the Offer. Pursuant to Amendment No. 1, Acquisition Company
will assign to Merger Subsidiary its right to purchase all Shares it is
obligated to purchase if more than 4,862,749 Shares but less than 6,135,061
Shares are validly tendered and not withdrawn pursuant to the Offer.
PROCEDURES FOR TENDERING SHARES
STOCKHOLDERS WHO HAVE PROPERLY TENDERED SHARES PURSUANT TO THE OFFER TO
PURCHASE AND NOT VALIDLY WITHDRAWN THE TENDERED SHARES AND WHO WISH TO HAVE
THOSE SHARES PURCHASED PURSUANT TO THE OFFER NEED NOT TAKE ANY FURTHER ACTION IN
ORDER TO ACCEPT THE OFFER.
VALID TENDER. For Shares to be validly tendered pursuant to the Offer, the
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 any other required documents, must be received
by the Depositary at one of its addresses set forth on the back cover of this
Supplement prior to the Expiration Date. In addition, either (i) the
certificates evidencing tendered Shares along with the Letter of Transmittal
must be received by the Depositary or Shares must be tendered pursuant to the
procedures for book-entry transfer set forth below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date,
or (ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below. Tendering stockholders may continue to use the
Letter of Transmittal and Notice of Guaranteed Delivery delivered with the Offer
to Purchase or may use the Letter of Transmittal and Notice of Guaranteed
Delivery which are being provided with this Supplement.
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 OPTION AND RISK OF THE TENDERING STOCKHOLDER AND DELIVERY WILL BE
DEEMED MADE 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.
BOOK-ENTRY TRANSFER. The Depositary has established an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer. Any financial institution that is a
participant in the Book-Entry Transfer Facility's system 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 such Book-Entry Transfer
Facility's procedures for 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 Supplement prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL 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 the
confirmation of a book-entry transfer of Shares into the Depositary's account at
the Book-Entry Transfer Facility (a "Book-Entry Confirmation"), which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the participant in the 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 Purchasers may enforce such agreement against
such participant.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"), unless
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(i) the Letters of Transmittal are signed by the registered holder(s) of Shares,
which term, for the purposes of this document, shall include any participant in
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of Shares) tendered hereby and such holder(s) has (have)
not completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letters of Transmittal or
(ii) if such Shares are tendered for the account of an Eligible Institution.
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 or not tendered
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 described above. 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 Shares may nevertheless be
tendered if all of the following conditions are met:
(i) the tender is made by or through an Eligible Institution;
(ii) prior to the Expiration Date, the Depositary receives a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Purchasers herewith; and
(iii) in the case of a guarantee of Shares, the certificates for (or a
Book-Entry Confirmation with respect to) such Shares, in proper form for
transfer, 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 NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery. An
"NYSE trading day" is any day on which the NYSE is open for business.
The Notice of Guaranteed Delivery may be delivered by hand 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 the Notice of
Guaranteed Delivery.
BINDING AGREEMENT. The Purchasers' acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Purchasers upon the terms and subject to the
conditions of the Offer.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Shares pursuant to any of the procedures described above will be
determined by Acquisition Company, in its sole discretion, which determination
will be final and binding. Acquisition Company reserves the absolute right to
reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of Acquisition Company's counsel, be unlawful. Acquisition Company
also reserves the absolute right, in its sole discretion, subject to the
provisions of the Merger Agreement and Amendment No. 1 to waive any conditions
of the Offer or any defect or irregularity in any tender of Shares, 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.
Subject to the terms of the Merger Agreement and Amendment No. 1,
Acquisition Company's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the
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<PAGE>
instructions thereto) will be final and binding. None of the Purchasers, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
APPOINTMENT. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder
irrevocably appoints designees of Acquisition Company 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 thereby and accepted
for payment by the Purchasers and with respect to any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect of such purchased Shares (collectively, "Distributions").
All such proxies will be considered coupled with an interest in the tendered
Shares. Such appointment will be effective if, when, and only to the extent that
the Purchasers accept such Shares for payment pursuant to the Offer. All such
powers of attorney and proxies will be irrevocable and will be deemed granted in
consideration of the acceptance for payment by the Purchasers of Shares tendered
in accordance with the terms of the Offer. Upon such acceptance for payment, all
prior powers of attorney, proxies and consents given by such stockholder with
respect to such Shares (and any and all Distributions) 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 Purchasers will thereby be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion deem proper at any annual or special meeting of the Company's
stockholders, or any adjournment or postponement thereof or otherwise in such
manner as each such attorney-in-fact and proxy or his substitute shall in his
sole discretion deem proper with respect to, to execute any written consent
concerning any matter as each such attorney-in-fact and proxy or his substitute
shall in his sole discretion deem proper with respect to, and to otherwise act
as each such attorney-in-fact and proxy or his substitute shall in his sole
discretion deem proper with respect to, all of the Shares (and any and all
Distributions) tendered hereby and accepted for payment by the Purchasers by
written consent or otherwise and the Purchasers reserve the right to require
that, in order for Shares (or other Distributions) to be deemed validly
tendered, immediately upon the Purchasers' acceptance for payment of such
Shares, the Purchasers must be able to exercise full voting, consent and other
rights with respect to such Shares (and any and all Distributions), including
voting at any meeting of the Company's stockholders, provided that such
requirement shall not apply to Shares purchased by the Company with respect to
any record date for the determination of stockholders entitled to vote which is
set after the date of purchase of Shares by the Company.
BACKUP WITHHOLDING. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH
RESPECT TO PAYMENT OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE
OFFER, A TENDERING STOCKHOLDER, OR ITS ASSIGNEE (IN EITHER CASE, THE "PAYEE"),
MUST PROVIDE THE DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP
FEDERAL INCOME TAX WITHHOLDING BY COMPLETING AND SIGNING THE SUBSTITUTE
FORM W-9 PROVIDED IN THE LETTER OF TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES
WITH RESPECT TO A STOCKHOLDER, THE DEPOSITARY IS REQUIRED TO WITHHOLD AND
DEPOSIT WITH THE INTERNAL REVENUE SERVICE 31% OF ANY PAYMENTS MADE TO SUCH
STOCKHOLDER. SEE INSTRUCTION 10 TO THE LETTER OF TRANSMITTAL.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment and paid for by the Purchasers pursuant to the
Offer, may also be withdrawn at any time after March 3, 2000, or at such later
time as may apply if the Offer is extended.
If the Purchasers extend the Offer, are delayed in their acceptance for
payment of, or payment for, Shares or are unable to accept for payment or pay
for Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchasers' rights under the Offer, the Depositary may, nevertheless, on behalf
of
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<PAGE>
the Purchasers, 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 herein. Any such delay will be by an
extension of the Offer to the extent required by law. UNDER NO CIRCUMSTANCES
WILL INTEREST ON THE PURCHASE PRICE OF SHARES BE PAID BY THE PURCHASERS,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT.
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 Supplement. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If the certificates for the Shares to be withdrawn 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 for the
account of an Eligible Institution, the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been tendered
pursuant to the procedures for book-entry transfer as set forth in "--Procedures
for Tendering Shares" of this Supplement, any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
Any Shares properly withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Shares may be re-entered by again
following one of the procedures described in "--Procedures for Tendering Shares"
of this Supplement at any time prior to the Expiration Date.
CONDITIONS TO THE OFFER
The conditions to the Offer remain the same as set forth in the Offer to
Purchase, except that a minimum of 4,862,749 Shares must be validly tendered and
not withdrawn on or prior to the Expiration Date and the Company and, if
necessary, Merger Subsidiary, shall have received the proceeds of the Financing
contemplated by the Revised Commitment Letter or other financing which is on
terms substantially similar to those set forth in the Revised Commitment Letter,
which together with the proceeds of the Unit Purchase Agreement, is sufficient
to finance (i) the purchase of the Shares pursuant to the Offer, (ii) the
payment of the Merger Consideration pursuant to the Merger and (iii) the fees
and expenses required to be paid by the Company in connection with the
transactions contemplated by the Merger Agreement. See "--Financing of the
Transactions" of this Supplement.
CERTAIN LEGAL MATTERS
On December 16, 1999, Plaintiff Melissa Marotta served her complaint,
MAROTTA V. NICHOLS, ET AL, C.A. No. 17643NC, upon the Company, Vestar Capital
Partners and each of the Company's directors. Defendants were served plaintiff's
first request for production of documents on December 29, 1999. On December 29,
1999, the Company, Vestar and the directors moved to dismiss this action for
failure to state a claim upon which relief can be granted. Along with this
motion, the Company, Vestar and the directors filed a motion to stay discovery.
These motions are presently before the Court of Chancery of the State of
Delaware, in and for New Castle County. The Court has not yet scheduled a
hearing date for these motions or entered any orders related to the motions.
RECAPITALIZATION ACCOUNTING
If 6,135,061 Shares are validly tendered and not withdrawn pursuant to the
Offer, the Transactions should still qualify for recapitalization accounting
treatment. However, if fewer than 6,135,061 shares are tendered and not
withdrawn, the Transactions will be accounted for under the purchase method of
accounting. Under purchase accounting principles, the Company will record an
intangible asset equal to the excess, if any, of the purchase price paid by
Acquisition Company in the Merger over the net fair
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market value allocated to the identifiable assets and liabilities of the
Company. Such excess is referred to as goodwill. This will result in substantial
amortization charges to the consolidated income of the Company over the useful
lives of those assets.
GLEASON CORPORATION
TORQUE ACQUISITION CO., L.L.C.
February 4, 2000
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<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, 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 the applicable address set forth below:
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 120 Broadway 85 Challenger Rd.
South Hackensack, NJ 07606 13(th) Floor Mail Stop--Reorg
New York, NY 10271 Ridgefield, NJ 07660
</TABLE>
BY FACSIMILE TRANSMISSION:
(201) 296-4293
(for eligible institutions only)
FOR CONFIRMATION TELEPHONE: (201) 296-4860
Any questions or requests for assistance or additional copies of this
Supplement, the Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and the other tender offer materials may be directed to the
Information Agent at the address and telephone number set forth below.
Stockholders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
[LOGO]
17 State Street, 10(th) Floor
New York, NY 10004
Banks and Brokers Call Collect (212) 440-9800
All Others Call Toll Free (800) 223-2064
<PAGE>
EXHIBIT I
AMENDMENT NO. 1
TO AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1, dated as of February 3, 2000 (the "Amendment"), amends
the AGREEMENT AND PLAN OF MERGER, dated as of December 8, 1999 (the "Merger
Agreement"), by and among Gleason Corporation, a Delaware corporation (the
"Company"), Torque Acquisition Co., L.L.C. ("Acquisition Company"), a Delaware
limited liability company and a wholly owned subsidiary of Vestar Capital
Partners IV, L.P. ("Vestar"), and Torque Merger Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of Acquisition Company ("Merger
Subsidiary"). Capitalized terms used herein and not otherwise defined herein
have the meanings ascribed to them in the Merger Agreement.
WHEREAS, the Company, Acquisition Company and Merger Subsidiary have entered
into the Merger Agreement and mutually desire to amend the Merger Agreement in
accordance with Section 9.1 thereof;
WHEREAS, the Special Committee, based on, among other things, the fact that
approximately 64.4% of the Shares available to be tendered were tendered in the
Offer, has unanimously recommended to the Board of Directors that the Company
enter into this Amendment; and
WHEREAS, Acquisition Company, Merger Subsidiary and certain subsidiaries of
the Company have entered into a revised commitment letter (the "Revised Bank
Commitment Letter") with Bankers Trust Company (the "Bank") pursuant to which
the Bank has committed, subject to certain conditions, to provide the debt
financing for the Offer and the Merger;
NOW THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:
1. The fifth "WHEREAS" clause of the Merger Agreement is hereby amended to
read in its entirety as follows:
"WHEREAS, the Offer shall be a joint third party tender offer by
Acquisition Company and a self-tender offer by the Company to purchase at
the Offer Price all Shares tendered pursuant to the Offer, with Acquisition
Company agreeing to pay for and purchase (A) if more than 4,862,749 Shares
but less than 6,135,061 Shares are validly tendered and not withdrawn
pursuant to the Offer, the first 4,862,749 Shares tendered pursuant to the
Offer and the Company agreeing to pay for and purchase all Shares tendered
in excess of the 4,862,749 Shares paid for and purchased by Acquisition
Company or (B) if 6,135,061 or more Shares are validly tendered and not
withdrawn pursuant to the Offer, the first 2,318,126 Shares tendered
pursuant to the Offer and the Company agreeing to pay for and purchase all
Shares tendered in excess of the 2,318,126 Shares paid for and purchased by
Acquisition Company;"
2. A new Section 1.1(c) shall be added to the Merger Agreement as follows:
"Notwithstanding any provision to the contrary contained in Section 1.1
of the Merger Agreement, the Company and Acquisition Company agree to amend
the Offer to Purchase to (i) extend the expiration date of the Offer to
midnight, New York City time, on February 17, 2000; (ii) provide that the
obligations of the Company and Acquisition Company to accept for payment and
to pay for Shares validly tendered and not withdrawn on or prior to the
expiration of the Offer shall be subject only to (A) a minimum of 4,862,749
Shares being validly tendered and not withdrawn prior to the expiration of
the Offer (the "Minimum Condition") and (B) the other conditions set forth
in
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<PAGE>
Annex A to the Merger Agreement, as such Annex A is modified by the
Amendment; (iii) provide that if more than 4,862,749 Shares but less than
6,135,061 Shares are validly tendered and not withdrawn pursuant to the
Offer, Acquisition Company will agree to pay for and purchase the first
4,862,749 Shares tendered pursuant to the Offer and the Company will agree
to pay for and purchase all Shares tendered in excess of the 4,862,749
Shares paid for and purchased by Acquisition Company; and (iv) provide that
if 6,135,061 or more Shares are validly tendered and not withdrawn pursuant
to the Offer, Acquisition Company will agree to pay for and purchase the
first 2,318,126 Shares tendered pursuant to the Offer and the Company will
agree to pay for and purchase all Shares tendered in excess of the 2,318,126
Shares paid for and purchased by Acquisition Company. Not later than
February 4, 2000, the Company and Acquisition Company will file an amendment
with the SEC with respect to the Offer Documents (and the Company will file
an amendment to the Schedule 14D-9) which shall contain (including as an
exhibit), or incorporate by reference, a supplement to the Offer to Purchase
(such supplement together with the related Letter of Transmittal is referred
to collectively as the "Supplement"). The Company shall take all steps
necessary to cause the Supplement to be disseminated to the stockholders of
the Company as and to the extent required by applicable federal securities
laws. In connection with the Supplement, if requested by Acquisition
Company, the Company shall promptly furnish or cause to be furnished to
Acquisition Company mailing labels, security position listings and any
available listing or computer file containing the names and addresses of the
record holders of the Shares as of a recent date, and shall furnish
Acquisition Company with such additional information (including updated
lists of holders of Shares and their addresses, mailing labels and lists of
security positions) and such other assistance as Acquisition Company or its
agents may reasonably request for the purpose of communicating the
Supplement to the record and beneficial stockholders of the Company. Except
for such steps as are necessary to disseminate the Supplement, Acquisition
Company agrees that the information contained in any of such labels and
lists and the additional information referred to in the preceding sentence
shall be subject to the terms of the Confidentiality Agreement, shall use
such information only in connection with the Offer and, if this Agreement is
terminated, shall deliver or cause to be delivered to the Company all copies
or extracts of such information then in its possession or control and shall
use its best efforts to cause its affiliates, agents or representatives to
so deliver such information in their possession or control. If more than
4,862,749 Shares but less than 6,135,061 Shares are validly tendered and not
withdrawn pursuant to the Offer, Acquisition Company will assign to Merger
Subsidiary its right to purchase all Shares it is obligated to purchase, as
permitted under the Offer Documents, and Merger Subsidiary will purchase
such Shares. Such assignment will not relieve Acquisition Company or Merger
Subsidiary of any obligations under this Agreement, and the Company hereby
consents to such assignment notwithstanding any other provision of this
Agreement."
All references to "Minimum Condition" in the Merger Agreement, Annex A
thereto and this Amendment shall be deemed to be references to the "Minimum
Condition" as defined in this Amendment.
3. Section 3.1 (a) of the Merger Agreement is hereby amended to read in its
entirety as follows:
"(a) CANCELLATION OF COMMON STOCK OF MERGER SUBSIDIARY. Except as
otherwise provided in Section 3.1(c) (iii) (II) hereof, each issued and
outstanding share of common stock, par value $.01 per share, of Merger
Subsidiary shall automatically be cancelled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor".
4. Section 3.1(c)(iii) of the Merger Agreement is hereby amended to read in
its entirety as follows:
"(iii) (I) If Acquisition Company purchases Shares pursuant to the
Offer, the shares of Company Common Stock purchased in the Offer and held by
Acquisition Company shall be treated as follows:
(A) 484,334 shares each shall be converted into the right to receive
one Retained Share;
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<PAGE>
(B) subject to Section 6.11 hereof, 1,833,792 shares each shall be
converted into the right to receive the following consideration
(collectively, the "Series A Preferred/Warrant Consideration"):
(x) one share of the Surviving Corporation's 13.17% Series A
Cumulative Redeemable Preferred Stock (the "Series A Preferred"),
such Series A Preferred having the terms set forth in the Amended
Charter, and
(y) one warrant to acquire shares of Surviving Corporation
Common Stock (collectively the "Warrants"), such Warrants having the
terms set forth in a warrant agreement (the "Warrant Agreement") term
sheet attached hereto as Annex D, which Warrant Agreement shall be
executed by the Company as of the Effective Time; and
(II) If Acquisition Company assigns its right to purchase Shares in the
Offer to Merger Subsidiary then:
(A) notwithstanding Section 3.1(a) hereof, the capital stock of Merger
Subsidiary shall be converted in the Merger into the following:
(x) 484,334 shares of Common Stock of the Surviving Corporation;
(y) subject to Section 6.11 hereof, 1,833,792 shares of Series A
Preferred; and
(z) Warrants to acquire 1,833,792 shares of Surviving Corporation
Common Stock; and
(B) all shares of Company Common Stock purchased by Merger Subsidiary
in the Offer shall automatically be cancelled and shall cease to exist and
no consideration shall be delivered in exchange therefor."
5. All references to the "Bank Commitment Letter" in Sections 4.20, 6.8 and
6.10 of the Merger Agreement shall be deemed to be references to the "Revised
Bank Commitment Letter."
6. The proviso at the end of Section 8.3(a) of the Merger Agreement is
hereby amended to read in its entirety as follows: "; PROVIDED, HOWEVER, that
all costs and expenses related to the filing, printing and mailing of the Offer
Documents, the Schedule 14D-9 and the Proxy Statement, as well as all costs and
expenses payable pursuant to the Revised Bank Commitment Letter, shall be borne
by the Company."
7. Section 8.3(b) of the Merger Agreement is hereby amended by
(i) changing the figure $2.5 million therein to $4.0 million and (ii) changing
the figure $1.25 million therein to $2.0 million.
8. Clause (iii) of the third paragraph of Annex A to the Merger Agreement
is amended to read in its entirety as follows:
"(iii) the Company and, if necessary, Merger Subsidiary, have not
received the proceeds of the Financing contemplated by the Revised Bank
Commitment Letter or other financing which is on terms substantially similar
to those set forth in the Revised Bank Commitment Letter which, together
with the proceeds of the Unit Purchase Agreement, is sufficient to finance
(x) the purchase of the Shares pursuant to the Offer, (y) the payment of the
Merger Consideration pursuant to the Merger, and (z) the fees and expenses
required to be paid by the Company in connection with the transactions
contemplated by the Agreement, or"
9. Each of the parties hereto shall execute such documents and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
10. Except as amended hereby, the Merger Agreement shall remain in full
force and effect in all respects and, except to the extent the context of the
Merger Agreement otherwise requires, each reference
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in the Merger Agreement to the Merger Agreement shall be deemed to refer to the
Merger Agreement as amended hereby.
11. This Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
entirely performed within such state.
12. This Amendment may be signed in any number of counterparts with the
same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of
this Amendment.
IN WITNESS WHEREOF, the Company, Acquisition Company and Merger Subsidiary
have caused this Amendment to be signed by their respective officers thereunto
duly authorized as of the date first written above.
<TABLE>
<S> <C> <C>
GLEASON CORPORATION
By: /s/ EDWARD J. PELTA
-----------------------------------------
Name: Edward J. Pelta
Title: Vice President, General Counsel and
Secretary
TORQUE ACQUISITION CO., L.L.C.
By: /s/ SANDER M. LEVY
-----------------------------------------
Name: Sander M. Levy
Title: President
TORQUE MERGER SUB, INC.
By: /s/ SANDER M. LEVY
-----------------------------------------
Name: Sander M. Levy
Title: President
</TABLE>
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